Total Overhaul of Light Duty Policies

 

Total Overhaul of Light Duty Policies

We are embarking on a total overhaul of our light duty policies.  This includes:

1)      Reviewing those with high IRS reimbursement vs. fleet cost for company vehicle and converting them to company vehicle if justified

2)      Strengthen our policy on rental of 120 miles vs. driving your own vehicle (if people insist may impose a limit to what we would have paid the rental agency)

3)      Review mileage and identify all underutilized vehicles for potential redeployment to high IRS

4)      We’ve always replaced like for like.  If you have had a truck for 10 yrs, when it gets old, we replace it.  Net new adds are challenged but not if you already have one. 

 

I was wondering if you had any insight into...

 #2 – has anyone gone for just reimbursing flat rate vs. IRS (may have safety implications if driving on co business and have accident, etc)

#3 – any insight as to what you and other utilities consider ‘underutilized’ for light duty (and even larger equip)

#4 – this is a tough one and will NOT be popular.  Our thoughts were to develop criteria for the person to justify keeping a co vehicle;

·         What kind of tools do you carry daily (approx size/weight??)

·         Do you go off road with this vehicle – if so, for what purpose

·         What is your avg mileage on your company vehicle annually

o   How much of this mileage is your casual use commute mileage (use mapquest for consistency)

·         What type of work do you do that requires a company vehicle?  Is this type of work done daily/weekly/monthly?

We’re still trying to work on the criteria and template which we would send out to probably Manager or Section level for completion.  I know this is a large task but we would break it into areas and I truly believe if someone were honest they would say:  I have a vehicle because I’ve always had one.  Getting the criteria rigid enough so EVERYONE can qualify is the tough part, as well as the evaluation and process-info gathering.

 

Our company is looking for savings ideas and we think this is a great time to get approval to challenge the norm but we have about two weeks to pull together a strawman of our approach and range of savings.  We already have most of the data –except for #4.

 

Thank you.

Progress Energy

Director, Transportation

 

Anonymous (not verified)
Anonymous's picture

 

Below is our employee assigned vehicle criteria as well as our takehome criteria.  I don't have any insight into questions 2 or 3.   Good luck with your project.

 

Employee-Assigned Vehicle Criteria

1.                  Driving more than 16,000 business miles per year.

Take Home Vehicle Criteria

1.                  Employee is designated as a First Responder / Emergency Responder, where timeliness is imperative (including select types of storm duty, safety, and environmental services) OR;2.                  Employee is required to carry tools or equipment and to respond directly to a job site from home OR;  3.                  Employee is designated as a Home Start to reduce drive time to work site, where there is no remote reporting location available

Anonymous (not verified)
Anonymous's picture

 

We recently revised our vehicle take home policy and our eligibility is solely based on an operational need.

Our requirements:

The position must participate in regularly schedule on-call duties.

There must be a defined operational need for a vehicle to be assigned that is approved by the respective division officer.

The employee must typically report to a work location other than a normal reporting site.

The employee will typically transport and have available tools and equipment related to the work being performed.

Employee must have a responsibility for  the direction of Company employees and perform, if necessary, physical work to address operational emergency conditions.

The employee must maintain a valid driver's license.

 

I hope this helps.

Anonymous (not verified)
Anonymous's picture

 

If you are doing a total overhaul you might consider requiring GPS installation in take home vehicles. This is for two primary reasons:

1. It enables you to to better maintain accountability of your asset as it possibly leaves your immediate area of operation and is operated for reasons other than official business.

2. By requiring customer departments to pay for GPS equipment and monitoring you further ensure that the take home assignment is actually a business need. If there is no cost, many customers will assign take home vehicles simply because it is an available option.

I also think enrollment in a MVR program such as California's Employee Pull Notice (EPN) should be mandatory for all take home vehicle operators and user departments must allow clearly differentiate between official use and take home mileages in order to meet possible income tax reporting requirements and also to enable cost quantification of take home vehicle use.

Other than that, I have no opinion on the matter.

