ADM Fleet Strategy - amathole.gov.za Fleet Strategy... · ADM Fleet Strategy. Fleet Management Strategy Page 2 Table of Contents 2. ... This assessment could be regarded as a representative

ADM Fleet Strategy

Fleet Management Strategy

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Table of Contents

2. Approach and Methodology _______________________________________ 43. Strategic Framework _____________________________________________ 64. Situational Analysis Key Findings - Assets __________________________ 8

4.1. Findings ___________________________________________________________________84.2. Size and Shape of the Assessed Fleet____________________________________________84.3. Fleet Condition _____________________________________________________________104.4. Recommendations __________________________________________________________11

5. Organisation __________________________________________________ 145.1. Findings __________________________________________________________________145.2. Recommendations __________________________________________________________15

6. Managing Vehicle Abuse ________________________________________ 176.1. Findings __________________________________________________________________176.2. Recommendations __________________________________________________________17

7. Managing Vehicle Mis-use and Utilisation __________________________ 197.1. Findings __________________________________________________________________197.2. Recommendations __________________________________________________________19

8. Managing Fleet Cost ____________________________________________ 208.1. Introduction _______________________________________________________________208.2. Venus Fleet Transactions_____________________________________________________208.3. Wesbank Monthly Schedules __________________________________________________218.4. Cost per Vehicle Type _______________________________________________________248.5. Findings __________________________________________________________________298.6. Recommendations __________________________________________________________29

9. Fleet Utilisation ________________________________________________ 319.1. Vehicle Utilisation___________________________________________________________319.2. Key Findings Vehicle Utilisation ________________________________________________319.3. Key Recommendations – Vehicle Utilisation ______________________________________31

10.Fleet Administration ____________________________________________ 3210.1. Findings __________________________________________________________________3210.2. Recommendations __________________________________________________________32

11.Fleet Management Business Process Maturity Assessment____________ 3312.Operations Control Processes ____________________________________ 38

12.1. Findings __________________________________________________________________38

13.Fleet Systems and Technology ___________________________________ 3913.1. Findings __________________________________________________________________3913.2. Recommendations __________________________________________________________3913.3. Recommendation - Centralised Fleet Control _____________________________________40

14.Business Processes and Practices – Management Interviews __________ 4114.1. Findings of Management Interviews ____________________________________________4114.2. Findings for Head Office Interviews ____________________________________________41

15.Essential Vehicle User Scheme (EVUS) ____________________________ 4615.1. Background and Description of the EVUS ________________________________________46


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15.2. EVUS Cost Levels Post Implementation _________________________________________47

ANNEXURE A: Fleet Management Strategy Implementation Plan__________ 48ANNEXURE B – List of Assessed vehicle with condition _________________ 49ANNEXURE C – Vehicles with Wesbank Transactions not Assessed _______ 50ANNEXURE D– CPK Repairs & Maintenance per Vehicle _________________ 51ANNEXURE E – Fuel litre per 100km per vehicle ________________________ 52


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1. Approach and Methodology

The following key elements were considered:

ADM fleet related financial and operational source information;

Structured interviews were conducted with the key role players and a formalised view of thecurrent ADM fleet management situation and practices were established and considered;

The ADM fleet was physically inspected and the overall condition established;

All relevant and available documentation was reviewed within the allocated timeframe;

Project Steering Committee Meetings were conducted and input was obtained frommanagement; and

Structured workshops and interviews were conducted with the ADM fleet managementdepartment.

The following diagram outlines the fleet improvement methodology that was applied:

The diagram above outlines action steps during Phase 1:

Project mobilisation;


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Assessment and measurement of the fleet function;

An optimised solution was envisioned and agreed upon; and

Strategy design and planning.

This report is the final deliverable of Phase 1.

Phase 2 will deal with strategy implementation and does not form part of this project phase.

The key activities during this phase includes:

Assistance with implementation; and

Progress review and assistance with implementation.


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2. Strategic Framework

The following diagram outlines the recommended ADM Strategic Fleet Management Framework(SFMF).

This diagram centres the ADM Fleet Management Strategy on four key elements:

Driver Management;

Fleet Operations Management;

Fleet Financial Management;

Asset Management.

These key elements and focus areas should work together in harmony to produce the followingdesired outcomes:

An available and reliable fleet;

An economically run and cost effective fleet operation.

The fleet should support ADM management strategy together with the service delivery mandate ofthe municipality.


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This report outlines the key findings of the ADM situational analysis, the fleet managementintegrated approach, as well as the strategic recommendations.


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3. Situational Analysis Key Findings - Assets

3.1. FindingsThe current ADM fleet size and shape is adequate for purposes of service delivery. The fleet is in agood condition, but fleet availability is a problem.

A total of 297 ADM vehicles were assessed out of an expected fleet size of 330 vehicles as stated inthe tender requirement document. A small portion (10%) of the fleet was not available forassessment due to operational demands.

This assessment could be regarded as a representative sample (90%) of the overall ADM fleetcondition.

Mobile technology was applied whilst conducting the fleet assessments.

The overall condition of the ADM fleet was assessed.

3.2. Size and Shape of the Assessed FleetThe pie graph below outlines the fleet configuration of the assessed vehicles:


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The following table provides a breakdown by vehicle type:

From the table it is clear that the bulk of the ADM fleet consists of 1 Ton LDV (194) vehicles,followed by sedans (30) and trucks (30). The remainder of the fleet consist of various smallcategories.

Fleet Size – Key Findings

There is a discrepancy in the ADM Fleet Size reported the following table indicates the various datasources and number of fleet units reported:

ADM Tender Document 8/2/20/2014-2015C = 330 fleet units;

ADM Venus Financial Systems = 409 fleet units; and

Wesbank System (Maintenance reporting & fuel) = 388 fleet units.

Concluding the situational analysis business review process and considering the various interactionswith key role players, the following key aspects regarding the fleet size and shape became clear:

There is no formal documented business process at ADM to determine the size and shape ofthe fleet; and

The relevance of the current fleet size, shape and utilization is being questioned.

Fleet Size – Key Recommendations

It is recommended that:

The Venus financial systems be updated with the actual ADM fleet master and that it be usedas the master data file for vehicles, plant and equipment;

The Wesbank and Netstar Vehicle tracking system be updated with the Venus vehicle masterdata;

Business process be implemented to ensure synchronisation of the various vehicle databases;

Vehicle Type QuantityLDV > 1TON 194SEDAN < 2L 30TRUCK 30LDV DOUBLE CAB 7FIRE TRUCK 7TRUCK - TANKER 6EQUIPMENT - TRACTOR 5LDV < 1TON 5TRAILER 3PANELVAN / BUS 16 SEATER 3EQUIPMENT - TLB 3SEDAN > 2L 2EQUIPMENT - PUMP 2Grand Total 297


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The vehicle classification codes be standardised and that all vehicle related descriptiveinformation be updated between the various systems;

A formal fleet size and shape review process be introduced and that this process besynchronised with a fleet budgeting process that needs to be introduced; and

The fleet utilization management process be aligned with the fleet size and shape reviewprocess.

