Strategic approaches to tight budgets

Sam Lamerato, Superintendent of Motor Pool, City of Troy, Michigan, and Chair, APWA Fleet Services Committee

Randy Owen, Senior Vice President, Mercury Associates, Inc., Charlotte, North Carolina

Fleet management organizations have a more difficult time justifying their budget requests than do those public works organizations that deliver services directly to the residents of a community. This is particularly the case when budgets are tight and funding is scarce. Most elected officials do not have a difficult time choosing between approving funding for new fleet vehicles or improvements to a congested street or to a park. The public works improvement project nearly always wins.

The reasons for this state of affairs are both obvious and logical—few officials have been reelected by trumpeting the improvements that they spearheaded in the fleet services department during their term in office. On the other hand, much political hay has been made from new parks and road improvement projects.

The connection between a well-managed (and appropriately-funded) fleet operation and a high quality of life in your community is difficult for most elected officials (and residents) to see. Since most elected officials want to be reelected, they naturally prefer spending money on projects that demonstrate to the electorate that they are delivering necessary services for the lowest possible cost. For most decision makers, spending scarce capital funds on new vehicles or a fleet maintenance facility rather than on sidewalks doesn't do a very good job of illustrating this point.

A fleet manager's challenge, therefore, is to clearly demonstrate the linkage between his or her organization's services and the overall goals of his or her jurisdiction (such as cutting the crime rate or reducing traffic congestion). Decision makers are much more likely to fully fund an organization that can clearly demonstrate its value and contribution to the bottom line and key goals.

So how does a public works fleet manager go about demonstrating value? First, it is important for fleet managers to educate themselves about the priorities that have been established in their jurisdictions. This may seem to some to be so self-evident that it does not deserve mention. However, it is surprising how many public works fleet managers are happy to remain out in the shop in virtual isolation from the important political, fiscal, and administrative issues that occur in and around a public works agency and at all levels of government. Some fleet managers have the attitude that the keys to success are to remain anonymous and so (hopefully) out of the line of fire.

The problem with this approach is that decision makers are not likely to approve funding requests and other initiatives put forth by virtually unknown managers who don't have a good grasp of the jurisdiction's goals, issues, and problems. On the other hand, requests for budget increases or policy changes that are backed by good business case justifications and that are linked to an organization's strategic priorities are much more likely to be approved. And it is important that fleet managers prepare and sign reports going to Council. Those fleet managers who attend City Council or County Board meetings, read business plans and budget documents, and volunteer for special assignments and committees are much more likely to gain approval for required investments in their programs than those who do not do these things.

Simply being visible and politically savvy, of course, does not necessarily guarantee success. Fleet managers also need to demonstrate that they have established credible practices and processes for managing their fleet program, that they are experts in their field, and that they are good stewards of their agency's financial resources. Accomplishing this is a two-step process. First, fleet managers must keep abreast of the latest trends and innovations in the field by reading fleet-related publications, attending industry conferences and seminars, seeking appointments to fleet boards and civic groups, and securing opportunities to speak at state and national conferences.

Fleet management is a varied and challenging business and the industry is constantly changing. Fleet managers must have a working knowledge of a wide range of subjects including the basics of materials management and logistics, alternative financing approaches such as leasing, advances in diesel technology, alternative fuels, environmental regulations, information technology, contracting, automotive engineering, etc. Training and education should be viewed as an indispensable key to success rather than the first budget line item to offer up during budget-cutting negotiations.

The second step in establishing credibility is to take proactive steps to explain to customers and to decision makers what you do and how you do it. Those fleet managers who fail to adequately explain and illustrate the method that they use to calculate their fully-burdened hourly shop labor rate (and other charge-back rates), for instance, are at a distinct disadvantage when they discover that they are losing money and need approval from the Finance Department for a rate increase. In contrast, those fleet managers who understand the basics of charge-back rate systems and have explained their methodology to decision makers will already have established credibility with finance staff and will have little difficulty in obtaining approval for any adjustments that may be periodically required. Other more thorny issues, such as requests for new staff or increases in vehicle replacement funding, are also much more likely to be approved if a fleet manager has demonstrated that he or she has established objective and credible processes for calculating program requirements.

Development of a business plan or an annual report is an excellent way to proactively reach decision makers and customers. Such a document should include a mission statement and goals (aligned with your agency's mission and goals); a description of key program statistics, services, procedures, and financial practices; and a listing of your organization's accomplishments. Business plans are an excellent public relations tool and force an organization to think strategically (long term) about its business: where it is, where it wants to be, and how to get there.

We have discussed steps that fleet managers can take to gain stature and influence within their public works agencies and the larger jurisdictions they serve. Without influence, a fleet manager is not likely to be successful in setting the agenda for the fleet management program, gaining approval for new initiatives, and securing the funding required to effectively serve his or her customers. Influence is something that must be earned and cannot be gained without a dedicated effort. Developing a planned and strategic approach to fleet management, including aligning your services with overall goals set by your jurisdiction, actively participating in the political process, explaining how and why your organization does business, and having a game plan for achieving continuous improvement in the organization's performance are keys to gaining influence and ultimately to developing a successful fleet management program.

Sam Lamerato, Chair of APWA's Fleet Services Committee, can be reached at (248) 524-3390 or at lameratosp@ci.troy.mi.us; Randy Owen can be reached at (704) 906-8898 or at rowen@mercury-assoc.com.