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E321 Fleet Management Lesson 6: Acquisition and Lifecycle of Vehicles -…
E321 Fleet Management Lesson 6: Acquisition and Lifecycle of Vehicles
Planning & Budgeting
First Stage of vehicle lifecycle
In this stage, business case is made in relation to the acquisition of a new vehicle
why is it required?
What will it be used for?
What is the proposed cost?
Requires a thorough evaluation of what the organization needs from the vehicle acquired
Is the new vehicle for replacement of aging vehicle ?
Is the new vehicle for expansion of business ?
Involves scheduling of exact acquisition timelines
Other factors might affect the acquisition decisions
Corporate Culture
Funding Availability
Organizational Image
Involves allocation of budget for acquisition
Selection & Acquisition
Defining of Vehicles Specification
Selection of Vehicles
Acquisition of Vehicles
Lifecycle Cost
Fixed
Taxes
Purchase, Loan or Lease Payment
Insurance/registration
License and Permit
Depreciation
Variable
Fuel
Maintenance
Labour
Spare Parts
Tolls
Purchasing Vs Leasing
Purchasing
Simply acquiring the vehicle by paying the price, either in the lump sum via installments
Leasing
Allows to use the asset for a fixed term by paying lease rentals periodically
Open-ended Lease
Closed-ended Lease
Evaluation Metrics for Vehicle Finance Options
Cost-Benefit Analysis
Payback Period
Internal Rate of Return (IRR)
Return-of-Investment (ROI)
Net Present Value (NPV)
Decision Matrix for Evaluation on Vehicle Types
Placing Vehicle in Service
Certificate of Entitlement (COE)
Insurance
Vehicle marked for safety / License plate displayed
Vehicle Modification Approval
Operation & Maintenance
Fleet Management
Tracking of Vehicle Location
Driver's Log
Vehicle utilization
Fuel Management
Fuel consumption and cost
Monitoring fuel pricing trend
Road Safety
Driver behavior
Accident rate
Maintenance Management
Fleet failure trend
Adherence to fleet maintenance plan
Definition
All fleet owners would be interested to know effective utilization and maintenance of fleet resources
Some of the areas tracked and monitored by fleet owners and managers are shown here
Technologies can be adopted to help tracking the vehicles' condition
Decommission & Remarketing
Decision to decommission the vehicle depends on:
The current condition of the vehicle
The mileage operated by vehicle to date
Age of vehicle
'Whole life' cost of owning the vehicle
Environment targets
Methods of disposal upon decomissioning
Retailing
Employee sales
Trade-ins
Auctions
Public tender
Transfer to another entity
Controlled/specialized disposal
Advantage
Lower fixed cost
No capital expenditure made to replace it
Disadvantage
Higher maintenance
Outdated technology -> Higher fuel consumption
Lower driver morale
Negative to the organizational
ISO 55000: Asset Management
Benefits
Improve financial reporting
Significant cost saving
Improved regulatory compliance
Increased resilience and system reliability
An enhanced reputation
ISO 55000: Overview, Principles, and Terminology
ISO 55001: Asset Management Required
ISO 55002: Implementation and application guide
Technologies for fleet asset tracking
Adopting technologies systems will help fleet owner to track their vehicles
Examples of technologies for tracking
Radio-Frequency Identification (RFID) tags
Sensors
Wireless modules for devices
Data Management Systems
An integrated asset management database and software will provide the convenience for the staff to monitor the vehicles
Example of such systems
Maximo