Chapter 1 V E H I C L E F L E E T M A N A G E M E N T IN G O V E R N M E N T

INSTITUTIONS

1.0 Introduction

The government of Sri Lanka has a number of ministries, departments, statutory bodies and
semi government institutions. The development and administration programs of these
institutes are undertaken by government departments and other institutes. The mobility is
playing a vital role in functioning of these institutes effectively. To facilitate for the mobility,
central government has provided vehicle fleets for necessary institutes. 9 5 % of government
institutions have their own motor vehicle fleets and the rest of other institutes have
outsourced for their transportation.

The fleet consistence pattern of the government institutions vary according to their needs and

wants relating to their services. There are various vehicle types in these fleets and most of

them have cars, jeeps, double cabs and lorries etc, while a few have motorcycles, vans and

buses. 99% of these fleets are consisted of gasoline powered cars where as jeeps, double cabs

and lorries powered by diesel. In each and every year, government allocates approximately

4.5% of its annual budget on fleet management according to the finance report published by

the general treasury. As the state income has declined since the last decade, government has

decided to cut down the expenditure for purchasing new vehicles. Especially the allocated

budget does not match with the existing prices of new vehicles. When the government

vehicle fleets are considered; 60% - 70% are old. This means that these old aged vehicles

have exceeded the active fleet age. They are ageing up to 20 years. Due to this situation,

maintenance, repair and operation costs of them have gone up remarkably. The main reason

for this is that the old vehicles have to be repaired very often. The downtimes of them are

very high and they take more time to travel. They are less fuel efficient as well. On the other

hand, the environmental pollution caused by the emissions of these vehicles is very high.

Further, these old vehicles cause incomplete combustion. Therefore, they emit more C O

(Carbon Monoxide) to the atmosphere. C O is a greenhouse gas that increases the global

warming and creates health problems to the society.

Though the government institutions have vehicle fleets from 1-20 years old or even more, the

average age of the active and efficient fleet in Sri Lanka is 6.2 years according to Dr

Jayaweera's research paper on "Vehicle inspection and maintenance policies and program".
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The reason that the government institutions have to keep aging vehicle fleets is due to an
investment constraint for the replacement of the vehicle fleet. It is obvious that an efficient
vehicle fleet management system is very important to minimize maintenance and operation
costs. An effective fleet management program should include policies and procedures on
acquisition, replacement, disposal, repair and maintenance of vehicles, record keeping and
labor management.

Though the general treasury deducts allocation of money on purchasing of new vehicles for
the government institutions, the cost that is born for repairs of these old vehicles are
marginally high in each year. As a solution to minimize the maintenance cost, it is being
observed that over 50% of old aged vehicles are not worth while in the long run due to their
unreliability even after their rehabilitation. Therefore, it is necessary to provide a proper
vehicle replacement program and efficient fleet management system to the government
institutions for more productive logistic services.

Problem of the Study

Lack of proper vehicle fleet management policies result in inefficient management of the
government vehicle fleets.

1.1 Background

There are 322 government institutes island wide according to the statics of the General

Treasury of Sri Lanka. Ninety five percent of these institutions have a motor vehicle fleet and

it appears as this is the second capital asset of these institutions. When comparing public

sector with the private sector in Sri Lanka, the private sector utilizes their fleet for business

purposes while government utilizes the fleet to cater services for the general public.

The way in which the vehicle fleets of private and public sector are managed has some

differences. For an example, the Seylan Bank of Sri Lanka has applied a proper maintenance

schedule and also they do preventive and routing maintenance in a timely manner such as

changing oil after every 5000 km and a periodical maintenance after every 10000 km, 20000

km and 80000 km intervals. Even though the manufacture's maintenance standard is to

change oil after every 5000 km interval, in general, the government institutions undertake

routine maintenance in between 5000 - 10000 km. In addition to that, the private sector keeps

the maintenance records in their electronic data bases while the government institutions do

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the same thing manually. As a result, most of past maintenance records of the vehicle fleets
are unavailable in the public sector and the important data like cost, km reading and fuel
consumption are not recorded properly. Further, the cost per km is calculated by the private
sector for each vehicle. If the cost increases than the recommended rate, they find the route
cause for this problem and take some corrective action in order to prevent its recurrence.
When considering the private sector, they replace the vehicles after every 150,000 km run or
7 years of age which ever occurs first. The government sector institutions use their vehicles
even if they exceed 500000 km or even 20 years or more. Therefore, having a proper vehicle
maintenance data base, a routine fleet replacement policy and a proper preventive
maintenance schedule will result in reducing vehicle operational and maintenance cost in the
government sector thus reducing the annual budgets of them.

