Fleet Operations Can Improve Efficiency Formalized . - San Diego

Performance Audit of the Fleet Operations’ Vehicle Acquisition ProcessFleet OperationsReorganization andStaffingAccording to the FY18 Adopted Budget, the Fleet ServicesDivision was reorganized in FY17 into the Fleet OperationsDepartment. Fleet Operations reports that its mission is to:“Provide our customers, the employees of the City of San Diego,with comprehensive fleet management services by deliveringenvironmentally-friendly, safe, and dependable vehicles,equipment, and fuel.” The department lists goals, two of whichrelate to effectively providing vehicle acquisition services to theCity departments:Goal : Provide quality fleet services efficiently andeconomically: Provide excellent customer service; Improve communications to our customers; and Provide reliable vehicles.Goal : Improve internal controls and accountability: Improve internal fleet operations information system; and Improve policies and procedures.Enterprise AssetManagement SystemFleetFocus EAM Data isNot Sufficiently ReliableOCA-19-007Fleet Operations uses Assetworks FleetFocus Enterprise AssetManagement system (FleetFocus EAM), which recently underwenta comprehensive update. FleetFocus EAM has the capability tomanage vehicle assets, fuel, parts, labor, and vehicle utilization.However, at least two previous reviews by consultants determinedthat FleetFocus EAM is underutilized and has many data reliabilityissues, especially related to vehicle utilization.There are several reasons that Fleet Operations has lowconfidence in much of the data. First, ongoing problems withFleetFocus EAM’s interface with equipment have caused somedata fields, the mileage data field in particular, to be recorded bythe system improperly. Second, prior to the FY17 reorganization,Fleet Operations indicated that it did not consistently useFleetFocus EAM. Specifically, Fleet Operations did not enterreliable data for vehicle acquisition or lifecycle. Fleet Operationsreports that prior to the reorganization, acquisition files were allhardcopy and may not have all acquisition information.Page 5

Performance Audit of the Fleet Operations’ Vehicle Acquisition ProcessCST ReportRecommendationsFleet Operations has been reviewed by CST consulting twice. Forthe first review, CST was a sub-contractor for Huron (this report isreferred to as the Huron Report, and the review began in FY14).While for the second review, Fleet Operations was revieweddirectly by CST. The report issued by CST in 2016 identifiedchanges that Fleet Operations management had made to improveoperations and improve staff morale. These achievementsincluded the creation of a short-term capital plan, increase insupervisory staffing, and updates to tools and other diagnosticprocesses. The report also made recommendations that areintended to be implemented moving forward. Therecommendations covered four main program areas, with onebeing fleet asset management—which includes processes andoperations related to vehicle acquisition.Specifically, the CST report recommended that Fleet Operationsclean up data and update FleetFocus EAM to meet the datacollection needs of the department. Accurate and complete datais vital for Fleet Operations to accurately assess assignment feesand predict true costs of vehicles. Further, accurate and completedata is needed for planning lifecycles and acquisition lead times.The recommendations also included updating lifecycles using thecapital plan, and then moving forward, updating lifecycles asFleetFocus EAM data becomes available. The report alsorecommends that Fleet Operations collect accurate FleetFocusEAM data so that it can be used for updated lifecycles and rightsizing efforts.The CST report noted that Fleet Operations lacks data validationand analytical staff. CST indicated that data validation is neededfor Fleet Operations to have useable and meaningful data that canbe used in planning and prediction of almost all aspects of FleetOperations’ duties. CST noted that the need for data validationwas evident in both the data inconsistency in FleetFocus EAM aswell as the lack of analytics necessary to make short- and longterm decisions. CST also noted a lack of business analytical staffexpertise within Fleet Operations’ staffing. CST indicated that thelack of analytical staff led directly to contracting with CST todevelop a capital plan. CST concluded that two business analyticpositions were needed—one positions that would serve as theFleetFocus EAM “champion” and one position that would use datamining for developing analytical models needed to support FleetOperations management.OCA-19-007Page 6

