A performance audit of the Arizona Department of Transportation equipment services section

              STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
A PERFORMANCE AUDIT
OF THE
D ARIZONA DEPARTMENT OF TRANSPORTATION
EQUIPMENT SERVICES SECTION
D
FEBRUARY 1983
A REPORT TO THE
ARIZONA STATE LEGISLATURE
REPORT 83- 2
DOUGLAS R. NORTON. CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
February 23, 1983
Members of the Arizona L e g i s l a t u r e
The Honorable Bruce Babbitt, Governor
M r . William A. Ordway, Director
Arizona Department of Transportation
Transmitted herewith is a r e p o r t of the Auditor General, A Performance
Audit of the Arizona Department of Transportation, Equipment Services
Section. This report is the f i f t h of a s e r i e s of r e p o r t s t o be issued on
the Arizona Department of Transportation and is i n response t o Senate B i l l
1001 enacted by t h e T h i r t y - f i f t h L e g i s l a t u r e , Second Special Session i n
1981.
The blue pages present a summary of the r e p o r t ; a response from the
Arizona Department of Transportation is found on the yellow pages
preceding the appendices.
My s t a f f and I w i l l be pleased t o discuss or c l a r i f y items i n the r e p o r t .
..'
Respectfully submitted,
bough& R. Norton
Auditor General
Enclosure
1 1 1 WEST MONROE SUITE 600 PHOENIX. ARIZONA 85003 ( 602) 255- 4385
OFFICE OF THE AUDITOR GENERAL
A PERFORMANCE AUDIT OF THE
ARIZONA DEPARTMENT OF TRANSPORTATION
EQUIPMENT SERVICES SECTION
A REPORT TO THE
ARIZONA STATE LEGISLATLTKE
REPORT 83- 2
TABLE OF CONTENTS
SUMMARY
INTRODUCTION AND BACKGROUND
FINDINGS
FINDING I
ADOT needs to improve r e p a i r shop operations.
CONCLUSION
RECOMMENDATIONS
FINDING I1
The Department has not e f f e c t i v e l y c o n t r o l l e d t h e
s i z e of its equipment f l e e t . The Department could
save at l e a s t $ 238,000 by n o t r e p l a c i n g unnecessary
equipment. In a d d i t i o n , the need f o r at l e a s t
another $ 480,700 i n equipment is questionable and
should be c a r e f u l l y reviewed.
CONCLUSION
RECOMMENDATIONS
FINDING I11
The Department has inadequate c o n t r o l over p a r t s and f u e l .
CONCLUSION
RECOMMENDATIONS
AREAS FOR FURTHER AUDIT WORK
WRITTEN RESPONSE TO AUDITOR GENERAL'S REPORT
-"
APPENDICES
APPENDIX I - D e s c r i p t i o n o f work sampling study
APPENDIX I1 - Work order data
APPENDIX I11 - Mechanic/ consultant's r e p o r t
- Page
i
1
LIST OF TABLES
- Page
TABLE 1 - ADOT Equipment S e r v i c e s S e c t i o n Operating
Budget and FTEs, F i s c a l Years 1980- 81 through
1982- 83
TABLE 2 - Comparison Between Central and Tucson Shops:
Percentage of Total Observations f o r Each Shop
i n S p e c i f i c A c t i v i t y Categories
TABLE 3 - ADOT Automobile and Light Truck U t i l i z a t i o n ,
12 Months Ending May 31, 1982
TABLE 4 - Estimates of Unneeded ADOT Equipment
TABLE 5 - Estimated Savings i n Future Replacement Costs
TABLE 6 - Analysis of Fuel Consumption f o r Selected Vehicles
TABLE A - ADOT- Equipment Work Order Sample, Summary by
Vehicle Class
LIST OF FIGURES
Page
FIGURE 1 - Comparison of Observed A c t i v i t i e s
Between the Phoenix Central and
Tucson Equipment Repair Shops ( Percentage
of Total Observations f o r Each Shop)
FIGURE 2 - Summary by Shop of Extent t o Which
Tine Charged f o r Sample Repairs Exceeded
Standard Times
The Office of the Auditor General has completed a performance audit of the
Arizona Department of Transportation ( ADOT), Equipment Services Section
( Equipment Section). This audit was conducted i n response to Senate B i l l
1001, enacted by the Thirty- fif th Legislature, Second Special Session
requiring a performance audit of the Arizona Department of Transportation
and is one of a s e r i e s of a u d i t s to be completed on the Department.
The Equipment Section is responsible f o r purchasing, maintaining and
disposing of ADOT's equipment f l e e t . To carry out t h i s charge, the
Section operates 8 main shops ( 1 c e n t r a l and 7 d i s t r i c t shops) and 11
smaller shops scattered throughout t h e S t a t e .
Our review included evaluating shop operations, equipment u t i l i z a t i o n and
control over parts and fuel. W e found t h a t ADOT has not established
appropriate standards and controls over its resources throughout several
areas i n the Equipment Section. Deficient shop operations, underutilized
equipment and inadequate control over p a r t s and f u e l are causing
unnecessary State expenditures.
ADOT needs t o improve the performance of its equipment r e p a i r shops.
Mechanics do not spend a s u f f i c i e n t percentage of t h e i r t i m e on
repair- related a c t i v i t i e s . Reasonable increases i n productivity a t two
repair shops may allow s t a f f i n g t o be reduced by about 12 percent,
r e s u l t i n g i n an annual savings of $ 120,000. Shop operations may a l s o be
d e f i c i e n t i n t h a t
- Compared t o industry standards, mechanics may be working too
slowly when repairing equipment; and
- The q u a l i t y of repairs may need improvement.
To improve shop operations, ADOT needs t o 1) e s t a b l i s h a system of t i m e
standards and q u a l i t y c o n t r o l procedures f o r equipment repairs and
2) monitor these systems closely ( see page 5 ) .
Many ADOT vehicles are underutilized. Our review shows ADOT can save a t
l e a s t $ 238,000 and very possibly more than $ 718,000 by t r a n s f e r r i n g or not
replacing equipment which is unnecessary or of questionable need.
Further, because t h i s was a limited review, s u b s t a n t i a l l y l a r g e r savings
may be f e a s i b l e . Improved management may r e s u l t i n replacement savings
even greater than those i d e n t i f i e d within our audit scope. To achieve
these savings, ADOT needs to improve its equipment management by
e s t a b l i s h i n g clear standards f o r u t i l i z a t i o n , monitoring equipment use
regularly and e s t a b l i s h i n g a r a t e s t r u c t u r e f o r automobiles and l i g h t
trucks which charges a l l users the f u l l cost of these vehicles ( see page
27).
ADOT has inadequate control over its parts inventory and f u e l usage.
Although ADOT has previously developed information and control systems f o r
these areas, i t f a i l e d t o adequately monitor input and control recording
procedures f o r the systems. As a r e s u l t , needed data is unavailable,
incomplete or inaccurate, and the Equipment Section does not have
s u f f i c i e n t control over t h e p a r t s inventory or f u e l usage ( see page 39).
ADOT management is aware of the need to improve the agency's equipment
operations. As a r e s u l t , ADOT is now developing a $ 400,000 Equipment
Management System to r e p l a c e t h e previous management information systems.
However, unless ADOT improves s u b s t a n t i a l l y its data monitoring and
control procedures, the new system w i l l not prove to be any more usable
than the previous systems ( see page 42).
We i d e n t i f i e d p o t e n t i a l a r e a s f o r f u r t h e r a u d i t work t h a t we could not
pursue due to time c o n s t r a i n t s . For a list of these areas, see page 45.
. w
INTRODUCTION AND BACKGROUND
The Office of the Auditor General has conducted a performance a u d i t of the
Arizona Department of Transportation ( ADOT), Equipment S e r v i c e s S e c t i o n i n
response t o Senate B i l l 1001 enacted by the T h i r t y - f i f t h L e g i s l a t u r e ,
Second S p e c i a l S e s s i o n i n 1981. This r e p o r t is one of a s e r i e s t o be
completed on the Department of Transportation.
The Equipment Ser- rices Section ( Equipment Section) of the Arizona
Department of Transportation ( ADOT) is responsible f o r purchasing,
maintaining and disposing of ADOT's equipment f l e e t . As of January 1982,
the Equipment Section maintained approximately 3,400 pieces of equipment
with an estimated replacement c o s t of $ 50 m i l l i o n . The statewide
operation c o n s i s t s of 8 main r e p a i r shops ( 1 f o r each d i s t r i c t and 1
c e n t r a l shop) and 11 smaller shops s c a t t e r e d throughout the S t a t e .
Since 1970, the Equipment Section has operated with a revolving fund
e s t a b l i s h e d by law.* Revenues a r e generated from equipment user f e e s and
f l e e t d i s p o s a l s . Funds are used f o r equipment a c q u i s i t i o n s , r e p a i r s and
operating expenses. ADOT's Maintenance Section, the l a r g e s t equipment
user, provides 70 t o 75 percent of the Equipment S e c t i o n ' s revenues.
According t o the ADOT Organization Manual, the Equipment S e c t i o n ' s primary
goals and o b j e c t i v e s a r e :
" a. Provide the Department of Transportation with an
e f f i c i e n t , e f f e c t i v e and well managed equipment
f l e e t
b. Provide the S t a t e of A'rizona with a l l data input
r e l a t e d t o equipment and equipment cost
c. Maintain, a t an appropriate l e v e l , a l l equipment
within the f l e e t
d . Constantly monitor, modify, up- date, and improve
operating methods and maintenance records."
* The revolving fund is c u r r e n t l y governed by A. R. S. $ 28- 1831. B.
1
The Equipment Section operates with an annual budget of about $ 15.5
million and employs about 180 people. Table 1 presents the Section's
operating budget and full- time equivalent personnel f o r f i s c a l years @
1980- 81 through 1982- 83.
TABLE 1
ADOT EQUIPMENT SERVICES SECTION
OPERATING BUDGET AND FTEs,
FISCAL YEARS 1980- 81 THROUGH 1982- 83
1980- 81 1981- 82 1982- 83
Expenditure C l a s s i f i c a t i o n Actual Actual Estimate
FTE positions
Personal services $ 3,223,400 $ 3,523,800
Employee- related expenditures 708,800 716,900
Professional and o u t s i d e s e r v i c e s 14 9,000 48,900
Travel :
In- S t a t e 41,800 45,500
Out- of - State 1,700 1,000
Other operating expenditures 6,395,000 7,232,700
Equipment
Total appropriated
Audit S c o ~ ea nd P u r ~ o s e
The purpose of our audit work was t o
1. Evaluate the effectiveness and productivity of shop operations
and vehicle maintenance procedures,
2. Evaluate vehicle u t i l i z a t i o n , and
3. Evaluate parts and f u e l inventory management and the extent t o
which ADOT management has- addressed d e f i c i e n c i e s i n Equipment
Services i d e n t i f i e d i n numerous studies over the past 13 years.
Because some data a r e unavailable, incomplete or inaccurate, we were
unable to address s e v e r a l a r e a s of concern. These i s s u e s a r e the
appropriateness of
1. Staffing l e v e l s a t s p e c i f i c shops,
2. Equipment replacement or r e p a i r d e c i s i o n s , and
3. The r e n t a l r a t e s charged t o equipment users.
Due t o time c o n s t r a i n t s , we were unable t o address s e v e r a l other i s s u e s .
P o t e n t i a l f u t u r e a u d i t i s s u e s a r e l i s t e d on page 45.
FINDING I
ADOT NEEDS TO IMPROVE REPAIR SHOP OPERATIONS.
ADOT Equipment Section management needs t o improve the performance of its
equipment r e p a i r shops. Shop operations a r e d e f i c i e n t i n t h a t
- Mechanics do not spend a s u f f i c i e n t percentage of t h e i r time on
productive a c t i v i t i e s ,
- Mechanics may be working too slowly when r e p a i r i n g equipment, and
- Quality of r e p a i r s may need improvement.
As a r e s u l t , t h e S t a t e has incurred a minimum of $ 120,000 annually i n
excessive c o s t s a t two r e p a i r shops.
The primary cause underlying a l l of these problems appears t o be ADOT's
i n a b i l i t y t o adequately evaluate and monitor the performance of i t s r e p a i r
s t a f f .
Mechanics Do Not Spend a S u f f i c i e n t Percentage
of Their Time on Productive A c t i v i t i e s
Productivity* a t two ADOT equipment r e p a i r shops can be improved
s u b s t a n t i a l l y . The Central Equipment Shop ( located i n Phoenix) could
increase p r o d u c t i v i t y by up t o 15 percent of a v a i l a b l e time, while the
Tucson Shop could increase by up t o 10 percent. Management could
accomplish t h e s e i n c r e a s e s by c o n t r o l l i n g t h e time mechanics spend on
other a c t i v i t i e s .
Work Sampling Study - As p a r t of our a u d i t we conducted a work sampling
study of the Central and Tucson equfpment r e p a i r shops.** The purpose of
t h i s study was t o determine the percentage of time r e p a i r s t a f f were
involved i n productive versus non- productive a c t i v i t i e s .
Figure 1 compares, f o r the Central and Tucson shops, the percentage of
time we saw r e p a i r s t a f f involved i n various a c t i v i t i e s .
* As used i n t h i s f i n d i n g , " p r o d u c t i v i t y " is defined a s including a l l
necessary a c t i v i t i e s associated with equipment r e p a i r s . ** See Appendix I f o r a d e s c r i p t i o n of t h i s study.
FIGURE 1
COMPARISON OF OBSERVED A C T I V I T I E S
BETWEEN THE PHOENIX CENTRAL AND TUCSON EQUIPMENT JLEPAIR SHOPS
( PERCENTAGE OF TOTAL OBSERVATIONS FOR EACH SHOP)
Central Shop Tucson Shop
CONSUI, TATION
UNKNOWN CLEANUP
4% 3%
As demonstrated i n Figure 1, t h e C e n t r a l and Tucson equipment shops
apparently d i f f e r a s t o the amount of time spent on various a c t i v i t i e s .