Figure 1.1: Grounded Pajero due to no proper inventory management system

Above picture shows one of the Mitsubishi Pajero grounded in a vehicle yard after an

accident; for the last lOyears. It has been neglected due to no proper inventory management

and no proper replacement policy. These cause to increase inefficiency of the government

vehicle fleet management. Such cases could be seen very often in government vehicle fleets.
 Figure 1.2: Grounded car due to no proper inventory management system
(Source: Ministry of Agriculture)

1.2 The Objective and the scope of the study

The objective of the research is to identify the behavior of maintenance and repair cost,

downtime, usage and the fuel cost of the government motor vehicle fleet against the age and

to identify possible improvement methods to increase the efficiency of fleet management.

And the scope of the research is to review of literature on efficiency of vehicle fleet

management in Sri Lanka and other countries. The data was collected from the 20

government institutions and their head offices located in Colombo due to the reason that there

are large numbers of vehicles being used by the head offices compared to their local

branches. Especially cars, jeeps, double cabs, vans, lorries and mini buses were focused in the

study. The scope of the study was limited to the vehicle fleet that provides services to the

departments and to the public. Vehicles such as tractors, ambulances or buses were not taken

into the study. The public transport sector was excluded because of the fee charged from the

public.

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1.3 Methodology

This section intends to describe the approach taken on rationalizing the research project. This
chapter would explain the theoretical framework, on how the problems and solutions are
identified;

Figure 1.3: Methodology

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One of the assistants and the researcher visited all the 20 institutes to collect the data for this

thesis. They met heads of transport divisions and discussed about the existing situation of

their fleets, problems they face in fleet managemenj, maintenance costs, spare parts costs,

their policies and procedures. Then the vehicle operators were interviewed and operational

data were collected. With the support of questionnaire, the data such as downtime, major

repair costs, utilization, and fuel consumption were collected. By reviewing past records,

vehicle ages, past repair costs and maintenance costs were found. By analysis we may be able

to find out causes for higher fleet maintenance cost and the result shall be used to develop a

vehicle fleet management strategy.

Twenty Government institutions which have their own vehicle fleets have been selected. The

transport officers w h o are the heads of the transport divisions in these institutions and their

staff members were interviewed on vehicle acquisition, maintenance, repair cost, downtime,

fleet size and availability etc. Following methods were used for data collection.

1) Interview survey
2) Questionnaire survey
3) Review of past records
4) Literature review

Using excel sheets, plotting graphs etc. found the cost behavior and identifying the

relationship among the variables that are effected to the vehicle fleet management efficiency

and developing vehicle fleet management strategy. Ex: Vehicle replacement policy,

preventive maintenance schedule, vehicle inventory management, fuel management and labor

management etc.
1.4 V e h i c l e f l e e t s i z e

D i f f e r e n t g o v e r n m e n t d e p a r t m e n t s h a v e d i f f e r e n t f l e e t s i z e s . In t h i s s t u d y a c t u a l d a t a o f

sample of 2 0 institutions h a s been collected with the help o f a q u e s t i o n n a i r e as m e n t i o n e d

below.

T a b l e 1.1: V e h i c l e f l e e t s i z e s

Institute N a m e Fleet Size

Ministry of Petroleum and Resource D e v e l o p m e n t 13

Ministry of Land and Land Development 26

Ministry of Irrigation and Water M a n a g e m e n t 35

Ministry of Labor 42

Authority of Samurdhi 44

Department of Archaeology 34

Ministry of Provincial Council and Local G o v e r n m e n t 40

Ministry of Public Administration and H o m e A f f a i r s 61

Agriculture Insurance Board 62

Sri Lanka C u s t o m s 64

Department of Inland Revenue 68

Department of Wild Life 96

Department of Education 94

Postal Department 98

Department of Agrarian D e v e l o p m e n t 113

Forest Department 180

Survey Department 196

Peoples Bank 201

Presidents Secretariat 206

Department of Agriculture 280

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Replacement vehicles may be purchased on a one for one basis but based on the financial
constraints of the government. Purchasing of new vehicles is very rare. Fleet size should
increase to match with the operational requirements of the institutional mission. But, year by
year, the government fleet size is decreased due to written off old vehicles and addition of
only a few new vehicles due to higher prices of new vehicles.

1.5 Type of Vehicles

According to questionnaire survey held for this study among the 20 institutions; it was
reported that different types of vehicles are used to satisfy their operational needs. Total units
of vehicles are 1933 in these 20 fleets.

