ADM Fleet Strategy

ADM Fleet Strategy
Fleet Management Strategy
Table of Contents
2. Approach and Methodology _______________________________________ 4
3. Strategic Framework _____________________________________________ 6
4. Situational Analysis Key Findings - Assets __________________________ 8
4.1. Findings ___________________________________________________________________8
4.2. Size and Shape of the Assessed Fleet ____________________________________________8
4.3. Fleet Condition _____________________________________________________________10
4.4. Recommendations __________________________________________________________11
5. Organisation __________________________________________________ 14
5.1. Findings __________________________________________________________________14
6. Managing Vehicle Abuse ________________________________________ 17
6.1. Findings __________________________________________________________________17
7. Managing Vehicle Mis-use and Utilisation __________________________ 19
7.1. Findings __________________________________________________________________19
8. Managing Fleet Cost ____________________________________________ 20
8.1. Introduction _______________________________________________________________20
8.2. Venus Fleet Transactions _____________________________________________________20
8.3. Wesbank Monthly Schedules __________________________________________________21
8.4. Cost per Vehicle Type _______________________________________________________24
8.5. Findings __________________________________________________________________29
9. Fleet Utilisation ________________________________________________ 31
9.1. Vehicle Utilisation ___________________________________________________________31
9.2. Key Findings Vehicle Utilisation ________________________________________________31
9.3. Key Recommendations Vehicle Utilisation ______________________________________31
10. Fleet Administration ____________________________________________ 32
10.1. Findings __________________________________________________________________32
11. Fleet Management Business Process Maturity Assessment____________ 33
12. Operations Control Processes ____________________________________ 38
12.1. Findings __________________________________________________________________38
13. Fleet Systems and Technology ___________________________________ 39
13.1. Findings __________________________________________________________________39
13.3. Recommendation - Centralised Fleet Control _____________________________________40
14. Business Processes and Practices Management Interviews __________ 41
14.1. Findings of Management Interviews ____________________________________________41
14.2. Findings for Head Office Interviews ____________________________________________41
15. Essential Vehicle User Scheme (EVUS) ____________________________ 46
15.1. Background and Description of the EVUS ________________________________________46
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15.2. EVUS Cost Levels Post Implementation _________________________________________47

ANNEXURE A: Fleet Management Strategy Implementation Plan__________ 48
ANNEXURE B List of Assessed vehicle with condition _________________ 49
ANNEXURE C Vehicles with Wesbank Transactions not Assessed _______ 50
ANNEXURE D CPK Repairs & Maintenance per Vehicle _________________ 51
ANNEXURE E Fuel litre per 100km per vehicle ________________________ 52
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1. Approach and Methodology

The following key elements were considered:
ADM fleet related financial and operational source information;
Structured interviews were conducted with the key role players and a formalised view of the
current ADM fleet management situation and practices were established and considered;
The ADM fleet was physically inspected and the overall condition established;
All relevant and available documentation was reviewed within the allocated timeframe;
Project Steering Committee Meetings were conducted and input was obtained from
management; and
Structured workshops and interviews were conducted with the ADM fleet management
department.
The following diagram outlines the fleet improvement methodology that was applied:
The diagram above outlines action steps during Phase 1:

Project mobilisation;
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Assessment and measurement of the fleet function;

An optimised solution was envisioned and agreed upon; and
Strategy design and planning.
This report is the final deliverable of Phase 1.

Phase 2 will deal with strategy implementation and does not form part of this project phase.
The key activities during this phase includes:
Assistance with implementation; and
Progress review and assistance with implementation.
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2. Strategic Framework
The following diagram outlines the recommended ADM Strategic Fleet Management Framework
(SFMF).
This diagram centres the ADM Fleet Management Strategy on four key elements:
Driver Management;
Fleet Operations Management;
Fleet Financial Management;
Asset Management.
These key elements and focus areas should work together in harmony to produce the following
desired outcomes:
An available and reliable fleet;
An economically run and cost effective fleet operation.
The fleet should support ADM management strategy together with the service delivery mandate of
the municipality.
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This report outlines the key findings of the ADM situational analysis, the fleet management
integrated approach, as well as the strategic recommendations.
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3. Situational Analysis Key Findings - Assets

3.1. Findings
The current ADM fleet size and shape is adequate for purposes of service delivery. The fleet is in a
good condition, but fleet availability is a problem.
A total of 297 ADM vehicles were assessed out of an expected fleet size of 330 vehicles as stated in
the tender requirement document. A small portion (10%) of the fleet was not available for
assessment due to operational demands.
This assessment could be regarded as a representative sample (90%) of the overall ADM fleet
condition.
Mobile technology was applied whilst conducting the fleet assessments.
The overall condition of the ADM fleet was assessed.
3.2. Size and Shape of the Assessed Fleet

The pie graph below outlines the fleet configuration of the assessed vehicles:
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The following table provides a breakdown by vehicle type:
Vehicle Type Quantity

LDV > 1TON 194
SEDAN < 2L 30
TRUCK 30
LDV DOUBLE CAB 7
FIRE TRUCK 7
TRUCK - TANKER 6
EQUIPMENT - TRACTOR 5
LDV < 1TON 5
TRAILER 3
PANELVAN / BUS 16 SEATER 3
EQUIPMENT - TLB 3
SEDAN > 2L 2
EQUIPMENT - PUMP 2
Grand Total 297
From the table it is clear that the bulk of the ADM fleet consists of 1 Ton LDV (194) vehicles,
followed by sedans (30) and trucks (30). The remainder of the fleet consist of various small
categories.
Fleet Size Key Findings

There is a discrepancy in the ADM Fleet Size reported the following table indicates the various data
sources and number of fleet units reported:
ADM Tender Document 8/2/20/2014-2015C = 330 fleet units;
ADM Venus Financial Systems = 409 fleet units; and
Wesbank System (Maintenance reporting & fuel) = 388 fleet units.
Concluding the situational analysis business review process and considering the various interactions
with key role players, the following key aspects regarding the fleet size and shape became clear:
There is no formal documented business process at ADM to determine the size and shape of
the fleet; and
The relevance of the current fleet size, shape and utilization is being questioned.
Fleet Size Key Recommendations

It is recommended that:
The Venus financial systems be updated with the actual ADM fleet master and that it be used
as the master data file for vehicles, plant and equipment;
The Wesbank and Netstar Vehicle tracking system be updated with the Venus vehicle master
data;
Business process be implemented to ensure synchronisation of the various vehicle databases;
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The vehicle classification codes be standardised and that all vehicle related descriptive
information be updated between the various systems;
A formal fleet size and shape review process be introduced and that this process be
synchronised with a fleet budgeting process that needs to be introduced; and
The fleet utilization management process be aligned with the fleet size and shape review
process.
3.3. Fleet Condition

