2006 Audit Recommendations  -  Status Tracking
							Document 4
	Audit:  Fleet Management	(Lead:  Richard Hewitt)
	Audit Recommendation	Management Response			Budget Implications 2008 or Beyond	Related Council Motions	Status Update / Comments
		Audit Management Response	Action Required Based on DCM Implementation Plan	Management Timelines    (Q1- Q4)	($$ if known)		(Status, risks, issues regarding implementation, etc)
2a)  b)	That Fleet Services (a) Revise its replacement criteria using total lifecycle costing, which may result in extended lifecycles; (b) Elaborate a sustainable replacement plan based on documented criteria instead of theoretical lifecycles;revise its replacement criteria using total lifecycle costing which may result in extended lifecycles.	Management agrees with this recommendation. Management currently submits a sustainable vehicle replacement plan through the Long Range Financial Plan. Council determines affordable funding levels during annual budget cycles.  Fleet Services vehicle lifecycles are based on industry standards; the City fleet is older than these standards as supported by independent analysis. There is a process of assessing replacement priority that considers age, usage, condition, cost and operational needs.  Fleet Services will commence a process of determining economic life by implementing the equivalent annual cost (EAC) methodology through phases in 2007, starting with identifying the best opportunity for savings and priority identification by end of Q3 2007.  This process may lead to shorter or longer lifecycles.	TS Lead See Management response	Q3 2007			Consultant will be hired to do the EAC analysis.  Will be further costs in 2008.  Fleet priority identification to be completed by end of Q3.  Development of a SOW for consultant contract is in progress.  Contract expected in Q4.
2c)	c) Quantify all impacts of delaying replacements	Management agrees with this recommendation.  Since 2005, Fleet Services has identified impacts of delayed replacements in the annual replacement report to Council in advance of budget deliberations and will continue to do so.	TS Lead See Management response	Q3 2007			Consultant will be hired to do the EAC analysis.  Will be further costs in 2008.  The 2008 Replacemnet Report, tabled at CSEDC on 18 Sep 07, identifies the impact of not renewing fleet.
5d)	d)  Elaborate an action plan to reduce the number of breakdowns and operator reports by reviewing preventive maintenance programs and measuring work quality in terms of MTBF (Mean Time Between Failures) or downtime and drilling down per category, per garage or per user groups until the root causes are identified.	Management agrees with this recommendation.  Fleet Services currently does failure analysis on a case-by-case basis to meet known problems.  With the implementation of the new FMIS, a systematic review of mean times between failures will be established.  Implementation is scheduled for end of Q2 2008.	TFM Lead	Q2 2008			Underway M5 Implementation in Transit Fleet Maintenance has been rescheduled until the end of Q2 2008
6	That Fleet Services evaluate its level of outsourcing and undertake a comprehensive review of the workload of all the shops based on benchmarks and budgeted number of maintenance hours per year per vehicle categories. Even though that exercise may have been done at amalgamation, the level of outsourcing as well as the number of mechanics per vehicle differ from comparable organizations, the situation has evolved since amalgamation and accurate data is now available to verify the original estimates. The use of activity based costing methods is highly recommended to determine which activity should remain in-house.	Management agrees with this recommendation. The recommendation will be reviewed as part of the Branch Process Review scheduled to be undertaken in 2007.	SSC Lead BPR will review this recommendation.	2007			BPR scheduled to begin project planning phase in Mid November 2007.  Project to commence January 2008, with an expected duration of 6 months.
8	That Fleet Services, with Supply Management, optimize the supply chain and logistics of spare parts in order to increase the turnover ratio up to the standards.	Management does not agree with this recommendation. The Auditor has correctly indicated that turnover rates are a controlling characteristic indicative of the performance of the supply chain process. However, Materials Management is concerned that the Auditor has too narrowly interpreted or misapplied the components of the equation yielding an incorrect turnover rate that would become a standard going forward in evaluating inventory performance. This will have very real effects on service to the public if blindly implemented.  Materials Management are of the opinion, that the rate should be evaluated against comparable sized fleets taking care to recognize clearly the fleet composition and characteristics.	Finance Comment:  Management staff will prepare a "Briefing Note" to CAWG outlining the management recommendation with supporting rationale in Q3 2007.	Q4 2007			Comparative statistics being gathered in support of the planned briefing note to CAWG, moved to Q4/2007.