Table 2 ( see page 8) f u r t h e r d e t a i l s the d i f f e r e n c e s we observed a t the
two shops.
Time Spent on Non- Productive A c t i v i t i e s Should Decrease - As shown i n
Table 2, the Central and Tucson shops could increase the time spent on
productive work by 1) reducing excessive i d l e / p e r s o n a l time and
2) reviewing and reducing the t i m e mechanics a r e absent from t h e i r work
s t a t i o n s .
Idle/ personal time f o r the Central Shop t o t a l e d 14 percent of our
observations, compared t o 8 percent f o r Tucson. These f a c t o r s appear t o
have a t t r i b u t e d t o t h i s excessive i d l e time:
1. 30 percent i d l e time by heavy equipment mechanics - Mechanics at
the heavy equipment shop i n the Central shop complex spent more
than 30 percent of observed time i d l e . ADOT Equipment Services
management s t a t e d t h a t t h i s problem was due t o lack of s u f f i c i e n t
shop space and d i f f i c u l t y i n obtaining heavy equipment p a r t s . We
were unable t o determine the extent t o which these conditions
e x i s t e d . However, during our s t u d y , a p p a r e n t l y n e i t h e r the shop
foreman nor management made any e f f o r t t o schedule these
mechanics t o work temporarily on other assignments where they
might have been more productive. ( I t should be noted t h a t these
heavy equipment mechanics a r e q u a l i f i e d t o do a l l other types of
mechanic work, including gasoline engine and o t h e r r o u t i n e
automotive r e p a i r s . )
.,
2. Excessive coffee breaks i n general - Central r e p a i r s t a f f spent
10 percent of observed time on coffee breaks, while only 6
percent is authorized. This, i n e f f e c t , amounts t o approximately
one e x t r a coffee break per day per person o r almost 8 e x t r a hours
d a i l y f o r the 31 mechanics observed.
TABLE 2
COMPARISON BETWEEN CENTRAL AND TUCSCN SHOPS:
PERCENTAGE OF TOTAL OBSERVATIONS FOR EACH SHOP I N SPECIFIC
ACTIVITY CATEGORIES
Actual Equipment Repairs
Consultation:
With foreman
With other mechanic
Reading i n s t r u c t i o n manual
Total - c o n s u l t a t i o n
Other r e p a i r - r e l a t e d a c t i v i t i e s :
Obtaining parts**
Handling p a r t s or t o o l s
Moving v e h i c l e ( i n / o u t of
bay, e t c . )
Test d r i v e / s e r v i c e c a l l
Paperwork
Total - other repair-r
e l a t e d a c t i v i t i e s
Miscellaneous i n t e r r u p t i o n s
Idle/ Personal:
Coffee breaks
Other observed i d l e t i m e
Total i d l e / p e r s o n a l
Cleanup ( excludes authorized
cleanup at end of day)
Unknown ( unable t o l o c a t e mechanic or
unknown purpose of a c t i v i t y )
TOTAL: ALL ACTIVITIES
Central Tucson
( Percentage ( Percentage
of Total of Total
Observations) Observations)
* Less than 1 percent
** Includes obtaining p a r t s by 1) requesting them from ADOT p a r t s
personnel or 2) driving t o a p a r t s s t o r e to purchase them.
*** This time is s i g n i f i c a n t l y higher than might be expected and is
discussed f u r t h e r , beginning page 7.
3. I n c o n s i s t e n t prelunch policy - Nearly e i g h t hours of r e p a i r time
a r e l o s t each day a t the Central complex* due t o an i n c o n s i s t e n t
prelunch policy. Management h a s a u t h o r i z e d Central complex
r e p a i r personnel t o take ten minutes t o clean up before lunch,
while neither the Tucson shop nor other shops a r e allowed t h i s
p r i v i l e g e . ** This policy i n e f f e c t gives the 45- person Central
complex r e p a i r s t a f f an unnecessary authorized i d l e period
amounting t o 7.5 hours d a i l y .
F i n a l l y , ADOT needs t o review the amount of time r e p a i r personnel a r e
absent from t h e i r work s t a t i o n s . This problem appeared i n two d i f f e r e n t
forms at the two shops:
1. Excessive time t h a t Central s t a f f could not be located or t h e i r
a c t i v i t i e s i d e n t i f i e d - Table 2 shows t h a t we were unable t o
l o c a t e Central r e p a i r s t a f f or determine what they were doing 11
percent of observed time as compared t o 4 percent f o r the Tucson
shop. While t h i s does not n e c e s s a r i l y i n d i c a t e a n abuse, it
amounts t o t h r e e times a s much unknown time as i n Tucson; thus,
t h e p o t e n t i a l is present t h a t t h i s time could be spent
inappropriately.
2. Too much time spent " chasing p a r t s " - The Tucson shop could
increase the time spent r e p a i r i n g v e h i c l e s by reducing " p a r t s
chasing" by mechanics. Tucson r e p a i r personnel spent up t o 12
percent of observed time driving t o and from p a r t s s t o r e s t o
purchase p a r t s . W e noted t h a t t h i s p a r t s chasing o f t e n occurred
f o r common parts-- items which should be stocked at the shop ( see
Finding I11 f o r a discussion of problems with the p a r t s
inventory). In a d d i t i o n , t h e p a r t s chasing which is necessary
may be more a p p r o p r i a t e l y performed by persons other than
mechanics. According t o a u t h o r i t a t i v e sources, it may be
* Includes the Central and D i s t r i c t I shops.
** We observed t h a t t h i s " cleanup" time was a c t u a l l y used by r e p a i r s t a f f
a s e x t r a lunch time. Thus, it is r e f l e c t e d a s " i d l e " or " unknown" i n
Table 2.
more cost e f f i c i e n t to assign parts chasing t o a lower- paid s t a f f
member. ADOT parts personnel receive an average annual s a l a r y of
approximately $ 17,000, while a mechanic's average salary is over
$ 21,000.
Productive Time Should Increase - The r e p a i r personnel a t the Central and
Tucson shops apparently can increase the amount of available time spent on
productive a c t i v i t i e s by up t o 15 and 10 percent, respectively. Currently
it appears the two shops a r e operating below the productivity level
reported by the City of Phoenix f o r its equipment shops.*
Using the City of Phoenix a s a model, it appears the Central Shop could
increase its productivity by 6 t o 15 percent of available time,** and the
Tucson shop apparently could increase p r o d u c t i ~ i i t y by about 10 percent.
The City of Phoenix reports its shop personnel achieved 88.5 percent
productivity l a s t f i s c a l year.*** Using the City's d e f i n i t i o n of which
a c t i v i t i e s c o n s t i t u t e productive work, the Central Shop currently appears
to achieve a productivity l e v e l of 74 t o 83 percent.** The Tucson shop's
productivity l e v e l is apparently about 78 percent.
* The City of Phoenix equipment r e p a i r operation is considered a
nationwide model.
** The range f o r the Central shop e x i s t s due t o d i f f e r i n g treatment of
the large number of " unknown" observations ( see Table 2, page 8).
Authoritative sources recommend removing the unknown observations
from the percentage base when analyzing work sampling observation
study r e s u l t s . However, we f e l t t h a t the number of unknown
observations a t the Central shop ( 11 percent) was r a t h e r high i n
comparison t o Tucson's four percent, and should be examined by
ADOT. Thus, we provided a range i n productivity figures f o r the
Central shop, including and excluding the unknown observations i n
the percentage base ( see page 9 f o r f u r t h e r discussion of unknown
observations a t the Central shop). Tucson's unknown observations
were excluded from the analysis a s recommended. *** After adjusting f o r sick leave, vacation, e t c .
Mechanics May Be Working Too Slowly
When Repairing Equipment
ADOT mechanics appear t o charge excessive time f o r many i n d i v i d u a l v e h i c l e
repairs. While part of the time charged may be explained by the
inappropriate manner of charging time ( see page 24) and a c t i v i t i e s such a s
parts chasing, such reasons do not appear t o explain - a l l the time
charged. This means that mechanics may take longer than they should t o
repair vehicles.
The Auditor General hired a mechariic/ consultant to review a sample of work
orders ( ADOT's service repair documents) covering 13 vehicle c l a s s e s and
most of the repair shops i n the S t a t e f o r the period April 1, 1981, t o
March 31, 1982. k The consultant was requested t o analyze these work
orders and
- Compare reported r e p a i r t i m e s on work orders to published
standard repair t i m e s ,
- Analyze " comebacks" ( r e p a i r s t h a t had t o be repeated) and
breakdowns,
- Evaluate the format of the ADOT work order,
- Analyze parts usage, and
- Note any other trends he observed.
* See Appendix I11 for the c o n s u l t a n t ' s report, including the
c o n s u l t a n t ' s q u a l i f i c a t i o n s . Appendix I1 explains how the sample of
work orders was selected by audit s t a f f .
When our consultant compared the time charged on t h e sample work orders t o
the standard time f o r the r e p a i r s , he found t h a t i n most instances
excessive time had been charged by the mechanics. Of the sample work
orders reviewed f o r which s u f f i c i e n t information was a v a i l a b l e , 65 percent
indicated t h a t t h e mechanics had charged excessive time.* All 14 shops
charged excessive time f o r the work orders i n our sample, a s i l l u s t r a t e d
i n Figure 2. Although we cannot make a s t a t i s t i c a l inference t o a l l work
orders on t h e b a s i s of t h i s sample, we believe it i n d i c a t e s t h a t charging
excessive time is a s e r i o u s problem.
Pcrcent of
Standard Time
FIGURE 2
SUMMARY BY SHOP OF EXTENT TO WHICH TIME CHARGED FOR
SAMPLE REPAIRS EXCEEDED STANDARD TIMES
Legend:
a Excoselve Tima Charqa
257. added t o standard ,
t l m c to allow lor qua I
Ity conmlder. tlons 1
Allowable time accord
ing to flmt- rate
e tandsrde
SHOP
Source: An a n a l y s i s of 274 work orders i n our sample f o r which s u f f i c i e n t
information was a v a i l a b l e t o make a comparison.
* Of 471 work orders reviewed, 274 contained s u f f i c i e n t information f o r
o u r c o n s u l t a n t t o compare times charged a g a i n s t standard time. Of
those 274 work orders, 178 ( 65 percent) showed excessive time had been
charged. ADOT estimates it processes about 20,000 work orders
annually.
As shown i n Figure 2, on the average, nearly double the standard times
were charged f o r the sample r e p a i r s . Our consultant suggested t h a t i n the
governmental environment i t would not be i n a p p r o p r i a t e f o r mechanics t o
take more time than t h a t allowed by f l a t - r a t e standards.* However, even
i f 125 percent is considered acceptable, ADOT mechanics still overcharged
time t o r e p a i r s . On the average, f o r our sample the excess amounted t o 70
percent of standard t i m e , even a f t e r allowing t h i s a d d i t i o n a l 25 percent.
The consultant i d e n t i f i e d many work orders on which excessive time had
been charged. The following cases a r e a few examples:
CASE I ( Tucson)
1972 Dump Truck ( Class 270)
Excessive time was charged f o r r e p a i r s on t h i s dump truck. On
September 11, 1981, the engine was removed and replaced with another
engine. According t o standard time, a maximum of 19 hours should have
been charged. However, 62 hours were charged, amounting t o over t h r e e
t i m e s the standard time. Subsequent t o t h i s r e p a i r a b a t t e r y was removed
and replaced, a standard operation which should take no more than one
hour. Four hours were charged-- three hours more than t h e standard t i m e .
* This i s because 1 ) ADOT wants t o emphasize the q u a l i t y of work
performed and 2) the mechanic, under the merit system, is paid a
s a l a r y , not by a f l a t r a t e o r t h e quantity of work he performs. Under
a f l a t - r a t e system, a mechanic is paid by the q u a n t i t y of work
performed but is - not paid f o r work which must be repeated.
CASE I1 ( F l a g s t a f f )
1977 Dump Truck ( Class 273)
Excessive t i m e was a l s o charged i n r e p a i r i n g t h i s dump truck. One work
order had 45 hours charged t o " R & R enginew* and " check a l l l i g h t s . " Our
c o n s u l t a n t r e p o r t e d t h a t 45 hours was too much f o r t h i s job. It should
have taken between 18 and 20 hours. Thus, a t l e a s t 25 a d d i t i o n a l labor
hours were charged t o t h i s v e h i c l e without documentation on t h e r e p a i r
order t o j u s t i f y these a d d i t i o n a l hours.
CASE I11 ( Central)
1977 Pickup Truck ( Class 142)
This truck r e f l e c t s both excessive time charged and comebacks.** A work
order dated June 25, 1981, shows extensive r e p a i r s , including replacement
of the transmission and a 15,000- mile preventive maintenance service. A
t o t a l of 53 hours were charged f o r those r e p a i r s , or 22 hours more than
standard times would j u s t i f y . On July 23, 1981-- only 559 m i l e s later-- the
vehicle was back i n the shop because of a problem with t h e passing gear.
According t o our c o n s u l t a n t , the passing gear should have been checked
when the transmission was replaced i n June. The transmission was pulled
twice during the July r e p a i r s and 19 hours were charged. Even allowing
f o r pulling the transmission twice, t h i s was 11 hours more than standard
times would j u s t i f y . On September 3, 1981-- 2,800 m i l e s l a t e r - - t h e v e h i c l e
was again i n the shop f o r a transmission problem, t h i s t i m e t o r e p a i r
transmission leaks.
