Performance audit, Department of Transportation, equipment management

              DOUGLAS R. NORTON. CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
LINDA J. BLESSING, CPA
DEPUTY AUDITOR GENERAL
October 1, 1987
Representative John Wettaw, Chairman
Joint Legislative Budget Committee
State Capitol - House Wing
Phoenix, AZ 85007
Dear Representative Wettaw:
Enclosed is the following report:
A Performance Audit of the
Arizona Department of Transportation
Equipment Management Function
This l e t t e r w i l l be released to the news media and the general public on
October 2.
Douglas R . Norton
Auditor General
&&* A@-
Linda J. Blessing
Deputy Auditor General
cc: Senator Jack Taylor
Vice- Chairman, JLBC
Enclosure
2700 NORTH CENTRAL AVE. SUITE 700 PHOENIX, ARIZONA 85004 ( 602) 255- 4385
DOUGLAS R. NORTON. CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
October 1, 1987
Members of the Arizona Legislature
The Honorable Evan Mecham, Governor
Charles L. Miller, Director
Arizona Department of Transportation
LINDA J. BLESSING, CPA
DEPUTY AUDITOR GENERAL
Transmitted herewith is a report of the Auditor General, A Performance Audit
of the Arizona Department of Transportation ( A DOT) equipment management
function. This report is in response to a July 26, 1985, resolution of the Joint
Legislative Oversight Committee.
The report addresses three areas in which ADOT can improve its fleet
management. We found that ADOT could reduce its fleet of cars and pickups by
195 vehicles, thereby improving vehicle utilization. We also found that $ 1
million worth of equipment sat idle for excessive lengths of time before being
placed into service; vehicles have been delayed up to two and one- half years.
Finally, we found that ADOT Equipment Services' Central Shop is keeping
equipment too long for repairs, and we recommend improvements which should
help to decrease downtime.
My staff and I will be pleased to discuss or clarify items in the report.
Respectfully submitted,
~ o u w a sR . Norton
Auditor General
Staff: William Thomson
Peter Francis
Martha Dorsey
Deborah Klein
Vivian Look
Mark Andrews
Ron Johnson
2700 NORTH CENTRAI. AVE. SUITE 700 @ PHOENIX, ARIZONA 85004 8 ( 602) 255- 4385
SUMMARY
The Office of the Auditor General has conducted a performance audit of the
Arizona Department of Transportation ( A DOT) equipment management function in
response to a July 26, 1985, resolution of the Joint Legislative Oversight
Committee. This performance audit is one in a series of audits on ADOT, and was
conducted as part of the Sunset Review set forth in Arizona Revised Statutes
$ 541- 2351 to 41- 2379.
ADOT owns and maintains a fleet of approximately 3,450 pieces of equipment, with
a total estimated replacement cost of $ 64 million. The fleet consists of heavy
equipment such as loaders, graders and snowplows, and lighter equipment, including
a large passenger fleet. The Equipment Services Section is responsible for
purchasing, maintaining and disposing of the equipment. However, according to
Equipment Services officials, i t does not have authority to control the size of the
fleet.
Approximately 195 Cars And Trucks Could Be
Eliminated From Its Fleet I f ADOT Improved
Efficiency and Did Not Replace Underutilized
Vehicles ( see pages 5 through 15)
More than 15 percent of ADOT's cars and light trucks are underutilized and could be
eliminated from ADOT's fleet, saving more than $ 1.7 million in replacement costs
alone. Based on a conservative measure of usage, we determined that ADOT could
reduce its fleet by an estimated 195 vehicles. We believe this estimate is
conservative because observations of construction field offices revealed that nearly
35 percent of assigned vehicles sat idle at each observed time during the day. The
practice of assigning vehicles to individuals rather than pooling or using other
alternatives contributes to the low usage. A DOT should require or encourage its
employees to use alternative methods of transportation, including pooling vehicles
and using personal cars.
Although ADOT has been aware of problems with underutilization, i t has not taken
sufficient action since our previous audit. In response to our 1983 audit, ADOT
reduced the number of heavy equipment units in its fleet, and reduced the number of
planned purchases of cars and pickups. However, A DOT did not develop a utilization
standard, and vehicle usage is not routinely reviewed. Further, the administrator of
Equipment Services had not been given authority to recall or transfer any equipment
that was underutilized or not justified. As a result, percentage of vehicles with low
utilization ( less than 1,000 miles per month) has increased from 43 to 48 percent.
Ninety- two pieces of equipment worth approximately $ 1 million at purchase have
remained unused for six to 30 months before being placed into service. In contrast,
other large fleet operations set goals of issuing new equipment well under two
months, The following case examples illustrate the ADOT delays.
8 In August 1984 ADOT accepted delivery of a number of 1- ton truck chassis, to
which special beds were to be added. Five of these chassis, costing a total of
$ 48,000 at purchase, were not issued to users until January 1987.
8 In mid- 1985 ADOT accepted delivery of still more 1- ton truck chassis. As of
June 24, 1987, 11 of these chassis were still on the Equipment Services lot,
awaiting fabrication and attachment of special bodies.
Equipment Services' failure to issue equipment in a timely manner has resulted in
wasted State funds as well as problems for some users. At a minimum, such
extensive delays have led us to question whether several vehicles were really
needed, at least at the time the purchases were made. Poor management and
planning appear to have caused the excessive delays in issuing new equipment.
ADOT Could Reduce Equipment Downtime And
Speed Repair Of Equipment Critical To Users
( see pages 25 through 32)
The amount of time critical highway maintenance equipment is in the Central shop
for repairs is excessive. In extreme instances, equipment considered by highway
maintenance foremen to be critical to their operations spent 100 days or more
during a recent 12- month period in Equipment Services' central repair shop. A
combination of factors have caused this equipment to experience unnecessary
downtime. Inadequate shop procedures for repair scheduling and tracking have
contributed to the downtime. Changes that could decrease downtime include
contracting out more repairs, keeping the shops open at night, improving the
availability of parts for repairs, and evaluating equipment refurbishing decisions.
TABLE OF CONTENTS
Page
INTRODUCTIONANDBACKGROUND. . . . . . . . . . . . . . . . . . . . 1
FINDING I : Approximately 195 Cars and Trucks Could Be
Eliminated From I t s Fleet I f ADOT Improved
E f f i c i e n c y and Did Not Replace U n d e r u t i l i z e d
Vehicles. . . . . . . . . . . . . . . . . . . . . . . 5
U t i l i z a t i o n C r i t e r i a . . . . . . . . . . . . . . . . . . . . . 5
Construction Fleet Could Be Reduced By Nearly 17 Percent . . . 6
Other ADOT Veiiicles Could Also Be Eliminated. . . . . . . . . . 11
Options Are Available To Meet Needs . . . . . . . . . . . . . . 12
ADOT Has Taken I n s u f f i c i e n t Action To Control Fleet Size. . . . 13
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . 15
FINDING I I : ADOT Has Allowed $ 1 M i l l i o n Worth Of New Equipment
To S i t I d l e Too Long Before Placing I t I n t o Service;
I n d i v i d u a l Units Have Been Delayed From Six Months
To Two and One- Half Years . . . . . . . . . . . . . . 17
Excessive Delays I n Issuing Some Equipment . . . . . . . . . . 17
Excessive Delays Have Resulted I n Waste Of
State Funds . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Equipment Services Has Mismanaged New
Equipment Preparation . . . . . . . . . . . . . . . . . . . . . 22
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . 23
FINDING I l l : ADOT Could Reduce Equipment Downtime And Speed
Repair Of Equipment That I s C r i t i c a l To Users . . . . 25
C r i t i c a l Equipment I s Down Excessively,
Impeding User Operations and Increasing Costs . . . . . . . . . 26
ADOT Could Improve Fleet A v a i l a b i l i t y By
Improving Shop Procedures and Management P o l i c i e s . . . . . . . 27
Recommendations. . . . . . . . . . . . . . . . . . . . . . . 32
OTHER PERTINENT INFORMATION . . . . . . . . . . . . . . . . . . . . 33
AREAS FOR FURTHER AUDIT WORK . . . . . . . . . . . . . . . . . . . 35
AGENCYRESPONSE . . . . . . . . . . . . . . . . . . . . . . . . . . 37
LlST OF TABLES
Page.
