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Acquisition and Lifecycle of Vehicle - Coggle Diagram
Acquisition and Lifecycle of Vehicle
Lifecycle of Vehicle
Planning and
Budgeting
First stage of the vehicle lifecycle
In this stage, business case is made in relation to the acquisition of vehicle
Require a thorough evaluation of what the organization needs from the vehicle acquired
Involves scheduling of exact acquisition timelines
Involves allocation of budget for acquisition
Other Factor might affect the acquisition decisions
Corporate culture
Funding Avaliability
Organizational Image
Selection and Acquisition
Defining of Vehicle Specification
Selection of Vehicle
Acquisition of Vehicle
Lifecycle Cost
Estimated amount of money spent on a vehicle over the course of its useful life
Known as Vehicle Total Cost of Ownership
Fixed
Taxes
Purchase, loan or lease payement
Insurance/registration
License and permits
Depreciation
Variable
Fuel
Maintenance
Labour
Spare parts
Tolls
Purchasing VS Leasing
Purchasing
Simply acquiring the vehice by paying either in the lump sum or via instalments
Leasing
Allows you to use the asset for a fixed term, by paying lease rentals periodically
Types of Leasing Arrangement
Open-ended Lease
Fleet managers have greater control of vehicle utilization and disposal
2 more items...
Lessee assumes responsibility for remarketing decisions, including the risk or reward involving resale value
3 more items...
Closed-ended Lease (Predictable Outcomes)
Lease term is typically set
Monthly payments are based on the estimated residual value of the vehicel at the end of the term
2 more items...
Lessor sells the vehicle and assumes responsibiity for any profits or losses caused by fluctuations in market values
More certainty to fleet managers who carry about the future of the used-vehicle market
Factors for Fleet Manager to consider
The length of time the vehicle will be used
Monthly cash flow budgeted for the usage of vehicle
Is the vehicle used for specific contract or can be used for other projects ?
Upfront cost of vehicle acquisition
Administrative tasks involved
Size of fleet acquiring
Risk Profile and culture in the company
Evaluation Metrics for vehicle Finance Options
Cost-Benefit Analysis
A systematic approach to estimate the short and long term consequences
Measuring all costs and all possible profits and benefits from an investment project proposal
Taking into account both quantitative and qualitative factors
Payback Period
The time required for positive project cash flow to recover negative project cash flow from the acquisition and/or development years
Return-On-Investment (ROI)
Directly measure the amount of return on a particular investment, relative to the investment's cost
The benefit (or return) of an investment is divided by the cost of the investment and expressed as a percentage or a ratio
Net Present Value (NPV)
The difference between the present value of cash inflows and the present vallue of cash outflows over a period of time
It takes into account all revenues, expenses, and capital costs associated with an investment
Internal Rate of Return (IRR)
The idiscount rate that makes the net presetn value (NPV) of a project zero
If IRR is greater than a company's minimum acceptable rate (MARR), the investment is good
Decision Matrix for evaluation on vehicle types
Vehicle acquisition decision is not purly based on miney value. There are other factor to consider
Ease of maintenance
Vehicle design
Driver's comfort
Weighted decision matrix
A tool used to compare alternatives with respect to mulitple criteria of different levels of importance.
Placing Vehicles in Services
Purchased buses (private) need to be registered with LTA after the arrival
Before placing vehicle in service
Vehicle Modification Approval
Modifications and betterments
Certificate of Entitlement
A cerificate of Entitlement (COE) gives you the right to own and use a vehicle in sinagpore
Insursance
Insurances purchased for buses to ensure adequate compensation.
Vehicle for safety/ License plate displayed
Display approved license number plate
All vehicles should be properly marked for safety
Operation and Maintenance
Effective utilization and maintenance of fleet recourses
Fuel Mangement
Fuel consumption and cost
Monitoring fuel pricing trend
Fleet Management
Tracking of vehicle location
Driver's Log
Vehicle utilization
Road Safety
Driver behaviour
Accudent Rate
Maintenance Management
Fleet failure trend
Adherence to fleet maintenance plan
Decommission and Remarketing
The decision to decommission the vehicle depends
• The current condition of the vehicle
• The mileage operated by vehicle to date
• Age of the vehicle
• ‘Whole-life’ cost of owning the vehicle
• Environment targets
Method of disposal upon decommissioning
• Retailing
• Employee sales
• Trade-ins
• Auctions
• Public tender
• Transfer to another entity
• Controlled/specialized disposal
ISO 55000 : Asset Mangement
Fleet Lifecycle management can also be affiliated to Asset Management
Helps to oraganisations effectviely manage their assets to optimize their lifetime value
Benefits of adopting ISO 55000
Improve Financial Reporting
Increased resilience and system reliability
Significant Cost Saving
An enhanced reputation
Improved regulatory compliance
Technologies for fleet asset tracking
Adopting technological systems will help fleet owner to track their vehicles and it's performance
Data Mangement systems
An integrated asset management database and software will provide the convenience for the staff to monitor the vehicles