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DateSeptember 8, 1998

To:Strategic Policies and Priorities Committee

From:Chief Administrative Officer

Subject:Fleet Management - Administrative Structures, Policies and Accountability Standards

Purpose:

The purpose of this report is to clarify the existing and planned administrative structures, operating policies, and standards of accountability in relation to the acquisition and management of fleet within the City.

Funding Sources, Financial Implications and Impact Statement:

This report has no financial impact.

Recommendations:

It is recommended that this report be received for information.

Council Reference/Background/History:

On July 24, 1998, the Strategic Policies and Priorities Committee had before it a transmittal letter from the Budget Committee recommending that: all new vehicle purchases and leases be approved by the Director of Fleet Management and the Budget Committee; the Director of Fleet Management assess vehicle justification and alternative methods to fill the request; and any difference of opinion between the Fleet Director and the department relating to vehicle acquisition be appealed to the Budget Committee. The Strategic Policies and Priorities Committee, in considering those recommendations, requested that the Chief Administrative Officer:

  • review administrative structures, policies, standards to meet standards of accountability and operating requirements reflected in the Budget Committee's recommendations mentioned above; and
  • report on the responsibility of staff, the Standing Committees and Budget Committee on the day to day decision making process with respect to the disbursement of funds.

This report pertains to the fleet administrative structures and policies; the subject of responsibilities of staff, the Standing Committees and the Budget Committee on the day to day decision making process with respect to the disbursement of funds is addressed in a separate report.

Comments and/or Discussion and/or Justification:

Background:

Each of the seven former municipalities had different policies and practices for the management of fleet operations. In some cases, formal fleet management functions existed; in other cases, the fleet was managed by staff whose primary focus was fleet maintenance and garage operations. As a result of the amalgamation, the new City of Toronto inherited those diverse practices and staff have been working since January 1998 to streamline and standardize the fleet management processes and practices.

In May 1998, pursuant to a Request for Proposals, the firm of KPMG Management Consulting was selected to conduct a fleet management study with a view to establishing a centralized fleet management function, standardizing fleet management policies and procedures and consolidation of garage operations. The study is expected to be completed by December 1998 and will be reported to the Corporate Services Committee. The initial findings will inform the 1999 budget submission. (refer to Appendix i.e., study deliverables).

On August 4, 1998, the Director of Fleet Management Services was appointed, and, in consultation with KPMG, an appropriate organization structure is under development. The major roles and responsibilities of the director relate to: asset management in relation to the fleet, operations management including maintenance, garage management, management of service providers and vendors of parts, fuels and services, and the development and implementation of fleet management policies based on best practices.

The interim administrative procedures for the initiation and approval of fleet transactions are outlined below. The centralized fleet management program within the Corporate Services Department reports to the Corporate Services Committee for the approval of ongoing program priorities and future plans. With respect to fleet, and consistent with the Interim By-law 23-1998, the role of the Corporate Services Committee is to make recommendations on fleet management. The role of the Budget Committee is to annually review and recommend fleet program budgets. Day to day decision making for fleet related transactions resides with the administration based on Council-approved procedures, policies and budget allocations.

Current Administrative Processes:

The current administrative policies and processes are described below; as part of the KPMG study, they are all under review and improvements will be identified and implemented during 1999.

During the approval of the 1998 budget, a general moratorium on the acquisition of new vehicles was put in place. The purpose of the moratorium is to ensure that vehicle requirements are still valid after taking into consideration the department's needs after amalgamation and restructuring, and ensuring that there are no other surplus units in the City's fleet that may be re-deployed.

For 1998, the following process is being followed:

  • upon approval of the departmental fleet budget, staff reassess their requirements and complete a "Request for Procurement of Vehicles/Equipment by Exception" form which is authorized by the commissioner and submitted to the centralized fleet management function;
  • departmental requests are reviewed and assessed by staff in the centralized fleet management function in consultation with the program managers requesting the fleet items;
  • the justification for fleet procurement is then reviewed by the Director of Fleet management Services and, upon authorization by the Commissioner of Corporate Services, vehicle requisitions are issued to the Purchasing and Material Management Section in the Finance Department for request for quotations; and
  • acquisition costs are charged to the fleet replacement reserve.

The following accountability framework is in place in relation to fleet:

  • the department is responsible for: cost/benefit analysis for justification of the vehicle consistent with program objectives, its proper deployment, prevention against misuse, keeping it in a safe condition, monitoring its use and costs, safeguarding against unauthorized personal use, and maintaining vehicle utilization records;
  • the centralized fleet management is responsible for: planning and consolidation of all authorized fleet purchases, selection of the fleet vendor, certification of vehicles received, authorization of payment to vendors, monitoring vehicle utilization and assignment, ensuring timely maintenance of fleet and disposal of vehicles replaced, and, appropriate cost recovery from departments; and
  • the recommendations and findings of the KPMG study addressing the centralized fleet management function, fleet requirements for the new City, maintenance standards, garage operations, organization structure and potential savings will be submitted to the Corporate Services Committee for consideration.