* K& R = Remove and Replace
** Repeat r e p a i r s
ADOT management claimed one reason f o r the excessive time may be t h a t
mechanics do not record on the work order a l l t h e r e p a i r work they
perform. While t h i s may be true, our mechanic consultant was careful to
check a l l available evidence associated with a r e p a i r i n order t o give
mechanics f u l l c r e d i t for work performed. In addition t o the work orders,
our consultant analyzed related parts lists from which he attempted to
f u r t h e r pinpoint repairs made. He only evaluated t h e r e p a i r s f o r which
there was s u f f i c i e n t information t o compare t o standard times.
Management s t a t e d t h a t another reason f o r excessive time charged may be
ADOT's emphasis on the quality of work r a t h e r than on speed of r e p a i r s .
However, we a l s o found evidence of poor quality work among some of the
work orders reviewed, as explained i n the following section.
Quality of Repairs May Need Improvement
Symptoms of poor q u a l i t y work were evident i n some of the work orders
reviewed by our consultant. This was seen i n the frequency of r e p a i r s ,
including comebacks.
As mentioned e a r l i e r , on the basis of our work order sample, we cannot
make a s t a t i s t i c a l inference regarding the q u a l i t y of a l l ADOT repairs.
However, our consultant found a number of s i g n i f i c a n t cases which may be
indicative of a problem regarding r e p a i r q u a l i t y .
Repairs Made Too Frequently - Some vehicles were down f o r r e p a i r s too
frequently according t o our consultant. One c l a s s of dump trucks i n our
sample averaged over 13 work orders per vehicle i n the 12- month period,
and 3 of t h e s e v e h i c l e s had 20 or more work orders. Another truck was
- 4
down f o r r e p a i r s on the average every 304 miles and had 11 work orders i n
5 months' time.
Too Many Comebacks - Comebacks appeared t o be a problem f o r some shops and
some v e h i c l e s . It was d i f f i c u l t i n many cases t o determine from the work
order whether the comebacks were j u s t i f i e d because the r e p a i r n a r r a t i v e
was inadequate or vague.* For example, one v e h i c l e had 10 work orders i n
a 12- month period which mentioned " check l i g h t s " o r " repair l i g h t s . " The
n a r r a t i v e on the work order did not explain the problem with the l i g h t s ;
thus it was ". . . impossible t o determine t h e legitimacy of the repeat
repair."** A number of v e h i c l e s i n the sample came back three or four
times f o r the same problems. One vehicle was i n the shop nine t i m e s with
the same problem i n a period of only seven months.
Following are a few examples of vehicles with a record of frequent
r e p a i r s , including comebacks. These examples a r e intended t o be
i l l u s t r a t i v e and not r e p r e s e n t a t i v e of a l l ADOT r e p a i r s .
CASE I V ( Globe)
1969 Dump Truck ( Class 270)
This truck i l l u s t r a t e s the problems of comebacks and frequent r e p a i r s .
Thirteen out of the twenty- one work orders from April 1, 1981, t o March
31, 1982, i l l u s t r a t e a problem with comebacks. They a r e summarized below.
* See page 24 f o r a discussion of vague work orders.
** See Appendix 111, page 111- 2.
PROBLEM IDENTIFIED ON WORK ORDER
Date of
Work Order
4/ 1/ 81
5/ 11/ 81
6/ 2/ 81
7/ 6/ 81
7/ 28/ 81
8/ 4/ 81
9/ 28/ 81
10/ 20/ 81
11/ 16/ 81
12/ 10/ 81
12/ 21/ 81
1/ 27/ 82
3/ 30/ 82
Totals
Back- up
Warning
System Exhaust System Hydraulic Pump
Repairs occurred on t h e average every 304 miles. Nine of these r e p a i r s
r e l a t e d t o the hydraulic pump.* A t o t a l of $ 760 on p a r t s alone was spent
t o r e p l a c e the hydraulic pump four times.
* Each time t h i s vehicle came back f o r a hydraulic pump problem, it w a s
u s u a l l y assigned t o a d i f f e r e n t mechanic. In a l l , s i x out of seven
equipment mechanic 11s worked on t h i s problem a t one time o r another.
CASE V ( Tucson)
1970 Dump Truck ( Class 260)
This dump truck is another example of comebacks and frequent r e p a i r s .
Work orders r e l a t e d t o comebacks a r e described below.
PROBLEM IDENTIFIED ON WORK ORDER
Date of
Work Order S t a r t e r I g n i t i o n
7/ 6/ 81 X
7/ 13/ 81 X
7/ 17/ 81 X
8/ 10/ 81
8/ 21/ 81
8/ 24/ 81
8/ 31/ 81
9/ 8/ 81
10/ 15/ 81
11/ 16/ 81
11/ 27/ 81 X
12/ 3/ 81 X
1/ 5/ 82
3/ 15/ 82
3/ 31/ 81 - -
Totals -- 2 - 3
Condenser
Carburetor and Points Steering Wiper
* These p a r t s were replaced a f t e r approximately 3,000 m i l e s . ** These p a r t s were again replaced a f t e r 18 m i l e s .
Where mileage could be determined, t h i s vehicle incurred r e p a i r s on t h e
average every 302 miles.
CASE V I ( Globe)
1969 Dump Truck ( Class 260)
This truck i l l u s t r a t e s problems with comebacks and frequent r e p a i r s . The
comebacks a r e summarized below.
Date of
Work Order
PROBLEM IDENTIFIED ON FJOW, ORDER
Carburetor Hydraulic Pump S t a r t e r Alternator
8/ 21/ 81
9/ 14/ 81
11/ 24/ 81
12/ 11/ 81
12/ 22/ 81
1/ 7/ 82
1/ 18/ 82
1/ 20/ 82
2/ 25/ 82
3/ 8/ 82
3/ 9/ 82
Totals
* 25 t o 30 hours of excessive t i m e were charged on t h i s work order.
** 3.4 hours t r a v e l time l i s t e d on a shop r e p a i r
The a l t e r n a t o r was replaced on February 25, 1982. The truck was checked
on March 8, 1982, f o r a s t a r t e r problem. On March 9, 1982, the s t a r t e r
was checked again, and t h e a l t e r n a t o r i n s t a l l e d on February 25 was
replaced by the same mechanic who had i n s t a l l e d it.
*
This dump truck had 19 r e p a i r orders i n 12 months' time, o r an average of
one f o r every 351 m i l e s traveled.
Consultant Questions Quality of Preventive Maintenance Program - Our
consultant suggested that t h e q u a l i t y or frequency of preventive
maintenance ( PM)* on some vehicles and some vehicle c l a s s e s may be poor i n
t h a t some repairs may be related to the absence of preventive
maintenance. According t o him, " there appears t o be s i g n i f i c a n t v i o l a t i o n
of PM schedules i n c e r t a i n shops and on c e r t a i n vehicles. There is strong
evidence t o suggest t h a t c e r t a i n f a i l u r e s and problems may be d i r e c t l y a
related to poor periodic maintenance."
In five of the s i x cases discussed above, despite repeated repairs and
breakdowns, we could find no evidence t h a t preventive maintenance
inspections were done i n the 12- month period between April 1, 1981, and
March 31, 1982. However, on t h e o t h e r hand we were able to document for
a t l e a s t a few v e h i c l e s t o o s h o r t a n i n t e r v a l between preventive
maintenance inspections. In one case only 17 days and 947 miles separated
two 15,000- mile inspections.
Although our consultant suggested t h a t preventive maintenance may be
d e f i c i e n t f o r some vehicles and some vehicle c l a s s e s , a f u l l evaluation of
the program would require f u r t h e r audit work.
State Has Incurred
Excessive Costs
Because of low productivity the Central and Tucson shops may be
overstaffed. I n a d d i t i o n , excessive repair time and poor quality work may
also be causing unnecessary expense.
* Preventive maintenance is routine, periodic, scheduled maintenance of
a vehicle. Work o r d e r s g e n e r a l l y do not record l u b r i c a t i o n and o i l
changes.
Increased Productivity W i l l Reduce Costs - I f t h e C e n t r a l and Tucson shops
were to increase t h e i r productivity ( time spent on r e p a i r - r e l a t e d
a c t i v i t i e s ) by 13 percent," they would be able t o
1. Handle the current workload with 12 percent fewer mechanics ( or 4
to 5 fewer mechanics),
2. Increase the amount of work handled ( t h u s decreasing p o t e n t i a l
backlogs and downtime), or
3. A combination of the above.
The d o l l a r value of the hours t h a t could be freed is 12 percent of the
c u r r e n t p a y r o l l f o r those mechanics, or approximately $ 120,000 annually.
I f productivity increases similar t o t h o s e p r o j e c t e d f o r the Central and
Tucson shops could be achieved statewide, ADOT could achieve even g r e a t e r
savings. Audit s t a f f estimates such an increase would save over $ 300,000
a year.
Other Costs May Be Unnecessary - In a d d i t i o n t o the c o s t s r e s u l t i n g from
low productivity, t h e S t a t e may a l s o be incurring unnecessary expense due
t o excessive r e p a i r t i m e and poor q u a l i t y r e p a i r s . While t h e c o s t s cannot
be q u a n t i f i e d , due t o i n s u f f i c i e n t d a t a , t h e s e c o s t s may be r e f l e c t e d i n
such things a s
1. Overstaffing,
2. Unnecessary p a r t s expense,
3. Unnecessary and c o s t l y t r a v e l t i m e f o r breakdowns, and
4. The amount of time the vehicles are unavailable f o r use.
* This 13 percent increase i n p r o d u c t i v i t y is an estimate based on the
following assumptions:
1) The City of Phoenix d e f i n i t i a n of productive a c t i v i t i e s is used.
2) For the two shops, the percent of mechanics' time spent on
productive a c t i v i t i e s averages about 78 percent.
3) The shops can achieve 88.5 percent productive time ( same as City
of Phoenix r e p a i r shops).
This 10- point increase ( from 78 t o 88) t r a n s l a t e s i n t o a 13 percent
increase i n productivity (- 10 x 100 = 12.8 or approximately 13 percent).
78
ADOT Does Not Adequately
Evaluate Mechanic Performance
Problems with low productivity, excessive time to complete repairs and
poor quality work appear to e x i s t because the ADOT Equipment Section does
not evaluate and monitor mechanics' performance adequately. However, ADOT
cannot currently evaluate mechanic performance because
- ADOT lacks a system of work standards,
- The work order form ( ADOT's service r e p a i r document) does not
provide for s u f f i c i e n t d e t a i l ,
- Mechanics do not adequately complete the work orders,
- Mechanics improperly charge time, and
- Until recently there has been no system f o r monitoring quality of
r e p a i r s .
Equipment Shops Should U s e Recognized Standards - Work standards, commonly
used i n the automotive and truck repair industry, are not used i n the ADOT
equipment repair shops. Although ADOT has been aware of the importance of
using work standards i n evaluating performance, it has f a i l e d t o implement
a standards system.
Work standards are used not only i n private industry but also by
governmental e n t i t i e s . Common practice i n private industry is to use the
f l a t - r a t e system, whereby each r e p a i r task has an estimated time to
complete given i n hours and f r a c t i o n s of an hour. The City of Phoenix
s t a r t e d out with time standards s p e c i f i c to i t s operation and f u r t h e r
modified them a s the c i t y gathered data on the a c t u a l repair times. There
a r e a l s o several other sources of established standards. In our opinion,
ADOT would not have to develop its own unique standards a t t h e o u t s e t .
Our consultant stated t h a t f l a t - r a t e . standards could be used a t l e a s t a s a
guideline i n e s t a b l i s h i n g standards f o r many ADOT repairs."
* As explained on page 13, our consultant suggested t h a t i n the
governmental environment i t would not be inappropriate f o r mechanics
to charge above a c t u a l f l a t - r a t e standard times. However, he f e l t
that the f l a t - r a t e manual could be used a s a beginning point i n
developing standards for many ADOT repairs.
A t l e a s t three p r i o r management s t u d i e s conducted f o r ADOT i n the l a s t 13
years have recommended the implementation of time standards f o r r e p a i r
a c t i v i t i e s . According t o a 1981 management r e p o r t ,
" hlechanics' performance must be known i n order t o
e s t a b l i s h a n accurate measure of t h e o v e r a l l q u a l i t y
and e f f e c t i v e n e s s of the workshop. One way t o measure
t h i s performance is t o compare man- hour requirements
for a shop t o recog- nized time standards f o r the same
task. " ( Emphasis added)
Work Order Format Needs Improvement - Even i f ADOT had work standards,
management could not evaluate the t i m e i t takes t o complete each r e p a i r
because the work order format is inadequate. The work order form commonly
i n use needs improvement because time f o r d i f f e r e n t r e p a i r s cannot be
i d e n t i f i e d on the form, there is not enough room f o r n a r r a t i v e and t h e r e
is no space t o specify f r a c t i o n s of an hour.*
Time f o r i n d i v i d u a l r e p a i r s cannot be i d e n t i f i e d on the work orders. For
example, one mechanic reported a t o t a l of t h r e e hours t o 1) " replace P. S.
belt" and 2) " repair t i r e . " ADOT cannot evaluate the time it took t o
perform e i t h e r task i n d i v i d u a l l y .
The ADOT work order does not allow s u f f i c i e n t space f o r the mechanic's
n a r r a t i v e . As a r e s u l t , the work order frequently is vague and the exact
nature of t h e r e p a i r s cannot be determined. The n a r r a t i v e is important t o
i d e n t i f y which work standard is appropriate and a l s o t o j u s t i f y any excess
time over standard. It should be noted t h a t only 58 percent of the sample
work orders could be analyzed by o u r c o n s u l t a n t because of vague n a r r a t i v e
( see Footnote *, page 12).
* The Equipment Section is experimenting with a p i l o t work order which
is an improvement over the current form; however, f u r t h e r r e v i s i o n s
may be needed.