3.3. Fleet ConditionThe table outlines the overall fleet condition of the assessed vehicles:

The bulk of the ADM fleet is in a Good to Very Good condition (77%) whilst 19% is in an Averagecondition. Only 5% is in a Poor to Very Poor condition.

The following bar graph illustrates the overall fleet condition:

From the fleet assessments it is clear that the ADM fleet is in a good technical condition with 95%above Average condition. This condition compares favourably to other municipalities in South Africa.

Condition Percentage of Fleet1=Very Poor 2%2=Poor 3%3=Average 19%4=Good 60%5=Very Good 17%Grand Total 100%


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The 5% of the fleet which is below average could impact on fleet availability and service delivery.In the absence of good fleet practice, the 5% poor fleet condition could increase over time.

Below is a further breakdown of condition by Vehicle Type:

The current ADM fleet management approach is fragmented and not integrated with the satelliteoffices.

Systems are not integrated with the ADM Venus financial systems which results in a lack ofmanagement information, data integrity and integrated fleet operation and financial reporting.

Maintenance management systems are lacking and vehicle repair and maintenance scheduling isabsent in the municipality. This impacts negatively on service delivery due to the fact that vehicleavailability is not managed.

3.4. RecommendationsThe following recommendations should be taken into consideration when compiling the 2015/16fleet operational budget together with the fleet replacement programme:

Vehicles which are in a Very Poor to Poor condition should be rehabilitated or considered forreplacement.

It is recommend that the Venus Fleet Master be verified and updated accordingly. It thenneeds to be reconciled as part of a potential phase 2 of the project.

A business processes need to be adjusted to ensure that the Venus Fleet Master is accurate atall times and correct asset detail is always available. Preferably this needs to be reported on amonthly basis and the Financial and Fleet Department need to co-ordinate this effort.

The Venus Fleet Master needs to be synchronised with the Wesbank fuel and maintenancetransaction records.

A business process needs to be introduced to ensure that ONLY authorised vehicles in Venusare maintained. Currently it is clear that there is a disconnection between Venus and Wesbanktransactions.

Service Scheduling – All service intervals of vehicles needs to be recorded in a fleetmanagement system. All trip sheets must to be captured in Venus to keep track of vehicle

Vehicle Type 1=Very Poor 2=Poor 3=Average 4=Good 5=Very Good Grand TotalEQUIPMENT - PUMP 1 1 2EQUIPMENT - TLB 1 2 3EQUIPMENT - TRACTOR 1 1 1 2 5FIRE TRUCK 1 6 7LDV < 1TON 1 3 1 5LDV > 1TON 3 6 31 119 35 194LDV DOUBLE CAB 3 3 1 7PANELVAN / BUS 16 SEATER 1 2 3SEDAN < 2L 1 1 2 18 8 30SEDAN > 2L 1 1 2TRAILER 2 1 3TRUCK 1 6 19 4 30TRUCK - TANKER 4 2 6Grand Total 5 9 55 177 51 297


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odometer readings. This will enable ADM to predict vehicle service intervals and manage fleetavailability.

Regular vehicle audits must be introduced at a Satellite Office level to ensure that vehicle abuseis managed and the known vehicle defects are recorded. The mobile technology used duringthe analysis could be deployed within the ADM fleet function which will enable ADM to continuewith this business process. This should serve as a building block for future fleet audits.

Maintenance best practice needs to be introduced in order to preserve and extend the usefulasset life of the ADM fleet.

The current lack of an integrated maintenance management and fleet management systemscould be regarded as a strategic impairment. It is strongly recommended that an integratedfleet maintenance management system be introduced as a matter of urgency.

Proposed ADM Fleet Management Integrated Approach

The diagram below outlines the proposed ADM Integrated Fleet Management Approach :

The proposed fleet management integrated approach highlights the four key elements which shouldbe managed in an integrated manner:

People – Fleet users and drivers of ADM;

Fleet Operations – Scheduling fleet operations and comparing the actual use of the vehicle /fleet unit against a scheduled operation on a daily, weekly and monthly basis;

Asset Management – Scheduling vehicle services, maintenance and repairs using a reliablesystem. The management of this process is imperative to ensure optimal fleet availability and


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preserving the useful fleet asset life cycle for as long as possible.

Fleet financial management – Ensuring that the ADM Venus financial management systemsand finance management processes are integrated with the fleet management processes. Theeffective and integrated fleet financial management process should ensure accountability by theUser Department for vehicle abuse and misuse.

These four key elements should be supported by:

Fleet Management Systems;

A Fleet Management Staff Structure; and

Fleet Management processes, procedures and policies.

The fleet management systems currently deployed by ADM are:

Fuel Management – Wesbank fuel card system;

Vehicle tracking and driver behaviour monitoring – Altech Netstar vehicle trackingsystem;

Fleet maintenance management system – Wesbank maintenance transactionauthorisation services and electronic card payment system;

Fleet operation control systems – Altech Netstar vehicle tracking supported with routeoptimisation; and

The fleet management systems currently deployed by ADM should be integrated with the ADM fleetmanagement business processes.

There is also a requirement for continuous vehicle auditing, scheduled inspections and defectrecording with monitored repairs being conducted;

Fleet user training is also lacking.

It can be concluded that an integrated fleet management approach should be adopted and instilledwithin ADM.


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4. Organisation

4.1. FindingsThe current fleet structure is centred around a Head Office fleet function with its main focus beingthat of the management of the Car-Pool operation. Currently the ADM fleet is managed by a team of1 Manager, 1 Assistant Manager, 2 Officers and 2 Admin Clerks and supported by a Car WashSupervisor, 3 Car Wash Assistants and a Driver.

This fleet staff structure is inadequate to manage 330 vehicles across all Satellite Offices due to thefollowing reasons:

The ADM fleet is operated across 7 satellite offices and the day-to-day fleet managementprocesses are not managed across these regions due to a lack of structure;

ADM fleet structure does not support the fleet management business processes required tomanage the fleet on a day-to-day basis at a satellite office;

The following organogram outlines the current ADM fleet structure:

The key functions currently managed by the fleet management structure are:

Management of the ADM vehicle pool;

Coordination of all vehicle maintenance activities;

Fleet UnitManager

Fleet Utilisation& Maintenance

Manager

Fleet ComplianceOfficer

Fleet AdminOfficer

CarwashSupervisor

General Assistant General Assistant General Assistant

Fleet AdminClerk

Fleet AdminClerk Driver


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Payment of suppliers for maintenance activities;

Procurement of new vehicles;

Disposal of old vehicles;

Hiring in of replacement vehicles;

Licencing of vehicle;

Payment of traffic fines;

Contract Management;

Vehicle tracking supplier management and contract meetings;

Managing Cost and Performance; and

Driver behaviour Management.