The table outlines the overall fleet condition of the assessed vehicles:
Condition Percentage of Fleet
1=Very Poor 2%
2=Poor 3%
3=Average 19%
4=Good 60%
5=Very Good 17%
Grand Total 100%
The bulk of the ADM fleet is in a Good to Very Good condition (77%) whilst 19% is in an Average
condition. Only 5% is in a Poor to Very Poor condition.
The following bar graph illustrates the overall fleet condition:
From the fleet assessments it is clear that the ADM fleet is in a good technical condition with 95%
above Average condition. This condition compares favourably to other municipalities in South Africa.
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The 5% of the fleet which is below average could impact on fleet availability and service delivery.
In the absence of good fleet practice, the 5% poor fleet condition could increase over time.
Below is a further breakdown of condition by Vehicle Type:
Vehicle Type 1=Very Poor 2=Poor 3=Average 4=Good 5=Very Good Grand Total
EQUIPMENT - PUMP 1 1 2
EQUIPMENT - TLB 1 2 3
EQUIPMENT - TRACTOR 1 1 1 2 5
FIRE TRUCK 1 6 7
LDV < 1TON 1 3 1 5
LDV > 1TON 3 6 31 119 35 194
LDV DOUBLE CAB 3 3 1 7
PANELVAN / BUS 16 SEATER 1 2 3
SEDAN < 2L 1 1 2 18 8 30
SEDAN > 2L 1 1 2
TRAILER 2 1 3
TRUCK 1 6 19 4 30
TRUCK - TANKER 4 2 6
Grand Total 5 9 55 177 51 297
The current ADM fleet management approach is fragmented and not integrated with the satellite
offices.
Systems are not integrated with the ADM Venus financial systems which results in a lack of
management information, data integrity and integrated fleet operation and financial reporting.
Maintenance management systems are lacking and vehicle repair and maintenance scheduling is
absent in the municipality. This impacts negatively on service delivery due to the fact that vehicle
availability is not managed.
3.4. Recommendations
The following recommendations should be taken into consideration when compiling the 2015/16
fleet operational budget together with the fleet replacement programme:
Vehicles which are in a Very Poor to Poor condition should be rehabilitated or considered for
replacement.
It is recommend that the Venus Fleet Master be verified and updated accordingly. It then
needs to be reconciled as part of a potential phase 2 of the project.
A business processes need to be adjusted to ensure that the Venus Fleet Master is accurate at
all times and correct asset detail is always available. Preferably this needs to be reported on a
monthly basis and the Financial and Fleet Department need to co-ordinate this effort.
The Venus Fleet Master needs to be synchronised with the Wesbank fuel and maintenance
transaction records.
A business process needs to be introduced to ensure that ONLY authorised vehicles in Venus
are maintained. Currently it is clear that there is a disconnection between Venus and Wesbank
transactions.
Service Scheduling All service intervals of vehicles needs to be recorded in a fleet
management system. All trip sheets must to be captured in Venus to keep track of vehicle
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odometer readings. This will enable ADM to predict vehicle service intervals and manage fleet
availability.
Regular vehicle audits must be introduced at a Satellite Office level to ensure that vehicle abuse
is managed and the known vehicle defects are recorded. The mobile technology used during
the analysis could be deployed within the ADM fleet function which will enable ADM to continue
with this business process. This should serve as a building block for future fleet audits.
Maintenance best practice needs to be introduced in order to preserve and extend the useful
asset life of the ADM fleet.
The current lack of an integrated maintenance management and fleet management systems
could be regarded as a strategic impairment. It is strongly recommended that an integrated
fleet maintenance management system be introduced as a matter of urgency.
Proposed ADM Fleet Management Integrated Approach

The diagram below outlines the proposed ADM Integrated Fleet Management Approach :
The proposed fleet management integrated approach highlights the four key elements which should
be managed in an integrated manner:
People Fleet users and drivers of ADM;
Fleet Operations Scheduling fleet operations and comparing the actual use of the vehicle /
fleet unit against a scheduled operation on a daily, weekly and monthly basis;
Asset Management Scheduling vehicle services, maintenance and repairs using a reliable
system. The management of this process is imperative to ensure optimal fleet availability and
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preserving the useful fleet asset life cycle for as long as possible.
Fleet financial management Ensuring that the ADM Venus financial management systems
and finance management processes are integrated with the fleet management processes. The
effective and integrated fleet financial management process should ensure accountability by the
User Department for vehicle abuse and misuse.
These four key elements should be supported by:
Fleet Management Systems;

A Fleet Management Staff Structure; and
Fleet Management processes, procedures and policies.
The fleet management systems currently deployed by ADM are:

Fuel Management Wesbank fuel card system;
Vehicle tracking and driver behaviour monitoring Altech Netstar vehicle tracking
system;
Fleet maintenance management system Wesbank maintenance transaction
authorisation services and electronic card payment system;
Fleet operation control systems Altech Netstar vehicle tracking supported with route
optimisation; and
The fleet management systems currently deployed by ADM should be integrated with the ADM fleet
management business processes.
There is also a requirement for continuous vehicle auditing, scheduled inspections and defect
recording with monitored repairs being conducted;
Fleet user training is also lacking.
It can be concluded that an integrated fleet management approach should be adopted and instilled
within ADM.
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4. Organisation
4.1. Findings
The current fleet structure is centred around a Head Office fleet function with its main focus being
that of the management of the Car-Pool operation. Currently the ADM fleet is managed by a team of
1 Manager, 1 Assistant Manager, 2 Officers and 2 Admin Clerks and supported by a Car Wash
Supervisor, 3 Car Wash Assistants and a Driver.
This fleet staff structure is inadequate to manage 330 vehicles across all Satellite Offices due to the
following reasons:
The ADM fleet is operated across 7 satellite offices and the day-to-day fleet management
processes are not managed across these regions due to a lack of structure;
ADM fleet structure does not support the fleet management business processes required to
manage the fleet on a day-to-day basis at a satellite office;
The following organogram outlines the current ADM fleet structure:
Fleet Unit
Manager
Fleet Utilisation
& Maintenance
Manager
Fleet Compliance Fleet Admin

Officer Officer
Carwash Fleet Admin Fleet Admin

Driver
Supervisor Clerk Clerk
General Assistant General Assistant General Assistant
The key functions currently managed by the fleet management structure are:
Management of the ADM vehicle pool;
Coordination of all vehicle maintenance activities;
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Payment of suppliers for maintenance activities;

Procurement of new vehicles;
Disposal of old vehicles;
Hiring in of replacement vehicles;
Licencing of vehicle;
Payment of traffic fines;
Contract Management;
Vehicle tracking supplier management and contract meetings;
Managing Cost and Performance; and
Driver behaviour Management.
With regards to Fleet Staff Structure, the following is recommended:
The ADM fleet structure requires the deployment of Fleet Control Officers at the Satellite
offices within the regions;
The revised fleet structure should also support the execution of fleet management business
processes at the Satellite Offices;
The fleet structure should be supported by a 24/7 Fleet Risk Control Centre at the ADM Head
Office;
Fleet Control Offices should be trained and developed to support the fleet control function at
the Satellite Offices within the region.
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The following diagram outlines the proposed Fleet Management structure:
ADM PROPOSED FLEET MANAGEMENT STRUCTURE

,
Senior Manager (7) Fleet Unit Manager
Fleet Utilisation&
Maintenance
Manager
Satellite Fleet Fleet Compliance Fleet Financial Fleet Admin