The ADOT work order does not s p e c i f i c a l l y provide f o r recording t o the
tenth of an hour, and ADOT management does not encourage reporting t o the
tenth of an hour. However, published work standards specify t o t h i s
d e t a i l so a s t o make the most e f f i c i e n t use of r e p a i r time.
Work Orders Are Not Properly Completed - Although the work order form
needs improvement, the mechanics currently f a i l t o complete much of the
data t h a t can be recorded on the present form. Without t h i s data it is
impossible f o r ADOT t o f u l l y j u s t i f y e i t h e r the t i m e or the s t a f f used to
repair equipment. According t o our consultant,
" From an auditing standpoint, the majority of work
order write- ups w e r e woefully inadequate. Very few
work orders had:
1. Adequate r e p a i r i n s t r u c t i o n s
2. Adequate r e p a i r narrative
3. Adequate parts descriptions or attached invoice."
Examples of o t h e r d a t a not being completed include whether the repair is a
" comeback," the dates i n and out of t h e r e p a i r shop and vehicle mileage.
Practice of Charging Time Needs t o be Changed - Time spent on r e p a i r s
tends t o be overstated on the work orders because it is standard p r a c t i c e
f o r t h e mechanic to charge the f u l l eight hours per day t o vehicle
r e p a i r s . Overhead costs such a s the mechanic's coffee breaks, t i m e spent
chasing parts and even unassigned time are reported on the work order a s
time charged t o vehicle r e p a i r s . This practice makes it d i f f i c u l t f o r
management to evaluate a mechanic's performance from the work orders.
No Systematic Quality Control i n the Past - Until May 1982, management had
*
not established a systematic q u a l i t y c o n t r o l operation a t the shop l e v e l .
Prior to t h i s , one individual had been assigned t o inspect the quality of
a small number of r e p a i r s statewide. In May, ADOT adopted a policy
whereby shop foremen would be required t o s y s t e m a t i c a l l y i n s p e c t and
verify r e p a i r quality f o r a designated percentage of equipment repairs.
New Information System May
Help Improve Shou Operations
ADOT claims t h a t t h e proposed Equipment Management System ( EMS) should
provide the data needed f o r more e f f i c i e n t shop operations.
In 1980 the Equipment Section received approval and funding t o c o n t r a c t
with o u t s i d e c o n s u l t a n t s t o develop a management information system. The
project is scheduled f o r completion i n October 1983 and w i l l cost
approximately $ 400,000. EMS w i l l capture information about s e v e r a l
aspects of the Equipment S e c t i o n ' s o p e r a t i o n s , i n c l u d i n g the use of r e p a i r
time by mechanics. However, as discussed i n Finding 111, unless ADOT
improves t h e c o n t r o l and monitoring over t h i s system a s compared t o t h a t
exercised over previous systems, l i t t l e b e n e f i t w i l l be derived from EMS.
In a d d i t i o n , even though EMS may enable ADOT t o monitor and evaluate the
use of r e p a i r t i m e , a t t e n t i o n must s t i l l be given t o the q u a l i t y of
r e p a i r s .
CONCLUSION
The S t a t e has i n c u r r e d e x c e s s i v e c o s t s due t o d e f i c i e n t shop operations.
As a r e s u l t of low p r o d u c t i v i t y , two ADOT equipment shops may be
overstaffed a t an annual cost of approximately $ 120,000. Moreover, ADOT's
f a i l u r e t o evaluate mechanic performance may be f u r t h e r costing t h e S t a t e
i n t h a t 1 ) mechanics may be working too slowly and 2) some r e p a i r s may
be of poor q u a l i t y , thus causing work t o be repeated.
RECOMMENDATIONS
1. Time standards should be implemented f o r r e p a i r s and preventive
maintenance. We suggest t h a t ADOT begin with published standards and
- w
r e v i s e them a s necessary.
2. The work order format should be changed to include
- More room for mechanic's n a r r a t i v e ,
- Allowance f o r reporting time t o a f r a c t i o n of an hour,* and
- Reporting the time of each repair individually."
3. Management should ensure t h a t the q u a l i t y c o n t r o l procedures adopted
i n May 1982 are carried out consistently.
4. Foremen should improve supervision of
A. Mechanics' uses of t i m e . Attention should be given t o
- Parts chasing,
- Appropriate/ useful mechanic assignments,
- I d l e t i m e ,
- Coffee breaks, and
- Cleanup.
B. Work order documentation. Attention should be given t o
- Meeting time standards,
- Adequate descriptions of r e p a i r s ( including r e p a i r codes),
- P a r t s u s a g e ,
- Completeness, and
- Sign- off by foreman.
C. Quality of work. Attention should be given t o
- Vehicle repair h i s t o r i e s and
- Comebacks i n p a r t i c u l a r .
* These items are on t h e p i l o t work order form and should be retained i n
any l a t e r revisions.
FINDING I1
THE DEPARTMENT HAS NOT EFFECTIVELY CONTROLLED THE SIZE OF ITS EOUIPMENT
FLEET. THE DEPARTMENT COULD SAVE AT LEAST $ 238,000 BY NOT REPLACING
UNNECESSARY EQUIPMENT. I N ADDITION, THE NEED FOR AT LEAST ANOTHER
$ 480.700 I N EQUIPMENT IS OUESTIONABLE AND SHOULD BE CAFEFULLY REVIEWED.
ADOT h a s n o t adequately reviewed the u t i l i z a t i o n of its r o l l i n g stock
equipment t o i d e n t i f y and eliminate unnecessary equipment. Although ADOT
reduced the s i z e of its equipment f l e e t by almost 9 percent between 1980
and 1982, our review shows t h a t the Department could still save at least
$ 238,000 and very possibly more than $ 718,000 by t r a n s f e r r i n g or not
replacing equipment which is unnecessary or of questionable need. To
ensure e f f i c i e n t u t i l i z a t i o n of ADOT equipment i n t h e f u t u r e , ADOT needs
t o strengthen its equipment management procedures.
ADOT Can Eliminate
Unnecessary Equipment
Up t o 5 percent of the automobiles, trucks and heavy equipment assigned
within ADOT i n May 1982 were e i t h e r not needed o r of questionable need.
ADOT's informal standards and other s t a t e s ' standards show t h a t a l a r g e
number of a d d i t i o n a l pieces of equipment are u n d e r u t i l i z e d . Although
underutilized equipment may be j u s t i f i e d by s p e c i a l needs or assignments,
a limited follow- up on only the l e a s t u t i l i z e d equipment revealed t h a t
many pieces of low- use equipment cannot be j u s t i f i e d by s p e c i a l needs.
Underutilized Cars and Trucks - Half of ADOT's automobiles and l i g h t
trucks were driven l e s s than Equipment S e c t i o n i n f o r m a l s t a n d a r d s d u r i n g
the 12- month period ended i n May 1982. Further, 44 percent of the c a r s
and 43 percent of the l i g h t trucks w e r e u n d e r u t i l i z e d when compared t o
other s t a t e s ' standards.
The Equipment Section a p p l i e s an informal mileage standard based on
average usage t o two c l a s s e s of automobiles and two c l a s s e s of pickups.
These s t a n d a r d s r e p r e s e n t the annual, or break- even, mileage t h a t v e h i c l e s
i n these c l a s s e s must t r a v e l t o earn s u f f i c i e n t revenue t o meet t h e i r
f i x e d c o s t s .
Break- even mileages range from 11,900 t o 18,300 miles. Approximately
51 percent of t h e v e h i c l e s covered by these four c l a s s e s have
u t i l i z a t i o n below the breakeven mileage ( Table 3).
H i s t o r i c a l u t i l i z a t i o n is a second informal standard t h a t the
Equipment S e c t i o n u s e s t o measure heavy equipment use. This
c r i t e r i o n i n d i c a t e s low use i f a piece of equipment is used l e s s than
half of t h e p a s t y e a r ' s average f o r t h a t c l a s s of equipment. Using
t h i s standard approximately 11 percent of ADOT's heavy trucks and
equipment a r e underutilized.
ADOT automobiles and l i g h t trucks a r e a l s o u n d e r u t i l i z e d when
compared t o standards used by other states. Three s t a t e s
surveyed-- California, Utah and Idaho-- reported having s p e c i f i c
u t i l i z a t i o n standards based on annual mileage. These c r i t e r i a a r e
12,000 miles, 14,400 and 11,000 miles, r e s p e c t i v e l y . Using the
12,000- mile c r i t e r i o n , a s many a s 43 percent of ADOT's c a r s and l i g h t
trucks a r e underutilized. Table 3 shows the percentage of cars and
l i g h t trucks which are u n d e r u t i l i z e d when compared t o the Equipment
S e c t i o n ' s and C a l i f o r n i a ' s standards.
TABLE 3
ADOT AUTOMOBILE AND LIGHT TRUCK UTILIZATION,
12 MONTHS ENDING MAY 31, 1982
Less than i
Equipment Section
Standards Less than 12,000 miles
Number Total Vehicles Number Total Vehicles
Below i n Applicable Percent of Below i n Applicable Percent of
Standards Classes* Total 12,000 m i Classes** Total
Automobiles 123
Light Trucks - 327
Totals 4- 50
* Standards cover four c l a s s e s only.
** Standards cover ten c l a s s e s only.
Equipment Not J u s t i f i e d by Special Need - Although some equipment with low
u t i l i z a t i o n may be j u s t i f i e d by s p e c i a l needs, our review of the l e a s t
used equipment shows 50 pieces of ADOT equipment t o be unneeded. Further,
the need f o r another 30 pieces of equipment is questionable. Because we
did not review a l l u n d e r u t i l i z e d equipment, however, t h e s e e s t i m a t e s a r e
conservative.
Some u n d e r u t i l i z e d equipment may be j u s t i f i e d by s p e c i a l needs. For
example, some highway crews require equipment t o carry out assigned tasks
even though they do not make extensive use of t h a t equipment throughout
the e n t i r e year. In p a r t i c u l a r , t h e Department uses heavy trucks and
other equipment f o r snow removal during winter months, but h a s o n l y
limited need f o r them during the remainder of the year. To determine
which u n d e r u t i l i z e d equipment was j u s t i f i e d by s p e c i a l needs, we reviewed
a d d i t i o n a l records and contacted equipment users.
Because of t i m e c o n s t r a i n t s , our review of s p e c i a l needs focused on a
sample of the l e a s t used equipment. This sample consisted of vehicles
which had l e s s than 50 percent of the average h i s t o r i c a l u t i l i z a t i o n f o r
t h a t c l a s s . For example, the average u t i l i z a t i o n of an ADOT compact sedan
was 15,216 miles per year f o r the period we analyzed. Thus, a c a r i n t h i s
c l a s s would not meet our standard i f it was driven l e s s than 7,608 miles
per year-- or 50 percent of the h i s t o r i c a l average. Using t h i s standard,
we s t i l l i d e n t i f i e d 13 percent of the equipment i n ADOT's major c l a s s e s of
r o l l i n g stock f o r f u r t h e r review.*
*
We anlayzed the period July 1979 through December 1981 t o determine
h i s t o r i c a l averages f o r each major c l a s s of f l e e t equipment. These
major c l a s s e s included 86 percent of ADOT r o l l i n g stock-- automobiles,
pickup t r u c k s , one- ton u t i l i t y trucks, heavy trucks and general
purpose heavy equipment such a s motorgraders, front- end loaders and
t r a c t o r mowers. The a n a l y s i s excluded c l a s s e s with small numbers of
vehicles such as compact trucks and s p e c i a l purpose equipment such a s
o i l d i s t r i b u t o r trucks. I n a d d i t i o n , we a l s o excluded equipment which
was i n s e r v i c e f o r l e s s than a f u l l year. Thus, the 1 3 percent is
based on 1748 pieces of equipment.
According t o our a n a l y s i s , ADOT had a t l e a s t 50 pieces of equipment
assigned i n May 1982 which were u n d e r u t i l i z e d - and not j u s t i f i e d by s p e c i a l
requirements. We i d e n t i f i e d another 30 pieces of u n d e r u t i l i z e d equipment
which were of questionable need. However, a v a i l a b l e d a t a d i d not permit a
f i n a l determination on t h i s equipment. Therefore, i n Table 4 we show both
a low and high estimate of unneeded equipment.
TABLE 4
ESTIMATES OF UNNEEDED ADOT EQUIPMENT
Low Estimate High Estimate
Percentage Percentage
Category Number of Total* Number of Total*
Automobiles 21 9%
Light trucks 2 7 6
Heavy trucks 2 **
Heavy equipment - 0 0
Totals -- 50 3%
* The t o t a l f i g u r e is the t o t a l number of pieces of f l e e t equipment i n
the major c l a s s e s we reviewed o r 86 percent of ADOT r o l l i n g stock. ** Less than one percent
Examples of t h i s unnecessary or questionable equipment include the
following vehicles:
- Equipment Section managers use two sedans f o r statewide t r a v e l . One
v e h i c l e traveled 4,410 miles i n 12 months. The second sedan was a l s o
a v a i l a b l e f o r t h i s purpose and traveled 9,575 miles during t h a t
i
period. One sedan should be s u f f i c i e n t f o r management t r a v e l . Motor
pool t r a n s p o r t a t i o n is r e a d i l y a v a i l a b l e i n Phoenix f o r the occasions
when t h e r e may be competing demand f o r the one automobile.
- The Tucson D i s t r i c t Materials Lab had two pickup trucks assigned f o r
general purpose t r a n s p o r t a t i o n . Employees drove one truck 2,839 miles
during 12 months. The second t r u c k t r a v e l e d 5,911 miles. The
combined annual mileage was 8,750 and would j u s t i f y only one truck.