4.2. RecommendationsWith regards to Fleet Staff Structure, the following is recommended:

The ADM fleet structure requires the deployment of Fleet Control Officers at the Satelliteoffices within the regions;

The revised fleet structure should also support the execution of fleet management businessprocesses at the Satellite Offices;

The fleet structure should be supported by a 24/7 Fleet Risk Control Centre at the ADM HeadOffice;

Fleet Control Offices should be trained and developed to support the fleet control function atthe Satellite Offices within the region.


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The following diagram outlines the proposed Fleet Management structure:

Summary of staff structure related recommendations:

The introduction of 7 Satellite Fleet Officers (RFO);

The RFO’s need to be supported by Fleet Administration Clerks;

A Fleet Risk Control Officer (RCO) needs to be introduced at Head Office and needs to report tothe current Fleet Compliance Officer;

A Fleet Financial Officer needs to be introduced and should assume overall control for theproduction of daily, weekly and monthly fleet management reports;

Fleet management processes, procedures and policy administration should be standardised andintegrated with the revised fleet management structure;

Job descriptions and performance management systems should be developed for each position.This needs to be translated into Win-Win performance management agreements.

A training strategy must be developed and implemented to ensure that the ADM fleet function isadequately skilled and operating at high levels of efficiency.

Fleet Unit Manager

Fleet Utilisation&Maintenance

Manager

Fleet ComplianceOfficer

Fleet AdminOfficer

Fleet Admin Clerk Fleet Admin ClerkCarwashSupervisor

DriverGeneral Assistants General AssistantsGeneral Assistants

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ADM – PROPOSED FLEET MANAGEMENT STRUCTURE,

Satellite FleetOfficer(7)

Admin Clerk(7)

Senior Manager (7)

Fleet Risk ControlCentre

Fleet FinancialOfficer

Financial Clerk


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5. Managing Vehicle Abuse

5.1. FindingsThe current ADM Vehicle Abuse Management could be improved and should be integrated with theother ADM business processes.

The Netstar tracking vehicle technology deployed at ADM has the capability to report and dealwith vehicle abuse.

The system has the capability to report driver behaviour on the following driving aspects:

o Harsh Braking

o Harsh Acceleration

o Speeding

o Over-revving

The process to manage driver behaviour is fragmented. The Legal Department from the Officeof the Municipal Manager informs the ADM fleet department to conduct driver misconductinvestigations.

Abuse management mechanisms and processes that have been identified as lacking:o No monthly consolidated reporting on vehicle abuse;o Vehicle abuse management information is available but reporting is lacking;o ADM Netstar tracking system is not optimally configured and utilised in this regard;

ando Actual vehicle abuse not measured against pre-set norms and drivers scoring.

5.2. RecommendationsThe corrective actions are recommended to minimise vehicle abuse:

The tracking system should be integrated into the ADM fleet management processes;

Driver behaviour monitoring should be incorporated into the ADM Fleet Department which, inturn, must be managed by the proposed ADM Fleet Risk Control Centre.

Vehicle abuse management mechanisms and processes to be introduced;

Monthly consolidated reporting on vehicle abuse;

Vehicle abuse management processes to be introduced;

Vehicle abuse management information to be extracted and integrated with managementprocesses;

Current ADM Netstar tracking system to be reconfigured and optimally utilized in this regard;

Reports per driver to be produced;

Preset norms and drivers scoring mechanisms to be introduced; and

“Driver of the month” and “Driver of the year” recognition systems to be introduced.


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6. Managing Vehicle Mis-use and Utilisation

6.1. FindingsThe assessment of the current ADM vehicle utilisation and misappropriation of business practiceshighlighted the following:

Current utilization management mechanisms and processes are not being optimally utilised:

No monthly consolidated reporting on vehicle utilisation is done;

Operating budget process are not linked to utilisation;

Trip authorization process is not being followed through;

Utilization management information is not being communicated effectively;

Current ADM Venus Financial System is not optimally integrated and utilized;

Actual utilization is not measured against scheduled utilization; and

Vehicle misuse is not currently detected and reported.

6.2. RecommendationsMis-use management mechanisms and processes are to be introduced:

Monthly consolidated reporting on vehicle utilization to be introduced;

Operating budget process to be linked to utilization and business processed to be introduced;

Trip authorization processes to be revised and implemented;

Post-trip printouts of trip tracking information to be signed off by the driver, RFO anddepartmental head.

Utilization management reporting systems to be implemented;

ADM Venus Financial System to be utilized for trip sheet capturing and should be configured forvehicle utilization management;

Business process to be introduced to measure actual utilisation against scheduled utilization;and

A centralised forum to be introduced to deal with vehicle mis-use issues.


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7. Managing Fleet Cost

7.1. IntroductionA fleet cost assessment was performed using the following two data sources which were providedby ADM:

1. Wesbank monthly schedules containing a total of expenditure per vehicle for the month.2. Venus Fleet Transactions.

The cost analysis for this project was performed on fleet costs and transactions for the 6 monthperiod from April 2014 to September 2014.

7.2. Venus Fleet TransactionsFor the 6 month period, a total fleet spend of R14.9m (excluding Consultancy Fees). This is 17.5%above the Wesbank total for the same period.

Upon investigation it was found that the Venus fleet transactions are not consistent with largevariances between the monthly periods.

The table above illustrates the Venus Fleet Transactions for the period April 2014 to August 2014.From the table it is clear that there is a large monthly variance in fleet cost ranging from R 4.2million to R 65,000. It is possible that the fleet costs are not accurately allocated to the appropriatemonthly periods.

The graph below illustrates the monthly variance in fleet cost based on the Venus data:


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7.3. Wesbank Monthly SchedulesThe Wesbank monthly cost report schedules for the period April 2015 to September 2014 indicate atotal fleet cost of R12.7 million.

The following key aspects were observed:

There is a smaller variance in total monthly fleet cost if compared to the Venus fleetinformation; and

The Wesbank information, although not at transaction level, is representative for purposes ofcost analysis.


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The graph below depicts the monthly fleet costs:

It must be noted that no vehicle fixed costs such as amortisation, licences, insurance are included inthe Wesbank cost information and therefore not analysed.


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The following table outlines the actual monthly Wesbank fleet cost per Cost Centre:

Engineering is the largest consumer of fleet variable cost (50%) followed by Budget & Treasury(16%) and Generators (15%) and then Health & Protection Services (12%);

The following graph illustrates the distribution of fleet cost per ADM function:


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7.4. Cost per Vehicle TypeThe table below outlines the ADM fleet cost per vehicle type for the period April 2014 to September2014, based on the Wesbank transaction data.

The fleet cost comprises Fuel & Oil, Repairs & Maintenance.

From the table above the following is clear that:

LDV > 1 Ton represents the majority of the fleet cost R 5,6 mil for the 6 months;

Truck and Tanker cost R 3 mil;

Generators R 1,7 mil

Sedans R 0,6 mil

TLB’s - R 0,5 mil

Fire trucks – R 0,78


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Fuel and Oil costs per month per vehicles type are between R1,3 mil and R1,6 mil. Almost 50% offuel costs were incurred by vehicle type LDV >1Ton.