TABLE 1 - ADOT Equipment Services Section
FTEs And Operating Budget
Fiscal Years 1984- 85 Through 1987- 88. . . . . . . . . 3
TABLE 2 - Summary Of I d l e Vehicles Observed I n D i s t r i c t I
Construction F i e l d O f f i c e s ( Orgs) On June 16, 1987. . 8
TABLE 3 - Summary Of Equipment Issues Delayed Six Months Or
L o n g e r S i n c e 1 9 8 4 . . . . . . . . . . . . . . . . . . 20
LlST OF FIGURES
Page
FIGURE 1 - Vehicles l d l e A t A D i s t r i c t I ( Phoenix) Construction
F i e l d O f f i c e ( Org) On June 24, 1987. . . . . . . . . 10
FIGURE 2 - A 1985 Truck Chassis, S t i l l Unused As
Of June 24, 1987 . . . . . . . . . . . . . . . . . . 18
FIGURE 3 - A 1986 Crewcab Pickup S t i l l Unused As
Of June 24, 1987 . . . . . . . . . . . . . . . . . . 19
INTRODUCTION AND BACKGROUND
The Office of the Auditor General has conducted a performance audit of the
Arizona Department of Transportation ( ADOT), equipment management function in
response to a July 26, 1985, resolution of the Joint Legislative Oversight
Committee. This performance audit is one in a series of audits on ADOT, and was
conducted as part of the Sunset Review set forth in Arizona Revised Statutes
3341 - 2351 through 41 - 2379.
ADOT owns and maintains a fleet of approximately 3,450 pieces of equipment, with
an estimated replacement cost of almost $ 64 million. Included in the fleet are
approximately 730 pieces of heavy equipment such as loaders, graders, snowplows,
and dump trucks; 1,310 light vehicles consisting mainly of a passenger fleet; and
1,410 nonmotorized and specialized equipment units such as u t i l i t y trailers,
compressors and generators.
Responsibility For Equipment
Management Within ADOT
The Equipment Services Section ( ESS) is responsible for purchasing, maintaining and
disposing of ADOT's equipment fleet. The Section, organized under ADOTts
Highways Division, operates 11 major maintenance shops and five other smaller
shops throughout the State. A l l 16 shops perform repairs and preventiv~
maintenance on equipment located in their areas. Equipment Services' Central
Shop, located in Phoenix, has the additional duties of preparing new equipment to be
distributed statewide, refurbishing selected pieces of older equipment to be placed
back into service, and disposing of old equipment for which ADOT has no further
use. The Central Shop also performs some repairs that the other three districts are
unable to handle, usually due to the difficulty of the work.
The Equipment Services Section's primary goals and objectives are as follows.
0 Provide the Department of Transportation with an efficient, effective and well
managed equipment fleet
e Provide ADOT with data related to equipment and equipment cost
e Maintain all equipment in the fleet
a Constantly monitor, modify, update, and improve operating methods and
maintenance records
However, according to Equipment Services, the Section does not have authority to
control the size of the equipment fleet. Such responsibility apparently rests with
either the districts or ADOT's upper management ( see Finding I, page 5).
Since 1970, ESS has operated with a revolving fund established by law. Revenues
are generated largely from equipment user fees and fleet disposals. Approximately
$ 23 million in revenues are generated annually, and according to the administrator
about 58 percent of this comes from highway maintenance operations. Funds are
used for all expenditures made by ESS, including equipment acquisitions, repairs and
operating expenses. ESS operates with an annual budget of about $ 25 million. I t
employs about 180 people. Table 1 ( see page 3) presents the Section's operating
budget and number of full- time equivalent personnel ( FTEs) for fiscal years 1984- 85
through 1987- 88.
Recent Effort To
Update Equipment Fleet
Equipment Services has been increasing its purchases of new equipment over the past
four years, to replace a reportedly aged fleet. Equipment purchases have increased
from approximately $ 4.1 million in fiscal year 1983- 84 to an estimated $ 11.2 million in
fiscal year 1986- 87. During this time, according to data supplied by Equipment
Services officials, the Section replaced approximately half of the total equipment
units owned by ADOT. According to Equipment Services officials, equipment
purchases are planned to remain at more than $ 9 million for the next two fiscal years.
TABLE 1
ADOT EQUIPMENT SERVICES SECTION
OPERATING BUDGET AND FTEs
FISCAL YEARS 1984- 85 THROUGH 1987- 88
1984- 85 1985- 86 1986- 87 1987- 88
Actual Actual Estimate Estimate
FTE p o s i t i o n s 177 177 177 185
Expenditure
Classi f i c a t ion:
Personal services $ 3,994,000 $ 4,198,700 $ 4,319,400 $ 4,622,400
Employee- Related 987,300 1,028,300 1,089,400 1,096,400
Professional and
Outside Services 183,800 183,800 95,000 97,400
Trave I
In State 55,100 55,200 82,900 82,900
Out of State 4,700 4,900 5,600 7,700
Other Operating 7,736,400 8,370,700 8,821,700 9,155,800
Equ i pmen t 7,173,700 8,538,000 12,200,000 9,054,400
TOTALS
Source: ADOT Equipment Services Operating Budget documents f o r f i s c a l
years 1984- 85 through 1987- 88.
Audit Scope And Purpose
Our audit work focused on the following issues.
a Whether ADOT1s passenger fleet is sufficiently utilized, and whether utilization is
adequately controlled
0 The extent of delay in preparing and issuing new equipment to ADOT users
0 Whether the amount of time critical highway maintenance equipment is down for
repairs is excessive
We also developed Other Pertinent Information regarding the automated information
system used by the Equipment Services Section ( page 37). Due to time constraints, we
were unable to address all potential issues identified during the audit. The section
Areas for Further Audit Work ( page 39) describes these potential issues.
This audit was conducted in accordance with generally accepted governmental auditing
standards.
The Auditor General and staff express appreciation to the Director of the Department
of Transportation and his staff for their cooperation and assistance during the course
of our audit.