- The ADOT Building and Grounds Section i n Phoenix has two one- ton
t r u c k s . One t r u c k t r a v e l e d 122 miles i n 12 months. The second truck
traveled 716 miles during the year. Because of the extremely low use
f o r both t r u c k s , it would appear t h a t the Section could c a r r y out its
d u t i e s with one truck.
Although our analysis i d e n t i f i e d up t o 5 percent of ADOT's f l e e t equipment
a s unnecessary or questionable, t h i s f i g u r e probably does not represent
the f u l l extent of unneeded equipment. F i r s t , the standards we used t o
s e l e c t vehicles f o r follow- up were more c o n s e r v a t i v e t h a n the standards
used by other s t a t e s t o i d e n t i f y u n d e r u t i l i z e d v e h i c l e s . As a r e s u l t , we
d i d n o t follow up on the majority of the equipment i d e n t i f i e d a s
underutilized i n Table 3.
Second, we reviewed the j u s t i f i c a t i o n f o r low- use c a r s and pickup trucks
assigned only t o the Central o f f i c e , D i s t r i c t One and portions of
D i s t r i c t s Two, Five and Six. Follow- up i n the remaining p a r t s of these
d i s t r i c t s and D i s t r i c t s Three, Four and Seven may a l s o i d e n t i f y
unnecessary equipment.
Third, i n most cases where f i e l d personnel indicated t h a t they required
equipment t o meet a s p e c i a l need, we did not v e r i f y t h a t response. It is
l i k e l y , upon f u r t h e r a n a l y s i s , t h a t some of t h i s equipment may a l s o be
unnecessary.
Much of the equipment we reviewed i n d e t a i l did appear t o be unnecessary
or questionable, however. Of the 125 c a r s and l i g h t trucks we reviewed i n
d e t a i l , 48 were unneeded and another 15 were questionable. While t h i s
d i s t r i b u t i o n may not apply t o a l l , of the u n d e r u t i l i z e d c a r s and trucks
i d e n t i f i e d i n Table 3, these f i g u r e s and t h e l i m i t e d scope of our a n a l y s i s
strongly suggest t h a t the 3 t o 5 percent estimate of unneeded equipment is
a t best a minimum estimate.
U n d e r u t i l i z a t i o n and Unnecessary
Eaui~ ment Result from a Lack of
Effective Management Procedures
Although ADOT is beginning to emphasize more e f f i c i e n t equipment
u t i l i z a t i o n , its a b i l i t y t o do so is limited by inadequate management
procedures. In p a r t i c u l a r , 1 ) the Equipment Section does not have
c l e a r l y defined u t i l i z a t i o n standards; 2) Equipment Section managers have
not s y s t e m a t i c a l l y monitored and followed up on low- use equipment; and
3 ) the r a t e s t r u c t u r e f o r renting cars and pickup trucks does not
encourage e f f i c i e n t u t i l i z a t i o n .
U t i l i z a t i o n Standards - Although ADOT previously had u t i l i z a t i o n standards
f o r some equipment c l a s s e s , no u t i l i z a t i o n standards a r e c u r r e n t l y i n
force. The ADOT Equipment Section Manual does not provide s p e c i f i c
guidance or standards on equipment u t i l i z a t i o n . Section 8.02 of the
manual s t a t e s only t h a t
" A l l vehicle assignments a r e subject t o a continuing
review t o assure t h a t a prudent and economical usage of
the department vehicle f l e e t is being r e a l i z e d .
Vehicle assignments a r e reviewed by the d i r e c t o r o r h i s
designee."
The manual e s t a b l i s h e s general c r i t e r i a f o r assigning vehicles to
o r g a n i z a t i o n a l u n i t s , i n d i v i d u a l s and motor pools. Nowhere, however, does
the manual specify the u t i l i z a t i o n c r i t e r i a the Director w i l l use i n
reviewing vehicle assignments nor does the manual address heavy equipment
u t i l i z a t i o n .
In place of formally e s t a b l i s h e d standards, the Equipment S e c t i o n u s e s two
informal u t i l i z a t i o n c r i t e r i a : break- even mileage and h i s t o r i c a l usage.
Break- even mileage standards apply t o two of four automobile c l a s s e s and
two pickup truck c l a s s e s . The breakeven mileage is t h e d i s t a n c e which a
vehicle must t r a v e l i n a year t o generate s u f f i c i e n t revenue t o pay i t s
f i x e d c o s t s . The h i s t o r i c a l usage standard a p p l i e s t o only heavy trucks
and equipment; the Equipment Section uses 50 percent of the last 12
months' u t i l i z a t i o n as its standard. However, these a r e informal
standards and do not c l e a r l y i n d i c a t e departmental policy. Consequently,
ADOT equipment users lack specific guidance on how the Equipment Section
will evaluate their equipment needs.
Because there are no formal utilization standards, field managers do not
consider the utilization rate as a major factor in determining their needs
for equipment, particularly in making replacement decisions. Maintenance
field personnel use the maintenance management system ( PeCOS) standards to
assess some of their equipment needs. These standards specify what
equipment is needed to perform specific maintenance tasks. However, PeCOS
addresses only maintenance tasks and does not cover automobiles or all the
uses of pickup trucks.
Monitoring Utilization - The Equipment Section has not systematically
monitored equipment utilization in recent years. Equipment Section
managers have not viewed this function as part of their responsibility.
Moreover, any efforts to monitor use are limited by the lack of reports
which readily identify low- use equipment and the lack of clear authority
for Equipment Section to review all ADOT equipment.
Equipment Section managers have viewed their role as supplying equipment
to ADOT users rather than controlling the size of the fleet. For example,
one manager stated that the Section " does not wear the black hat" of
forcing users to relinquish underutilized equipment.
Although Equipment Section personnel assert that they are assuming a
stronger management role, they lack a means for readily identifying
underutilized equipment. The only source for identifying this equipment
is the monthly report on use and cost for all equipment in each class.
This report simply lists informatio? for each of the approximately 2,000
pieces of rolling stock. Therefore, identifying underutilized equipment
is a tedious, manual process that Section personnel do not regularly
perform. Once the Department establishes utilization standards for the
various equipment classes, it should be able to program the existing
equipment information system to identify underutilized equipment without
much difficulty. Equipment Section and other managers could then follow
up on low- use equipment to more carefully assess needs.
The extent of Equipment Section managers' authority t o monitor u t i l i z a t i o n
is not c l e a r . The Assistant S t a t e Engineer for Equipment does not have
f u l l authority to question the need f o r a l l ADOT Equipment. In early
1982, the Section i d e n t i f i e d 81 underutilized vehicles and n o t i f i e d the
users-- through the State Engineer-- of t h i s condition. However, only
Highway Division users-- 52 vehicles-- were asked to j u s t i f y t h e i r needs for
t h i s equipment. Notices sent to users i n other divisions simply provided
the information for t h e i r use and did not request any s p e c i f i c action.
Rental Rates - Rental r a t e s f o r ADOT passenger cars and pickup trucks
provide no incentive f o r improved u t i l i z a t i o n . Vehicle users pay the same
r a t e per mile whether t h e i r vehicle t r a v e l s 200 miles or 20,000 miles per
year. High mileage u s e r s s u b s i d i z e low mileage users who have no economic
incentive to improve vehicle u t i l i z a t i o n .
Economic incentives are an important complement t o periodic review of
u t i l i z a t i o n . Such incentives provide f i e l d managers with a reason to
carefully balance the cost of having a piece of equipment against its
intended use. For the heavy truck and equipment c l a s s e s , Equipment
Section charges a f l a t r a t e per month to recapture t h e f i x e d overhead and
depreciation costs incurred by having a piece of equipment available. For
example, the f l a t r a t e for a one- ton u t i l i t y truck was $ 121 per month i n
1981- 82, the r a t e for a three- axle d i e s e l truck was $ 703 monthly. These
charges are i n addition t o the hourly or mileage charges f o r actually
operating the equipment and force the user to pay the t r u e cost of having
the vehicle. If the vehicle is underutilized, the user must s t i l l pay f o r
the privilege of having the vehicle available but i d l e .
Rates for automobiles and pickup . trucks lack any such f l a t charge.
Instead, the mileage charge includes fixed as well a s operating c o s t s .
Under such a system, high- mileage users subsidize v e h i c l e u s e r s who do not
produce s u f f i c i e n t revenue through t h e i r own use to cover fixed costs. As
a r e s u l t , users lack any economic incentive to u t i l i z e t h e i r vehicles more
e f f i c i e n t l y .
For example, i f a pickup truck c o s t s $ 7,200 and has an expected useful
l i f e of s i x years, the annual d e p r e c i a t i o n cost is $ 1,200. Currently,
t h i s c o s t is included, along with other fixed c o s t s , i n the 27 cents per
mile usage charge. However, at an annual u t i l i z a t i o n r a t e of 2,200 miles
per year, the user w i l l only pay $ 594--$ 600 l e s s than the d e p r e c i a t i o n
cost. Moreover, the u s e r ' s payment does not meet any o t h e r f i x e d c o s t s or
any operating c o s t s f o r the vehicle. Because the user does not bear the
f u l l c o s t s , he has no incentive t o t u r n i n the vehicle. I f a f l a t r a t e
plus usage charge were used, the c o s t of the u n d e r u t i l i z e d v e h i c l e would
more than double, providing an economic incentive not t o r e t a i n the
vehicle.
ADOT Can Save Future Replacement
Costs by Transferring or Not
Replacing Unnecessary Equipment
ADOT has begun t o improve management of its equipment by t r a n s f e r r i n g or
r e t i r i n g unnecessary equipment, but a d d i t i o n a l s a v i n g s c a n s t i l l be
achieved. Since May 1982, 6 c a r s and 13 trucks i d e n t i f i e d as unnecessary
i n the Auditor General's a n a l y s i s have been t r a n s f e r r e d or scheduled f o r
t r a n s f e r . However, ADOT could t r a n s f e r t h e remaining 31 pieces of
unnecessary equipment f o r replacement savings of approximately $ 238,000
( Table 5). I f the Department t r a n s f e r s or decides not t o replace the
a d d i t i o n a l 30 pieces of questionable equipment, a n t i c i p a t e d replacement
savings would be about $ 718,700.
TABLE 5
ESTIMATED SAVINGS I N FUTURE REPLACEMENT COSTS
Automobiles
Light trucks
Heavy trucks :
One- ton u t i l i t y
Dump trucks
Heavy equipment
Low Estimate High Estimate
Replacement Replacement
Number Cost Number Cost
Improved u t i l i z a t i o n of e x i s t i n g equipment, p a r t i c u l a r l y c a r s and pickup
t r u c k s , can eliminate the need t o purchase replacements. At the beginning
of f i s c a l year 1982- 83 ADOT estimated t h a t it would need t o purchase 30
automobiles and 90 pickup trucks during the year. At l e a s t 15 t o 23 of
the estimated automobile purchases appear t o be unnecessary. S i m i l a r l y ,
the purchase of between 14 and 21 pickup trucks may a l s o be unnecessary.
CONCLUSION
Our review shows ADOT can save a t least $ 238,000 by not replacing
unnecessary equipment and possibly another $ 480,700 or more by not
replacing equipment with questionable need. Additional replacement •
savings may r e s u l t from a comprehensive review of equipment i n a l l
d i s t r i c t s . To achieve these savings, ADOT needs t o improve its equipment
management by e s t a b l i s h i n g c l e a r standards f o r u t i l i z a t i o n , r e g u l a r l y
monitoring use and e s t a b l i s h i n g a r a t e s t r u c t u r e f o r automobiles and l i g h t
trucks which charges a l l u s e r s t h e f u l l c o s t s of these vehicles.
1. AIjOT should develop standards which r e a l i s t i c a l l y define the need f o r
each c l a s s of equipment i n terms of expected u t i l i z a t i o n and s p e c i a l
needs. The Department should publish the standards i n its policy
manual and disseminate them t o a l l equipment users.
The Equipment Section should r e g u l a r l y review and evaluate the needs
f o r a l l equipment assigned within ADOT. The D i r e c t o r o f ADOT should
authorize the Assistant S t a t e Engineer, Equipment Section t o r e c a l l o r
t r a n s f e r any equipment which is u n d e r u t i l i z e d and not j u s t i f i e d under
the new u t i l i z a t i o n standards. As a f i r s t s t e p , the Equipment Section
should c a r e f u l l y review the need and j u s t i f i c a t i o n f o r u n d e r u t i l i z e d
equipment t h a t Auditor General s t a f f did not review f u r t h e r .
S p e c i f i c a l l y t h i s review should encompass a l l passenger vehicles
assigned t o D i s t r i c t s Three, Four and Seven and vehicles i n portions
of D i s t r i c t s Two, Five and Six.
3. To f a c i l i t a t e timely equipment review, the Equipment Section should
develop a monthly r e p o r t which i d e n t i f i e s equipment not meeting the
u t i l i z a t i o n standard.
4. The Equipment Section should change the r a t e s t r u c t u r e f o r automobiles
and pickup trucks t o charge each user f u l l fixed c o s t s of each vehicle
i n a d d i t i o n t o operating c o s t s .
5. The Equipment Section should reduce the amount of its r o l l i n g stock by
t r a n s f e r r i n g or eliminating unnecessary equipment. Planned purchases
of vehicles should be reduced by t r a n s f e r r i n g u n d e r u t i l i z e d v e h i c l e s
t o replace vehicles scheduled f o r disposal.
FINDING 111
THE DEPARTMENT HAS INADEOUATE CONTROL OVER PARTS AND FUEL.
ADOT does not have adequate control over its parts inventory and f u e l
usage i n the Equipment Section. Although ADOT has previously developed
information and control systems f o r these areas, i t f a i l e d to adequately
monitor input and control recording procedures f o r the systems. As a
r e s u l t , needed data is unavailable, incomplete or inaccurate. ADOT is now
developing a $ 400,000 Equipment Management System ( EMS) t o replace the
previous systems. However, i f ADOT does not improve its monitoring and
control procedures, t h i s system w i l l not prove t o be any more usable than
the previous systems.