Officer(7) Officer Officer Officer
Fleet Risk Control Carwash

Admin Clerk(7) Financial Clerk Fleet Admin Clerk Fleet Admin Clerk
Centre Supervisor
General Assistants General Assistants General Assistants Driver
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Summary of staff structure related recommendations:

The introduction of 7 Satellite Fleet Officers (RFO);
The RFOs need to be supported by Fleet Administration Clerks;
A Fleet Risk Control Officer (RCO) needs to be introduced at Head Office and needs to report to
the current Fleet Compliance Officer;
A Fleet Financial Officer needs to be introduced and should assume overall control for the
production of daily, weekly and monthly fleet management reports;
Fleet management processes, procedures and policy administration should be standardised and
integrated with the revised fleet management structure;
Job descriptions and performance management systems should be developed for each position.
This needs to be translated into Win-Win performance management agreements.
A training strategy must be developed and implemented to ensure that the ADM fleet function is
adequately skilled and operating at high levels of efficiency.
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5. Managing Vehicle Abuse

5.1. Findings
The current ADM Vehicle Abuse Management could be improved and should be integrated with the
other ADM business processes.
The Netstar tracking vehicle technology deployed at ADM has the capability to report and deal
with vehicle abuse.
The system has the capability to report driver behaviour on the following driving aspects:
o Harsh Braking
o Harsh Acceleration
o Speeding
o Over-revving
The process to manage driver behaviour is fragmented. The Legal Department from the Office
of the Municipal Manager informs the ADM fleet department to conduct driver misconduct
investigations.
Abuse management mechanisms and processes that have been identified as lacking:
o No monthly consolidated reporting on vehicle abuse;
o Vehicle abuse management information is available but reporting is lacking;
o ADM Netstar tracking system is not optimally configured and utilised in this regard;
and
o Actual vehicle abuse not measured against pre-set norms and drivers scoring.
The corrective actions are recommended to minimise vehicle abuse:
The tracking system should be integrated into the ADM fleet management processes;
Driver behaviour monitoring should be incorporated into the ADM Fleet Department which, in
turn, must be managed by the proposed ADM Fleet Risk Control Centre.
Vehicle abuse management mechanisms and processes to be introduced;
Monthly consolidated reporting on vehicle abuse;
Vehicle abuse management processes to be introduced;
Vehicle abuse management information to be extracted and integrated with management
processes;
Current ADM Netstar tracking system to be reconfigured and optimally utilized in this regard;
Reports per driver to be produced;
Preset norms and drivers scoring mechanisms to be introduced; and
Driver of the month and Driver of the year recognition systems to be introduced.
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6. Managing Vehicle Mis-use and Utilisation

6.1. Findings
The assessment of the current ADM vehicle utilisation and misappropriation of business practices
highlighted the following:
Current utilization management mechanisms and processes are not being optimally utilised:
No monthly consolidated reporting on vehicle utilisation is done;
Operating budget process are not linked to utilisation;
Trip authorization process is not being followed through;
Utilization management information is not being communicated effectively;
Current ADM Venus Financial System is not optimally integrated and utilized;
Actual utilization is not measured against scheduled utilization; and
Vehicle misuse is not currently detected and reported.
Mis-use management mechanisms and processes are to be introduced:
Monthly consolidated reporting on vehicle utilization to be introduced;
Operating budget process to be linked to utilization and business processed to be introduced;
Trip authorization processes to be revised and implemented;
Post-trip printouts of trip tracking information to be signed off by the driver, RFO and
departmental head.
Utilization management reporting systems to be implemented;
ADM Venus Financial System to be utilized for trip sheet capturing and should be configured for
vehicle utilization management;
Business process to be introduced to measure actual utilisation against scheduled utilization;
and
A centralised forum to be introduced to deal with vehicle mis-use issues.
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7. Managing Fleet Cost

7.1. Introduction
A fleet cost assessment was performed using the following two data sources which were provided
by ADM:
1. Wesbank monthly schedules containing a total of expenditure per vehicle for the month.
2. Venus Fleet Transactions.
The cost analysis for this project was performed on fleet costs and transactions for the 6 month
period from April 2014 to September 2014.
7.2. Venus Fleet Transactions

For the 6 month period, a total fleet spend of R14.9m (excluding Consultancy Fees). This is 17.5%
above the Wesbank total for the same period.
Upon investigation it was found that the Venus fleet transactions are not consistent with large
variances between the monthly periods.
The table above illustrates the Venus Fleet Transactions for the period April 2014 to August 2014.
From the table it is clear that there is a large monthly variance in fleet cost ranging from R 4.2
million to R 65,000. It is possible that the fleet costs are not accurately allocated to the appropriate
monthly periods.
The graph below illustrates the monthly variance in fleet cost based on the Venus data:
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7.3. Wesbank Monthly Schedules

The Wesbank monthly cost report schedules for the period April 2015 to September 2014 indicate a
total fleet cost of R12.7 million.
The following key aspects were observed:
There is a smaller variance in total monthly fleet cost if compared to the Venus fleet
information; and
The Wesbank information, although not at transaction level, is representative for purposes of
cost analysis.
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The graph below depicts the monthly fleet costs:
It must be noted that no vehicle fixed costs such as amortisation, licences, insurance are included in
the Wesbank cost information and therefore not analysed.
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The following table outlines the actual monthly Wesbank fleet cost per Cost Centre:
Engineering is the largest consumer of fleet variable cost (50%) followed by Budget & Treasury
(16%) and Generators (15%) and then Health & Protection Services (12%);
The following graph illustrates the distribution of fleet cost per ADM function:
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7.4. Cost per Vehicle Type

The table below outlines the ADM fleet cost per vehicle type for the period April 2014 to September
2014, based on the Wesbank transaction data.
The fleet cost comprises Fuel & Oil, Repairs & Maintenance.
From the table above the following is clear that:

LDV > 1 Ton represents the majority of the fleet cost R 5,6 mil for the 6 months;
Truck and Tanker cost R 3 mil;
Generators R 1,7 mil
Sedans R 0,6 mil
TLBs - R 0,5 mil
Fire trucks R 0,78
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Fuel and Oil costs per month per vehicles type are between R1,3 mil and R1,6 mil. Almost 50% of
fuel costs were incurred by vehicle type LDV >1Ton.
TOTAL FUEL AND OIL Month
Cost Centre 2014-04-20 2014-05-20 2014-06-20 2014-07-20 2014-08-20 2014-09-20 Grand Total
EQUIPMENT - FORKLIFT R0 R 709 R 1 599 R 1 051 R 370 R0 R 3 730
EQUIPMENT - GENERATOR R 233 307 R 320 140 R 342 756 R 305 686 R 230 004 R 266 323 R 1 698 215
EQUIPMENT - LAWNMOWER R 1 643 R 748 R 1 771 R 628 R 842 R 886 R 6 518
EQUIPMENT - PUMP R 8 573 R 3 001 R 10 813 R 38 407 R 60 435 R 39 727 R 160 956
EQUIPMENT - TLB R 41 623 R 17 127 R 32 203 R 24 816 R 29 164 R 33 450 R 178 383
EQUIPMENT - TRACTOR R 1 703 R 2 393 R 2 249 R 3 973 R 3 922 R 1 955 R 16 195
FIRE TRUCK R 17 685 R 19 645 R 18 742 R 29 384 R 39 859 R 37 306 R 162 620
LDV < 1TON R 7 779 R 4 531 R 7 950 R 6 911 R 6 870 R 6 674 R 40 715
LDV > 1TON R 658 827 R 594 317 R 674 079 R 688 344 R 679 230 R 778 112 R 4 072 908
LDV DOUBLE CAB R 19 372 R 19 385 R 27 321 R 24 203 R 24 197 R 26 150 R 140 629
PANELVAN / BUS 16 SEATER R 8 113 R 9 177 R 8 488 R 6 296 R 4 445 R 14 377 R 50 896
SEDAN < 2L R 62 764 R 43 317 R 69 931 R 65 068 R 64 183 R 77 360 R 382 622
SEDAN > 2L R 19 514 R 24 874 R 16 297 R 17 488 R 18 097 R 17 647 R 113 916
TRUCK R 192 035 R 129 913 R 244 516 R 276 771 R 276 855 R 260 236 R 1 380 327
TRUCK - TANKER R 57 452 R 52 458 R 56 724 R 46 185 R 35 702 R 42 148 R 290 669
Grand Total R 1 330 390 R 1 241 734 R 1 515 439 R 1 535 213 R 1 474 173 R 1 602 350 R 8 699 298
Vehicle repairs and maintenance spend ranges monthly between R440,000 and R930,000.
The table below depicts the maintenance and repairs costs for the 6 months under assessment:
TOTAL MAINTENANCE Month
Cost Centre 2014-04-20 2014-05-20 2014-06-20 2014-07-20 2014-08-20 2014-09-20 Grand Total
EQUIPMENT - FORKLIFT R0 R0 R0 R0 R0 R0 R0
EQUIPMENT - GENERATOR R0 R0 R0 R0 R 2 377 R0 R 2 377
EQUIPMENT - LAWNMOWER R0 R0 R0 R0 R0 R0 R0
EQUIPMENT - PUMP R 145 R 145 R0 R0 R0 R 73 061 R 73 351
EQUIPMENT - TLB R 71 727 R 41 910 R 12 771 R 16 856 R 118 854 R 52 043 R 314 161
EQUIPMENT - TRACTOR R 4 425 R0 R 1 395 R0 R0 R0 R 5 820
FIRE TRUCK R 2 411 R 8 364 R 40 153 R 187 638 R 21 124 R 48 436 R 308 126
LDV < 1TON R 2 105 R0 R 1 449 R 10 150 R0 R 4 747 R 18 451
LDV > 1TON R 206 808 R 201 689 R 224 804 R 239 121 R 242 062 R 324 913 R 1 439 398
LDV DOUBLE CAB R 13 884 R 4 222 R 15 031 R 7 385 R 10 569 R 7 410 R 58 501
PANELVAN / BUS 16 SEATER R 18 058 R 20 608 R 2 279 R0 R0 R 2 673 R 43 617
SEDAN < 2L R 17 809 R 7 525 R 20 912 R 26 112 R 2 739 R 29 646 R 104 742
SEDAN > 2L R 26 021 R 11 769 R0 R0 R 18 353 R0 R 56 143
TRUCK R 76 497 R 91 739 R 157 186 R 180 913 R 263 052 R 145 899 R 915 286
TRUCK - TANKER R 1 545 R 26 951 R 25 053 R 35 372 R 247 311 R 74 381 R 410 612
Grand Total R 441 433 R 414 923 R 501 032 R 703 546 R 926 441 R 763 209 R 3 750 584
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TLB and generator utilisation are measured in terms of Operating Hours. A total of R2,1 mil was
spent between these two categories of fleet units whilst the hour utilisation is not recorded
accurately on either of the Wesbank and Venus systems. This cost represents 16.5% of the total
fleet cost for the period assessed.
Costs per Cost Category

The following table outlines the cost per category per ADM department:
68% of the fleet cost is spent on Fuel & Oil; followed by 29% spent on Maintenance & Services and
2% relates to card administration.
Cost by Vehicle Condition

The table below outlines the cost per vehicle condition classification. This analysis was executed
with the aim to determine how much fleet cost is allocated to vehicles which are in a very poor and
poor condition.
From the table above the following is clear:

The bulk of fleet costs are spent on vehicles which are in an average to very good condition;
Only 1% of the fleet cost was spent on vehicles which are in a very poor to poor condition;
No fleet cost was spent of vehicles which are in a very poor condition;
Vehicles not assessed incurred 20% of the fleet cost;
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Vehicle Running Cost

A cost per kilometre reasonability assessment was performed based on the Wesbank fleet data for
the period April 2014 to Sept 2014.
The following table outlines the running cost per kilometre per ADM vehicle category. Hourly based
equipment have been excluded.
Estimated
6 Months 6 Months Industry cost Potential
R&M and Utilization Cost /Km norm Above / Annual Loss / Overall
Vehicle Category Fuel (KM) ( Rand) (Rand/Km ) (Under ) Gain Percentage Loss
Fire Truck 478,269 37652 12.70 12.70 0.00 - 0%
LDV < 1 Ton 63,154 29663 2.13 1.93 0.20 11,809 9%
LDV > 1 Ton 5,681,795 2542559 2.23 2.42 (0.19) (942,396) -8%
Double Cab 205,348 92920 2.21 2.42 (0.21) (39,037) -10%
Minibus 96,853 26908 3.60 2.42 1.18 63,471 33%
Sedan < 2L 508,582 330466 1.54 1.54 (0.00) (671) 0%
Sedan > 2L 173,171 66024 2.62 2.80 (0.18) (23,392) -7%
Truck 2,331,523 216599 10.76 7.54 3.22 1,396,733 30%
Tanker 710,261 59567 11.92 10.58 1.34 160,084 11%
Total 10,248,956 3402348 3.01 626,601 3%
From the table above the following can be derived:

The average running cost per vehicle which includes fuel, R&M and tyres is R3.01 per
kilometre.
It is our professional opinion that this cost is reasonable considering the size, shape, operation
environment and distances of the ADM fleet.
Truck running cost is out of the norm with R1,3 mil per year whilst LDV running cost is well
within the norm.
The overall estimated annual loss is R626,601 which represents 3% of the annual fleet running
cost.
Fire trucks are the most expensive to run per kilometre at R 12.70 whilst sedans <2L are the
most cost effective at R 1.45 per km.
Fuel Consumption
The fuel consumption was assessed for the ADM fleet based on the April to September 2014 figures.
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The below table outlines the average fuel consumption per vehicle category for the period under
analysis:
Vehicle Type KMs Litres Litre/100km
FIRE TRUCK 37 080 11 826.5 31.9
LDV < 1TON 29 653 2 858.4 9.6
LDV > 1TON 2 539 476 292 812.7 11.5
LDV DOUBLE CAB 90 591 9 835.1 10.9
PANELVAN / BUS 16 SEATER 26 908 3 671.1 13.6
SEDAN < 2L 330 466 27 503.7 8.3
SEDAN > 2L 66 024 8 202.3 12.4
TRUCK 216 599 99 907.4 46.1
TRUCK - TANKER 59 567 20 688.2 34.7
Grand Total 3396364 477305.3 14.1
From the above table it is clear that the average fuel consumption of the fleet is well under the
control expected for the Truck Category. ADM can benefit from more focus on fuel consumption in
this vehicle category.
Repairs & Maintenance Expenditure