247
529
125
k ' or • Cars
.r; .
ji , . si • Jeeps

Double cabs

• Lorries
4 v Others

Figure 1.4: Fleet Size

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Fleet Consistence as follows:

There are 529 cars which belong to different makes and models such as Toyota Corolla,

Nissan Sunny, and Mazda Familia which fill about 2/3 rd of the fleet and which are dense

among the other models such as Mercedes Bens S Class, E Class, C Class, Volvo S80, S60,

BMW 5series, 7series, Jaguar X type and few cars of Indian and Korean brands added very

recently.

Among 555 units of Sports Utility Vehicle (SUV) Mitsubishi Pajero is one of the most

popular models. As well Toyota Land Cruisers with an amazing engine power supports the

fleets in a reasonable way. And Land Rover defenders which are made for off road purposes

give a fullest contribution to the fleets as an individual performer as well as a backup vehicle.

The newer members of the SUV fleet such as Mahindra Bolero and Scorpio c o m e from India

and Ssang Yong Musso and Kyron come from Korea also play a good role.

Toyota Hilux, Nissan and Isuzus populate all most all the Double cab fleet of 477 units while

recently added Mahindra and Tata fulfill the rest of the fleet.

There are 125 units of Lorries consist of Hino, Benz, Nissan Diesel, Isuzu, Tata and Ashok

Leyland as well as ERF Leyland from UK.

Finally there are 247 of other units considered in the research which includes Passenger vans,

Cargo Vans and Mini buses. Most common makes of these are Toyota Hiace, Nissan Urvan,

Mitsubishi Delica and Isuzu Fargo.

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1.6 Staffing

There are various staffing levels in different institutions to match with the size of their
vehicle fleets. In this study, the staffing levels taken into consideration are 1-6, and their
duties are shown below;

Record keeping
Dispatching and purchasing
Inventory management
Costing
Budgeting
Labor management
Repair and maintenance

Typical organization chart of the vehicle fleet management division in a government

Figure 1.5

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1.7 Recruitment of Drivers

Normal procedure is recruitment of drivers from the available short list at the recruitment
period. There are no selection criteria to check the technical knowledge or skills of the driver
recruits when they are selected. If there is a valid driving license and they can take the vehicle
on the road, they will be selected.

1.8 Diagnosis of repairs

If there is any fault in the vehicle its driver's responsibility to inform it to the transport
officer. Then the transport officer forwards it to the technical officer to diagnose the fault.
But only 20% of the government institutions have technical officers attached to transport
sections. Rests of the institutions send their breakdown vehicles directly to the contracted
garages for repairs.

1.9 Out-sourcing of Repair and Maintenance

At present there are no in house repair and maintenance facilities in any of the government
institutions in Sri Lanka. All the vehicle repairs and maintenance works are been out sourced.
According to government vehicle maintenance policies, repairs can be done via following
vendors.

1) Local Agents (for particular make of vehicle)

Local Agent (Franchise Agents)

Toyota Lanka Pvt. Ltd, United Motors Lanka PLC, Sathosa Motors PLC and Diesel and

Motor Engineering PLC are some of the local agents for various vehicle makes in the world.

• Toyota Lanka for Toyota vehicles

• U.M.L. PLC for Mitsubishi vehicles

• DIMO for Mercedes Benz and Tata vehicles

• AMW PLC for Nissan vehicles

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All the local agents use genuine parts for new vehicles. But sometimes local agent also uses

reconditioned or used parts for vehicles beyond lOyears of age cause of lack of new parts for

aged vehicles. It obvious that local agent's prices are very high. Therefore 75% of

government vehicle repairs and maintenance are done via registered garages.

Registered garages

National Procurement Agency (NPA) has a registry for motor vehicle repair vendors. NPA
don't have any scientific criteria to select suitable garages. They publish a paper notice in
national news papers; call for registration and register all the applicants. According to
interview survey done with the transport officers there are 9 0 % of garages which use non
genuine parts for the repairs and repairs are very low standard as well.

1.10 Costing and Budgeting

In every 3rd quarter of the year the transport officers have to prepare a cost estimate for the
major repairs (Capital Expenditure), Minor repairs (Recurrent expenditure) and fuel cost.
These estimates are sent to the Treasury to get the approval for the budget of the upcoming
year. But as it's usual, that less amount from the budget has been allocated than requested for
the whole year.