Parts Inventory
Despite recommendations made i n a t l e a s t four s t u d i e s between 1975 and
1981, ADOT has not developed adequate control over the $ 1.5 million parts
inventory. Although ADOT has revised the inventory system, it does not
c o l l e c t s u f f i c i e n t data nor does ADOT adequately monitor inventory
procedures to ensure that data is correct. As a r e s u l t , d a t a a v a i l a b l e
through the inventory system is inaccurate and commonly used items may be
under stocked.
Inaccurate Data - Parts inventory data is unreliable and does not agree
with physical inventory counts. A review of three outlying shops found
records are incorrect because parts withdrawals and r e c e i p t s are not
always recorded. We found s i g n i f i c a n t differences between the physical
inventory count and inventory recortds. One shop had differences f o r 22
percent of its inventory items, r e s u l t i n g i n a $ 1,900 net shortage. Three
months prior to year- end physical inventory, another shop could not
account f o r 44 t i r e s valued a t $ 3,800. A t a t h i r d shop, r e c e i p t s are not
always recorded. As a r e s u l t , discrepancies cannot be i d e n t i f i e d because
parts personnel cannot determine the amounts which should be on hand.
Understocking - The S t a t e may incur excessive costs i f mechanics are
underutilized when p a r t s a r e not available. Stockouts occur f o r commonly
used i t e m s which are understocked. For example, a t one shop mechanics @
must " chase" common parts which are not available when needed ( see Finding
I, page 9 ) .
This may be caused i n part by the f a c t that neither the automated system
used i n Phoenix nor the manual system used i n outlying shops is designed
to capture all necessary data regarding parts demand. Demand must be
known or estimated with reasonable c e r t a i n t y t o determine which i t e m s to
carry as w e l l a s the appropriate amounts t o stock. The present inventory
systems do not capture some usage data needed to estimate demand, such as
purchases of nonstock i t e m s o r l e n g t h s of stockouts.
Monitoring Inventory Procedures - ADOT has not controlled t h e q u a l i t y of
a v a i l a b l e d a t a through supervision and training. The r e l a t i v e newness of
the systems, infrequent inventory counts and s t a f f turnover create
unfamiliarity with prescribed procedures. Since the manual system was
implemented more than one year ago, spot checks have not been conducted.
According t o t h e p a r t s department manager, he has been unable to conduct
periodic inventory counts due t o t i m e c o n s t r a i n t s . Furthermore, the area
supervisors have not conducted spot checks on the p a r t s inventories a t
outlying shops although they v i s i t these shops on a r e g u l a r b a s i s .
Fuel Usage
The f u e l usage monitoring system ADOT attempted to implement contains
misleading or inaccurate data because input was not adequately monitored.
As a r e s u l t , management cannot adequately control f u e l usage.
*
Organizations with large f l e e t s monitor f u e l usage, measured by miles per
gallon ( mpg), t o control f u e l consumption and i d e n t i f y problem areas a
including t h e f t . Maricopa County, most t r a n s p o r t a t i o n agencies i n other
s t a t e s surveyed and a large construction company contacted by our Office
monitor mpg f o r a l l v e h i c l e s r e g u l a r l y and i n v e s t i g a t e s i g n i f i c a n t
variances from vehicle c l a s s averages.
ADOT's " Fuel Economy Report" generated by the f u e l inventory system is
useless f o r monitoring f u e l usage. Data input i n t o the system is e i t h e r
untimely or unedited, r e s u l t i n g i n misleading or erroneous reports. The
following conditions i l l u s t r a t e data input problems:
- Six- digit odometer readings are input i n t o a five- digit f i e l d ,
r e s u l t i n g i n truncation, o r c u t t i n g o f f , of one d i g i t and a
d i s t o r t i o n of such readings.
- The system lacks computer e d i t procedures t o i d e n t i f y f u e l
t i c k e t s input more than once. Audit s t a f f found duplicate
inputs, r e s u l t i n g i n overstated f u e l consumption.
- The f u e l consumption report uses input data from two sources.
Because these sources a r e independent and the reporting periods
do not necessarily coincide, f u e l consumption can be misstated.
Miles per gallon f i g u r e s reported i n the " Fuel Economy Report" f o r some
vehicles a r e markedly d i f f e r e n t from three- month averages f o r
identical- model vehicles. Comparisons of some reported and average mpgs
are shown i n Table 6.
TABLE 6
ANALYSIS OF FUEL CONSUMPTION FOR SELECTED VEHICLES
Average f o r
Vehicle Description Fuel Economy Report I d e n t i c a l Model Vehicles
Pickup Truck - ' 74 Chev.
Pickup Truck - ' 74 Chev.
Pickup Truck - ' 75 Dodge
Pickup Truck - ' 76 Chev.
Pickup Truck - ' 76 Chev.
Pickup Truck - ' 77 Chev.
.3 mpg.
6.5 mpg.
7.1 mpg.
N/ A *
N/ A
N/ A
9.9 mpg.
9.9 mpg.
10.9 mpg.
12.9 mpg.
12.9 mpg.
13.0 mpg.
* Unreasonable rnpg f i g u r e s , based on miles driven and gallons consumed,
a r e suppressed or edited with " N/ A."
Normally such variances would be i n v e s t i g a t e d t o determine the cause.
However, because Equipment Section management knows t h a t the " Fuel Economy
Report" is u n r e l i a b l e , they do not i n v e s t i g a t e variances.
Need f o r Monitoring New EMS System
The proposed Equipment Management System ( EMS) should provide the data
needed t o c o n t r o l ADOT resources, including p a r t s and f u e l . However,
f a i l u r e t o c o n t r o l t h e q u a l i t y of information w i l l render the system
useless.
As evidenced by ADOT's past experiences with information systems,
inadequate c o n t r o l over data recording procedures and data input r e s u l t s
i n u n r e l i a b l e d a t a which is e s s e n t i a l l y u s e l e s s . For example, i n 1975 the
Equipment Section implemented an automated manpower planning system
designed t o capture workload information such as number of labor hours per
v e h i c l e , s p e c i f i c r e p a i r a c t i v i t y and shop performing t h e r e p a i r .
Management f a i l e d t o ensure t h a t shop personnel provided c o r r e c t and
complete information. Therefore, the data input c l e r k , u n f a m i l i a r w i t h
r e p a i r a c t i v i t i e s , was required t o complete the coding and v e r i f y the
accuracy of documents, c r e a t i n g a backlog. Because the r e p o r t s were
inaccurate and untimely, management discontinued the system. As discussed
above, the current p a r t s inventory and f u e l usage monitoring systems a l s o
contain inaccurate information. Unless ADOT implements and uses c o n t r o l s
over EMS, the new system w i l l prove t o be only a more expensive version of
the e x i s t i n g systems.
EMS w i l l capture information which can be used i n making decisions i n
inventory management, s t a f f i n g and work measurement and c o n t r o l . EMS
should assist ADOT i n the following Geas:
- Determining the number of mechanics needed a t each shop,
- I d e n t i f y i n g which items should be c a r r i e d i n t h e p a r t s inventory
and determining the appropriate amount of each item t o stock,
- E s t a b l i s h i n g the most economical point t o replace equipment, and
- Evaluating mechanic performance a g a i n s t e s t a b l i s h e d standards.
A l l of these c a p a b i l i t i e s , however, depend upon a c c u r a t e , c o n t r o l l e d data
input and data recording procedures. Data must be " cleaned" and data
e n t r i e s must be monitored f o r the system t o be a meaningful management
t 001.
CONCLUSION
ADOT does not have adequate c o n t r o l over its p a r t s inventory and f u e l
usage because of past f a i l u r e s t o monitor and c o n t r o l information systems
for t h e s e a r e a s . Improvements i n monitoring and c o n t r o l procedures must
be made i f the EMS under development is t o be of value.
1. ADOT should implement and use procedures t o c o n t r o l t h e q u a l i t y of
data produced by EMS, including
- Continual foreman review of source documents used i n performance
evaluations and manpower planning t o ensure completeness and
correctness;
- Periodic area supervisor review of outlying shops' p a r t s inventory
procedures and records;
- More frequent inventory counts at outlying shops, supervised by
area supervisors or Phoenix p a r t s department personnel.
2. ADOT should c o r r e c t d e f i c i e n c i e s i n t h e f u e l usage monitoring system,
including developing e d i t procedures and coordinating the timing of
input from various sources.
AREAS FOR FURTHER AUDIT WORK
During the course of the a u d i t , we i d e n t i f i e d s e v e r a l p o t e n t i a l a r e a s f o r
f u r t h e r a u d i t work. These a r e a s , which were o u t s i d e the scope of our
audit or were not completed due t o t i m e c o n s t r a i n t s ( see page 3 ) , include
as follows:
To what extent do s t a t u t o r y bidding requirements a f f e c t ADOT's a b i l i t y
t o r e p a i r equipment i n a timely manner by delaying the purchase of
p a r t s ?
Is the t o o l s inventory adequately c o n t r o l l e d ?
Is the preventive maintenance program e f f e c t i v e i n maintaining ADOT's
equipment f l e e t ?
Are the equipment maintenance and r e l a t e d a c t i v i t i e s performed by
personnel i n ADOT's Maintenance Section adequately managed and
e f f e c t i v e ? ( This work is i n a d d i t i o n t o work performed by the
Equipment Services Section.)
b
ARIZONA DEPARTMENT OF TRANSPORTATION
206 South Seventeenth Avenue Phoenix, Arizona 85007
b BRUCE BADBIT7
Governor
WILLIAM A. ORDWAY
Dlrector
February 22, 1983
M r . Douglas Norton
Auditor General
Auditor General's Office
111 West Monroe, S u i t e 600
Phoenix, AZ 85003
Gear Doug:
Thank you f o r the opportunity t o review the revised
preliminary r e p o r t d r a f t of the performance a u d i t of
the Arizona Department of Transportation, Equipment
Section. Our comments concerning t h e t h r e e f i n d i n g s
a r e attached.
Again, thanks f o r t h i s opportunity t o comment and f o r
the cooperation extended by you and your s t a f f .
C o r d i a l l y A
WA0: dl
Enclosure
Director
,/
HIGHWAYS . AERONAUTICS ' MOTOR VEHICLE - PUBLIC TRANSIT ' ADMINISTRATIVE SERVICES ' TRANSPORTATION PLANNING
ADOT'S COMMENTS ON AUDITOR GENERAL'S PERFORMANCE AUDIT
OF THE ARIZONA DEPARTMENT OF TRANSPORTATION'S EQUIPMENT SERVICES SECTION
The Arizona Department of Transportation believes the report prepared
by the Auditor General's staff on the Equipment Services Section contains
valuable recommendations. Substantially all of the recommendations have
been previously identified by agency management and are being implemented
through the Equipment Management System under development. In this sense,
the audit is a " snapshot" of an organizat- ional unit in mid- transition
after intensive management review with nationally recognized consultant
B support.
Although the recommendations are considered valid and useful, we
cannot agree with some of the conclusions and statements within the body
b of the report. Many are unsupported by fact, and simply represent
opinions.
Comments on individual findings follow:
@
FINDING I - ADOT NEEDS TO IMPROVE REPAIR SHOP OPERATIONS
ADOT POSITION: CONCUR
b ADOT is addressing and will continue to emphasize more effective and
productive use of mechanics' time. Idle time by heavy equipment mechanics,
excessive coffee breaks and inconsistent pre- lunch policies have been
addressed and corrected.
C
The need to develop work standards and monitor repair staff
performance is recognized. The Equipment Management System under
development will
rn 1. Identify in excess of 275 repair tasks for cach of 760 equipment
classes. Each of these combinations of task and class will have
its own work ( labor) standard.
2. Provide an " employee task labor versus standards" report.
3. Develop repair cost standards for all classes of vehicles.
4. Track " comebacks" which will indicate the quality and permanency
of repair work.
5. Generate work delay reports and identify cause of same.
t
ADOT's Comments
Auditor General's
Performance Audit
Page 2
6. Facilitate further development of the on- goinq preventative
maintenance program. Comprehensive PM schedules will be
established by equipment class. The EMS will automatically
generate PM work orders when a vehicle is due for service. The 4
PM work order includes a complete list of tasks to be performed.
7. Utilize a revised work order form which will include labor
reporting to the tenth of an hour, work repair reasons and work
delay reasons. There will be ample room for mechanics comments. ( I
8. Track open work orders ( both PM and repair). Any work order not
completed and closed properly will be flagged as still open.
9. Develop staffing requirements.
1
Exception must be taken to the sampling of work conducted, and the
cases cited as examples of excessive repair time and frequent repairs,
pages 11 to 24. The consultant stated that the work orders provided for
his analysis were woefully inadequate as to repair instructions, repair 4
narratives and parts descriptions. Additionally, the sample was in no
way random. Minor repair work orders and vehicles with less than three
work orders per year were eliminated. Vehicles reflecting high parts
usage and/ or frequent repairs were deliberately included.
Based on the foregoing, the analysis cannot be considered a true
measure of mechanics performance, but may merely be an indication that
all activities were not recorded, thereby distorting the repair times.
Following is a description of- the three vehicles cited as examples
of frequent repairs:
Case IV - E34- 162, Roosevelt based 1969 IHC dump truck averaging ( I
7,400 miles/ year on the unpaved road section out of Parker
Creek, 45 miles from the nearest shop.
Case V - E34- 210, Tucson based 1970 IHC plow service truck averaging
11,000 miles/ year in general dump truck and occasional plow 4
service ( current mileage 127,000).
