{"id":5968,"date":"2020-06-01T12:43:08","date_gmt":"2020-06-01T10:43:08","guid":{"rendered":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/?p=5968"},"modified":"2020-06-01T12:43:08","modified_gmt":"2020-06-01T10:43:08","slug":"maintenance-3","status":"publish","type":"post","link":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/2020\/06\/01\/maintenance-3\/","title":{"rendered":"Insourcing Maintenance: How to Start"},"content":{"rendered":"

Many fleets outsource some of their work, but others also insource it \u2014 that is, they provide maintenance, repair, or upfitting for other public entities. Perhaps it\u2019s for a police department, or a small town without its own fleet division, or a volunteer fire department. Fleet managers who insource work say there are significant benefits, including the ability to spread overhead costs across more vehicles, reducing costs for everyone.<\/span><\/p>\n

Wondering whether insourcing is right for you, now or in the future, and how to start? Here\u2019s what you need to know.<\/span><\/p>\n

Getting Started<\/span><\/h2>\n

Obtaining work from outside entities often depends on reputation, referrals, active searching, and sometimes, luck.<\/span><\/p>\n

Marilyn Rawlings<\/a>, fleet manager for the City of Cape Coral, Fla., recalled receiving a phone call about a school bus stuck on the side of the road. The charter school needed help with the maintenance and repair of its 19 buses, which were breaking down too often. The school\u2019s sole mechanic, who was also the inspector, was signing off on buses that Rawlings\u2019 team later found had numerous safety violations, including torn seat covers, bald tires, broken swing-out safety arms, and air conditioning that didn\u2019t work, said Pete Milana, fleet supervisor for the city.<\/span><\/p>\n

Rawlings, confident her team was up to the task, sought approval from management and submitted and was awarded a proposal to take over bus fleet maintenance, the operation\u2019s first and only insourcing contract.<\/span><\/p>\n

The Sonoma County, Calif., fleet had more experience performing insourcing work, performing maintenance, repair, and upfitting for various small towns and police departments, said former fleet manager David Worthington (now manager of fleet and construction support for the East Bay Municipal Utility District in California). Officers talked to each other, leading to word-of-mouth referrals to other agencies unhappy with their own services. The county fleet team has been taking on additional work for years as it became available.<\/span><\/p>\n

\"The<\/span>
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The Cape Coral, Fla., fleet team took over the maintenance of a charter school\u2019s 19 buses. Technicians stepped up to the task, earning an ASE certification and studying to become bus inspectors. <\/span>Photo: City of Cape Coral<\/em><\/span><\/p>\n<\/figcaption><\/figure>\n

In Prince George\u2019s County, Md., Fleet Manager Rick Hilmer, CAFM, saw insourcing as an opportunity. During the economic recession in 2008, the county froze hiring, leaving the fleet division staffed at just two-thirds its usual level. As the economy improved and Hilmer could hire back more staff members, he realized that insourcing more work (the county fleet has always performed work for small towns, volunteer fire departments, and even the state) would allow him to spread out the costs of his expanding team.<\/span><\/p>\n

Last year, the county added a small town and a library system fleet to its list of customers. The library\u2019s lone mechanic was retiring, and it couldn\u2019t justify a full-time hire, so its staff members approached the county, Hilmer said.<\/span><\/p>\n

Lee Hall, fleet manager for the City of Fairfax, Va., has a different experience. Rather than insourcing, he\u2019s brought back previously outsourced work in house. The city\u2019s vendor for fire truck and ambulance service was not meeting the turnaround time outlined in the contract agreement, leading the city\u2019s own fire department staff to have to borrow other jurisdictions\u2019 vehicles just to stay in service, he said. There had to be a better solution \u2014 that\u2019s when the fleet team stepped in.<\/span><\/p>\n

Evaluating Costs & Revenue<\/span><\/h2>\n

Insourcing work can be a big project, but it can help fleet agencies reduce costs for all its customers. It\u2019s important to determine costs and savings, calculate charges for external customers, and, in most cases, ensure you stay cost neutral.<\/span><\/p>\n

Worthington said insourcing has allowed him to reduce overall costs such as parts for patrol car setup \u2014 the fleet operation gets volume discounts by purchasing parts in bulk.<\/span><\/p>\n

\u201cIt cut our costs \u2014 of brand-new parts for a patrol car set-up \u2014 by $1,300,\u201d he explained.<\/span><\/p>\n

As for charging customers, Worthington has found that they often wanted a guaranteed price, which he couldn\u2019t offer because the fleet is a zero net cost operation. He had to explain that he would charge the internal rate county departments are charged. As for external vendor work, the customer would also be billed through the labor rate to accurately reflect the time spent processing the order.<\/span><\/p>\n