The table below indicates the R&M spend per vehicle category, expressed in Cent per Kilometre
(CPK).
From the table above it is clear that:

R&M is well within the limit for all vehicle categories except for the 16 seater minibuses, trucks
and tanker trucks. More detailed investigations should be applied in order to determine the
cause of the problem.
A detailed fleet transaction analysis will determine the extent and reasonability of the fleet
maintenance transactions;
The introduction of a fleet management system will enable ADM to make informed decisions on
the reasonability of fleet transactions;
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7.5. Findings
In summary, the following has been established:
Fleet cost could be considered as reasonable with an estimated 3% overall running cost above
the norm.
When the ADM Venus financial system and the Wesbank systems are compared, the Venus
system reports R2,7 mil more fleet costs for the period April to Sept 2014. This needs further
investigation;
Venus fleet cost information on a month-to-month basis cannot be used for analysis
purposes. There are more consistency in the cost information provided by the Wesbank system;
The Wesbank system reports on odometer readings per transaction whilst the Venus system
does not;
The Wesbank system does not report on operating hours per machine unit for plant and
generators which represent 15% of the total fleet cost. No analysis on costs of these fleet types
could be performed;
In addition, plant and generator fuel consumption could not be analysed due to hour meters
readings not being recorded in the system;
Engineering, Budget & Treasury, Generators, Health and Protection Services makes up 93% of
the total fleet cost;
Currently there is no formal documented system and process for reporting fleet cost;
The fleet transactions in Venus do not incorporate any odometer or hour meter readings to
facilitated vehicle utilisation analysis.
Vehicle fixed and variable costs should be recorded in one system at the vehicle registration /
fleet number level;
Monthly fleet cost analysis reporting should be developed and introduced;
Truck running cost should be investigated as it is estimated as 30% above the industry norm;
Fleet cost should be allocated to the correct period in the Venus financial system;
Fleet cost in the Venus financial system should be reconciled with the Wesbank fleet cost and a
business process should be introduced in this regard;
A fleet management systems should be introduced in order to assist with the accurate
recording and reporting on fleet and related cost together with fleet utilisation information
(Operating Hours and Kilometres );
Vehicle life cycle cost recording and reports should be introduced through a fleet management
system in order to guide the ADM vehicle replacement and disposal decisions;
A formal fleet budgeting process should be introduced. This budgeting process should be
based on planned fleet unit utilisation;
Fleet utilisation budget plans should be driven by the demand for fleet in the annual service
delivery plans;
The fleet budget should be based on planned kilometres travelled for sedans, LDVs and Trucks
Page 29
and in the case of the Yellow plant it should be based on operating hours;
The anticipated vehicle maintenance services should be scheduled, costed and incorporated
into the fleet budget;
Ad Hoc vehicle repairs should be budgeted for separately;
Fleet budgets should be compiled per functional user group;
Venus should be configured to incorporated fleet budgets per user department;
Monthly expenditure reports reflecting actual performance against budgeted performance
should be produced and distributed to the ADM fleet department, functional departmental
heads and Satellite senior management structures;
Fleet Cost and Utilisation budgets should be signed off by the user departments to ensure
responsibility and accountability for fleet utilisation, vehicle mis-use, vehicle abuse and fleet
costs;
Accurate fleet cost performance reports should be circulated on a monthly basis be user
department per region. These mentioned reports should include a minimum of total variable
and fixed cost per kilometre or operating hours per fleet units per month; and
Vehicles which is in a Very Poor conditions incurred no fleet cost and should be disposed as
soon as possible.
Page 30
8. Fleet Utilisation
8.1. Vehicle Utilisation
The following section outlines the ADM fleet Utilisation. Utilisation of vehicle and equipment was
assessed using the latest odometer readings on the Wesbank vehicle cost data.
This table depicts total kilometres driven by vehicle category per month. This excludes all types of
equipment for which utilisation is measured by operating hour.
From the table the following observations could be made:

A total of 3,4 mil kilometres were driven by all vehicles for a period of 6 months; and
The estimated annual distance travelled for the ADM is 6.8 million kms.
8.2. Key Findings Vehicle Utilisation

The following key observations could be made:
Vehicle utilization should be evaluated against pre-budgeted kilometres and operating hours;
and
Service delivery plans by user departments should inform fleet utilisation in terms of kilometres
and operating hours.
8.3. Key Recommendations Vehicle Utilisation

Business processes should be introduced to manage vehicle utilisation;
Vehicle utilisation should be the responsibility of the functional user departments; and
Functional heads of user departments should be evaluated against conformance to fleet
budgets.
Page 31
9. Fleet Administration
9.1. Findings
No files per vehicle is kept.
Only spare keys and vehicle papers are kept by the Fleet Department.
Fleet administration should be centralised and information shared and generated by the RFO.
A fleet management system needs to be introduced which should serve as a centralised data base
of all fleet and related administration. The following functional aspects needs to be recorded on this
system:
Fleet register
Vehicle audit information
Known vehicle defects
Fuel consumption norm and actual fuel consumption
Accidents, which includes formal investigation, report and corrective action taken
Insurance claims
Traffic fines
Incidents
Vehicle technical specifications
Vehicle utilisations
Planned / scheduled services
Driver licence details and renewal dates
Driver permit details and renewal dates, i.e. PODs, medicals where applicable
Vehicle licence details and renewal dates
Special permits and requirements, e.g. access permits
Authorised suppliers
Warranties on vehicles and maintenance work done
Supplier invoices for maintenance done
Tyre brand numbers
Tyre replacement per vehicle per position on vehicle
Technical details of an auxiliary equipment fitted to the vehicle and inspection dates, i.e. fire
extinguishers, PTOs, etc.
Page 32
10. Fleet Management Business Process Maturity Assessment

The following section summarises the evaluation performed of the maturity of the ADM fleet
management business processes.
For each standard fleet management process the table below indicates whether it is applicable to
ADM, the current maturity level of the execution thereof and comments.
Note that execution level is rated between 1 and 10, where 1 is very poor and 10 is excellent.
Process Applicable Execution Level Comments

(1-10)
Fleet Asset Management
Fleet Asset Procurement & Yes 2 It is our opinion that the current
Capital Budgeting Process process is driven from a historical
and financial management
perspective only.
Fleet Asset Take-on Process Yes 1 The fleet registers in Venus,

Wesbank and Netstar systems are
not synchronised. There is no
current business management
process to ensure data integrity in
this regard.
Asset Disposal Process Yes 7 There are assets on the ADM fleet
which needs to be disposed of.
The condition of these fleet
assets are poor, and no fuel or
maintenance transactions are
visible for these vehicles.
Annual Licensing Process Yes 8 All vehicles which were assessed

had valid licences. Vehicle licence
renewal should be controlled from
a central point. A fleet
management system should
enable early warning on licence
expiry dates.
FML/Hire Contract Yes 1 There are no systems in place to

Management manage the hiring in of vehicles.
The ADM fleet department does
not have oversight in this regard.
Page 33

(1-10)
Fuel Management Yes
Bulk Fuel Purchasing Yes 1 Bulk fuel is procured for

generators and plant units. Fuel
consumption for these vehicles
are not determined accurately.
Fuel Dispensing from Yes 1 Limited centralised records are

Bowsers available to determine the exact
litres of fuel that were dispensed
to the plant units.
Fuel Stock Control and Yes 1 No system in place.