Vehicle repairs and maintenance spend ranges monthly between R440,000 and R930,000.

The table below depicts the maintenance and repairs costs for the 6 months under assessment:

TOTAL FUEL AND OIL MonthCost Centre 2014-04-20 2014-05-20 2014-06-20 2014-07-20 2014-08-20 2014-09-20 Grand TotalEQUIPMENT - FORKLIFT R 0 R 709 R 1 599 R 1 051 R 370 R 0 R 3 730EQUIPMENT - GENERATOR R 233 307 R 320 140 R 342 756 R 305 686 R 230 004 R 266 323 R 1 698 215EQUIPMENT - LAWNMOWER R 1 643 R 748 R 1 771 R 628 R 842 R 886 R 6 518EQUIPMENT - PUMP R 8 573 R 3 001 R 10 813 R 38 407 R 60 435 R 39 727 R 160 956EQUIPMENT - TLB R 41 623 R 17 127 R 32 203 R 24 816 R 29 164 R 33 450 R 178 383EQUIPMENT - TRACTOR R 1 703 R 2 393 R 2 249 R 3 973 R 3 922 R 1 955 R 16 195FIRE TRUCK R 17 685 R 19 645 R 18 742 R 29 384 R 39 859 R 37 306 R 162 620LDV < 1TON R 7 779 R 4 531 R 7 950 R 6 911 R 6 870 R 6 674 R 40 715LDV > 1TON R 658 827 R 594 317 R 674 079 R 688 344 R 679 230 R 778 112 R 4 072 908LDV DOUBLE CAB R 19 372 R 19 385 R 27 321 R 24 203 R 24 197 R 26 150 R 140 629PANELVAN / BUS 16 SEATER R 8 113 R 9 177 R 8 488 R 6 296 R 4 445 R 14 377 R 50 896SEDAN < 2L R 62 764 R 43 317 R 69 931 R 65 068 R 64 183 R 77 360 R 382 622SEDAN > 2L R 19 514 R 24 874 R 16 297 R 17 488 R 18 097 R 17 647 R 113 916TRUCK R 192 035 R 129 913 R 244 516 R 276 771 R 276 855 R 260 236 R 1 380 327TRUCK - TANKER R 57 452 R 52 458 R 56 724 R 46 185 R 35 702 R 42 148 R 290 669Grand Total R 1 330 390 R 1 241 734 R 1 515 439 R 1 535 213 R 1 474 173 R 1 602 350 R 8 699 298

TOTAL MAINTENANCE MonthCost Centre 2014-04-20 2014-05-20 2014-06-20 2014-07-20 2014-08-20 2014-09-20 Grand TotalEQUIPMENT - FORKLIFT R 0 R 0 R 0 R 0 R 0 R 0 R 0EQUIPMENT - GENERATOR R 0 R 0 R 0 R 0 R 2 377 R 0 R 2 377EQUIPMENT - LAWNMOWER R 0 R 0 R 0 R 0 R 0 R 0 R 0EQUIPMENT - PUMP R 145 R 145 R 0 R 0 R 0 R 73 061 R 73 351EQUIPMENT - TLB R 71 727 R 41 910 R 12 771 R 16 856 R 118 854 R 52 043 R 314 161EQUIPMENT - TRACTOR R 4 425 R 0 R 1 395 R 0 R 0 R 0 R 5 820FIRE TRUCK R 2 411 R 8 364 R 40 153 R 187 638 R 21 124 R 48 436 R 308 126LDV < 1TON R 2 105 R 0 R 1 449 R 10 150 R 0 R 4 747 R 18 451LDV > 1TON R 206 808 R 201 689 R 224 804 R 239 121 R 242 062 R 324 913 R 1 439 398LDV DOUBLE CAB R 13 884 R 4 222 R 15 031 R 7 385 R 10 569 R 7 410 R 58 501PANELVAN / BUS 16 SEATER R 18 058 R 20 608 R 2 279 R 0 R 0 R 2 673 R 43 617SEDAN < 2L R 17 809 R 7 525 R 20 912 R 26 112 R 2 739 R 29 646 R 104 742SEDAN > 2L R 26 021 R 11 769 R 0 R 0 R 18 353 R 0 R 56 143TRUCK R 76 497 R 91 739 R 157 186 R 180 913 R 263 052 R 145 899 R 915 286TRUCK - TANKER R 1 545 R 26 951 R 25 053 R 35 372 R 247 311 R 74 381 R 410 612Grand Total R 441 433 R 414 923 R 501 032 R 703 546 R 926 441 R 763 209 R 3 750 584


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TLB and generator utilisation are measured in terms of Operating Hours. A total of R2,1 mil wasspent between these two categories of fleet units whilst the hour utilisation is not recordedaccurately on either of the Wesbank and Venus systems. This cost represents 16.5% of the totalfleet cost for the period assessed.

Costs per Cost Category

The following table outlines the cost per category per ADM department:

68% of the fleet cost is spent on Fuel & Oil; followed by 29% spent on Maintenance & Services and2% relates to card administration.

Cost by Vehicle Condition

The table below outlines the cost per vehicle condition classification. This analysis was executedwith the aim to determine how much fleet cost is allocated to vehicles which are in a very poor andpoor condition.

From the table above the following is clear:

The bulk of fleet costs are spent on vehicles which are in an average to very good condition;

Only 1% of the fleet cost was spent on vehicles which are in a very poor to poor condition;

No fleet cost was spent of vehicles which are in a very poor condition;

Vehicles not assessed incurred 20% of the fleet cost;


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Vehicle Running Cost

A cost per kilometre reasonability assessment was performed based on the Wesbank fleet data forthe period April 2014 to Sept 2014.

The following table outlines the running cost per kilometre per ADM vehicle category. Hourly basedequipment have been excluded.

From the table above the following can be derived:

The average running cost per vehicle which includes fuel, R&M and tyres is R3.01 perkilometre.

It is our professional opinion that this cost is reasonable considering the size, shape, operationenvironment and distances of the ADM fleet.

Truck running cost is out of the norm with R1,3 mil per year whilst LDV running cost is wellwithin the norm.

The overall estimated annual loss is R626,601 which represents 3% of the annual fleet runningcost.

Fire trucks are the most expensive to run per kilometre at R 12.70 whilst sedans <2L are themost cost effective at R 1.45 per km.

Fuel Consumption

The fuel consumption was assessed for the ADM fleet based on the April to September 2014 figures.