Rawlings estimated that it took about $400,000 to get the charter school\u2019s vehicles up to acceptable working condition \u2014 a shock for the school.<\/span><\/p>\n

However, she provided a $20,000 monthly cost estimate for preventive maintenance (PM), inspections, and minor repairs for the buses (although they are billed for actual work) and reported that the estimate is about accurate, with the city billing between $10,000 and $20,000 monthly.<\/span><\/p>\n

\u201cNow we\u2019re under where we projected, so they\u2019re thrilled,\u201d she said.<\/span><\/p>\n

Rawlings\u2019 fleet charges the charter school the same as it does its internal departments and sells fuel at no markup.<\/span><\/p>\n

\u201cWe\u2019re trying to help the charter school become solid,\u201d she explained.<\/span><\/p>\n

The Prince George\u2019s County fleet operation charges a slightly higher rate for external clients. That\u2019s because most county departments are charged a normalized annual cost based on vehicle classes. But Hilmer said with external clients, he stays cost neutral and has a below-market labor rate.<\/span><\/p>\n

\u201cI think we\u2019re very competitive and very attractive to customers. They\u2019re not going to get this service at this cost in the open market,\u201d he said.<\/span><\/p>\n

For the City of Fairfax, Hall said he ran an analysis for vendor work for the fire and ambulances, which previously took up half of his vendor outsourcing budget. Comparing one-year costs of outsourcing work and doing it in-house, in-house work allowed the city to save $184,600 while also increasing in-service time by 7,331 hours, he said.<\/span><\/p>\n

\"Prince<\/span>
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Prince George\u2019s County (Md.) technician Limbert Emmanuel is pictured working on a library system pickup truck, a new insourcing client for the county. <\/span>Photo: Prince George’s County<\/em><\/span><\/p>\n<\/figcaption><\/figure>\n

Addressing Manpower and Training Needs<\/span><\/h2>\n

It\u2019s not just costs fleet managers have to consider, but also technician time and training.<\/span><\/p>\n

Worthington attributes Sonoma County\u2019s ability to absorb additional work \u2014 without hiring additional staff or increasing overtime \u2014 to talented fleet staff. The operation was constantly looking for efficiencies, allowing it to free up some labor time to take on the work.<\/span><\/p>\n

As for working on the transit system\u2019s newer vehicles, he said technicians took it in stride. One new thing they encountered: high rail transit vehicles that drive on railroad tracks.<\/span><\/p>\n

\u201cThe whole mechanism was something we\u2019d never been exposed to before. So there was a little bit of a learning curve with it, but we found that a lot of the components were similar to snowplows.\u201d<\/span><\/p>\n

Rawlings\u2019 staff, which hadn\u2019t worked on school buses, set out to train themselves. One mechanic received certifications from the National Institute for Automotive Service Excellence (ASE) to work on buses, and two studied for months to become certified bus inspectors.<\/span><\/p>\n

As for workload, Rawlings said that as the fleet operation began the process to get the buses back in good shape, she outsourced other work to free up technician time. This ended once the initial work on the buses was complete.<\/span><\/p>\n

Hilmer said incorporating the library\u2019s vehicles into the fleet maintenance program meant technicians were seeing more variety in the vehicles they were servicing \u2014 such as Nissan and Chrysler vehicles. This meant ordering and stocking different parts.<\/span><\/p>\n

When bringing fire and EMS equipment in house, Hall tripled the training budget and sent technicians out to get factory training. He began working on an incentive promotion program for emergency vehicle technician (EVT) certifications to mirror the city\u2019s ASE incentive program. These efforts worked, and technicians now have EVT certifications in four different fields.<\/span><\/p>\n

In addition to increasing the training budget, he hired a part-time employee to offset other work that comes into the shop. This person is a retiree with 34 years of service, and he\u2019s still there. Hall also filled a vacant position with a technician who had previous fire apparatus repair experience.<\/span><\/p>\n

Hall re-evaluated PM schedules, using repair cost and downtime data to extend service intervals on some vehicles to free up technician time \u2014 for example, trash truck PM schedules were increased from three to four months.<\/span><\/p>\n

Like Rawlings\u2019 experience, Hall also focused on intense PM procedures to get the vehicles up to standards in the beginning.<\/span><\/p>\n

The fleet operation believes PM means \u201cfix it now before it causes a breakdown in the future,\u201d he explained.<\/span><\/p>\n

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Is Your Fleet a Good Candidate for Insourcing?<\/span><\/h2>\n

It takes a specific set of conditions to be a good candidate for insourcing fleet maintenance and repair work. Here\u2019s what fleet managers say are necessary:<\/span><\/p>\n