FINDING I
APPROXIMATELY 195 CARS AND TRUCKS COULD BE
ELIMINATED FROM ITS FLEET IF ADOT IMPROVED EFFICIENCY
AND DID NOT REPLACE UNDERUTILIZED VEHICLES
More than 15 percent of ADOT's cars and trucks are underutilized and could be
eliminated from ADOT's fleet, saving more than $ 1.7 million in replacement costs
alone. ADOT could reduce its construction fleet by an estimated 78 vehicles. An
additional 11 7 vehicles assigned throughout other areas of A D 0 T also appear
unnecessary. ADOT could make reductions and still meet all transportation needs
by adopting more efficient practices, such as greater use of motor pool vehicles to
meet short- term or seasonal requirements. Although ADOT was made aware of
problems with underutilization in our 1983 audit, i t has failed to take sufficient
action.
ADOT has a large fleet of light vehicles. ADOT light vehicles include sedans and
pickups, vans and four- wheel- drive vehicles less than 1 ton. As of March 1987,
1,265 assigned vehicles, or nearly 60 percent of ADOT's equipment fleet, fell into
these categories.
Utilization Criteria
We adopted a conservative measure of usage based on standards widely accepted by
fleet managers. Utilization is best measured by reviewing the number of miles a
vehicle is driven and the amount of time the vehicle is in use.
Vehicles driven less than 1,000 miles per month are generally considered
underutilized. The Department of Administration's motor pool fleet manager
indicated that the need for vehicles driven less than 1,000 miles per month is
questionable. ADOT also uses 1,000 miles per month as a standard. According to
the administrator of Equipment Services, the Section plans for equipment
replacement assuming vehicles will accumulate 1,000 miles per month.
Adopting a more conservative criteria, we considered any vehicle driven less than
500 miles per month unnecessary and uneconomical. When vehicle mileage is this
low, it is more cost- efficient to consider other alternatives such as pooling vehicles
or reimbursements for use of personal vehicles. Both the Department of
Administration motor pool and ADOT Equipment Services managers consider
vehicles averaging less than 500 miles per month clearly underutilized. In fact,
ADOT's Productivity Resource Management System ( PRMS) group, which also
reviewed equipment utilization, adopted 1,000 miles a month as its standard and
considered vehicles averaging less than 500 miles as extremely underutilized.
We also adopted a conservative standard based on daily use. We considered any
vehicle driven 10 days per month or less underutilized. By adopting more efficient
practices, half of these vehicles could be eliminated. We assumed approximately 22
working days in any given month. Therefore, average vehicle use of 10 days a month
or less shows clear underutilization. Eliminating half these vehicles would bring the
combined utilization for this group to fewer than 20 days per month. We further
tested this analysis for reasonableness through observations. Observations of actual
usage showed this analysis to be conservative since i t does not account for duration
of use. For example, i f a vehicle is used only one hour during a day and is idle for
the remaining hours, the vehicle is still credited for a day's use.
Construction Fleet Could Be
Reduced By Nearly 17 Percent
ADOT could reduce its construction fleet by an estimated 78 vehicles, thus saving
ADOT more than $ 700,000 in replacement costs. Construction orgs "' have far
more vehicles than needed, as evidenced by the low mileage and infrequent use. Our
observations of construction field offices indicate that our recommendation to
reduce the construction fleet by nearly 17 percent may actually be conservative.
ADOT's construction vehicles represent a major portion of ADOT's fleet. Of the
1,265 automobiles and light pickups assigned in March 1987, 464 ( 37 percent) were
assigned to construction orgs. Construction orgs are responsible for quality control
of contracted work, and construction staff use vehicles to commute to construction
project sites to inspect the contractors' work.
( 1 ) Construction orgs are management uni t s responsible f o r overseeing construction
p r o j e c t s .
Construction orgs have too many vehicles - Construction orgs have nearly 17 percent
more vehicles than are needed. Seventy- one vehicles average less than 500 miles a
month, and an additional 14 vehicles with mileage above 500 miles a month average less
than 10 days use per month. By not replacing all vehicles averaging less than 500 miles
a month and half of those with usage less than 10 days, ADOT could eliminate 78
vehicles. Since the average replacement cost for A DOT vehicles is $ 9,067, ADOT could
save more than $ 700,000 by eliminating these vehicles.
Inefficient use - Our observations of construction field offices indicate that our
recommendation of a 17 percent reduction in construction org vehicles may actually be
based on a conservative estimate of the number of vehicles underutilized. To
determine i f vehicle fleet size could be reduced, we observed construction orgs in
District I.") Our staff conducted observations of nine District I construction org
offices on Tuesday, June 16, 1987. Each construction org was observed from 3 to 5
times between 7: 30 a. m. and 1: 30 p. m., and the number of vehicles in the lot were
recorded. Since each construction org office has construction projects in progress, and
has a day shift operating during our observation hours, vehicle usage should have been
optimal. However, we found that an average of eight vehicles, or nearly 35 percent of
assigned vehicles, were parked in construction lots each observed time during our
observations. The results of the analysis are summarized in Table 2.
( 1 ) Analysis based on observations of construction orgs i n D i s t r i c t 1 would r e s u l t i n
the most conservative estimates of u n d e r u t i l i z a t i o n since the D i s t r i c t i s the
busiest i n t h e S t a t e , has about 50 percent of a l l construction v e h i c l e s , and shows
some of t h e h i g h e s t d a i l y usage of i t s vehicles.
TABLE 2
SUWARY OF IDLE VEHICLES OBSERVED IN
DISTRICT I CONSTRUCTION FIELD OFFICES ( ORGS) ON JUNE 16, 1987
Ave rage Total
Numbe r of Number of % of Assigned
Construction I d l e Vehicles Vehicles Vehicles I d l e
Org No. Observed Assigned In Org Lot
AVERAGE -
Source: Observations conducted by Auditor General staff. The number of vehicles
assigned was obtained from the Equipment Services report, " Reported ( I
Usage Past 12 Months by Org as of March 1987."
District 1' s practice of assigning vehicles to individuals contributes to low usage.
Currently, District I construction orgs assign vehicles to individuals rather than
pooling vehicles. Vehicles are often assigned to individual staff based on seniority. 4
Thus i f an individual who is assigned a vehicle is in the office or on leave for a day,
the vehicle may remain idle in the parking lot. This is confirmed by our interviews
with resident engineers.(" We asked the resident engineers why the vehicles we
0
( 1 ) Resident engineers are i n immediate charge of one or more construction p r o j e c t s .
I t i s t h e i r r e s p o n s i b i l i t y t o ensure t h a t p r o j e c t s are constructed i n accordance
w i t h plans and speci f i c a t i ons.
observed were parked at the org office during the day of our observation. Reasons
provided by the resident engineers included: assigned user was conducting off ice
work, user was sick or on leave, user works the night shift, or vehicie observed was
currently unassigned.