Reconciliation
External Fuel Purchases Yes 7 Fuel is procured through the use

of Wesbank fuel cards. It is
assumed that accurate litres and
odometers are recorded by
Wesbank.
Only monthly summarised reports
from the Wesbank system were
made available for analysis.
Detailed fuel transactions should
be available from the Wesbank
system as and when required.
Monthly Fuel Management Yes 8 Fuel consumption reports for

Reports vehicles are available from the
Wesbank system.
Operating hours are not recorded
for plant units and equipment and
therefore accurate fuel
consumption in litres per hour is
not possible.
Fuel Management System Yes 9 The current fuel management

Requirements - Policy system should be extended to
incorporate plant units and
equipment e.g. generators.
Fuel consumption reports should
be generated per user
department, and thus making
Page 34

(1-10)
functional managers accountable.
Vehicle & Driver Operations
Driver Code of Practice Yes 10 ADM has a code of driver good

practices.
Trip Authorisation and Yes 7 Trip Authorisation and Vehicle

Vehicle Inspections Process Inspections are executed only for
pool vehicles.
This process should be extended
to all vehicles deployed at ADM
and should be inclusive of hired
vehicles.
Vehicle Utilisation Yes 4 Vehicle utilisation management

Management Process process could be improved.
Special attention should be
applied to authorisation of trip
and post trip control.
Accident Management Yes 10 Process in place.

Process
Fines Administration Process Yes 10 Process in place.
Monthly Driver Licence Yes 8 Process could be controlled

Renewal Process centrally.
Driver performance Yes 5 Driver scoring and performance

management and training training processes are not in
process place.
Vehicle Monitoring Process Yes 5 Netstar tracking system is in place

(Vehicle tracking) but not utilised for pre and post
trip briefing.
Limited utilisation of the
information which gets generated
by the tracking system.
Control System Contract Yes 5 No visible performance contract

Management management system with system
providers in place.
Page 35

(1-10)
4 Tyre Management
New Vehicle Tyre Take-on Yes 1 Wesbank transaction processing,

Process cost recording and approval
system in place. No tyre
management process in place.
Tyre Inspection Process Yes 1 Pre and post trip inspection by

driver. This is, however, not
controlled.
Workshop Management Yes Although ADM does not have

its own maintenance
workshops, it is important to
manage the maintenance
service providers.
Process Yes 4 All maintenance work gets pre-

authorised through Wesbank.
Warranty management Yes 6 All warranties on vehicles and

related work done on the asset
should be managed through a
centralised system.
Internal Job Process Yes 4 Maintenance work is executed

through external maintenance
service providers. Processes to
manage quality, service
turnaround times and price is
limited needs to be implemented.
Planned Maintenance Yes
Service Take-on Process Yes 1 Vehicle services are not centrally

scheduled.
Weekly Service Planning Yes 1 Services are not planned

Process centrally.
Maintenance Contracts Yes 1 Process needs to be introduced.

Management
Page 36

(1-10)
Management, Financial & Yes

Budgeting
Fleet Operational Budgeting Yes 1 Process not in place and should

Process be driven from an operational
point of view.
Monthly Fleet Cost Analysis Yes 1 No fleet cost reports are available
Process expect for Wesbank which reports
on fleet variable costs only.
No visibility of total cost of
ownership costs which is inclusive
of fixed and variable costs.
Fleet Policy & Procedure Yes 1 A regular fleet policy review and
Amendment Process amendment process needs to be
introduced.
8 Pool Vehicles
8.1 Vehicle Pool & External Yes 8 Pool vehicle management agent
Hiring of Vehicles process is in place.
Page 37
11. Operations Control Processes

11.1. Findings
Trip Authorities
Information required to complete a Trip Authorities is open for operators to manipulate the system.
This approach needs to be precise to the area of operation for each foreman and it should be town
or location specific.
A unique identification system for vehicles should be introduced as per the satellite office they are
allocated to e.g. a vehicle allocated to Mbashe satellite office needs to be easily identified as an
Mbashe satellite office vehicle and not just as an ADM vehicle. This will assist Senior Managers in
the satellite office to control and react timeously when they see their vehicle outside their
jurisdiction.
Accidents
Satellite offices need to be given the mandate to investigate locally occurred accidents and should
not have to rely on officials from Head Office to come and do the investigation. The delay in waiting
for the Head Office officials may have a negative impact on the investigation as evidence can be lost
due the delays.
Page 38
12. Fleet Systems and Technology

12.1. Findings
A high level investigation into the fleet systems currently used by ADM concluded that:
Netstar Vehicle Tracking

The Netstar vehicle tracking system is currently implemented on the ADM vehicles. Two support
technicians are on-site to support the system.
The Netstar system is not widely used and training is required to enable the Satellite Office
Management to use the system.
Wesbank Fleet Card System

A Wesbank card system is utilised for all Fuel and Repairs costs. Costs are recorded per unique
registration number.
Venus Financial System

The Venus Fleet Management module is available. The functionality of the module is not
extensively utilised.
Serious integrity issues with the fleet transactions need to be addressed.
Fleet reporting is currently very limited, although the current ADM Venus financial system has
the capability to produce fleet reports.
It is highly recommended that ADM develop an integrated fleet management systems approach that
will integrate the current Venus financial system with other fleet management systems and
technologies to support the fleet management strategy of the ADM.
The integrated fleet management system must deliver on the following:
o A consolidated fleet master which is visible to all at all times.
o Must be real time updated so that everyone can see the latest information.
o Must have a service schedule plan for each vehicle.
o Must be able to monitor and report on the service schedule on a weekly, monthly and
annual basis.
o Must have one schedule of all the ADMs vehicles licenses renewal dates.
o Must have a formal accident reporting process in place.
o Must have an improved service management strategy.
Training is required for all staff members to ensure the uptake of fleet reporting.
Page 39
12.3. Recommendation - Centralised Fleet Control

Fleet Risk Operations Control Centre
It is recommended that a Fleet Risk Operations Control Centre to be established for ADM.
A fleet risk operations control centre is a physical location which is has 24/7 fleet risk and operations
control through centralised fleet management systems which include the following:
Vehicle movement monitoring through tracking
Maintenance management
Asset management
Fuel management
Etc.
The FROCC would typically be depicted as follows. A customised FROCC model needs to be
designed for ADM:
Page 40
13. Business Processes and Practices Management Interviews