Fleet Maintenance:

Currently, the fleet is maintained on a status quo basis; i.e., the fleet maintenance arrangements that existed prior to amalgamation are largely undisturbed. However, a centralized team is now working to explore ways and means of improving efficiencies in fleet maintenance.

Fleet Management Reporting:

At this time, the management information systems that exist have not as yet been integrated. As a result, monitoring of the fleet operations is labour intensive and requires extensive co-ordination.

Other Items:

Fleet management is responsible for the centralized fleet activities that existed in the former municipalities. The fleet operations in Ambulance Services and Fire Departments are subject to a separate study by KPMG, currently in progress. Acquisition of vehicles for the Police Force are verified and processed by the City's centralized fleet function.

Guiding Principles for Centralized Fleet Management:

In establishing a centralized fleet management function, the following guiding principles will be taken into consideration:

  • current best practices, policies, procedures, and systems for fleet management and garage operations will be adopted;
  • fleet assignment will be justified on operational considerations and cost benefit analysis of vehicle deployment;
  • cost effective solutions will be identified through centralized fleet management and consolidated garage operations;

Cthe Division will operate on a cost recovery basis;

Cvehicle replacement and repairs will be based on life cycle analysis of costs;

Cfleet acquisitions will be financed through a replacement reserve;

Ccurrent technology will be taken into account to achieve optimum efficiencies; and

Calternative service delivery options for fleet management and maintenance services will be considered.

Fleet Justification and Assignment Policy:

A Fleet Justification and Assignment Policy is currently under development. The policy will identify:

  • the criteria under which a department may justify a vehicle;
  • vehicle utilization records to be maintained by the department;
  • circumstances for the use of employee vehicles for business purposes;
  • exceptions under which personal use of City vehicles may be allowed; and
  • reporting of personal use of City vehicles as a taxable benefit.

Based on this policy, the centralized fleet management function in consultation with the departments will be responsible for the annual zero base review of the fleet and long term planning of fleet requirements and replacements.

Conclusion:

As part of the amalgamation and restructuring process, the centralized fleet management function has now been established and formal fleet management structures and policies are under development. Departmental requests for fleet are processed by centralized fleet management on the basis of approved budgets, and authorization by senior management. The findings and recommendations of the KPMG study in relation to the corporate fleet will be submitted to the Corporate Services Committee for consideration. The role of the Budget Committee is to review and recommend fleet program budgets on an annualized basis. In the interim, extra care is exercised by the centralized fleet management function to ensure that services required by the department are provided in the most cost efficient and timely manner and that proper accountability is maintained for all resources consumed.

Contact Names:

Firoz Kara, Assistant Director, Corporate Policy and Planning Division - 392-8678

Stan Burrows, Director, Fleet Management Services, Corporate Services Department - 392-7791

Michael R. Garrett

Chief Administrative Officer

Appendix

Centralized Fleet Management Function and KPMG Study

The role of the centralized fleet management function will be defined by the KPMG study. The essential role will relate to: asset management (acquisition, maintenance, assignment, disposal), safety, compliance with regulations, procurement of fuel, parts, other services, management reporting, and management of garage operations. From an implementation perspective, the KPMG report will define the role in detail with reference to:

  • asset management;
  • provision of support and service to the departments using the fleet;
  • fleet justification based on the fleet assignment policy;
  • procurement of fleet, fuel and fleet maintenance services;
  • fleet right sizing and rotation;
  • monitoring of fleet operations and costs;
  • management of garage operations; and
  • incorporation of best practices relating to fleet operations.

The purpose of the study includes:

  • identification of a framework and a recommended approach for the establishment of a centralized fleet management function;
  • determination and assessment of the revised fleet requirements for the New City;
  • determination of appropriate fleet maintenance standards and requirements;
  • identification of garage operations and fuelling stations that are to continue;
  • estimation of potential savings; and
  • determination of an appropriate organization structure for fleet management and garage operations from the perspective of the new City of Toronto.

The study will ensure the following specific deliverables:

  • current situation assessment (fleet management and maintenance);
  • design and establishment of a centralized fleet management function;
  • fleet policies for implementation;
  • estimate of the required fleet size;
  • service delivery under a consolidated approach and estimate of fleet maintenance requirements;
  • rationale for garages that are to continue to operate with estimated resource requirements (human, financial, systems, equipment) and procedures for cost control and the estimated hourly labor charge out rate;
  • systems and technologies - identification of appropriate financial, costing and inventory systems with supporting software for effective centralized fleet management and garage operations; and estimate of savings from fleet size reduction, consolidation of fleet management, use of contracted services, garage consolidations and surplus facilities.

 

   
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