Vehicle Category

6 MonthsR&M andFuel

6 MonthsUtilization(KM)

Cost /Km( Rand)

EstimatedIndustry costnorm(Rand/Km )

Above /(Under )

PotentialAnnual Loss /Gain

OverallPercentage Loss

Fire Truck 478,269 37652 12.70 12.70 0.00 - 0%LDV < 1 Ton 63,154 29663 2.13 1.93 0.20 11,809 9%LDV > 1 Ton 5,681,795 2542559 2.23 2.42 (0.19) (942,396) -8%Double Cab 205,348 92920 2.21 2.42 (0.21) (39,037) -10%Minibus 96,853 26908 3.60 2.42 1.18 63,471 33%Sedan < 2L 508,582 330466 1.54 1.54 (0.00) (671) 0%Sedan > 2L 173,171 66024 2.62 2.80 (0.18) (23,392) -7%Truck 2,331,523 216599 10.76 7.54 3.22 1,396,733 30%Tanker 710,261 59567 11.92 10.58 1.34 160,084 11%Total 10,248,956 3402348 3.01 626,601 3%


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The below table outlines the average fuel consumption per vehicle category for the period underanalysis:

From the above table it is clear that the average fuel consumption of the fleet is well under thecontrol expected for the Truck Category. ADM can benefit from more focus on fuel consumption inthis vehicle category.

Repairs & Maintenance Expenditure

The table below indicates the R&M spend per vehicle category, expressed in Cent per Kilometre(CPK).

From the table above it is clear that:

R&M is well within the limit for all vehicle categories except for the 16 seater minibuses, trucksand tanker trucks. More detailed investigations should be applied in order to determine thecause of the problem.

A detailed fleet transaction analysis will determine the extent and reasonability of the fleetmaintenance transactions;

The introduction of a fleet management system will enable ADM to make informed decisions onthe reasonability of fleet transactions;

Vehicle Type KMs Litres Litre/100kmFIRE TRUCK 37 080 11 826.5 31.9LDV < 1TON 29 653 2 858.4 9.6LDV > 1TON 2 539 476 292 812.7 11.5LDV DOUBLE CAB 90 591 9 835.1 10.9PANELVAN / BUS 16 SEATER 26 908 3 671.1 13.6SEDAN < 2L 330 466 27 503.7 8.3SEDAN > 2L 66 024 8 202.3 12.4TRUCK 216 599 99 907.4 46.1TRUCK - TANKER 59 567 20 688.2 34.7Grand Total 3396364 477305.3 14.1


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7.5. FindingsIn summary, the following has been established:

Fleet cost could be considered as reasonable with an estimated 3% overall running cost abovethe norm.

When the ADM Venus financial system and the Wesbank systems are compared, the Venussystem reports R2,7 mil more fleet costs for the period April to Sept 2014. This needs furtherinvestigation;

Venus fleet cost information on a month-to-month basis cannot be used for analysispurposes. There are more consistency in the cost information provided by the Wesbank system;

The Wesbank system reports on odometer readings per transaction whilst the Venus systemdoes not;

The Wesbank system does not report on operating hours per machine unit for plant andgenerators which represent 15% of the total fleet cost. No analysis on costs of these fleet typescould be performed;

In addition, plant and generator fuel consumption could not be analysed due to hour metersreadings not being recorded in the system;

Engineering, Budget & Treasury, Generators, Health and Protection Services makes up 93% ofthe total fleet cost;

Currently there is no formal documented system and process for reporting fleet cost;

The fleet transactions in Venus do not incorporate any odometer or hour meter readings tofacilitated vehicle utilisation analysis.

7.6. Recommendations Vehicle fixed and variable costs should be recorded in one system at the vehicle registration /

fleet number level;

Monthly fleet cost analysis reporting should be developed and introduced;

Truck running cost should be investigated as it is estimated as 30% above the industry norm;

Fleet cost should be allocated to the correct period in the Venus financial system;

Fleet cost in the Venus financial system should be reconciled with the Wesbank fleet cost and abusiness process should be introduced in this regard;

A fleet management systems should be introduced in order to assist with the accuraterecording and reporting on fleet and related cost together with fleet utilisation information(Operating Hours and Kilometres );

Vehicle life cycle cost recording and reports should be introduced through a fleet managementsystem in order to guide the ADM vehicle replacement and disposal decisions;

A formal fleet budgeting process should be introduced. This budgeting process should bebased on planned fleet unit utilisation;

Fleet utilisation budget plans should be driven by the demand for fleet in the annual servicedelivery plans;

The fleet budget should be based on planned kilometres travelled for sedans, LDV’s and Trucks


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and in the case of the Yellow plant it should be based on operating hours;

The anticipated vehicle maintenance services should be scheduled, costed and incorporatedinto the fleet budget;

Ad Hoc vehicle repairs should be budgeted for separately;

Fleet budgets should be compiled per functional user group;

Venus should be configured to incorporated fleet budgets per user department;

Monthly expenditure reports reflecting actual performance against budgeted performanceshould be produced and distributed to the ADM fleet department, functional departmentalheads and Satellite senior management structures;

Fleet Cost and Utilisation budgets should be signed off by the user departments to ensureresponsibility and accountability for fleet utilisation, vehicle mis-use, vehicle abuse and fleetcosts;

Accurate fleet cost performance reports should be circulated on a monthly basis be userdepartment per region. These mentioned reports should include a minimum of total variableand fixed cost per kilometre or operating hours per fleet units per month; and

Vehicles which is in a Very Poor conditions incurred no fleet cost and should be disposed assoon as possible.


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8. Fleet Utilisation

8.1. Vehicle Utilisation

The following section outlines the ADM fleet Utilisation. Utilisation of vehicle and equipment wasassessed using the latest odometer readings on the Wesbank vehicle cost data.

This table depicts total kilometres driven by vehicle category per month. This excludes all types ofequipment for which utilisation is measured by operating hour.

From the table the following observations could be made:

A total of 3,4 mil kilometres were driven by all vehicles for a period of 6 months; and

The estimated annual distance travelled for the ADM is 6.8 million kms.

8.2. Key Findings Vehicle UtilisationThe following key observations could be made:

Vehicle utilization should be evaluated against pre-budgeted kilometres and operating hours;and

Service delivery plans by user departments should inform fleet utilisation in terms of kilometresand operating hours.

8.3. Key Recommendations – Vehicle Utilisation Business processes should be introduced to manage vehicle utilisation;

Vehicle utilisation should be the responsibility of the functional user departments; and

Functional heads of user departments should be evaluated against conformance to fleetbudgets.


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9. Fleet Administration

9.1. Findings No files per vehicle is kept.

Only spare keys and vehicle papers are kept by the Fleet Department.

9.2. RecommendationsFleet administration should be centralised and information shared and generated by the RFO.

A fleet management system needs to be introduced which should serve as a centralised data baseof all fleet and related administration. The following functional aspects needs to be recorded on thissystem:

Fleet register

Vehicle audit information

Known vehicle defects

Fuel consumption norm and actual fuel consumption

Accidents, which includes formal investigation, report and corrective action taken

Insurance claims

Traffic fines

Incidents

Vehicle technical specifications

Vehicle utilisations

Planned / scheduled services

Driver licence details and renewal dates

Driver permit details and renewal dates, i.e. PODs, medicals where applicable

Vehicle licence details and renewal dates

Special permits and requirements, e.g. access permits

Authorised suppliers

Warranties on vehicles and maintenance work done

Supplier invoices for maintenance done

Tyre brand numbers

Tyre replacement per vehicle per position on vehicle

Technical details of an auxiliary equipment fitted to the vehicle and inspection dates, i.e. fireextinguishers, PTOs, etc.