Case VI - E34- 185, Roosevelt based 1963 IHC plow service truck
averaging 11,000 miles/ year on the unpaved road sections
.( I
D
ADOT's Comments
Auditor General ' s
Performance Audit
Page 3
out of Parker Creek, 45 miles from the nearest shop
( current mileage 135,000) .
D The deliberate inclusion of " problem" equipment naturally results
in such examples.
FINDING I1 - THE DEPARTMENT HAS NOT EFFECTIVELY CONTROLLED THE SIZE OF
ITS EQUIPMENT FLEET. THE DEPARTMENT COULD SAVE AT LEAST
$ 238,000 BY NOT REPLACING UNNECESSARY EQUIPMENT. IN ADDITION,
THE NEED FOR AT LEAST ANOTHER $ 480,700 IN EQUIPMENT IS
QUESTIONABLE AND SHOULD BE CAREFULLY REVIEWED.
ADOT POSITION: PARTIALLY CONCUR
ADOT does not totally agree with the statement that fleet size has
not been effectively controlled. For the past several years, ADOT has
D significantly reduced fleet size - approximately 9% since 1980 - and is
raking a concentrated effort to identify unnecessary equipment. A
recently completed report, prepared by a committee established for this
purpose, has identified more than 100 additional vehicles which will be
# removed from the fleet.
Although budgeted, the 120 cars and pickups referenced in the report
will not be purchased this fiscal year. Budgets are developed well in
@ advance of expenditures, but a detailed second analysis is made prior to
the actual purchase of any equipment. Should need not be apparent,
purchase is not made. I*
I) The Equipment Management System under development will further assist
in control of fleet size by
1. Tracking equipment utilization,
2. Providing utilization analysis reports,
3. Providing fleet size analysis reports,
4. Setting utilization standards,
5. Providing utilization exception reports of below - standard usage,
6. Providing downtime reports,
ADOT's Comments
Auditor General's
Performance Audit
Page 4
7. Providing availability reports,
8. Tracking equipment usage by operator.
Equipment usage will be reported on a daily, rather than monthly
basis. In addition to miles/ hours, the number of trips and shifts per
day will be reported. Equipment rates will be calculated and charged
based on usage, as well as a monthly rate, which will encourage more
effective utilization.
FINDING 111 - THE DEPARTMENT HAS INADEQUATE CONTROL OVER PARTS AND FUEL.
ADOT POSITION - PARTIALLY CONCUR ( I
While there is a need to improve control, positive steps have been
taken in this direction. In 1980, the new Parts Manager initiated a
standardized manual parts inventory and filing system. Concurrently,
parts storage facilities were redesigned and security improved.
The Equipment Management System under development will provide an
on- line statewide parts inventory system. All parts inventory locations,
including highway maintenance camps and service trucks, will be tracked II
individually. All major equipment shops will be equipped with CRT
terminals and printers. Parts transactions will be entered on- line and
the files will be updated immediately. Parts inventory will be verified
cyclically and the parts to be inventoried each cycle will be provided ( 3!
automatically for spot checking purposes. Inventory listings by location
or part number may be requested at'any time. EMS will calculate economic
order points and quantities for each part and provide this information
automatically. EMS will track IMU ( immediate use items) and provide ( I
information to indicate if these items should be stocked. Parts
disbursement will be entered on a two part form. One part will be used
by the Parts Specialist to update the invcntory file. The other part will
accompany the repair or PM order and be entered into the computer when the 4
repair/ PM order is closed. This will charge the parts usaqe to the
equipment being serviced. The " Security Detail Print" report will
identify any discrepancies between the two forns.
, . a '
B ADOT's Comments
Auditor General's
Performance Audit
Page 5
ADOT maintains an accurate inventory of fuel stock on hand via
receipts and disbursement records.
B EMS will thoroughly track fuel usage. Mileage exception reports will
be automatically generated. Fuel pump totalizer readings will be entered
into the system and tracked. Tank dip stick readings will continue to be'
entered and will be tracked. EMS will provide reports showing both
excessive fuel ( more than vehicle tank capacity) and wrong fuel type
reporting.
ADOT, at all levels of management, is committed to the implementation
B and success of the Equipment Management System. A reorganization of the
Equipment Section is planned to provide the necessary support personnel
to monitor and control the System. Information Systems Group has
committed the necessary resources to assure EDP programming support and
0 hardware avail. ability.
APPENDIX I
DESCRIPTION OF WORK SAMPLING STUDY
Auditor General s t a f f conducted a work sampling study of the Central and
Tucson ( D i s t r i c t Two) equipment shops. The purpose of the study was t o
gain an understanding of the amount of t i m e t h e r e p a i r s t a f f a t each shop
spends on various a c t i v i t i e s ( such a s a c t u a l equipment r e p a i r s , p a r t s
obtainment and paperwork). The r e s u l t s were t o help us i d e n t i f y the
improvements, i f any, which could be made i n shop operations.
Work sampling is a generally accepted means of determining productivity.
We chose t o study the Central and Tucson equipment shops because t h e i r
work loads did not e x h i b i t s u b s t a n t i a l seasonal f l u c t u a t i o n s a s do many
northern shops. As a r e s u l t , a comparison between the two would be
meaningful.
Our work sampling study involved making a number of " snapshot"
observations of i n d i v i d u a l s t a f f persons a t predetermined times during the
workday. Each observation was recorded and then grouped with a l l other
observations made at t h a t shop. Please note t h a t our study should not be
confused with " time- and- motion" s t u d i e s or other types of p r o d u c t i v i t y
analyses; it was not our purpose t o e v a l u a t e t h e performance of i n d i v i d u a l
mechanics.
Sources Consulted
We designed our study according t o guidelines set by two widely accepted
t e x t s on the subject* and two ex. p erts i n the i n d u s t r i a l engineering
f i e l d . D r . M. E. Mundell advised us on some s p e c i f i c study parameters.
D r . W i l l i a m Moor, from the Arizona S t a t e University I n d u s t r i a l Engineering
Department, reviewed and approved our research design.
* Ralph Pi. Barnes, Work Sampling, New York: John Wiley & Sons, Inc.
1961; and
R. E. Heiland and W. J. Richardson, Work Sampling, New York:
McGraw- Hill Book Company, Inc., 1957.
Sample Selection
For the purpose of determining sample s i z e , we defined a c t u a l equipment
repairs as " productive" and a l l other a c t i v i t i e s a s " nonproductive." We
used the generally accepted confidence level of 95 percent and accuracy
r a t e of plus or minus 5 percent. Based upon the t a b l e s for sample
selection,* 1,420 and 1,260 observations were required f o r the Central and
Tucson shops, respectively. Our f i n a l observation t a l l y was 1,478 for
Central and 1,455 for the Tucson shop.
Our s t a f f completed the Central shop observations i n May and June and the
Tucson observations i n July 1982. Prior t o the Central shop study, D r . M.
E. Mundell, consultant to the Auditor General, recommended t h a t the
Central shop observations occur over a 30- day period to reduce the
p o t e n t i a l of bias r e s u l t i n g from c y c l i c a l work loads. Therefore, we
completed an average of 70 observations over each of 21 consecutive
working days to a r r i v e a t our t o t a l of 1,478 observations. However, a f t e r
a statement by Equipment Section management t h a t the Tucson shop work load
did not f l u c t u a t e s i g n i f i c a n t l y over a 30- day period, we made an average
of 162 observations over each of 9 consecutive working days a t Tucson to
t o t a l 1,455 observations.**
* Barnes, Work Sampling, page 31.
** To allow f o r invalid observations due to employee absence, we a c t u a l l y
selected 90 and 170 observations per day f o r the Central and ~ u c s o h
shops, respectively. Thus, the daily averages mentioned above of 70
and 162 observations excluded an average of 20 and 8 observations due
to employee absence.
Immediately p r i o r to commencement of the observations a t each shop, we
conducted a t r i a l study. This was t o allow f o r observation times which
may not be v a l i d due t o b i a s r e s u l t i n g from a l t e r e d employee behavior a t
the beginning of the a c t u a l observations. The t r i a l study amounted t o 392
t e s t observations over 6 days at the Central shop and 312 observations
over 2 days a t Tucson. We did not include these t e s t observations i n our
a n a l y s i s .
The sample f o r each shop was s e l e c t e d using a random number generator
computer program. Random hours and minutes of the work s h i f t were
selected f o r each day, excluding the f i r s t 5 minutes at t h e beginning of
the day, the lunch period and the 10 minute clean- up period a t the day's
end. Repair personnel were a l s o selected randomly from the
a ) Mechanic Level Is and IIs, welders, p a i n t e r s , machinists and auto
body s p e c i a l i s t s assigned t o the Central shop ( t o t a l observed-- 31
persons) and
b) Mechanic Level 11s and Automotive Service Attendant Level Is
assigned t o the Tucson shop ( t o t a l observed-- 8 persons)."
D e f i n i t i o n s
In recording t h e o b s e r v a t i o n s , our s t a f f used the following a c t i v i t y
categories:
I. Actual Equipment Repairs
11. Other A c t i v i t i e s
1. Consulting/ Instruction:
- with other mechanic
- withforeman
- with other person
' 4 - reading manual
2. Break
3. Other i d l e l p e r s o n a l
* " Traveling" mechanics were not selected i n our sample.
1- 3
4. Obtaining parts
5. Paperwork
6 . Moving vehicle
7. Handling t o o l s o r p a r t s
8. Road t e s t
9. Miscellaneous Interruptions
10. Clean up:
- shop area
- personal
- other
11. Unknown:
- unable to locate
- unidentifiable a c t i v i t y
We defined these categories very conservatively i n a l l cases. As a
general rule, we gave the observed individual the benefit of the doubt i f
there was any question a s t o h i s a c t i v i t y a t the t i m e of observation. For
example, i f the mechanic was standing over a vehicle but not actively
r e p a i r i n g t h e v e h i c l e , we s t i l l recorded the observation as an a c t u a l
equipment repair. Similarly, we recorded an observation as
" Idle/ Personal" only i f it was c l e a r l y i d l e time. As a r e s u l t , we classed
all telephone c a l l s as " Miscellaneous Interruptions" rather than i d l e
time, and a l l conversations held by the repair s t a f f a s " Consultation."
Finally, we made every e f f o r t possible to locate an individual before we
categorized an observation as " Unknown."
Intended U s e of Study Results
According to a u t h o r i t a t i v e sources, the sample a t each shop is
s c i e n t i f i c a l l y valid a t a 95 percent confidence level and plus or minus 5
percent accuracy. As a r e s u l t , the overall findings of our study can be
generalized-- i. e., taken as a normal s t a t e of occurrence f o r that
shop-- for the major a c t i v i t y categories " Actual Equipment Repairs" and
" Other A c t i v i t i e s . " A l l other detailed a c t i v i t y categories are meant for
descriptive purposes and are not to be generalized.
APPENDIX 11
WORK ORDER DATA
The Equipment Section does not have a management information system for
evaluating the effectiveness and efficiency of i t s repair services.
Therefore, Auditor General s t a f f analyzed a sample of work orders ( r e p a i r
orders) t o evaluate several aspects of shop operations.
Selection of Sample
The vehicles included i n the work order sample were selected i n the
following manner:
The 20 l a r g e s t c l a s s e s of vehicles were i d e n t i f i e d , excluding classes
8,000- 9,999 which represent l o s t and stolen, r e n t a l and disposed
equipment. We then excluded vehicles which are primarily attachments
t o other vehicles such as t r a i l e r s and snow plows, arriving a t 13
vehicle classes.
Once the 13 classes had been i d e n t i f i e d for inclusion i n the sample, the
actual vehicles were selected randomly by computer. The sample s i z e f o r
each class was determined as follows:
- 2 0 p e r c e n t o f t h e c l a s s i f n u m b e r o f v e h i c l e s i n c l a s s w a s l e s s
than 100 and
- 10 percent of the c l a s s i f number of vehicles i n c l a s s exceeded
100.
The computer selected 212 vehicles for the sample. However, we found that
some had been sold a t auction, and+ there were others for which we could
find no work orders. Thus the f i n a l sample included 187 vehicles.
We obtained a l l available work orders for these 187 vehicles for the
period April 1, 1981, t o March 31, 1982-- a t o t a l of 1,275 work orders. Of
those 1,275 work orders
- 36 represented work done outside of ADOT, such a s windshield
r e p a i r , and
- 104 represented p a r t s only, where p a r t s were i n s t a l l e d by user.
Of the remaining 1,135, 92 percent were complete with labor hours and days
of labor. ( See Table A f o r a breakdown of the sample v e h i c l e s and work
orders by v e h i c l e c l a s s . )
TABLE A
ADOT- EQU IPMENT
WORK ORDER SAMPLE,
SWIMARY BY VEHICLE CLASS
Average
Vehicle Number of Number of
( I
Vehicle Class Vehicles Number of Work Orders
Type Code i n Sample Work Orders Per Vehicle
Compact Sedan 103
112- ton Pickup 120
112- ton Pickup w l a i r 12 1
314- ton Pickup 13 0
314- ton Pickup 142
Crew Cabs, 314 ton 14 3
1- ton Flatbed Dump Truck 223
Plow Service Trucks 260
Dump Truck, 2 axle, gas 270
Dump Truck, 2 axle, d i e s e l 271
Truck, 2 a x l e , Dodge 2 73
Grader 71 1
Front- end Loader 806
Totals - 187 1,275 - 6.8
Analysis of Work Order Sample
We attempted to analyze the work orders for frequency of r e p a i r s ,
downtime, repair time charged, parts usage, delays caused by unavailable
parts and evidence of preventive maintenance. However, due t o inadequate
data on the work orders-- such as dates, r e p a i r n a r r a t i v e and parts
information-- we were not able t o make conclusions from some phases of the
analysis. Nor could we generalize by shop as our sample was of vehicles
which had been randomly selected by equipment number, not shop location.
