The Right-Sizing Playbook: How Data Is Shrinking Government Fleets

John Martin was working as a program manager about six years ago for the Massachusetts office of vehicle management when the governor’s office put his department in charge of an initiative to right-size the state’s vehicle fleet.

Martin oversaw the project that resulted in the right-sizing of the Massachusetts fleet by 10%, from about 3,500 vehicles and equipment to about 3,150.

“I realized a growing trend in the industry was that many fleets are oversized, and that’s one of the many things I do at Mercury Associates,” said Martin, who became president and managing partner of fleet management consulting firm, Mercury Associates, this past July.

He said various Mercury clients express the same concern that their fleets could use some downsizing.

“They think, ‘we’re spending a ton of money on the acquisition and maintenance of vehicles; we feel from an operational perspective that we may not need as many assets as we have,’ and so they hire us to come in and do a study,” Martin said.

Martin has used telematics and stakeholder interviews as part of the process of downsizing for government fleets.

Right-sizing analysis

“We started collecting utilization data via telematics, which was the beginning of my right- sizing journey,” Martin said of his work with the Massachusetts fleet.

The utilization data showed that the state used some vehicles and assets all day, every day. Other assets did not have an ignition event for weeks or months.

For the Massachusetts fleet and other fleets that Martin works to right-size, he uses the telematics data that the fleet has received on its vehicles.

The telematics equipment provides information such as whether any engine fault codes exist, miles traveled, the vehicle’s location, total engine runtime, and the number of trips the vehicle takes.

The equipment helps Martin’s team identify vehicle patterns whether it’s across specific asset classes or across specific agencies.

“From there what we like to do is engage with the operational employees and managers who are actually using these assets, and then we try to collect context surrounding that data,” Martin said, adding that he does that through stakeholder meetings and surveys.

The meetings and surveys bring answers to additional questions such as how many passengers does a vehicle need to carry, is the vehicle traveling over certain types of terrain, and does it need to carry certain tools. A snowplow might be removing snow and spreading sand and salt on the road constantly from November to February. From March to October that vehicle might register little utilization, but that’s an extremely expensive asset. Martin goes asset to asset and reviews whether that asset could be repurposed.

He and his team then take a deeper dive and determine whether the organization could get away with a smaller or less-expensive vehicle. Does the organization really need an F-150, or could it get away with a Ford Ranger? Is the extra towing capacity and 4-wheel drive needed?

The team builds a utilization profile for each individual asset, and if the analysis determines certain assets aren’t needed, the team recommends that the organization consider removing or reallocating them to a department that might be short on assets and could use that specific asset class.

From there, Martin’s team can quantify the savings.

“So let’s say that we remove 50 vehicles from your fleet,” he said. “That’s 50 vehicles that you’re no longer budgeting replacement funds for, paying to maintain, insurance or risk- related costs, fleet subscription costs [such as telematics and FMIS], so we quantify that savings and send it to the city manager, the mayor, fleet manager, whoever the stakeholder of the client is.”

Vehicle types that stay, go

Snowplows and other specialty vehicles usually remain in the fleet after a right-sizing analysis, Martin said.

“Those are the ones where they’re going to register a lot of low utilization, but then when you start to dig into what is this vehicle actually used for, there usually is with those specialty vehicles a legitimate reason why they’re needed,” he said. “The client needs to keep them, but they have low utilization. But the context surrounding the operational need makes sense.”

The ones that usually go? Those are generally administrative vehicles and motor pool type assets, but it really depends on the fleet.

“Maybe you have 25 vehicles in your motor pool, but you really only need 15, because when you look at the motor pool rental data, a lot of vehicles are significantly underutilized,” Martin said. “You might have 25 vehicles that are rented out 25% of the time. You want to get the total overall utilization higher. You don’t need 25 vehicles at 25% utilization; maybe you need 15 or 10 vehicles at 60 or 70% utilization, provided you can still meet operational needs. There are other supplemental strategies as well, such as the adoption of short-term rentals.”

Personal feelings

At the beginning of a right-sizing analysis, friction sometimes occurs between the analyzers and the users who feel they need certain equipment and vehicles to do their jobs and that taking those assets away would make their jobs more difficult.

“This is certainly not what we’re trying to do,” Martin said. “We’re trying to optimize and prevent waste in terms of financial spending and so forth, so that’s why those interviews in that context are so important.”

When working with stakeholders, Martin and his team seek a full understanding of what their operational requirements are and the tools they need.

“We’re showing them, ‘You’re telling us you need to accomplish X Y and Z, what is the reason that you need 50 vehicles instead of 40 vehicles to accomplish that?” he said. “We kind of put the ball back in their court and we give them every opportunity to justify the need to have those vehicles, but in a lot of cases as well, there’s not always a ton of friction.”

Many times the stakeholders realize the vehicles cost extra money for parts, to deal with collision repair, and to provide labor anytime an accident occurs.

“So there’s a lot of ways that it costs your organization beyond the sticker price, and that’s what we try to point out,” Martin said.

Unions might raise concerns when proposed fleet changes have an impact on areas such as vehicle assignments, working conditions, and response capabilities. But Martin and his team often calm those concerns through data and telling union leaders that vehicles and equipment are clearly not seeing enough use.

Right-sizing trend to continue

Martin said he has seen an increase in the number of government entities that are looking to right-size their fleets.

Operational needs are something that are constantly changing, he said.

“It’s rare that the operational need of an organization or department will stay static long term, so it’s important that leaders of different organizations are constantly reassessing this to figure out what are the tools that we need to execute the operational mission of their organization,” he said.

Assuming that the operational needs of a fleet will be the same three to five years from now as it is today could result in over-fleeting, which leads to cost, procurement, and replacement planning cost overruns, he said.

“It’s taking away your staff’s time to have to deal with a lot of these vehicles that are down, and a lot of our clients are asking us to do these types of analysis because I think people are realizing there’s significant cost savings in this area.”