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10. Fleet Management Business Process Maturity Assessment

The following section summarises the evaluation performed of the maturity of the ADM fleetmanagement business processes.

For each standard fleet management process the table below indicates whether it is applicable toADM, the current maturity level of the execution thereof and comments.

Note that execution level is rated between 1 and 10, where 1 is very poor and 10 is excellent.

Process Applicable Execution Level(1-10)

Comments

Fleet Asset Management

Fleet Asset Procurement &Capital Budgeting Process

Yes 2 It is our opinion that the currentprocess is driven from a historicaland financial managementperspective only.

Fleet Asset Take-on Process Yes 1 The fleet registers in Venus,Wesbank and Netstar systems arenot synchronised. There is nocurrent business managementprocess to ensure data integrity inthis regard.

Asset Disposal Process Yes 7 There are assets on the ADM fleetwhich needs to be disposed of.The condition of these fleetassets are poor, and no fuel ormaintenance transactions arevisible for these vehicles.

Annual Licensing Process Yes 8 All vehicles which were assessedhad valid licences. Vehicle licencerenewal should be controlled froma central point. A fleetmanagement system shouldenable early warning on licenceexpiry dates.

FML/Hire ContractManagement

Yes 1 There are no systems in place tomanage the hiring in of vehicles.The ADM fleet department doesnot have oversight in this regard.


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Comments

Fuel Management Yes

Bulk Fuel Purchasing Yes 1 Bulk fuel is procured forgenerators and plant units. Fuelconsumption for these vehiclesare not determined accurately.

Fuel Dispensing fromBowsers

Yes 1 Limited centralised records areavailable to determine the exactlitres of fuel that were dispensedto the plant units.

Fuel Stock Control andReconciliation

Yes 1 No system in place.

External Fuel Purchases Yes 7 Fuel is procured through the useof Wesbank fuel cards. It isassumed that accurate litres andodometers are recorded byWesbank.

Only monthly summarised reportsfrom the Wesbank system weremade available for analysis.Detailed fuel transactions shouldbe available from the Wesbanksystem as and when required.

Monthly Fuel ManagementReports

Yes 8 Fuel consumption reports forvehicles are available from theWesbank system.

Operating hours are not recordedfor plant units and equipment andtherefore accurate fuelconsumption in litres per hour isnot possible.

Fuel Management SystemRequirements - Policy

Yes 9 The current fuel managementsystem should be extended toincorporate plant units andequipment e.g. generators.

Fuel consumption reports shouldbe generated per userdepartment, and thus making


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Comments

functional managers accountable.

Vehicle & Driver Operations

Driver Code of Practice Yes 10 ADM has a code of driver goodpractices.

Trip Authorisation andVehicle Inspections Process

Yes 7 Trip Authorisation and VehicleInspections are executed only forpool vehicles.

This process should be extendedto all vehicles deployed at ADMand should be inclusive of hiredvehicles.

Vehicle UtilisationManagement Process

Yes 4 Vehicle utilisation managementprocess could be improved.Special attention should beapplied to authorisation of tripand post trip control.

Accident ManagementProcess

Yes 10 Process in place.

Fines Administration Process Yes 10 Process in place.

Monthly Driver LicenceRenewal Process

Yes 8 Process could be controlledcentrally.

Driver performancemanagement and trainingprocess

Yes 5 Driver scoring and performancetraining processes are not inplace.

Vehicle Monitoring Process(Vehicle tracking)

Yes 5 Netstar tracking system is in placebut not utilised for pre and posttrip briefing.

Limited utilisation of theinformation which gets generatedby the tracking system.

Control System ContractManagement

Yes 5 No visible performance contractmanagement system with systemproviders in place.


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Comments

4 Tyre Management

New Vehicle Tyre Take-onProcess

Yes 1 Wesbank transaction processing,cost recording and approvalsystem in place. No tyremanagement process in place.

Tyre Inspection Process Yes 1 Pre and post trip inspection bydriver. This is, however, notcontrolled.

Workshop Management Yes Although ADM does not haveits own maintenanceworkshops, it is important tomanage the maintenanceservice providers.

Process Yes 4 All maintenance work gets pre-authorised through Wesbank.

Warranty management Yes 6 All warranties on vehicles andrelated work done on the assetshould be managed through acentralised system.

Internal Job Process Yes 4 Maintenance work is executedthrough external maintenanceservice providers. Processes tomanage quality, serviceturnaround times and price islimited needs to be implemented.

Planned Maintenance Yes

Service Take-on Process Yes 1 Vehicle services are not centrallyscheduled.

Weekly Service PlanningProcess

Yes 1 Services are not plannedcentrally.

Maintenance ContractsManagement

Yes 1 Process needs to be introduced.


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Comments

Management, Financial &Budgeting

Yes

Fleet Operational BudgetingProcess

Yes 1 Process not in place and shouldbe driven from an operationalpoint of view.

Monthly Fleet Cost AnalysisProcess

Yes 1 No fleet cost reports are availableexpect for Wesbank which reportson fleet variable costs only.

No visibility of total cost ofownership costs which is inclusiveof fixed and variable costs.

Fleet Policy & ProcedureAmendment Process

Yes 1 A regular fleet policy review andamendment process needs to beintroduced.

8 Pool Vehicles

8.1 Vehicle Pool & ExternalHiring of Vehicles

Yes 8 Pool vehicle management agentprocess is in place.


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11. Operations Control Processes

11.1. Findings

Trip Authorities

Information required to complete a Trip Authorities is open for operators to manipulate the system.This approach needs to be precise to the area of operation for each foreman and it should be townor location specific.

A unique identification system for vehicles should be introduced as per the satellite office they areallocated to e.g. a vehicle allocated to Mbashe satellite office needs to be easily identified as anMbashe satellite office vehicle and not just as an ADM vehicle. This will assist Senior Managers inthe satellite office to control and react timeously when they see their vehicle outside theirjurisdiction.

Accidents

Satellite offices need to be given the mandate to investigate locally occurred accidents and shouldnot have to rely on officials from Head Office to come and do the investigation. The delay in waitingfor the Head Office officials may have a negative impact on the investigation as evidence can be lostdue the delays.


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12. Fleet Systems and Technology

12.1. FindingsA high level investigation into the fleet systems currently used by ADM concluded that:

Netstar Vehicle Tracking

The Netstar vehicle tracking system is currently implemented on the ADM vehicles. Two supporttechnicians are on-site to support the system.