Performance Audit of the Fleet Operations’ Vehicle Acquisition ProcessVehicle AcquisitionProcessCurrently, three staff are mainly responsible for placing orders andensuring that vehicle specification and other information iscollected, funds are transferred, approvals are granted, and ordersare placed. After delivery, one additional staff member isresponsible for performing a vehicle inspection, City decalplacement, and additional up-fitting, as required. However,additional departments and outside vendors are responsible forsome specialized up-fitting, such as communication radio and GPSinstallation.In this audit, we reviewed the acquisition process in three phases:1. Start Vehicle Purchase Process to Order Placed;2. Order Placed to Vehicle Delivery; and3. Vehicle Delivery to In-Service.Key decision points in the first phase of acquisition include: FleetOperations starts the purchase process; Decision to retire or holdvehicle based on condition and fleet needs; Customer approval ofoutlay form; Fleet Financial Manager approval of funds;Comptroller’s Office approval; and Purchasing & ContractingDepartment approval. 2The second phase of the acquisition process starts once apurchase order is created and an order is placed. This phase runsuntil the order is delivered to the City (typically to FleetOperations). Some purchases may involve more than onemanufacturer and subsequent up-fitting from a third-partyvendor.The third phase of acquisition—Vehicle Delivery to In-Service—includes initial inspection when a vehicle is delivered to FleetOperations, City decal placement, radio installation, lightingwiring, GPS installation, Orpak installation, and any additional upfitting or specialty fabrication, if needed. 32The outlay form provides order specification and cost information for vehicle orders.3Orpak is the system that captures fuel usage by vehicle and limits fuel to only the City’s fleet.OCA-19-007Page 7

Performance Audit of the Fleet Operations’ Vehicle Acquisition ProcessAudit ResultsFinding 1: Fleet Operations can make itsvehicle acquisition process more efficient,and should collect more data to evaluate thetimeliness of the processThe City of San Diego (City) Fleet Operations Department (FleetOperations) may be able to get vehicles in-service more quickly byimproving internal efficiencies, and by improving communicationwith City departments and vendors responsible for up-fitting. Asfurther discussed in Finding 2, we reviewed a sample of vehicleacquisitions from FY16 and FY17 and found that data was notsufficiently reliable to identify a comprehensive timeline andspecific delays in the acquisition process. However, using varioussources, we were able to calculate that once a vehicle is purchasedand delivered to the City, it took Fleet Operations an average of 84days in FY16 and 57 days in FY17 to get the sampled vehicles inservice.Delayed acquisition can cost customer departments in the form ofcontinued repair costs of vehicles that are being retired whilewaiting for new vehicles to be put in-service. Delayed acquisitioncan also result in customer frustration. We found that FleetOperations does not have a process in place to routinely evaluatethe timeliness of the acquisition process and the data it collects isnot sufficient to evaluate delays in the acquisition process. Finally,we found that there are no formalized roles and responsibilitiesagreements between many of the City departments involved inthe vehicle acquisition process and Fleet Operations.We recommend Fleet Operations set performance goals, establishpolicies and procedures to collect data on vehicle acquisitiontimes for each phase, and investigate missed performance goals.We also recommend Fleet Operations increase accountability byestablishing Service Level Agreements (SLAs) or other formaladministrative agreements to define roles and responsibilitiesbetween Fleet Operations and other City departments involved inthe acquisition process.OCA-19-007Page 8