Although some resident engineers have indicated that pooling of vehicles would be
difficult, we found that vehicles could be readily shared. Currently, staff who do
not have assigned vehicles pool with staff who are assigned vehicles. Numerous
vehicles are only used for short periods of time and are left idle much of the
workday. Further, even during shift changes, there are still several vehicles
available. Finally, equipment needed by construction inspectors is minimal and
could be readily transferred from one vehicle to another. We conducted
observations to verify ADOT's ability to pool vehicles, with the results as follows.
o Observation of daily usage - Observations were conducted to verify whether
vehicles were in use most of a workday. The construction org chosen was an
org that had utilization figures above our standard. Of the 26 vehicles assigned,
22 averaged more than 500 miles per month and only one vehicle was used
fewer than 10 days per month. Auditors observed vehicles for an entire work
shift between 5: 30 a. m. and 2: 30 p. m. Although most of the vehicles were used
at some point during the day, the duration of use was often minimal. Further,
the number of cars in the lot ranged from a low of nine to a high of 19 at the
end of the shift. The observation showed that even though the construction org
had only one vehicle used fewer than 10 days per month, the amount of time
that vehicles are in use is often limited. Figure 1 presents the results of our
observation.
a Observation of shift change - We observed an org to determine whether shift
vehicles could be shared. According to one resident engineer, his night shift
generally included eight staff who worked until 6 a. m. and six staff who worked
from 5 a. m. to 1: 30 or 2: 30 p. m. He indicated that the vehicles could not be
shared because of the shift overlap. We observed the site from 4: 40 a. m. to
6: 20 a. m. and found that between 5 a. m. and 6 a. m., there were no fewer than
eight vehicles parked in the lot. Only one ADOT vehicle that could have been
assigned to the night shift entered the yard between 5 a. m. and 6 a. m. Further,
the staff indicated that the night crew is on a rotating basis and all employees
do not work every night.
o Examination of equipment needed by construction inspectors - We examined
whether the size or amount of equipment used by construction inspectors
precluded their ability to share vehicles. Some resident engineers indicated
construction inspectors need separate vehicles to transport special equipment
and tools. We interviewed construction org personnel and observed vehicles at
construction sites and found only a limited number of inspectors need to carry
significant equipment in the back of their vehicles on a regular basis. The tools
used by inspectors are essentially the same and include minor first aid
materials, tape measures, plans, manuals, flashlights, and levels. A l l of the
equipment and tools can be transferred among vehicles.
FIGURE 1
VEHICLES IDLE AT A DISTRICT I ( PHOENIX)
CONSTRUCTION FIELD OFFICE ( ORG) ON JUNE 24, 1987
15: 00 6: 00 7: 00 8: 00 9: 00 10: OO 1l: OO 12: 00 1 : 00 2: 00 3: Oq
VEHICLE I I I I I I I I I I
HOURLY TOTALS: - 13 11 9 10 12 12 15 18 19 AT ORC PARKING LOT
Source: Auditor General observation of District I org on June 24, 1987.
ADOT lacks control over construction f l e e t size - By not exercising proper
control, ADOT allows construction orgs to retain unnecessary vehicles. Equipment
Services, the Section responsible for fleet management, does not monitor or
otherwise control vehicle assignments. No other u n i t w i t h i n ADOT's central office
exercises control over assignments. As a result, orgs are not discouraged from
retaining unneeded vehicles. Several org o f f i c i a l s indicated that they had unneeded
vehicles that could be reassigned to other construction orgs. One org o f f i c i a l
indicated that he had two extra vehicles. Another, a resident engineer, indicated
that he would not n o t i f y anyone if he had an extra vehicle but would wait until
another construction org contacted him.
As further evidence of the lack of control, an analysis of the ratio of vehicles to
staff shows that some construction orgs have more vehicles than ADOT's own policy
permits. As of March 1987, 17 of the construction orgs had ratios of vehicles to
staff that exceeded ADOT's own standards of .85 for rural orgs and .75 for urban
orgs. In fact, five orgs had at least one vehicle per staff member.
In addition to the extra construction vehicles, ADOT has approximately 117
underutilized vehicles in other agency units valued at more than $ 1 million.
More nonconstruction vehicles than needed - ADOT has far more nonconstruction
vehicles than is necessary as evidenced by low mileage and usage. ADOT could
reduce the size of its nonconstruction fleet by 117 vehicles. Our review of vehicle
mileage for the one year period of April 1986 through March 1987 shows that AD07
has 89 nonconstruction vehicles with usage less than 500 miles a month. ADOT has
an additional 57 vehicles with mileage above 500 miles per month, but which had an
average usage of less than 10 days per month.") By taking half of those with
usage less than 10 days, ADOT could eliminate another 28 vehicles. Since the
average replacement cost for A DOT vehicles is $ 9,067, A DOT could save more than
$ 1 million by eliminating the 117 vehicles.
( ' I Our a n a l y s i s o f v e h i c l e s w i t h l e s s than 10 days use excluded motor pool v e h i c l e s
because of the l a c k o f data. Thus, t h e r e p o r t e d number o f v e h i c l e s w i t h l e s s than
10 days use i s a c o n s e r v a t i v e f i g u r e .
Underutilized vehicles are found in numerous AD OT sections, including the A DOT
motor pool, the Motor Vehicle Division, various districts, Arizona Highways
magazine and Equipment Services. For example, the Motor Vehicle Division has two
vehicles assigned to a TARGATS project, which are used to commute between
project offices. One vehicle is l e f t parked at 1801 W. Jefferson, while the other is
located at 801 E. Jefferson. One vehicle only accumulates an average of 244 miles
a month, and the other is driven about 190 miles a month. In this case, alternative
modes of transportation, such as use of a personal car or the bus may be more cost
effective.
Options Are Available
To Meet Needs
ADOT has several management options available to meet the transportation needs
of its staff after eliminating the underutilized vehicles.
1. Pooling vehicles at the work sites. As noted previously, many vehicles are
assigned to individuals, and are often idle for major portions of the day. ( An
average of 35 percent of the vehicles at the construction orgs we observed were
available at any one time for use by other staff.) Pooling vehicles would be a
major means of using vehicles more efficiently while meeting the needs of the
staff.
2. Reassigning vehicles within the Department. Even i f excess vehicles were
eliminated, our analysis is conservative enough to provide ADOT sufficient
f l e x i b i l i t y in assigning vehicles to critical users. To do so, however, would
require reassignment of vehicles across organizational boundaries with
adjustments as needs change.
Use of ADOT motor pool and DOA motor pool. Some of ADOT's transportation
needs may be appropriately filled by increased use of central motor pools. As
of March 1987, ADOT had 108 vehicles in its motor pool. Many of these
vehicles are themselves underutilized. For example, 13 ADOT motor pool
vehicles were driven less than 500 miles per month between April 1986 and
March 1987. Similarly, according to a DOA motor pool official, the DOA motor
pool has 174 vehicles available for use by State agencies - including A DOT i f
necessary.
4. Encouraging use of other forms of transportation. ADOT could encourage
employees to use personal vehicles and public transportation. If a vehicle is
driven fewer than 500 miles per month, it is less expensive for the State to pay
mileage for use of personal vehicles than to pay for the costs of purchasing,
maintaining and operating a vehicle.
ADOT Has Taken Insufficient
Action To Control Fleet Size
ADOT has not taken adequate steps to ensure control over its vehicle fleet size.
Our 1983 audit of utilization found that ADOT was not adequately controlling its
fleet. Since then ADOT did reduce portions of its fleet, but it has not established
ongoing management reporting and control over utilization.