1.11 Engine capacities and Different makes

Eighty five percent (85%) of the government fleets consist of Japanese vehicles and rest of

them are Indian, Korean, British, German, American and Swedish vehicles. There is no

standardization in fleet and therefore they mix with different makes, models and types. Eg:

Toyota. Nissan, Mitsubishi, Isuzu, Daihatsu, Mazda, Tata, Mahindra, Benz, Land Rover,

Volvo and Jeep etc.

There are different classes of vehicles mixed among the fleets as sedans, dual purpose

vehicles, SUV's and lorries.

Engine Capacities as follows

• Double cabs 2500cc - 2800cc

• SUVs 2500cc - 4500cc

• Cars 1300cc - 2500cc

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• Lorries 4500cc - 6800cc

• Vans 2500cc - 3800cc

1.12 Fleet Fuelling Policy

a) Use of gasoline for cars

b) Use of diesel for Double cabs, SUVs, Jeeps, Vans and Lorries

c) Refueling at IOC or C E Y P E T C O fuel stations (Registered at NPA)

d) Use of fuel orders

Fuel orders are used when the vehicles are refueled. This voucher is categorized as
grneral231. It has triplicate; one for fuel station, one for accountant for payment and the rest
for audits. A cash deposit is needed to be paid to the fuel depot before issuing a fuel order in
each and every year. The orders can only be issued within the limits.

1.13 Training

It is a must that there should have continuous training for the transport staff and the drivers to

improve vehicle fleet efficiency and cut down unnecessary cost. In Government institutions,

sometimes there is some limited staff training available. But most of them are not related to

vehicles fleet management. Driver training programmes also are held very rarely.

1.14 Vehicle Assignment

In according to circular N O 22/90, head of the departments and the similar class officers are

eligible for private use of the government vehicles at that time. Accordingly, some of the

vehicles are assigned to eligible officers and rests of the vehicles are assigned to the

individual drivers.

1.15 Prices and Availability of Parts and Labour

It is difficult to bear the high prices of genuine spare parts and high labour charges at present.

Prices of some parts are 100% higher than that of the time which vehicle was purchased.

Labour charges are also rapidly increased. There are several factors influenced to the increase

of spare part prices. Some of these price hikes are due to the depreciation of Sri Lankan rupee

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against Yen, Euro, Dollar and the Indian Rupee. As well the uneven duties are charged by the
government. It's difficult to manage the fleet in good condition since prices are very high.

Therefore, it causes to select not only qualified garages but unsuitable garages as well which

become troublesome when vehicles are sent there for repairs.

Figure 1.6: Active Truck Fleet 15-20 years old

Above picture is the truck fleet of Department of Agrarian Development. It consists of trucks
which are older than 15 years of age. These cause to low fleet efficiency and high vehicle
operating cost. The main reason to use such old trucks in active fleet is the lack of proper
vehicle replacement policy.

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 Figure 1.7: Double Cab 0-5 years old
(Source: Dep. of Agrarian Development)

This is a brand n e w d o u b l e c a b p u r c h a s e d r e c e n t l y b y t h e D e p a r t m e n t o f A g r a r i a n
Development. T h i s h a s p r o v e n h i g h f u e l e f f i c i e n c y , e f f e c t i v e u s a g e a n d c o s t e f f e c t i v e n e s s .
This new vehicle h a s b e e n c o n t r i b u t i n g a lot t o t h e v e h i c l e f l e e t . A n d directly s u p p o r t to
increase fleet m a n a g e m e n t e f f i c i e n c y .

Figure 1.8: Grounded Car

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 Figure 1.9 Grounded vehicles
(Source: Ministry of Public Administration & Home Affairs)

1.16 Documents in Government Institute use for Fleet Management

1.16.1 Certificate of Registration of Motor Veh : cle

This is like the birth certificate of v e h i c l e . T h i s i n c l u d e s t h e m a k e , m o d e l , c o l o r , e n g i n e

capacity, seating capacity, w e i g h t , a n d f u e l t y p e , c o u n t r y o f o r i g i n , r e g i s t r a t i o n n u m b e r a n d

the first registration date.

1.16.2 Running Chart

This is like a book. It includes the v e h i c l e r e g i s t r a t i o n n u m b e r , f u e l t a n k c a p a c i t y , o d o m e t e r

reading and other current details of the j o u r n e y a n d f u e l b a l a n c e in t h e v e h i c l e etc.

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This includes repairs and payment, service, replacement of the tires and battery changes.

1.16.4 Vehicle Inventory Management System

Vehicle inventory management is one of the most important factors in proper fleet
management system. To improve fleet efficiency there should be proper inventory
management system to keep important records of each and every vehicle in the fleet.