Driven to Despair

If an organisation is big enough to need a fleet of vehicles then – and yes we have heard this – they should know how to drive them and it is not a prominent area for audit attention.

It is often easy in audit to overlook the less complex making the assumption that they will be well controlled because of their simplicity.

Fleet management is one such area.

It is in this context that a recent United States Government Accountability Office report on best practices for fleet management is worthy of a read.

Now keeping in mind that reference is being made to the United States Federal Government, the magnitude of the United States fleet captures the attention:

In fiscal year 2013, federal agencies spent over $4.4 billion to acquire, operate, and maintain about 635,000 nontactical vehicles to help carry out agencies’ varied missions. The United States Postal Service (Postal Service), which operates the single largest civilian fleet, accounted for over 200,000 of those vehicles and $1.6 billion of those costs.

So to state the obvious but worth stating it is:

Agencies need to provide assurance that they are managing their fleets in the most cost-effective way possible.

How does one do that?

Firstly one needs a fleet management information system (FMIS):

A well-designed and comprehensive FMIS allows managers to monitor fleet performance and conduct the analysis needed for management decision making. To be comprehensive, an FMIS should include data on critical aspects of fleet management, such as costs, utilization, and repair and service history. Costs include direct costs such as fuel, repairs, and vehicle depreciation, as well as indirect costs such as personnel costs, office supplies, building rental, and utility costs. Utilization information would include mileage or other metrics to justify owning or leasing the vehicle.

Secondly organisations need to adopt a mindset of lifecycle cost analysis:

Life-cycle cost analysis—which captures vehicle costs from the beginning to the end of the vehicle ownership—can help agencies make cost-effective fleet investment decisions, such as when to replace a vehicle, and whether to purchase or lease that vehicle.

Thirdly it can be as basic as continually assessing the portfolio of vehicles in the fleet:

Should use a methodology that emphasized eliminating unnecessary vehicles and ensuring that vehicle composition met the agency’s mission.

As to why fleet management matters.  Well take a look at who has been casting an eye over the United States Federal Government fleet:

In recent years, Congress, the Office of Management and Budget (OMB) and the President have raised questions about the size and cost of federal agencies’ fleets.

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