Previous audit noted problems - Our 1983 audit of equipment utilization noted
problems with ADOT's ability to control its fleet size. A t the time of the audit, 43
percent of ADOT's automobiles and light pickups were not accumulating 1,000 miles
per month. The audit identified an estimated 29 to 44 automobiles and light trucks
that should not be replaced. Our audit included the following recommendations to
increase ADOT's control over its fleet size.
0 ADOT should develop utilization standards and disseminate them to equipment
users.
0 The Equipment Section should review and evaluate equipment needs, and
authorization should be given to the assistant state engineer, Equipment
Section, to recall or transfer any equipment that is underutilized or not
justified.
0 The Equipment Section should develop a monthly report that identifies
equipment not meeting the utilization standard
0 ADOT's rate structure should be changed to charge each user for the full fixed
costs of vehicles in addition to operating costs.
0 The Equipment Section should reduce its rolling stock by transferring or
eliminating unnecessary equipment, and planned purchases of vehicles should be
reduced by transferring underutilized vehicles to replace vehicles scheduled for
disposal.
In its response to our 1983 report, ADOT indicated that i t would remove 100
vehicles from its fleet, and not purchase the 120 cars and pickups planned. Further,
Department officials indicated that the Equipment Management System under
development at the time of the audit would assist in controlling fleet size by:
tracking equipment utilization; providing utilization analysis reports, fleet size
analysis reports, utilization exception reports of below standard usage, downtime
reports, and availability reports; setting utilization standards; and tracking
equipment usage by operator.
Inadequate Implementation of Needed Changes - AD 0 T has not taken adequate
steps to implement recommendations of our previous audit report. In response to
our 1983 audit, ADOT reduced the number of heavy equipment units in its fleet, and
reduced the number of planned purchases of cars and pickups. However, i t has not
taken sufficient action to control its passenger fleet. Although we recommended
that ADOT monitor utilization, ADOT has not yet developed a utilization standard,
and the Equipment Services official responsible for monitoring utilization has
indicated that he does not routinely review vehicle usage. Further, although
Equipment Services has responsibility for overseeing utilization, ADOT did not
provide clear authorization to the Equipment Services Administrator to recall or
transfer any equipment that was underutilized or not justified. The administrator of
Equipment Services indicated that he tried to work with users to reduce
underutilization, but was unsuccessful. As a result, underutilization may have
increased over the past few years. Between 1982 and March 1987, the number of
automobiles and light pickups in A DOT'S fleet increased from 1,119 to 1,265. The
percentage of low use vehicles has also increased. In the 1983 audit we found that
43 percent of the vehicles were driven less than 1,000 miles per month. Now the
proportion of vehicles with less than 1,000 miles per month has increased to 48
percent.
RECOMMENDATIONS
1. ADOT should reduce its fleet of light duty vehicles by approximately 195
vehicles. ADOT should submit a written plan and timetable to the legislature.
2. To improve efficiency of use, ADOT should: a) require construction orgs to
pool vehicles rather than assigning vehicles to individuals, b) reassign vehicles
within the Department to f i l l critical needs, c) make greater use of the ADOT
motor pool vehicles, and d) encourage use of other forms of transportation.
3. ADOT should develop utilization standards and use the equipment management
system to monitor vehicle utilization.
4. ADOT should clarify who has authority to monitor and control utilization,
including the authority to remove or reassign vehicles that do not meet
utilization criteria.
FINDING II
ADOT HAS ALLOWED $ 1 MILLION WORTH OF NEW EQUIPMENT TO SIT IDLE TOO
LONG BEFORE PLACING IT INTO SERVICE; IMDlVlDhlAL UNITS HAVE BEEN
DELAYED FROM SIX MONTHS TO TWO AND ONE- HALF YEARS
Approximately $ 1 million worth of newly purchased equipment has remained unused
for six to 30 months before being placed into service. These delays have resulted in
waste of State funds, as well as lost user productivity. Poor management and
planning appear to be the cause of the excessive delays.
A major responsibility of ADOT's Equipment Services Section is to prepare and issue
new equipment to all ADOT users. Equipment preparation ranges from minimal
( applying ADOT decals and lights to passenger cars) to more major effort ( attaching
specialized bodies and other equipment to truck chassis). ADOT mechanics
complete a large portion of the specialized work, but the Department frequently
contracts with vendors for fabrication and attachment of the special bodies and
equipment. A l l vehicles included in our review required fabrication and attachment
of specialized equipment.
Even with special fabrication needs, other organizations have recognized the
importance of issuing new equipment promptly and have set target goals for
completing new equipment preparation. For example, the City of Phoenix's
Equipment Management Section considers delays beyond one and one- half to three
months to be unacceptable. Salt River Project's goal is to issue all new equipment
in two weeks, because it requires the vendor to fabricate and attach all specialized
equipment prior to delivery.
Excessive Delays In
Issuing Some Equipment
Although other fleet operations attempt to issue all new equipment within three
months of receipt, at least 92 ADOT vehicles purchased since 1984 have remained
unused for six months or longer before being placed into service. Some of these
vehicles, purchased as early as July 1985, are s t i l l i n the Equipment Services parking
lot, while others now in service sat as long as two and a half years before they were
put into service.
The following case examples illustrate the delays.
0 In August 1984, ADOT accepted delivery of several 1- ton truck chassis, to
which special beds were to be added. Five of these chassis, costing a total of
$ 48,000 at purchase, were not issued to users until January 1987.
0 In July and August 1985 ADOT accepted delivery of at least 29 1- ton truck
chassis, for a total purchase price of almost $ 323,000. As of June 24, 1987, 11
of these chassis were still on the Equipment Services' lot awaiting the
fabrication and attachment of special bodies. Another 12 were issued to users
between December 1986 and April 1987.
FIGURE 2
One of the 1985 1- ton chassis, still at Equipment Services
as of June 24, 1987
0 In September 1986 ADOT accepted delivery sf nine 3/ 4- ton crew cab pickup
trucks worth mare than $ 106,800, to which special bodies were to be attached.
As of June 24, 1987, all nine were still on Equipment Services' lot. Recently,
Equipment Services ordered five rnure crew cabs at an additional cost of nearly
$ 60,000, yet the original nine still are not in st:: vice,
FIGURE 3
A 1986 creweah pickup, still awaiting
special body work as of June 24, 1987
Although these examples illustrate the extreme delays, numerous other vehicles
were also delayed excessively. Table 3 shows the results of an Auditor General
review of new equipment issuance delays.
TABLE 3
S W R Y OF EQUIPMENT ISSUES DELAYED SIX MONTHS OR LONGER
S l NCE 1984( a)
New
Vehicles
s t i l l on
ES l o t ( b)
Vehicles
A l ready i n
Service
TOTALS
6 Mo. To Less 1 Year To Less 18 Mo. to Less 2 Years Or
Than One Year Than 18 Month Than 2 Years More
( a) The vehicles l i s t e d i n Table 4 are only those with delays of six months or longer
since 1984. The table represents only trucks weighing 1 ton or less, and does not
include such heavy equipment as snowplows.
( b) A s o f J u n e 2 4 , 1987.
As shown in Table 3, 38 vehicles have been delayed from 6 to more than 23 months
and are still awaiting placement into service. Furthermore, excessive delays have
occurred at least since 1984. Fifty- four pieces of equipment currently in service
were delayed six months or more before they were available to users. Five of these,
purchased in 1984, were delayed approximately two and a half years.