10	That Fleet Services assign an account manager to clients and that Fleet produce accurate and timely reports measuring different parameters like: · Days of downtime. · Compliance to inspection schedules (preventive maintenance). · Customer’s survey, customer satisfaction levels. · List of complaints received and actions taken.	Management agrees with this recommendation. Fleet Services retained KPMG in 2003 to build a client relationship model and perform a customer satisfaction survey.  While no specific account manager was necessarily assigned, each functional area in the branch has a person assigned to the appropriate level in the client’s branch. A multitude of reports are provided to clients, monthly, quarterly, and at the end of each year.  The information contained in these reports include:  actual expenditures, budget forecasting, training provided, collisions tracked, fuel consumed, kilometres travelled, vehicle under utilization, and much more.  For participating clients, monthly management meetings are held where issues are raised, addressed, and the outcomes documented.   Fleet Services agrees another customer satisfaction survey is warranted and will schedule for completion in Q4 2008.	OSP Lead See Management Response	Q4 2008			No cost at this time. Survey will be conducted by a consultant.  Costs estimated at $10-15K in 2008.
11a)	That Fleet Services join Materials Management in a combined effort to: a) Revise store staffing requirements.	Management does not agree with this recommendation.  Management agrees with the recommendation however it disagrees that it can be implemented within existing resources. Approval will be requested for an additional $180K Operating Budget funding in 2008 in order to allow Municipal Materials Management to hire three (3) Purchasing Stores Clerks to support currently unattended technician shifts. Presently, there are not any available resources to transfer staff from a regular day shift to an evening or night assignment.	Supply Management Comment: Supply Management staff will prepare a "Briefing Note" to CAWG outlining the management recommendation, and containing a cost vs benefit analysis with supporting rationale in Q3 2007.	Budget 2008 / Q1 2009	$180k in 2008 operating budget		Implementation is dependant on approval of the 2008 budget in Q4 2007, after which Supply will revise store staffing requirements. If budget not approved, Supply will prepare a briefing note to CAWG in Q1 2008
11b)	b) Improve training for store keepers.	Management does not agree with this recommendation. Management agrees with the recommendation, however it disagrees that it can be implemented within existing resources. Training is required in order to maximize the efficiencies of SAP and improve training in other areas of concern to Fleet Services. Approval is required for an additional $100K in the 2008 Operating Budget in order to allow Materials Management to complete this training by January 2009.	Supply Management Comment: Supply Management staff will prepare a "Briefing Note" to CAWG outlining the management recommendation, and containing a cost vs benefit analysis with supporting rationale in Q3 2007.	Budget 2008 / Q1 2009	$ 100k in 2008 operating budget		High level Supply reconciliation complete, however the item is being analyzed in greater detail by Supply Management at the request of the AG.
11c)	c) Measure waiting times at the counter and set targets acceptable to Fleet.	Management does not agree with this recommendation. Management agrees with the recommendation, however it disagrees that it can be implemented within existing resources. Materials Management will request approval for one-time Capital Budget funding of $60K in order to purchase an electronic queuing system and an on-going Operating Budget increase of $7K is required to cover the life cycle costs for the continued use of the system. It will be completed six (6) months after the receipt of the 2008 budget approval.	Supply Management Comment: Supply Management staff will prepare a "Briefing Note" to CAWG outlining the management recommendation, and containing a cost vs benefit analysis with supporting rationale in Q3 2007.	Budget 2008 / Q1 2009			Supply plan to implement a counter monitoring system to measure waiting times and provide management with meaningful information on "waiting times" using 2007 funding.  Purchasing plan to obtain bids in Q4 2007.
