By Ross Moody
If your council is considering outsourcing fleet services or equipment, it is important that decisions are not simply based on upfront costs.
It is important that fleet managers undertake a proper process to ensure they are making informed decisions. To complete this process, they must:
1. define the problem;
2. identify limiting factors;
3. consider the alternatives;
4. analyse the alternatives;
5. select the best alternative;
6. implement the decision; and
7. monitor and evaluate the results.
Overall, the decision-making process is completely dependent upon the right information being available to the right people, at the right time.
For example, applying this process in a mechanical workshop would involve first conducting a skills and equipment audit of the existing workshop and identifying any shortfalls.
Next, to identify the limiting factors, the workshop would have to ascertain the needs of the end user for after-hours servicing and repairs, the impact, if any, of in-house servicing on warranty and resale values, the requirements of maintenance chain of responsibility on mechanical services, and finally the availability of contractors.
The fleet manager would then have to consider and analyse the alternatives; either keeping the work in house, or outsourcing to a contractor.
When analysing the in-house option, these questions must be answered:
• How critical is availability and what are the workshop’s operational hours?
• Do these hours meet end-user needs?
• Is there an internal service level agreement?
• Are the internal projected repair and maintenance costs known?
• What do we do best and what work do we have the skills and equipment for?
• How should after-hours and emergency situations be handled?
• How should specialised repairs be handled?
• What are the costs of workshop staff training?
• Will we be able to employ the labour we need
• Do we know our true costs and how do they compare to industry flat rates?
• What are the budgetary restraints for purchasing the equipment we need?
• What will it cost to manage the contract?
• Does the organisation have the skills to manage the contractor?
Similarly, the fleet manager must answer these questions on the outsourcing alternative:
• Is there a contractor available?
• How far away are they?
• What are their flat rates?
• Does the contractor satisfy WHS requirements?
• Will they be able to provide the data we need for our maintenance management system?
• Will the contractor agree to work at the manufacturers’ flat rates?
• Are the contractor’s staff sufficiently trained to maintain the machinery?
• Does the contractor have a Quality Management System in place?
• Is the contractor financially sound?
Once the fleet manager has selected the best alternative, a method of implementing and monitoring the choice should be used. A service level agreement is good way of doing this.
It provides an agreed service specification to enable the end user to get the level and standard of service required, and enable both the service provider and end users to be clear on performance standards. It will increase accountability, improve customer service and assist in managing costs.
The fleet manager should also undertake a weighted analysis of all the factors that have been assessed, to determine which are the most important. For instance, criteria such as total annual costs, staff numbers and skills, facilities, operational convenience, and after-hours response can all be ranked according to their importance.
With these weightings, you can form a total score for keeping services in house or outsourcing them.