The Netstar system is not widely used and training is required to enable the Satellite OfficeManagement to use the system.

Wesbank Fleet Card System

A Wesbank card system is utilised for all Fuel and Repairs costs. Costs are recorded per uniqueregistration number.

Venus Financial System

The Venus Fleet Management module is available. The functionality of the module is notextensively utilised.

Serious integrity issues with the fleet transactions need to be addressed.

Fleet reporting is currently very limited, although the current ADM Venus financial system hasthe capability to produce fleet reports.

12.2. RecommendationsIt is highly recommended that ADM develop an integrated fleet management systems approach thatwill integrate the current Venus financial system with other fleet management systems andtechnologies to support the fleet management strategy of the ADM.

The integrated fleet management system must deliver on the following:o A consolidated fleet master which is visible to all at all times.o Must be real time updated so that everyone can see the latest information.o Must have a service schedule plan for each vehicle.o Must be able to monitor and report on the service schedule on a weekly, monthly and

annual basis.o Must have one schedule of all the ADM’s vehicle’s licenses renewal dates.o Must have a formal accident reporting process in place.o Must have an improved service management strategy.

Training is required for all staff members to ensure the uptake of fleet reporting.


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12.3. Recommendation - Centralised Fleet Control

Fleet Risk Operations Control Centre

It is recommended that a Fleet Risk Operations Control Centre to be established for ADM.

A fleet risk operations control centre is a physical location which is has 24/7 fleet risk and operationscontrol through centralised fleet management systems which include the following:

Vehicle movement monitoring through tracking

Maintenance management

Asset management

Fuel management

Etc.

The FROCC would typically be depicted as follows. A customised FROCC model needs to bedesigned for ADM:


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13. Business Processes and Practices – Management Interviews

13.1. Findings of Management Interviews

Background

Structured interviews were conducted by a Carrus Tshenolo fleet consultant for each of the sevenregions.

Four departments were interviewed at Head Office, mainly;

1. Engineering – water services;

2. BOT;

3. Supply Chain Management; and

4. Protection services.

Below is a summary of comments from the interviews conducted with personnel at the area officesconsisting of Senior Managers, Area Managers - Engineering and Admin Assistants.

13.2. Findings for Head Office Interviews The Engineering Department owns the majority of the fleet of ADM. They have 221 fleet of

vehicles and the majority of them are used for technical services. The last batch of vehiclespurchased do not meet the end user requirements as the LDV’s purchased are single cabs thatseat x2 people and as the ADM policy on fleet does not allow municipality officials to betransported on an open vehicle. This leads to multiple trips being done to services one call as ateam leader has a minimum of 2 assistants.

The other departments have a limited number of vehicles but Protection Services, who is alsoresponsible for the fire department.

The Fire Services fleet utilises fire engines. The current technology being used is outdated. Inthe interview it became clear that that the municipality has to consider the upgrading of theentire fleet of the fire department.

The departments also have a challenge of supporting the community with essential needs likewater and sanitation. This service is offered by utilising water tankers. These vehicles arecurrently in short supply to ADM and that leads to the municipality having to hire these vehiclesfor service providers.

The costly hiring-in of water tankers was stated as a matter of concern. This absorbs fundswhich could have been applied to improve service delivery to the community. It is proposedthat the issue of hiring-in water tankers be investigated in more detail and that the root causebe identified, verified and that a strategy be formulated to solve this matter of concern.

It is proposed that this investigation be incorporated into Phase 2 of the project.

In the BTO Department the individual interviewed did not have much knowledge of fleetmanagement but was very assisting in understanding the financial side of the business. It isproposed that the BTO department be trained in the business processes of fleet operational


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budgeting processes. An extensive fleet management training strategy will have to bedeveloped as part of a Phase 2 of the project.

The Supply Chain Management Department is responsible to facilitate the procurement processof vehicles.

Summary of Responses from Area Management

Questions Summary of Responses

1. Fleet adequacy for service delivery – (size andcomposition)

The size is adequate

2. Fleet availability and reliability – what are thecurrent levels and is it adequate?

The fleet is available but not in goodstanding.

3. Current control mechanisms regarding vehicleabuse and mis-use and is it adequate?

Only Trip Authority no access to the Netstarsystem.

4. Do they receive cost fleet reports (daily,weekly and monthly)?

No, handled by East London. Regular fleetreports are required to manage the fleet.

5. Could they take informed decisions on thelevel of fleet reporting?

All fleet related issues are handled by HeadOffice.

6. Is their fleet cost in line with budget andindustry norms?

Currently all fleet budget issues are stillhandled by Head Office.

7. Is the fleet management structure adequateto address the fleet needs, management andcontrol?

Not as yet, a fleet office is required.

8. How do they measure and manage tripsheets?

Not measured.

9. Are the trip sheets recorded and do theyreceive a monthly report?

Manual filing.

10. Are there driver briefing and de-briefingprocedures?

No.

11. Are there pre and post trip vehicleinspections?

No.

12. Are the vehicles assessed on a regular basisand do they receive reports in this regard?

Not done, but planned to be done monthly.

13. Is there a need to discuss fleet managementand fleet operational issues on a structuredforum?

Yes, there is a need. A fleet item is going tobe included in the monthly meetings withstaff.

14. Do you partake in the fleet budgetingprocess?

Not participating currently.


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Questions Summary of Responses

15. Is their service delivery budgets translatedinto fleet budgets?

Currently centralised in departments.

16. Is the current fleet budget adequate? Currently centralised to departments

17. Licence administration - do you have a recordof valid driver licences and expiry dates and anotification process of when which driverlicence is to be revenue (inclusive of PRDP’s)?

Currently not done, the driver reports onexpired vehicle license disk.

18. Do they have the same for vehicle licences? Same as above.

19. Are all vehicles scheduled for maintenanceand do they have a prediction of when whichvehicle needs to be serviced?

Drivers inform the engineering departmentwhen service is due and they’ll send a mailto head office.The driver will take the vehicle to EastLondon for service.

20. Is the vehicle maintenance cost reasonable? Do not see invoice, all invoices are sent tohead office.

21. Is the vehicle maintenance cost expressed onthe CPK basis and do they have it from“cradle to grave” for the vehicle?

No.

22. How often are the vehicle drivers trained? No driver training program exist (policy tobe reviewed and look at health issues).

23. Do they have record per driver of trafficviolations?

Currently handled by head office.

24. Who pays for traffic violations? Currently not clear as to who pays for thefines.

25. Is drivers disciplined on traffic violations? Do not know, head office handles fines.

26. How accidents are handled – who reports andis there a formal investigation?

ADM Policy stipulates what action to betaken.

27. Vehicle licence renewal – who notifies andrenews the licence?

Drivers advise Supervisor and head office.

28. Do they have a copy of vehicle insuranceschedules and is it up to date?

Currently handled by head office.

29. Is fuel consumption measured in L/100 kmand measured against a norm?

No.

30. Is fuel consumption measured in L/hour forequipment and measured against the norm?

No.