The Auditor General hired a consultant t o perform a technical analysis of
a portion of the work order sample described above. The larger sample of
1,275 was reduced t o approximately 500 for t h e c o n s u l t a n t ' s review. To
accomplish t h i s , we excluded work orders that involved parts only, outside
labor, minor repairs and vehicles with l e s s than three work orders i n a
year. To reduce f u r t h e r , we randomly eliminated vehicle numbers.
Certain vehicles were included i n t h i s sample of 500 because our i n i t i a l
analysis suggested that a potential problem might e x i s t with regard t o
- parts usage or
- frequency of repairs.
These 500 work orders covered 66 vehicles i n 13 c l a s s e s and serviced a t 14
shops. The work orders f o r each vehicle i n t h e c o n s u l t a n t ' s sample
included a l l relevant work orders from f i l e s f o r the period April 1, 1981,
t o March 31, 1982. The consultant was requested t o analyze these work
orders and
- Compare r e p a i r times on work orders t o published standard r e p a i r
times,
- Analyze " comebacks" ( r e p a i r s t h a t had t o be repeated) and
breakdowns,
- Evaluate the format of the ADOT work order,
- Analyze parts usage, and
- Note any o t h e r t r e n d s he observed.
The c o n s u l t a n t ' s report describing the r e s u l t s of h i s analysis is
contained i n Appendix 111.
APPENDIX I11
MECHANIC/ CONSULTANT'S REPORT
FINDINGS
REPAIR TIMES- FLAT KATE: In the majority of r e p a i r s , t h e r e p a i r times exceedea
suggested labor times. In comparing reported t i m e s ( from work orders) t o
standard times, allowance was made f o r the highest permissible time. For
example, i f extra time was allowed because of special accessories o r
equipment, that time was figured in, even though the work order gave no
evidence of these extras. The larger the equipment, the more l i b e r a l the
time allowance. Some equipment, such a s loaders, graders and plow trucks
may require extensive cleaning and equipment removal before r e p a i r s can
begin.
Some overcharges were small enough t o be dismissed a s diagnostic o r
cleanup time. There were, however, many gross overcharges ( labor) that
i n no way could be qualified. These findings do not universally suggest
or insinuate d e l i b e r a t e fraud. The mechanics/ technicians may i n f a c t
have worked the e n t i r e time. Without supporting evidence o r n a r r a t i v e ,
the comparisons can only be t o standard time.
STRAIGHT TIM: Certain operations ( rewiring, welding, painting, e t c . )
are not amenable t o f l a t - r a t e schedules. These a r e considered s t r a i g h t
or clock time. Questions on suspected excessive s t r a i g h t time can only
be raised ... answering involves on- site inspection, interview and
evaluation.
+
DIAGNOSTIC TIME : Many work orders included i n s t r u c t ions t o " check b a t t e r y , I 1
11 check charging system," e t c . The f l a t - r a t e manual gives d e f i n i t e times
for most of these operations. In almost a l l cases, these times were
exceeded with no explanation.
ROAD CALL TINE: As with s t r a i g h t time, i n l i e u of adequate description o r
n a r r a t i v e , these times are impossible to c a l l .
PARTS OBTAINMENT: In e o s e n t i a l l y a l l cases, the method of purchasing parts
was expedient and reasonable. Some shops use the mechanics t o " chase
parts." Serious consideration needs t o be given t h i s matter.
PARTS PRICING: ADOT garages appear t o be paying competitive p r i c e s f o r p a r t s
and supplies. Although there were some price questions on one or two
work orders, they were minor and not indicative of any trends.
PARTS APPLICATION: Very few work orders had any discrepancies on parts
application. There were some questions on c e r t a i n popular, universal
supplies l i k e anti- freeze, but again, there were no trends or gross
violations.
COPEBACKS: From a s t a t i s t i c a l standpoint, comebacks may appear t o be
excessive. However, comebacks can be c a t e g o r i c a l l y defined a s j u s t i f i e d
or u n j u s t i f i e d . For example, a s e r i e s of work orders documenting reports
( multiple) t o the top l i g h t s may be j u s t i f i e d ( breakage, vibration, etc.)
or u n j u s t i f i e d ( poor workmanship on the i n i t i a l repair). I f the work
order repair n a r r a t i v e is inadequate o r vague, i. e. " fix l i g h t s , " " check
l i g h t s , " " repair l i g h t s , " then it becomes impossible t o determine the
legitimacy of the repeat repair.
Comeback evaluation must also be tempered with vehicle types and usage.
Some classes of vehicles ( heavy trucks, plow trucks, dump trucks, e t c . )
can be subjected t o more severe use and abuse than other vehicles. Such
things as clutch, d r i v e l i n e and suspension abuses are common i n these
vehicles. Evaluation of comebacks t h a t do not f i t i n the aforementioned
categories ( such as f u e l , ignition and charging systems) reveals a
comeback r a t e t h a t , while c e d a i n l y not h o r r i b l e , d e f i n i t e l y needs some
a t t e n t i o n f o r improvement.
PERIODIC MAINTENANCE ( PM): There appears t o be s i g n i f i c a n t v i o l a t i o n of PM
schedules i n c e r t a i n shops and on c e r t a i n vehicles. There is strong
evidence to suggest that c e r t a i n f a i l u r e s and problems may be d i r e c t l y
related to poor periodic maintenance.
WORK ORDERS: From an auditing standpoint, the majority of work order write- ups
were woefully inadequate. Very few work orders had:
1. Adequate repair instructions,
2. Adequate r e p a i r n a r r a t i v e , or
3. Adequate parts descriptions or attached invoices.
STANDARD SERVICES: A wide range of time was charged in d i f f e r e n t shops for PM
on similar vehicles. A 10,000- mile check ranged from 5 or 6 hours i n one
shop to 20 or 30 i n another. Almost universally, when performing
inspections and r e p a i r s , t h e mechanics f a i l e d t o consider combinations
and overlapping times. The most frequent violation/ examples consisted of
charging f u l l time for tune- up and brake work when i n f a c t , engine and
chassis parts had t o be disassembled t o f a c i l i t a t e a PM service and
inspection.
SUGGEST IONS
LABOR TIMES- FLAT KATE: Managers need to implement a standard t i m e awareness
procedure. This should include f l a t - r a t e manual application and usage a t
a l l shops. Meeting f l a t - r a t e t i m e exactly is u n r e a l i s t i c and should not
be a goal ... r a t h e r , it should be used as a general guideline f o r
productivity and efficiency evaluation. If a " total" f l a t - r a t e system is •
implemented, then one would expect mechanics also t o be rewarded f o r
" beating" the f l a t r a t e . I f e e l t h a t q u a l i t y , r a t h e r than volume, should
be an ADOT goal and a reasonable compromise is i n order.
LABOR TIMES- STRAIGHT TIME: Managers need t o implement procedures t o provide
more accountability and control i n s t r a i g h t time operations. I would
suggest that a l l s t r a i g h t time operations be accompanied with detailed
narratives ( work descriptions) on or attached t o the work orders.
LABOR TIMES- ROAD CALL: It is expected that f i e l d repairs would take longer
than shop repairs; however, s u f f i c i e n t d e t a i l s on time and d i s t a n c e a r e
necessary to evaluate and separate repairs and t r a v e l time.
TRAVEL TIME-" PARTS CHASING": Philosophical and administrative questions need
t o be raised on the practice of having mechanics " chase" parts.
WORK OKDER FORMAT AND STYLE: Significant space is dedicated t o the middle
r i g h t s i d e of the work order ( ~ 1 0 ) f or work generator codes or checkoff.
In almost a l l cases, t h i s part of the W/ O was unused and therefore
wasted. Work generator codes could be printed on other forms and posted
or made available to the managers and mechanics ( i f codes are
necessary). The r i g h t s i d e of the page should have r e p a i r i n s t r u c t i o n s
a t the top and adequate space for the mechanic's write- up ( workirepair
description or n a r r a t i v e ) . It is i n t e r e s t i n g to observe that on forms
which do not have a 1110th- hour column, almost a l l labor charges were
made i n even hours. On fonns with 1110th- hour columns, most labor
charges were figured to the tenth of an hour.
Some forms with spaces for checkoff of miscellaneous time ( cleanup, p a r t s
chasing, c l e r i c a l , etc.) seem to have a high amount of time charged to
these categories. I encourage mechanics t o allow for and charge for t h i s
time, but a checkoff system seems to be abused.
The parts side of the page is generally adequate and seemed to be well
used i n most shops. It could be divided i n t o categories:
1. Internal Shop Supplies
2. I n t e r n a l P a r t s
3. External Parts/ Supplies
3,000; 5,000; 10,000 and 15,000 MILE SERVICES: Managers, mechanics and
consultants need t o develop time guidelines f o r t h e s e s e r v i c e s f o r
p a r t i c u l a r vehicle categories. Supervisors and mechanics need t o be
aware of overlapping labor combinations.
DEFINITIONS
LABOR TIMES: The Mitchell " Estimated Labor Times," given i n hours and tenths
of an hour, generally r e f l e c t the needs of an average, t r a i n e d a u t o
mechanic working i n an average, independent r e p a i r shop. Times l i s t e d
are t o be used as a guide only and therefore may need t o be adjusted t o
meet individual repair shop and vehicle conditions.
1
The estimated times generally include appropriate time f o r standard t e s t
procedures or normal services which accompany individual operations.
They do not include allowances f o r diagnosis, booking the job, b i l l i n g , •
wash- up time or any special courtesy services t h a t may be performed, such
as cleaning windows. The t i m e s also do not allow f o r the f a c t that a job
may be delayed due t o lack of p a r t s a v a i l a b i l i t y .
1
a
ADDITIONAL TIME: " Additional Time," t h a t extra time needed t o gain access t o
a p a r t , is s i g n i f i e d i n Mitchell by * o r a t a r i f f ( 1). The * indicates
t h a t the additional time has general application ( e. g. that any vehicle
equipped with power steering needs t h e s p e c i f i c extra time); the t a r i f f •
is a note for a specific model or option.
F u r t h e r a d d i t i o n a l time should be used t o cover conditions such as these:
Broken studs or b o l t s ,
Siezed b o l t s ,
Rusted or corroded p a r t s ,
Undercoating removal,
St eam c leaning,
Check and clean used p a r t s , and
1 Accessory items not coverzd by t e x t .
1 Plitchell Manuals: Mechanical ~ a r t s / L a b o r Estimating Guide, Domestic
Trucks, 1979 Edition.
111- 6
COMBINATIONS: " Combinations," denoted in the Mitchell t e x t by a , are
additional labor t i m e s t o be used to perform additional tasks which are
d i r e c t l y related to the o r i g i n a l operation and are conveniently done
along with it.
For example: a voltage regulator being replaced i n combination with an
1 a l t e r n a t o r overhaul.
OVERLAPPING LABOR TIMES: When two or more operations are performed on a
vehicle and have overlapping labor times, a reasonable deduction should
be made from the t o t a l times given. It i s impossible to give specific
recommendations for a l l these s p e c i f i c s i t u a t i o n s . For example, i f one
is doing a carburetor overhaul and finds t h a t the water pump also needs
r e p a i r , 0.2 hours should be deducted from the t o t a l of the individual
times. 1
- D& A: Disassemble and Assemble. 1
O/ H, O/ HAUL, OVERHAUL: Disassemble, clean, adjust and r e p a i r or replace p a r t s
as necessary t o restore a part or assembly t o its o r i g i n a l order or
working condition.
1
K & I , REMOVE AND INSTALL: Removal of a part or assembly from vehicle t o
f a c i l i t a t e overhaul or other work and r e i n s t a l l the same part on
vehicle. Includes any alignment necessary to reposition removed part or
assembly.
1
K& R, REMOVE AND REPLACE: Removal of part or assembly from vehicle, t r a n s f e r
of any attached parts to new~ part or assembly, r e i n s t a l l new part or
assembly on vehicle. Includes any alignment necessary to reposition
removed part or assembly. Add t i m e as necessary i f welded p a r t s a r e
transferred.
1
DIAGNOSTIC TIME: Repair shops a r e e n t i t l e d to charge for time spent i n
diagnosing vehicle malfunctions and discrepancies and i n preparing an
estimate t o e f f e c t necessary repairs. •
hany vehicle operators are unable t o describe technically the complaint
t o a service technician; the technician must sometimes make a road t e s t
t o determine the exact discrepancy. Such diagnosis and estimation ( I
requires time, experience and, i n many cases, the use of expensive
t e s t i n g equipment. 1
STRAIGHT TIME: Labor time for operations not l i s t e d i n t h e f l a t - r a t e manual.
These include custom work/ repair and operations such as welding and
painting .
REFERENCES
GENERAL CONSULTANT : PHIL D . RANDOLPH
Professor of Automotive Technology and Program Director a t Glendale
Community College, Glendale, Arizona. Member of The Society of
Automotive Engineers ( SAE) and c e r t i f i e d NIASE ( National I n s t i t u t e f o r
Automotive Service Excellence) General Mechanic i n a l l areas.
PARTS CONSULTANT: JOHN SPENCER
Owner of Metro Auto Parts, Spence's Arco and Spence's Towing and
I n s t r u c t o r i n Automotive Parts Merchandising a t Glendale Community
College.
FLAT- RATE MANUALS
The l a t e s t editions of Mitchell Mechanical PartsILabor Estimating Guide
were used. Various editions cover passenger cars and trucks.
HEAVY EQUIPMENT RESOURCE
Personnel and f l a t - r a t e books a t John Deere and Case were used. Resource
people include Warren Brower, Service Manager a t Arizona I n d u s t r i a l
Machinery ( ~ o h nD eere) and Mike Urban a t Case Power and Equipment.