Performance Audit of the Fleet Operations’ Vehicle Acquisition ProcessWhat We FoundFleet Operations TakesOn Average About TwoMonths to Put a VehicleIn-Service Once It IsDelivered to the CityFleet Operations Does Not Have an Efficient Process for BringingVehicles In-ServiceWe reviewed a sample of vehicle acquisitions from fiscal year 2016(FY16) and FY17 to calculate total acquisition time. To determinetotal acquisition time, we examined a judgmental sample ofpurchase orders from FY16 and FY17 and reviewed the vehiclesacquired via the purchase orders. 4 As further discussed in theBackground and in Finding 2, the data in the FleetFocus EnterpriseAsset Management system (FleetFocus EAM) is not sufficientlyreliable. Therefore, in order to do our analysis and identify keydates, we used data in FleetFocus EAM, along with relevant data inSAP and other documents such as emails, outlay forms, quotes,and other information in the hardcopy vehicle files. However, dueto lack of available data from all sources related to the beginningphases of vehicle acquisition, we focused much of our analysis onthe last phase of the acquisition process.To perform our analysis, we broke the acquisition process intothree phases, with each phase containing multiple key dates. Asshown in Exhibit 1, the three phases of the acquisition processthat we identified for testing were:1. Start Vehicle Purchase Process to Order Placed;2. Order Placed to Vehicle Delivery; and3. Vehicle Delivery to In-Service.We used a judgmental sample of 23 purchase orders from both FY16 and FY17. The sample was intended toselect orders that were placed by several departments and include a variety of vehicle types. In total wereviewed the acquisition of 64 vehicles.4OCA-19-007Page 9

Performance Audit of the Fleet Operations’ Vehicle Acquisition ProcessExhibit 1:Phases of Acquisition and Key StepsSource: Auditor generated based on interviews and review of transaction documents.Fleet Operations acquires many types of motive equipment,ranging from mowers to fire trucks. The type of vehicle can have alarge impact on the acquisition timeline. Exhibit 2 showstimelines for 1) Start Vehicle Purchase Process; 2) Order Placed toVehicle Delivery; and 3) Vehicle Delivery to In-Service, for FY16,and Exhibit 3 shows timelines for FY17. These exhibits are brokendown by vehicle type to show the impact vehicle type has onacquisition timelines.OCA-19-007Page 10

Performance Audit of the Fleet Operations’ Vehicle Acquisition ProcessExhibit 2:Vehicle Acquisition Timelines for FY16 SampleEstimated Days to Vehicle In-Service FY16Days (average)010061Milling Machines (n 2)60Vehicle TypeHeavy Duty Trucks (n 2)200300400500347139Packers (n 5)22382210Roller (n 1)36 17 27Sedans (n 12)125600339171SUVs (n 17)154Start Vehicle Purchase Process to Order Placed1122174139Order Placed to DeliveryDelivery to In-ServiceSource: Auditor generated based on data in FleetFocus EAM, SAP, and vehicle files.Exhibit 3:Vehicle Acquisition Timelines for FY17 SampleEstimated Days to Vehicle In-Service FY17Days (average)0100Aerial Lift (n 2)Vehicle TypeBobcat (n 8)30010672202160Sedans (n 4)11246600485815614710150061106Pickup (n 3)40037178Packer (n 5)SUVs (n 3)200715344Start Vehicle Purchase Process to Order PlacedOrder Placed to DeliveryDelivery to In-ServiceSource: Auditor generated based on data in FleetFocus EAM, SAP, and vehicle files.OCA-19-007Page 11