11d)	d)  Document and eliminate clandestine inventory.	Materials Management agrees with this recommendation. Materials Management will continue to assist Fleet Services by cataloguing and restocking parts that are presented to Materials Management by Fleet Services to be held in inventory.	Supply Management Comment: Management agrees with recommendations d) and e) and measures are underway to comply.	Budget 2008 / Q1 2009			Fleet and Supply have agreed to either add the parts to stock or to dispose of them in accordance with the Purchasing By-Law. Implementation underway.
11e)	e) Introduce performance measures for stores and include them in a service level agreement with Fleet.	Materials Management agrees with this recommendation. Materials Management, in conjunction with Fleet Services, will review requirements and establish service level performance measures.	Supply Management Comment: Management agrees with recommendations d) and e) and measures are underway to comply.	Budget 2008 / Q1 2009			Discussions have taken place between Supply and Fleet to implement the AG recommendation, and are ongoing.
15	That Fleet Services establish a series of performance indicators, track them systematically in a dashboard and that Fleet Services be accountable for them.	Fleet Services agrees with this recommendation. Fleet Services already has some established performance indicators, namely those that are part of OMBI (Ontario Municipal CAO’s Benchmarking Initiative) and some that are strictly internal to the City of Ottawa (including one dashboard measure).  Fleet Services is leading the development of other indicators with CAMFM (Canadian Association of Municipal Fleet Managers).  With the arrival of a single Fleet Management Information System, Fleet Services will be in a position in 2008 to expand the dashboard indicators.	OSP Lead Underway	Q4 2008	No cost at this time.
17	That Materials Management consolidate and repatriate all parts, new, used and remanufactured, within official inventory	Management does not agree with this recommendation. Management agrees with the recommendation, however it disagrees that it can be implemented within existing resources. Materials Management believes that the used and remanufactured material currently residing outside their span of control should be moved from Fleet Services control into a secure environment and recorded in the SAP system. The opportunity to create a secure and effective storage area will present itself with the opening of the Swansea Rebuild area under the Fleet Capacity Optimization project. Three (3) new staff positions at a cost of  $183K were approved in the 2007 Operating Budget. Additional funding requests of $140K are planned for 2008 for racking and equipment to create a clean, safe and controlled storage environment. Materials Management will assume control and movement of the materials in 2007, where appropriate, following a risk assessment and cost-benefit analysis.  Full and secure control of the appropriate stock will occur by the end of 2008 following budget approval.	Supply Management Lead See Management Response	Q4 2008	Supply Management Comment:  $183K was approved in the 2007 Operating Budget to fund three new staff positions. $140K will be sought in the 2008 Capital Budget to cover the installation of racks and shelving and the creation of a secure area.		Supply Management Comment:  Management plans to bring all appropriate stock into inventory by Q4 2008. Approved increases in staff are currently underway with training to be completed in Q4 2007. By Q1/Q2 2008 necessary internal storage space within St. Laurent South will become available once Fleet vacates the area which is currently occupied by a group moving to Swansea under the Fleet Capacity Optimization Project. Approximately $140K will be sought in the 2008 Capital Budget to cover the installation of racks and shelving and the creation of a secure area. In 2008 staff will commence identifying all new, used and remanufactured parts and complete movement and inventorying of all remaining outstanding materials in the secured area.
18	That Fleet Services and Employee Services develop a strategy for succession planning as Transit may have a shortage of qualified mechanics within a few years.	Management agrees with this recommendation.  This skill shortage is an industry-wide issue.  The ongoing replacement of mechanics has already been identified as a component of the City’s Succession Management/Talent Management Strategy.  Fleet Services and Employee Services branches are currently working together on succession strategies including expansion of the apprenticeship program.	OSP Lead Underway		This is an industry wide issue. No cost to Fleet Services.		Employee Services Comment: The Fleet Services Branch has drafted a policy and procedures for the Mechanic Apprenticeship program.  The drafts have been provided to Employee Services for comment which will be forthcoming shortly. With respect to the overall Branch Talent Management plan, meetings are being conducted throughout the summer to explore opportunities, in addition to the apprenticeship program, to expand the talent pool for mechanics.