Anonymous (not verified)
Anonymous's picture

 

We are embarking on a total overhaul of our light duty policies.  This includes:

1)      Reviewing those with high IRS reimbursement vs. fleet cost for company vehicle and converting them to company vehicle if justified

2)      Strengthen our policy on rental of 120 miles vs. driving your own vehicle (if people insist may impose a limit to what we would have paid the rental agency)

3)      Review mileage and identify all underutilized vehicles for potential redeployment to high IRS

4)      We’ve always replaced like for like.  If you have had a truck for 10 yrs, when it gets old, we replace it.  Net new adds are challenged but not if you already have one. 

 

I was wondering if you had any insight into…

 #2 – has anyone gone for just reimbursing flat rate vs. IRS (may have safety implications if driving on co business and have accident, etc)

#3 – any insight as to what you and other utilities consider ‘underutilized’ for light duty (and even larger equip)

#4 – this is a tough one and will NOT be popular.  Our thoughts were to develop criteria for the person to justify keeping a co vehicle;

·         What kind of tools do you carry daily (approx size/weight??)

·         Do you go off road with this vehicle – if so, for what purpose

·         What is your avg mileage on your company vehicle annually

o   How much of this mileage is your casual use commute mileage (use mapquest for consistency)

·         What type of work do you do that requires a company vehicle?  Is this type of work done daily/weekly/monthly?

We’re still trying to work on the criteria and template which we would send out to probably Manager or Section level for completion.  I know this is a large task but we would break it into areas and I truly believe if someone were honest they would say:  I have a vehicle because I’ve always had one.  Getting the criteria rigid enough so EVERYONE can qualify is the tough part, as well as the evaluation and process-info gathering.

 

Our company is looking for savings ideas and we think this is a great time to get approval to challenge the norm but we have about two weeks to pull together a strawman of our approach and range of savings.  We already have most of the data –except for #4.

 

Thank you.

Director, Transportation

 


 

 

When times are tough, it seems as though everyone reviews this area and we are no exception.  About two years ago, we rewrote our policies in this area.  However, we are taking another look at it now.  Here is what we have done.

 

1)  We are doing the same as you are as far as "forcing" people in to a company vehicle.  Historically our stand was to allow the employee to make the choice as to whether he or she wanted a vehicle or wanted to be paid mileage.  We are taking a much more active stance on this now.  The fleet organization has done a "break-even analysis" for all users.  If the users are not running enough miles to make the unit cost effective then we are making them return that unit.  Conversely, when we find a person where we are paying way too much money out, we want to put them into a company unit.  The break-even analysis identifies both issues.  You may be surprised at what you find when you actually reconcile the miles that they have been turning in once they have a company unit.  One of the biggest areas of opportunity that I have found over the years is in the area of work miles vs. commute vs. personal.  A process to manage this is really crucial.    

2)  We don't have the 120 mile rule that you speak of.  But, I really like it and we will have shortly.  Thanks for the tip.

 

3)  Underutilized is a tough question.  But I can tell you what we do.  We break all of our assets into two categories.  Light duty and work vehicles.  Light duty generally includes cars and pick-up trucks.  We then break that down into to sub-categories, passenger carrying unit (company car, pool unit, etc) or work unit.  The rest of the units are work vehicles.  We manage each group differently.  Passenger carrying units are evaluated utilizing our break-even model.   We like this model because it doesn't matter what kind of unit that you drive.  The break-even point is nothing more than the cost of running a mile in that particular unit vs. the cost of running a mile at the IRS rate.  The line in the dirt is pretty clear when you do it this way.  As far as work vehicles go, we use a staffing based fleet model for this.  We have a list of each of the equipment that each crew type uses and we have a list of each crew....name by name.  We utilize the model to ensure that excess units are kept to a minimum.  

 

4)  In general, we repalce like for like as well, but we constantly review specs in all areas.  However, it would not be surprising to have alike for like program if you have a good grip on your historical needs.   

 

Your other "insight" issues:

 

IRS rate vs. Flat Rate Payment:  This can be done, but in most cases you have either winners or losers.  Those who don't run a lot of miles will make lots of money and will be verify happy, but the company will be sad because it over paid in this area.  Those who run a lot of miles will be sad because they will have to subsidize the company to run those additional miles.  The company will be happy about the subsidy, but will be sad after listening to all of the justifiable complaining.  I have used this methodology in the past and found it very difficult to manage.  It works fine for execs, but not too well for the masses.

