senior manager
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Advanced Fleet Budgeting Workshop. Senior Manager. Tony Yankovich. Mercury Associates, Inc. Workshop Agenda. Introduction Fleet Operation Funding Principles Types of Charge-back Systems Rate Development Conclusions. Introduction. Relevant Experience Workshop Goals - PowerPoint PPT PresentationTRANSCRIPT
Senior Manager
Advanced Fleet Budgeting Workshop
Mercury Associates, Inc.
Tony Yankovich
Workshop Agenda
• Introduction• Fleet Operation Funding Principles• Types of Charge-back Systems• Rate Development• Conclusions
Introduction
• Relevant Experience
• Workshop Goals– Walk through the development of Service-based
Charge-back Rates
Fleet Funding Principles
Direct Appropriation Charge-back System
•Easy to administer
•Requires minimal effort
•Provides a means to distribute costs (direct and indirect)
•Promotes understanding of cost
•Links behavior to cost
•Demonstrates competitiveness
•Complies with A-87
•Consistent with Best Practices
Link Behavior to Cost
Types of Charge-back Systems
• Proportional Systems• Class-based Systems
– Charged by time– Charged by usage
• Service-based Systems– Mimics private sector approach
“RUN IT LIKE A BUSINESS”
Rate Development
1. Identify Costs to be Distributed2. Define Services3. Allocate Costs4. Calculate Rates5. Update Rates Annually
Rate Development
1. Identify Costs to be Distributed (Setting the Rate Base)
– Direct Costs– Indirect Costs– Facilities Costs– Depreciation Costs
Rate Development
2. Define Services– In-house Maintenance and Repair– Parts– Sublet Work– Fuel– Fleet Management– Vehicle Wash
Rate Development
3. Allocate Costs– Direct Costs– Indirect Costs
Rate Development
Position M&R Parts Sublet Fuel FMA Vehicle Wash Total
Mechanic 1 100% 100%
Mechanic 2 100% 100%
Mechanic 3 85% 5% 5% 5% 100%
Lead Mechanic 75% 5% 20% 100%
Admin Asst 50% 15% 7% 10% 15% 3% 100%
Rate Development
Position Total S&B M&R M&R Cost Parts Parts Cost
Mechanic 1 $75,000 100% $75,000 0% $0
Mechanic 2 $75,000 100% $75,000 0% $0
Mechanic 3 $75,000 85% $63,750 0% $0
Lead Mechanic $90,000 75% $67,500 20% $18,000
Admin Asst $55,000 50% $27,500 7% $3,850
Total 100% 81% 4.5%
Rate Development
Line Item Budget Allocation M&R Parts Sublet Fuel FMA Vehicle Wash
S&W 81.0% 4.5% 3.0% 2.5% 8.0% 1.0%
Shop Tools $26,000 Direct $26,000
Car Wash Supplies $6,000 Direct $6,000
Office Supplies $18,000 S&W $14,580 $810 $540 $450 $1,440 $180
Rate Development
4. Calculate Rates– Identify Billable Unit of Service– Convert Cost of the Activity into a Rate
Rate DevelopmentCharge-Back Rate Billable Units of Service FY 2011-12 Rate
Shop Labor Rate Number of available billable labor hours $87.71 hour
Parts Markup Cost of parts dispensed Parts invoice cost plus 14.0% markup
Sublet Repair Management Fee Cost of sublet repairs Sublet repair invoice cost plus 8.1% markup
Fuel Management Fee Gallons of fuel dispensed $.08 per gallon markup
Vehicle Management FeeVehicle months of availability for assigned vehicles
$5.56 per vehicle per month
Vehicle Wash Fee Number of vehicle washes completed $4.50 per vehicle wash
Rate Development
5. Update Rates Annually– Review Revenues vs. Expenses– Review Rate Base for Next Year– Review Billable Units of Service
Conclusions
• Direct Appropriations vs. Charge-back Approach
• Service-based Rate System• Accurate Rates Provide Clear Indication of
Competitiveness of Fleet Operation• Manage Rates
Contact Information
Tony Yankovich, Senior ManagerMercury Associates, Inc.
www.mercury-assoc.com