Performance Audit of the Fleet Operations’ Vehicle Acquisition ProcessThe first phase—Start Vehicle Purchase Process to Order Placed—should be interpreted cautiously because evidence for thedecision to purchase varied by vehicle and may not always bedirectly comparable. For instance, we recorded the Start VehiclePurchase Process date based on the first evidence we found that adecision to make a purchase was made. In some cases, this datewas based on an email between Fleet Operations and another Citydepartment. In other instances, the date was based on a quotedate. However, if a quote date was the first evidence we could findthat the purchasing process of a new vehicle was starting, it islikely that a quote came days or even weeks after the decision topurchase was made. Therefore, for vehicles which we recordedthe Start Vehicle Purchase Process date as a quote date orcontract date, it is likely that the acquisition process actuallybegan well before that date. Therefore, the data for the first phaseof the acquisition process is not detailed enough to know ifdurations are representative of actual timelines.Fleet Operations indicated that it started to record vehicle “birthrecord” data and status of acquisition process in FleetFocus EAMin calendar year 2018 (CY18). We discussed with Fleet Operationsthe option of using the “birth record” data as the start date of thevehicle purchasing process. Fleet Operations indicated that the“birth record” date would not be an accurate reflection of the startof the vehicle purchasing process. However, FleetFocus EAMprovides several other possible options for tracking the start ofvehicle acquisitions. The Equipment Planning module, discussedfurther in Finding 2, provides tracking for planned and actual startand completion dates, as well as events and approvals throughoutthe acquisition process. It is also possible to query FleetFocus EAMfor the “DATE ADDED” field in the equipment master data.However, utilizing this data requires well-defined policies andprocedures for when to create a new equipment item inFleetFocus EAM.In on our sample, we generally found that the longest period ofthe acquisition process was the second phase—Order Placed toVehicle Delivery—for each vehicle type. The overall average timefor this middle phase was 194 days in FY16 and 147 days in FY17.This phase can include orders being filled from one or moremanufacturers, as well as up-fitting from other vendors. We foundlimited tracking data within the Order Placed to Vehicle Deliveryphase in the form of Expected Delivery dates in FleetFocus EAM,although Fleet Operations reported that it receives periodicupdates from some up-fitters and pursues updates from others.OCA-19-007Page 12

Performance Audit of the Fleet Operations’ Vehicle Acquisition ProcessWe also found that the overall average time from Vehicle Deliveryto In-Service was 84 days in FY16 and 57 days in FY17. FleetOperations indicated that it has been making efforts to decreasethe total Vehicle Delivery to In-Service time for new vehicles. FleetOperations provided us a small dataset to evaluate the VehicleDelivery to In-Service timeliness of vehicles received in FY18. Wereviewed the list of vehicles and found that the average VehicleDelivery to In-Service time for this set of vehicles was 33 days. 5This third phase of acquisition—Vehicle Delivery to In-Service—includes initial inspection when a vehicle is delivered to FleetOperations, City decal placement, radio installation, lightingwiring, GPS installation, Orpak installation, and any additional upfitting or specialty fabrication, if needed. Although our analysisincluded reviewing work orders and additional comments in thework order screens of FleetFocus EAM, we did not find clear andreliable data indicating the time and duration of each of these keysteps within this last phase of acquisition. Therefore, it was notpossible to systematically analyze the efficiency of the final upfitting process. Exhibit 4 identifies potential key steps within thefinal phase of acquisition.Exhibit 4:Steps in Third Phase of Acquisition: Vehicle Delivery to In-ServiceKey Steps in the Last Phase of Vehicle AcquisitionInitial Inspection by Fleet OperationCity Decal PlacementOrpak InstallationSpecialty fabrication by Fleet Operations*GPS Installation**Radio/Laptop Install & Lighting WiringSpecialty Fabrications by Wireless Communications*Review for RecallsVehicle In-Service*Specialty fabrications by Fleet Operations and Wireless Communications are not standard processes, but areperformed as needed.**Performed by a vendor that is contracted with the City.Source: Auditor generated based on FleetFocus EAM work orders and interviews.This average Order Placed to Vehicle Delivery time is a decrease from our FY17 sample. However, it is importantto note that this was an additional dataset selected by Fleet Operations and reviewed at the end of fieldwork toshow accomplishments made by the department.5OCA-19-007Page 13

Performance Audit of the Fleet Operations’ Vehicle Acquisition ProcessWe interviewed relevant parties about the process of final upfitting to try to determine key steps that may be slowing downthis third phase of acquisition. According to Fleet Operations,initial inspection is typically performed upon the vehicle bei

departments involved in the vehicle acquisition process and Fleet Operations. Finding 2 Fleet management is a data-rich enterprise, generating trackable metrics including maintenance, utilization, fuel, and acquisitions. Fleet Operations uses FleetFocus EAM, which recently underwent a comprehensive update, as its fleet management software.