 

Criteria for keeping a vehicle:  Your right, its not popular.  but, we do exactly what you have outlined above.  We use all of the criteria that you do, but we also consider first responder, emergency or security status.  We have some jobs that get a vehicle because of the job, not because of the usage.  Jobs like revenue collections, corporate security, and front line electric supervisors.  not all supervisors, but only the ones who are required to respond directly to emergency situations. 

 

I hope this helps.  Let me know if oyu need anything else.  I'm glad to share.

 

tks. 

 

Anonymous (not verified)
Anonymous's picture

 

We have been successful in transferring business miles from POVs to state vehicles.  We review mileage reimbursement expenditures annually and identify which employees or office locations would benefit from additional state vehicles.  Agencies have used our Master Lease contract to lease-purchase additional state vehicles and transfer those business miles significantly reducing our cost.  Our state agencies did not have the upfront capital to buy vehicles so the lease-purchase worked nice for us.  We also have a state travel policy that has been instrumental in requiring employees to use our Trip Optimizer which is a simple cost estimating tool to display the lowest cost travel option between state, rental and POV and requires employees to utilize the lowest cost option or their reimbursement is reduced to our lower rate.  top management support for the new travel policy was very important in making this change.  Our POV expenditures have declined for the third straight year despite increases in reimbursement rates each year. 

 

State Fleet Manager

State of Missouri

 

Anonymous (not verified)
Anonymous's picture

What are your companies' policies on take home vehicles for supervisors? 

Anonymous (not verified)
Anonymous's picture

 

The state of Georgia requires agencie to justify take-home and assigned vehicles on an annual basis via its MV-1 policy. (Policy available upon request) The state of Georgia recently implemented a Comprehenisve State Improvement plan that addresses most of the issues associated with providing cost-effective vehicle transportation. (The plan also focues on combined weighted average of regular and low use % utilization by agency with goal of 70% annual use) We discovered due to the increased age of fleet due to historical lack of funding that agencies were making poor or high cost decisions to provide transportation options. One agency paid an individual over $29000 to use their own vehicle. We look at all vehicle cost solutions and are presenting options to agencies to reassess how they fund transportaion.

To provide effective and efficient transportation there is no "one-size-fits-all" solution. An effective progrom looks at all types of use and determines the appropriate mix of alternative solutions. We have a transportation calculator available for our fleet customers to plan their use in advance and make decisions of best options. We are currently expanding this tool to add leasing to the mix. Presently we look at the annual cost of providing transportation and encourage agencies to choose the lowest cost. For example, if you look at transaportation as a single yearly cost based on utilization standards it makes this process a little easier. To obtain a new vehicle or an assigned vehicle the State of GA requires it be used at least 14,000 miles annually. Below is a breakdown of transportation options using this as a standard over cost for first year:

POV = $7000 (.50 mile)

Leasing = $5740 (.41 mile*)

Daily Rental = $9100 (.65 mile)

Ownership = $14000 (.100)

The state of GA fleet has become old and unreliable due to a lack of capital funding over several years and is now forced to look at options to renew its fleet one year at a time. (Obviously if you have the luxury to amortize this over the life of the vehicles these costs will change and ownership if funded (and appropriated properly) is most always best over vehicle life.) Presently the state of GA is evaluating transportartion cost options based on first year expenses because the current economy dictates a closer analysis of its cash flow. Example: If you have $14000 in 2010 to spend and need 2 vehicles your best option maybe to lease 2 vehicles at $7000 each. All other options won't get you 2 vehicles. (Note: You should perform a break-even analysis to determine you lowest costs by option)

Our low use threshold is anything under 6000 miles annually. We just embarked on a campaign to flag all vehicles we know will be less than 6000 by nature of application. This will allow GA to remove these from initial low use analysis. However these units will still be evaluated based on type of vehicle and average use of the aggregate class miles. Anything less than 50% of aggregate is identified as the low hanging fruit and subject to elimination from use for low use.

A complete copy of our fleet plan is available upon request.

Good luck!

*Your cpm may differ.