Excessive Delays Have Resulted
In Waste Of State Funds
Equipment Services1 failure to issue equipment in a timely manner has resulted in
wasted State funds as well as problems for some users. Some vehicles were
purchased that were not needed, and the delays in their issuance caused still further
waste. In addition, some users whose vehicles were scheduled to be replaced by
equipment yet to be issued have likely experienced losses in productivity due to
excessive breakdown of their old equipment.
Unnecessary purchases - Equipment that was delayed one year or longer may have
been unnecessary. Equipment Services was responsible for delays of one year or
longer on 31 of the 92 vehicles, worth more than $ 327,000 at purchase. Such
extensive delays lead us to question the need for these vehicles, at least at the time
the purchases were made. Furthermore, at least two of the vehicles sitting at
Equipment Services1 lot were purchased to replace vehicles that have such low
utilization ( see Finding I) that replacement is not necessary.
We identified additional waste resulting from excessive delays.
0 Possible damage - According to an expert mechanic, new vehicles that sit
unused for extended periods may become damaged. The mechanic stated that
all vehicles which have sat unused for one year or more will need new batteries,
and all those sitting for four months or more should have their batteries
checked. The tires may also have developed a permanent flat spot. Also, any
fuel remaining in the vehicles may have dried, leaving a residual varnish. As a
result, the vehicles might need a fuel pump replacement or a carburetor
overhaul to remove this residue.
Elapsed warranty time - Five of the 92 vehicles we identified had expired
warranties while parked at Equipment Services. Numerous others have lost
substantial portions of their warranties.
0 Decreased useful l i f e - Because of Equipment Services' replacement practices,
these delayed units may have lost up to two and one- half years of their useful
life. An Equipment Services official stated that equipment is replaced based on
a specific age or mileage, whichever comes first. Unless ADOT monitors which
vehicles were delayed in being placed into service, these vehicles could be
prematurely replaced by as much as two and one- half years.
0 Lost interest earnings - A total of $ 90,000 in interest earnings has been lost
since 1984 because of unnecessary delays on the part of Equipment Services.
This amount could have been earned through normal Equipment Revolving Fund
investments i f AD 0 T had delayed purchasing trucks until proper preparation
had been made.
User losses - On the other hand, at least one user has experienced unnecessary
productivity losses because he has had to continue using an old truck that was
scheduled for replacement two years ago. A sign truck '" broke down 13 times for
a total of at least 56 days during the period of May 1986 through April 1987. This
truck was scheduled to be replaced two years ago by a 1985 vehicle that has been
sitting idle and unfinished in Equipment Services lot.
Equipment Services Has Mismanaged
New Equipment Preparation
Poor management and planning appear to have caused the excessive delays in issuing
new equipment. The Equipment Services Section apparently purchased more
equipment than i t could timely prepare and issue. Had management been monitoring
new equipment delays, this would have become evident. Equipment Services also
needs to plan more effectively for new equipment preparation.
Equipment Services personnel stated that more equipment had been received than
staff could reasonably handle. According to Section officials, staff have been
overworked purchasing and preparing new equipment.
Sign t r u c k s a r e s p e c i a l l y equipped t o carry and put up road signs, i n c l u d i n g signs
t h a t a l e r t m o t o r i s t s of accident s i t e s .
However, management could have become aware of the heavy workload through
monitoring. Equipment Services does not monitor new equipment from the time a
chassis is purchased u n t i l the finished unit is issued. In many cases, vehicles appear
to have been " lost" in the system. Several Equipment Services o f f i c i a l s were
apparently unaware of the extent o f equipment delays. In fact, Section staff
completed body specifications for five 1985 and 20 1986 vehicles after our auditors
questioned Equipment Services regarding the delays. Had management been
monitoring its new equipment, it could have been aware of the problem.
Finally, poor planning contributed to the excessive delays. Equipment Services
waited to complete the specifications for the chassist specialized bodies until after
the chassis were received. Had the specifications been completed prior to receipt
of the chassis, the vendors could have been selected and ready for the chassis by the
time they were delivered to Equipment Services. Preparing body specifications
prior to chassis delivery is a common practice among other large equipment fleet
managers we contacted.
RECOMMENDATIONS
Equipment Services should eliminate all unnecessary delays in issuing new equipment
to users.
1. Management should:
a. Purchase only as much equipment as it can handle in a reasonable time.
b. Ensure that all new equipment is monitored through the preparation
process, from the time it is ordered to the time i t is issued to A D O T
users. Through monitoring, Equipment Services should determine whether
and how delay time can be reduced.
2. Equipment Services should follow proper procedures in planning for new
equipment issuance, such as completing body specifications, issuing bids, and
selecting vendors to complete equipment additions before the chassis are
received.
3. Equipment Services should monitor the delayed equipment for appropriate
replacement timing, to avoid replacing i t before its useful life has elapsed.
FINDING Ill
ADOT COULD REDUCE EQUIPMENT DOWNTIME AND SPEED REPAIR
OF EQUIPMENT THAT IS CRITICAL TO USERS.
ADOP could increase the availability of critical highway maintenance equipment
maintained and repaired by the central shop. Critical equipment experiences
excessive downtime, which impairs user operations and increases costs. Downtime
could be reduced by improving repair shop policies and practices that contribute to
repair delays.
Minimizing unnecessary equipment downtime is important. It would enable users to
perform work as scheduled, without borrowing or renting equipment a t extra cost.
It would also enable ADOT to benefit from i t s capital investment in equipment by
maximizing equipment availability and mini mizing the number of spare equipment
pieces needed.
We looked a t c r i t i c a l highway maintenance equipment serviced by the central repair
shop"' because this shop is responsible for servicing the most vehicles and it
has unique duties, which make repair management and scheduling inherently more
complex. Citing safety and operational priorities, maintenance foremen we
interviewed identified 70 pieces of critical equipment out of the 146 pieces assigned
to them. For example, Road Maintenance foremen consistently identified loaders as
important because they are needed for many activities their crews might be engaged
in. Equipment for t r a f f i c control ( e. g., lane closures) is also considered critical
because work cannot be done safely on the highway without such equipment. Other
critical equipment mostly included dump trucks, graders and other larger equipment,
as opposed to the passenger vehicles and light pickups discussed in previous findings.
Central r e p a i r shop serves D i s t r i c t 1, covering the Phoenix metropolitan area, and
O i s t r i c t 5 , statewide s i g n i n g and s t r i p i n g .
Critical Equipment Is Down Excessively,
Impeding User Operations And Increasing Costs
Excessive downtime for some critical equipment may have negatively affected user
operations and increased costs. Our review of equipment repairs from May 1, 1986,
through April 30, 1987, showed that some equipment may have experienced
excessive downtime.") In extreme cases, six pieces of equipment were out of
service for more than 100 working days, and records showed that f o r one piece of
equipment, downtime exceeded 200 days.
Total downtime f o r a l l 70 pieces of critical equipment was 15.6 percent.' 2'
Although the Equipment Services Administrator asserts that availability of 75 to 85
percent ( equivalent of 15 to 25 percent downtime) for heavy equipment is " not
undesirable", such performance is poor compared with standards and performance of
other shops.