13.1. Findings of Management Interviews
Background
Structured interviews were conducted by a Carrus Tshenolo fleet consultant for each of the seven
regions.
Four departments were interviewed at Head Office, mainly;
1. Engineering water services;
2. BOT;
3. Supply Chain Management; and
4. Protection services.
Below is a summary of comments from the interviews conducted with personnel at the area offices
consisting of Senior Managers, Area Managers - Engineering and Admin Assistants.
13.2. Findings for Head Office Interviews

The Engineering Department owns the majority of the fleet of ADM. They have 221 fleet of
vehicles and the majority of them are used for technical services. The last batch of vehicles
purchased do not meet the end user requirements as the LDVs purchased are single cabs that
seat x2 people and as the ADM policy on fleet does not allow municipality officials to be
transported on an open vehicle. This leads to multiple trips being done to services one call as a
team leader has a minimum of 2 assistants.
The other departments have a limited number of vehicles but Protection Services, who is also
responsible for the fire department.
The Fire Services fleet utilises fire engines. The current technology being used is outdated. In
the interview it became clear that that the municipality has to consider the upgrading of the
entire fleet of the fire department.
The departments also have a challenge of supporting the community with essential needs like
water and sanitation. This service is offered by utilising water tankers. These vehicles are
currently in short supply to ADM and that leads to the municipality having to hire these vehicles
for service providers.
The costly hiring-in of water tankers was stated as a matter of concern. This absorbs funds
which could have been applied to improve service delivery to the community. It is proposed
that the issue of hiring-in water tankers be investigated in more detail and that the root cause
be identified, verified and that a strategy be formulated to solve this matter of concern.
It is proposed that this investigation be incorporated into Phase 2 of the project.
In the BTO Department the individual interviewed did not have much knowledge of fleet
management but was very assisting in understanding the financial side of the business. It is
proposed that the BTO department be trained in the business processes of fleet operational
Page 41
budgeting processes. An extensive fleet management training strategy will have to be

developed as part of a Phase 2 of the project.
The Supply Chain Management Department is responsible to facilitate the procurement process
of vehicles.
Summary of Responses from Area Management

Questions Summary of Responses
1. Fleet adequacy for service delivery (size and The size is adequate
composition)
2. Fleet availability and reliability what are the The fleet is available but not in good
current levels and is it adequate? standing.
3. Current control mechanisms regarding vehicle Only Trip Authority no access to the Netstar
abuse and mis-use and is it adequate? system.
4. Do they receive cost fleet reports (daily, No, handled by East London. Regular fleet
weekly and monthly)? reports are required to manage the fleet.
5. Could they take informed decisions on the All fleet related issues are handled by Head
level of fleet reporting? Office.
6. Is their fleet cost in line with budget and Currently all fleet budget issues are still
industry norms? handled by Head Office.
7. Is the fleet management structure adequate Not as yet, a fleet office is required.
to address the fleet needs, management and
control?
8. How do they measure and manage trip Not measured.
sheets?
9. Are the trip sheets recorded and do they Manual filing.
receive a monthly report?
10. Are there driver briefing and de-briefing No.
procedures?
11. Are there pre and post trip vehicle No.
inspections?
12. Are the vehicles assessed on a regular basis Not done, but planned to be done monthly.
and do they receive reports in this regard?
13. Is there a need to discuss fleet management Yes, there is a need. A fleet item is going to
and fleet operational issues on a structured be included in the monthly meetings with
forum? staff.
14. Do you partake in the fleet budgeting Not participating currently.
process?
Page 42

15. Is their service delivery budgets translated Currently centralised in departments.
into fleet budgets?
16. Is the current fleet budget adequate? Currently centralised to departments
17. Licence administration - do you have a record Currently not done, the driver reports on
of valid driver licences and expiry dates and a expired vehicle license disk.
notification process of when which driver
licence is to be revenue (inclusive of PRDPs)?
18. Do they have the same for vehicle licences? Same as above.
19. Are all vehicles scheduled for maintenance Drivers inform the engineering department
and do they have a prediction of when which when service is due and theyll send a mail
vehicle needs to be serviced? to head office.
The driver will take the vehicle to East
London for service.
20. Is the vehicle maintenance cost reasonable? Do not see invoice, all invoices are sent to
head office.
21. Is the vehicle maintenance cost expressed on No.
the CPK basis and do they have it from
cradle to grave for the vehicle?
22. How often are the vehicle drivers trained? No driver training program exist (policy to
be reviewed and look at health issues).
23. Do they have record per driver of traffic Currently handled by head office.
violations?
24. Who pays for traffic violations? Currently not clear as to who pays for the
fines.
25. Is drivers disciplined on traffic violations? Do not know, head office handles fines.
26. How accidents are handled who reports and ADM Policy stipulates what action to be
is there a formal investigation? taken.
27. Vehicle licence renewal who notifies and Drivers advise Supervisor and head office.
renews the licence?
28. Do they have a copy of vehicle insurance Currently handled by head office.
schedules and is it up to date?
29. Is fuel consumption measured in L/100 km No.
and measured against a norm?
30. Is fuel consumption measured in L/hour for No.
equipment and measured against the norm?
31. Are trip sheets filled in and captured on the No.
Venus computer systems?
32. Is monthly utilisation actual vehicle utilisation No planning is done.
Page 43

compared to scheduled vehicle utilisation
against the norm?
33. Do they have access to tracking information The system is available and is in the process
and is it useful? of being implemented. User access is
currently in the process of being
implemented.
34. Do they have access to driver behaviour No. Same as above.
information from the tracking system (Harsh
Braking, Harsh Acceleration, Over Speeding,
Excessive Idling and Out of Green band
driving)?
35. Are drivers scored for their individual No.
performances on a monthly basis?
36. Are rogue drivers identified and provided with No
corrective training?
37. Is a monthly fleet report compiled and No.
submitted to senior management?
38. Is there a need to improve fleet performance Latest vehicle selection for the new buy
and why? does not accommodate operational
requirements and contradicts ADM Policy.
Single cab LDVs were bought instead of
double cab LDVs and the ADM Policy does
not allow for employees to sit at the back of
the LDVs, this leads to multiple trips being
done when employees are attending to call
outs for repairs.
Replacement policy to be reviewed.
Access to tracking system, maintenance
policy to be reviewed.
39. What are the main pain points from a fleet Latest vehicle selection for the new buy
perspective? does not accommodate operational
requirements and contradicts ADM Policy.
Replacement policy to be reviewed.
Access to tracking system, maintenance
policy to be reviewed.
From the assessment it is clear that:

The fleet management function at ADM is not adequately structured and staffed.
A system of fleet reporting should be introduced whereby regions are held responsible and
accountable for fleet operational and financial performance.
Page 44
The Head Office function should take centralised control of maintenance scheduling and license
renewal and should be the custodian of a monthly fleet forum and consolidated fleet reporting.
The structure should incorporate the introduction of satellite fleet officers and administrative
clerks in order to facilitate fleet management activities at a satellite level.
The current Venus Financial System should be set up to facilitate satellite fleet budgeting,
capturing of trip sheets and enable fleet cost control on a satellite bases.
Vehicle maintenance schedule should be centralised and adequate reports should be distributed
to the regions.
The current tracking system should be centralised at head office with visibility at a satellite
level.
The current Wesbank maintenance and fuel consumption reports should be set up on a satellite
bases and daily reports should be made available to satellite transport officers and senior
managers.
Driver behaviour should be measured and monitored and rogue drivers should be trained and
performance managed.
Vehicle misuse should be identified through comparing the tracking system information and the
actually vehicle trip sheets.
Fleet budgeting should be aligned with services delivery demand and translated into size and
shape of the fleet, operating hours and kilometre.
Fleet budget should be initiated at a satellite level and consolidated into a centralised fleet
budget which should be primarily driven by services delivery demands and not historical trends.
Satellite managers should be hold accountable for cost performance against budget. The
financial system should be aligned to incorporate these budgets and vehicle cost should be
recorded on a per vehicle budget in the Venus financial system.
The fleet policy should be adjusted to incorporate the above changes, it is further
recommended that the central and satellite fleet management incumbents be trained up in fleet
management best practise through a SAQA approved institution.
Service level agreements with currents fleet service provides needs to be reviewed.
Practises which will enhance fleet availability whist reducing fleet operational cost needs to be
introduced, providers of fleet information will need to make fleet information more accurate,
relevant and reliable.
Page 45
14. Essential Vehicle User Scheme (EVUS)

The following section outlines the assessment of the ADM Subsidised Motor Vehicles Scheme for
Essential Users, which is commonly referred to as the Essential Vehicle User Scheme (EVUS).
14.1. Background and Description of the EVUS

It is our understanding that the EVUS was introduced with the aim to supplement the current ADM
fleet and reduce the fleet operational risk whilst improving the overall mobility of ADM employees in
the execution of their duties.
The EVUS has the following key attributes:
Mobility of employees should be improved;
Fleet operational risk should be minimised;
Qualifying EVUS participants takes full financial accountability for the vehicles and the related
financial obligations;
Travelling should be an integral part of the duties of the participant;
ADM subsidises the vehicle instalments by 70% and the participant 30%;
The vehicle is to be used 70% or more for business purposes and a maximum of 30% for
private purposes;
The minimum contract period is 32 months and the maximum period 48 months;
The vehicle is contracted for 200 000 kms over the full contract period;
Maintenance and insurance is paid by the participant;
The participant is reimbursed for actual business mileage travelled on a monthly basis
according to a per kilometre rate as determined by the National Department of Transport;
The intention of the abovementioned is to reimburse the participant for:
o Fuel;
o Wear and tear;
o Maintenance & repair;
o Insurance; and
o Tracking devices.
Vehicle types for non-scarce skills participants:
o Sedans with 1800 engine capacity;
o LDVs a maximum of 2500 engine capacity;
Vehicle types for scarce skills category participants :
o Sedans with a 2000 engine capacity;
o LDVs with a 3000 engine capacity;
Page 46
14.2. EVUS Cost Levels Post Implementation

The period from December 2013 to November 2014 was assessed (12 months).
A total of R 5.4m was paid out in claims based on R 3.30 per kilometre.
A total of R 967,000 was paid out in fixed cost.
Total cost benefit of the scheme if compared to the situation if ADM had to procure the vehicles on
an FML basis is R 938 00 to the benefit of ADM.
Potential risk and consideration of the EVUS

The following table illustrates the relevant risk elements and implications to the ADM EVUS
programme:
Key Risk Element Risk Consideration
Administration Administrative intensive.

The ratio private to business kilometres could be open to
abuse.
Inaccurate odometer readings and travel claims could be
submitted and approved.
Cost Norms In the policy, mention is made of the DOT cost parameters
which is applied.
It is unclear as to which cost reimbursements cost reward
levels are applicable SARS or DOT.
Capping of capital 70% of the capital instalment is reimbursed to the

expenditure participants.
The capital expenditure is not capped and it is quite
possible to buy a very expensive vehicle;
This could be aggravated by the fact that the effectiveness
of the EVUS is not tested on a monthly basis.
Kilometre Control Relevant, accurate and timeous travel kilometres is

required.
Electronic devices should be able to supply accurate travel
information which will enable the participant to report on
private and business travel and kilometre expense claim.
Accurate distance travelled information should be recorded
electronically and classified accordingly.
Page 47
ANNEXURE A: Fleet Management Strategy Implementation
Plan
ANNEXURE B List of Assessed vehicle with condition
ANNEXURE C Vehicles with Wesbank Transactions not
Assessed
ANNEXURE D CPK Repairs & Maintenance per Vehicle
ANNEXURE E Fuel litre per 100km per vehicle

ADM Fleet Strategy - 201415

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Fleet Management Strategy

15.2. EVUS Cost Levels Post Implementation _________________________________________47

1. Approach and Methodology

The diagram above outlines action steps during Phase 1:

Assessment and measurement of the fleet function;

This report is the final deliverable of Phase 1.

3. Situational Analysis Key Findings - Assets

3.2. Size and Shape of the Assessed Fleet

The following table provides a breakdown by vehicle type:

Vehicle Type Quantity

Fleet Size Key Findings

Fleet Size Key Recommendations

3.3. Fleet Condition

Proposed ADM Fleet Management Integrated Approach

These four key elements should be supported by:

Fleet Management Systems;

The fleet management systems currently deployed by ADM are:

Fleet Compliance Fleet Admin

Carwash Fleet Admin Fleet Admin

General Assistant General Assistant General Assistant

Payment of suppliers for maintenance activities;

The following diagram outlines the proposed Fleet Management structure:

ADM PROPOSED FLEET MANAGEMENT STRUCTURE

Senior Manager (7) Fleet Unit Manager

Satellite Fleet Fleet Compliance Fleet Financial Fleet Admin

Fleet Risk Control Carwash

General Assistants General Assistants General Assistants Driver

Summary of staff structure related recommendations:

5. Managing Vehicle Abuse

6. Managing Vehicle Mis-use and Utilisation

7. Managing Fleet Cost

7.2. Venus Fleet Transactions

7.3. Wesbank Monthly Schedules

The graph below depicts the monthly fleet costs:

7.4. Cost per Vehicle Type

From the table above the following is clear that:

Costs per Cost Category

Cost by Vehicle Condition

From the table above the following is clear:

Vehicle Running Cost

From the table above the following can be derived:

Repairs & Maintenance Expenditure

From the table above it is clear that:

From the table the following observations could be made:

8.2. Key Findings Vehicle Utilisation

8.3. Key Recommendations Vehicle Utilisation

10. Fleet Management Business Process Maturity Assessment

Process Applicable Execution Level Comments

Fleet Asset Management

Fleet Asset Take-on Process Yes 1 The fleet registers in Venus,

Annual Licensing Process Yes 8 All vehicles which were assessed

FML/Hire Contract Yes 1 There are no systems in place to

Process Applicable Execution Level Comments

Fuel Management Yes

Bulk Fuel Purchasing Yes 1 Bulk fuel is procured for

Fuel Dispensing from Yes 1 Limited centralised records are

Fuel Stock Control and Yes 1 No system in place.

External Fuel Purchases Yes 7 Fuel is procured through the use

Monthly Fuel Management Yes 8 Fuel consumption reports for

Fuel Management System Yes 9 The current fuel management

Process Applicable Execution Level Comments

functional managers accountable.