19	That Fleet Services implement a preventative maintenance program for bodies and structures.	Fleet Services agrees with this recommendation. A Materials/Mechanical engineer was hired in 2005 to develop a preventative corrosion protection program for bus chassis and structures.  This program for all the transit bus fleet is under development, with support from other transit agencies such as STO (Gatineau) and STM (Montreal), as well as bus manufacturers. In the interim, Fleet Services has implemented an inspection protocol for its newest transit bus models, D60LF (227 buses) and D40i (239+ buses). Inspections have been established in 2005 and updated in 2006, and meet the bus builder recommended preventative maintenance schedule.	TS Lead Underway	2008-2009	Unknown until Phase 1 is complete.		Fleet Services Comment:  NRC contracted to perform Phase 1.  Phase 1 completion has been delayed to Q4 2007.  Phase 2, to be completed by NRC, would result in a detailed PM plan by Q2 2008 and will require funds.  Funding requirements will be known once Phase 1 is completed.  Once Phase 2 is completed, implementation could commence in 2008-9 subject or resource availability in TFM.
21	That Fleet Services and Supply Management determine the exact costs of reconditioning components (ABC - Activity Based Costing) and charge all the reconditioned parts to the inventory.	Management agrees with this recommendation. However, costing the components is complex and needs further review by Supply Management, Accounting and Reporting and Fleet Services.  This work will be completed by the end of 2008.	Supply Management Lead See Management Response	Q4 2008			Costing the components is complex and needs further review by Supply Management, Accounting and Reporting and Fleet Services. A further meeting with these various stakeholders is scheduled for Q4 2007, and this work will be completed by the end of 2008.
22	That Fleet Services elaborate and document its refurbishing program.	Management agrees with this recommendation. A procedure is already in place for determining which buses will be reconditioned and on what frequency. A spreadsheet detailing past, present and future activity exists however the process has not been documented.  Fleet Services will undertake to complete this documentation of the process by Q3 2007.	TS Lead Documentation is underway.	Q3 2007			This project is linked to #19 as inspections for the refurbishment program are part of the overall PM process.  Phase 1 to be complete by Q3 2007.  Once the Phase 2 plan documentation is complete in Q1 2008, an updated process document regarding the refurbishment program will be generated.  EDC Q2 2008.
23	That Fleet Services document the preventative maintenance program and train/inform the mechanics.	Management agrees with this recommendation. Transit Fleet’s Preventative Maintenance program is presently under review. Some changes have already been implemented and it is anticipated that further modifications will be introduced by Q3 2007.   Training is being carried out as part of the review as is the use of working groups to optimize the programs.  Also, the implementation of a new Fleet Management Information System (FMIS) in the latter part of Q4 2007 will provide Transit Fleet Maintenance with the tool necessary to better manage the program.	TFM Lead Underway	Q2 2008			M5 Implementation in Transit Fleet Maintenance has been rescheduled until the end of Q2 2008.
34	That Fleet Services’ budgeting process be reviewed to: · Reassess its process for informing the appropriate client/business unit of expected budget overruns; · Reassess the accountability of each business unit (Fleet Services, Supply Management or Fleet Services’ clients) over expenses incurred by Fleet Services; · Identify the cost drivers for each of Fleet Services’ expenses; · Develop tools to measure and track each cost driver; · Allocate each cost driver’s responsibility to the appropriate business unit, and incorporate performance measures to the budget of each business units controlling these cost drivers.	Management agrees with the recommendation. The current billing system of charging actual costs to clients does not accurately reflect the allocation of responsibilities for cost drivers.  A lease-based system would more accurately reflect these cost drivers, including usage, workshop efficiencies, accident damage and misuse. Fleet Services will investigate the opportunity of moving to a lease-based system by the end of 2008.	OSP Lead Business Case analysis will be conducted on a leased based system.	Q4 2008			Terms of Reference is being finalized for KPMG to review the chargeback model. No budget implications.  Chargeback methodology to clients may change based on recommendation.