0 Luke Air Force Base - Luke Air Force Base, which has several types of
equipment, including heavy equipment, has an availability standard of 90
percent.
0 New York DOT - The New York Department of Transportation has an
availability goal of 93 per cent for 37 types of equipment considered critical
to operations. Of the 37 equipment types, at least 29 ( 78 percent) are
considered heavy equipment.( 3) Yet, New York has been able to achieve
close to 90 percent availability for this equipment. Although New York's
performance far exceeds that of Equipment Services, a review of New York's
operations concluded that further improvements could enable them to achieve
95 percent availability.
This review i s based on manual records. We were unable t o u t i l i z e r e p a i r
information generated by Equipment Services' computer information system because we
i d e n t i f i e d s i g n i f i c a n t inaccuracy i n the way i t calculates downtime.
( 2 ) Because r e p a i r record format was not e a s i l y conducive t o even manual downtime
t r a c k i n g , equipment could have been a v a i l a b l e t o users a t times when r e p a i r records
were l e f t open. To the extent t h i s occurred, our review overestimates downtime.
However, estimates were conservative i n other respects. a) We d i d not include
downtime i n c u r r e d t r a n s p o r t i n g equipment between user and shop. Travel time f o r
remote users i s an hour or more per t r i p . b) Some users perform some repairs
commercially o r on t h e i r own. Such downtime i s not always r e f l e c t e d i n Equipment
Services records. c) Where we on1 y had data on r e p a i r i n and out dates, r a t h e r than
a c t u a l c l o c k times, we used the most conservative i n and out times possible. This
method may have underestimated downtime by as much as two days per r e p a i r instance.
( 3) F i f t y - f i v e o f the 70 pieces ( 79 percent) of ADOT equipment we reviewed were heavy
equipment.
0 Salt River Project ( SRP) - An SRP shop we visited reported 89.3 to 98.4 per
cent availability for nine pieces of equipment with the most downtime in the
heavy equipment classes for the month of May 1987. By comparison, 35 of 70
( 50 percent) pieces of ADOT equipment reviewed had availability of less than
90 percent.
ADOT's performance is 5.6 percent below even a 90 percent availability standard.
Excessive downtime can negatively impact user effectiveness and efficiency. For
example, i t can force users to do without a needed piece of equipment, possibly
preventing them from performing some highway maintenance tasks. Additional
costs resulting from excess downtime may also be incurred by users. For example,
it could cause ADOT to maintain more equipment than would be otherwise
necessary to substitute for those items being repaired. Or, it may force ADOT to
rent equipment. For example, one user who has experienced significant downtime
with his dump trucks has had to rent three trucks continuously, at a total cost of
$ 17,550 as of April 29, 1987.
A DOT Could Improve Fleet Availability By
Improving Shop Procedures and Management Policies
A DOT could reduce downtime by improving shop procedures and management
policies. In identifying the possible causes of unnecessary downtime, we noted
several changes in shop procedures that would improve repair turnaround time,
including improvements in repair scheduling and equipment tracking. Other changes
that could improve downtime require management intervention, and include taking
action to relieve heavy shop workload, making modifications in shop work hours,
improving the availability of parts for repairs, and evaluating refurbishing
decisions.
Our records review showed numerous delays occurring prior to and after repairs
were initiated. The great majority ( 59 percent) of reported delays occurred because
labor was unavailable. Some repairs experienced multiple delays. For example, a
striper came in on September 11 and the repairs were not completed until November
18, 1986 because of labor delays totaling 46 working days. Personnel in the shop
responsible for repairing the striper confirmed that they were continually pulled off
one job to begin another.
Improve repair scheduling - Delays could be reduced by improving repair
scheduling. Unlike other fleet operations, Equipment Services does not estimate
repair completion times on its repair forms. According to one authority, the use of
estimated completion times could be expected to increase shop productivity by 10
percent. Because the shop does not use estimated completion times, Equipment
Services may not only experience decreased productivity, but users may also have
d i f f i c u l t y scheduling work because they cannot predict when equipment will be
available. In addition, the shop cannot identify what repairs take longer than they
should or the reasons for the additional repair time. By comparison, Luke Air Force
Base's fleet operation uses a f l a t rate manual or has its experienced mechanics
estimate completion times. SRP also uses estimated completion times.
Need for better equipment tracking-- Downtime could also be reduced by better
equipment tracking. In some instances, central shop appeared unable to determine
the location or status of equipment. One user stated that he was recently told by
the shop on two separate occasions that equipment was ready to be picked up, but
when the user arrived to pick it up, he was told the vehicle was not ready. Our
review also showed delays when equipment goes from one specialty shop to another.
For example, records show that one dump truck apparently l e f t a shop on August 28,
1986, but did not go into the next specialty shop until September 4, 1986. The truck
apparently remained in the possession of Equipment Services between August 28 and
September 4, because the mileage shown on repair records did not change between
those dates. The district equipment manager was unable to explain the apparent
discrepancy.
In contrast, other shops we visited could instantly determine the status of equipment
within the shop. The City of Phoenix shop tracks its equipment by computer, and
takes a physical inventory of its equipment daily. Luke Air Force Base and SRP use
control boards to monitor equipment going through the shop. SRP characterized its
control board function as " critical" to shop operations and Luke Air Force Base
described its control board as the " heart" of its operation. Yet, only one of the
three Equipment Services shop supervisors currently uses any method that allows the
instant tracking of equipment. In addition, Equipment Services has no single person
who keeps track of equipment going from shops under the jurisdiction of one shop
supervisor to another. It appears that these may be the conditions under which
equipment or work orders seem to get " lost."
Open shop during user o f f hours - Equipment availability could also be increased
by operating the shop during user off- hours. ADOT1s shop is usually open during
ADOTts regular work hours, and not at night or on weekends. When equipment is
being repaired, users must find alternative ways of accomplishing tasks, such as
renting or borrowing replacement equipment or accomplishing work using less
effective means. In contrast, repairs minimally affect scheduling for City o f
Phoenix and SR P users because Phoenix' central repair shop is open 365 days a year,
24 hours a day, and SRPfs is open seven days a week, 16 hours a day. Keeping repair
shops open during off- hours allows these operations to complete many minor repairs
overnight, resulting in minimal interference with user operations.
The Equipment Servicest administrator has been reluctant to initiate evening or
weekend repairs. He believes such work hours would only be appropriate for repairs
taking one day or less. However, our review showed that more than 40 percent of
repairs for the c r i t i c a l equipment took less than eight hours, which appears to
justify off- hour shifts. The administrator is also reluctant to have evening shifts
because it would require additional supervision and added hours for the parts room.
However, evening shifts are far more beneficial to equipment users. One way
private industry ( e. g., u t i l i t y and telephone companies) operates at more efficient
levels is to schedule repair work at night, which maximizes the the number of
vehicles and other equipment available for operations during the day.
Contract out excess workload - Unnecessary downtime could be decreased by
relieving excess workload. ADOT documents show that in the one year period prior
to April 1986, the number of vehicles serviced by central shop increased by more
than 50 percent. According to an ADOT official, a significant portion of the
increase has resulted from Equipment Services' e f f o r t s t o update ADOT's fleet ( see
page 4). However, other shops we visited have ways to handle repairs during peak
workload periods. For example, the City of Phoenix advocates contracting out
repairs during peak periods to meet fleet availability needs, and SRP has specific
criteria under which equipment repairs are contracted out.