31. Are trip sheets filled in and captured on theVenus computer systems?

No.

32. Is monthly utilisation actual vehicle utilisation No planning is done.


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Questions Summary of Responsescompared to scheduled vehicle utilisationagainst the norm?

33. Do they have access to tracking informationand is it useful?

The system is available and is in the processof being implemented. User access iscurrently in the process of beingimplemented.

34. Do they have access to driver behaviourinformation from the tracking system (HarshBraking, Harsh Acceleration, Over Speeding,Excessive Idling and Out of Green banddriving)?

No. Same as above.

35. Are drivers scored for their individualperformances on a monthly basis?

No.

36. Are rogue drivers identified and provided withcorrective training?

No

37. Is a monthly fleet report compiled andsubmitted to senior management?

No.

38. Is there a need to improve fleet performanceand why?

Latest vehicle selection for the new buydoes not accommodate operationalrequirements and contradicts ADM Policy.Single cab LDVs were bought instead ofdouble cab LDVs and the ADM Policy doesnot allow for employees to sit at the back ofthe LDVs, this leads to multiple trips beingdone when employees are attending to callouts for repairs.Replacement policy to be reviewed.Access to tracking system, maintenancepolicy to be reviewed.

39. What are the main “pain points” from a fleetperspective?

Latest vehicle selection for the new buydoes not accommodate operationalrequirements and contradicts ADM Policy.Replacement policy to be reviewed.Access to tracking system, maintenancepolicy to be reviewed.

From the assessment it is clear that:

The fleet management function at ADM is not adequately structured and staffed.

A system of fleet reporting should be introduced whereby regions are held responsible andaccountable for fleet operational and financial performance.


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The Head Office function should take centralised control of maintenance scheduling and licenserenewal and should be the custodian of a monthly fleet forum and consolidated fleet reporting.

The structure should incorporate the introduction of satellite fleet officers and administrativeclerks in order to facilitate fleet management activities at a satellite level.

The current Venus Financial System should be set up to facilitate satellite fleet budgeting,capturing of trip sheets and enable fleet cost control on a satellite bases.

Vehicle maintenance schedule should be centralised and adequate reports should be distributedto the regions.

The current tracking system should be centralised at head office with visibility at a satellitelevel.

The current Wesbank maintenance and fuel consumption reports should be set up on a satellitebases and daily reports should be made available to satellite transport officers and seniormanagers.

Driver behaviour should be measured and monitored and rogue drivers should be trained andperformance managed.

Vehicle misuse should be identified through comparing the tracking system information and theactually vehicle trip sheets.

Fleet budgeting should be aligned with services delivery demand and translated into size andshape of the fleet, operating hours and kilometre.

Fleet budget should be initiated at a satellite level and consolidated into a centralised fleetbudget which should be primarily driven by services delivery demands and not historical trends.

Satellite managers should be hold accountable for cost performance against budget. Thefinancial system should be aligned to incorporate these budgets and vehicle cost should berecorded on a per vehicle budget in the Venus financial system.

The fleet policy should be adjusted to incorporate the above changes, it is furtherrecommended that the central and satellite fleet management incumbents be trained up in fleetmanagement best practise through a SAQA approved institution.

Service level agreements with currents fleet service provides needs to be reviewed.

Practises which will enhance fleet availability whist reducing fleet operational cost needs to beintroduced, providers of fleet information will need to make fleet information more accurate,relevant and reliable.


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14. Essential Vehicle User Scheme (EVUS)

The following section outlines the assessment of the ADM Subsidised Motor Vehicles Scheme forEssential Users, which is commonly referred to as the “Essential Vehicle User Scheme” (EVUS).

14.1. Background and Description of the EVUSIt is our understanding that the EVUS was introduced with the aim to supplement the current ADMfleet and reduce the fleet operational risk whilst improving the overall mobility of ADM employees inthe execution of their duties.

The EVUS has the following key attributes:

Mobility of employees should be improved;

Fleet operational risk should be minimised;

Qualifying EVUS participants takes full financial accountability for the vehicles and the relatedfinancial obligations;

Travelling should be an integral part of the duties of the participant;

ADM subsidises the vehicle instalments by 70% and the participant 30%;

The vehicle is to be used 70% or more for business purposes and a maximum of 30% forprivate purposes;

The minimum contract period is 32 months and the maximum period 48 months;

The vehicle is contracted for 200 000 kms over the full contract period;

Maintenance and insurance is paid by the participant;

The participant is reimbursed for actual business mileage travelled on a monthly basisaccording to a per kilometre rate as determined by the National Department of Transport;

The intention of the abovementioned is to reimburse the participant for:o Fuel;o Wear and tear;o Maintenance & repair;o Insurance; ando Tracking devices.

Vehicle types for non-scarce skills participants:o Sedans with 1800 engine capacity;o LDV’s a maximum of 2500 engine capacity;

Vehicle types for scarce skills category participants :o Sedans with a 2000 engine capacity;o LDV’s with a 3000 engine capacity;


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14.2. EVUS Cost Levels Post ImplementationThe period from December 2013 to November 2014 was assessed (12 months).

A total of R 5.4m was paid out in claims based on R 3.30 per kilometre.

A total of R 967,000 was paid out in fixed cost.

Total cost benefit of the scheme if compared to the situation if ADM had to procure the vehicles onan FML basis is R 938 00 to the benefit of ADM.

Potential risk and consideration of the EVUS

The following table illustrates the relevant risk elements and implications to the ADM EVUSprogramme:

Key Risk Element Risk Consideration

Administration Administrative intensive.

The ratio private to business kilometres could be open toabuse.

Inaccurate odometer readings and travel claims could besubmitted and approved.

Cost Norms In the policy, mention is made of the DOT cost parameterswhich is applied.

It is unclear as to which cost reimbursements cost rewardlevels are applicable – SARS or DOT.

Capping of capitalexpenditure

70% of the capital instalment is reimbursed to theparticipants.

The capital expenditure is not capped and it is quitepossible to buy a very expensive vehicle;

This could be aggravated by the fact that the effectivenessof the EVUS is not tested on a monthly basis.

Kilometre Control Relevant, accurate and timeous travel kilometres isrequired.

Electronic devices should be able to supply accurate travelinformation which will enable the participant to report onprivate and business travel and kilometre expense claim.

Accurate distance travelled information should be recordedelectronically and classified accordingly.

ANNEXURE A: Fleet Management Strategy ImplementationPlan

ANNEXURE B – List of Assessed vehicle with condition

ANNEXURE C – Vehicles with Wesbank Transactions notAssessed

ANNEXURE D– CPK Repairs & Maintenance per Vehicle

ANNEXURE E – Fuel litre per 100km per vehicle

Documents

ADM Fleet Strategy - amathole.gov.za Fleet Strategy... · ADM Fleet Strategy. Fleet Management Strategy Page 2 Table of Contents 2. ... This assessment could be regarded as a representative