Improve parts availability - Downtime could also be decreased by improving parts
availability. Delays occur because parts are out of stock, which necessitates a
mechanic or other staff spending added time getting the part or ordering the part i f
it is not readily available. Mechanics may also be moved from one job to another as
they wait f o r parts to come in. According to an ADOT official, since delays may
involve commonly used parts, repairs may be unnecessarily delayed as a result.
According to ADOT officials and Purchasing representatives, parts delays may be
decreased by increasing use of parts contracts, setting adequate parts reorder
points, and hiring additional parts personnel. In particular, setting parts reorder
points so parts arrive long before stock is depleted could help decrease parts delays.
Even with adequate reorder points, however, ADOT officials state that parts delays
would continue to occur because ADOT lacks sufficient staff to assign parts
numbers needed before reorder points can be set.
Evaluate Refurbishing Decisions - Downtime could also be decreased i f
management reviewed its decision- making on refurbishing.(" Refurbishing
affects the shop's ability to schedule because i t is unpredictable and such jobs take
at least two to four weeks to complete, potentially interfering with repair tasks.
For example, one backup snowplow to be refurbished came in for seven repair tasks.
Before the job was done, shop personnel had found 13 additional needed repairs. At
the time of auditor observation, the shop had been working on the snowplow for
more than a month and was still not finished. SRP recognizes the impact of
refurbishing on repair scheduling. SR P's Transportation Services Manager asserted
that i t is " impossible" to schedule refurbishing without disrupting repair operations.
As a result, SRP contracts out all refurbishing. Other shops also seem to do less
refurbishing than Equipment Services. ( 2
( ' 1 Refurbishing i s the renovation or conversion of older equipment ( turned i n by users)
f o r low usage f u n c t i o n s .
(') Equipment Services may be more l i k e l y to r e f u r b i s h equipment because i t does not
consider the cost- effectiveness when deciding whether to r e f u r b i s h . Other shops we
v i s i t e d consider economic feasi b i l i t y when making such decisions. For example, the
C i t y o f Phoenix f l e e t manager suggested against r e f u r b i s h i n g unless it could r e s u l t
i n a subsequent l i f e equal t o a s p e c i f i c percentage o f o r i g i n a l equipment l i f e .
RECOMMENDATIONS
1. Equipment Services should modify its shop procedures to decrease repair
turnaround time and increase equipment availability to users by:
a. Monitoring its workload and contracting out repairs when workload exceeds
that which can be completed by the shop within a reasonable time.
b. Establishing evening or night shifts which would allow the shop to complete
repairs during user off- hours.
c. Estimating a completion time on repair orders, and conducting follow- up i f
the estimated time of completion is not met.
d. Establishing a system that would allow the shop to instantly identify the
status and location of equipment in for repairs.
e. Improving the parts reorder formula to ensure parts are available when
needed.
f. Using additional parts contracts and consider assigning additional personnel
to assist the parts manager in assigning parts numbers.
g. Reevaluating the refurbishing policy, improving its evaluation procedures
for equipment being considered for refurbishing, and considering
contracting out refurbishing.
OTHER PERTINENT INFORMATION
Other pertinent information was developed regarding the Equipment Management
System ( E M S).
Central data management of the Equipment Services Section is performed through
the Equipment Management System. However, the EMS system has several
shortcomings that severely limit its usefulness to both management and users.
These shortcomings were identified by Arthur Young, consultant to ADOT's
Productivity Resource Management System ( PR MS), and by Auditor General staff in
the course of our audit.
Arthur Young, under contract with PRMS, found that reports were inaccurate due to
errors made by data input personnel. Error rates invalidated several report
printouts because persons providing and inputting the data had not been sufficiently
trained. As a result, data has been of limited usefulness to users. For example, in
our own study of downtime, we found that both the equipment services
administrator and the fleet maintenance manager had concerns with the quality of
downtime reports.
Usefulness of reports is limited not only because of inaccurate data but because of a
less than satisfactory program. Equipment Services adapted a standard program,
Prototype, for use as its management information system. However, Prototype was
designed to support a single location maintenance shop whose primary objective is
maintenance of a fleet of sedans and small trucks. It was not designed to support a
large, multilocation fleet with the many diverse pieces of equipment that ADOT
owns. Although the system was modified by the vendor, deficiencies are still
evident. For example, PRMS concluded that because of poor data input training and
a less than satisfactory program, downtime figures generated by EMS are faulty as
well as misleading. As noted in Finding Ill, we were unable to use EMS downtime
data to conduct our analysis.
Reports are not only inaccurate, but they are cumbersome for management to use
because they are long and unnecessarily detailed. Much of the data are provided in
a format that requires a manager to look through detailed listings to locate desired
information. In part, this occurs because exception reports require standards to be
established in the system. However, because many standards have not been
established, some reports identify everything as an exception. For example, one
exception report is more than 200 pages long. Yet, this report is only one of 139
reports routinely generated by the EMS. By contrast, West Virginia's Equipment
Management System provides comprehensive management information in a summary
report which is a single page long. According to a former user, the system can
provide any ievel of detail a user might need to evaluate performance.
AREAS FOR FURTHER AUDIT WORK
During the course of our audit we identified a potential issue that we were unable to
pursue due to time constraints.
0 Should ADOT contract out portions of the equipment management function?
Several concerns lead us to question whether at least portions of ADOT's equipment
management could be handled more efficiently and effectively by private
contractors.
( 1) Currently, ADOT does much of the fabricating and attaching of specialized
equipment to its heavy and light duty trucks. Yet, both Salt River Project and
the City of Phoenix contract out nearly all of this work. Contracting out new
equipment preparation has enabled both of these other shops to issue their new
equipment in a relatively short time, while leaving repair shop personnel free to
conduct actual equipment repairs.
( 2) ADOT's Equipment Services Section also refurbishes selected old equipment to
save much of the cost of purchasing expensive new equipment. However,
refurbishing takes a great deal of mechanical labor and interferes with regular
equipment repairs. In contrast, the City of Phoenix currently does not refurbish
equipment, and SRP contracts out all its refurbishing.
( 3) Equipment Services also appears to be experiencing numerous repair delays
because i t has to wait for parts. In Finding Ill, we recommend increasing parts
contracts and adding personnel to expedite parts. However, at least one other
large fleet operation, Luke Air Force Base, obtains some parts through a
private parts store on contract with the Base.
Further audit work is needed to determine whether i t would be more cost- effective
to contract out these and other functions.
ARIZONA DEPARTMENT OF TRANSPORTATION
206 South Seventeenth Avenue Phoenix, Arizona 85007
rn September 30, 1987
EVAN MECHAM CHARLES L MILLER
Governor Director
Mr. Douglas R. Norton
Auditor General
2700 North Central Avenue, Suite 700
Phoenix, Arizona 85004
Dear Doug:
Thank you for the opportunity to review the revised preliminary
report of the performance audit of the ~ rizona Department of
Transportation, Equipment section. Our comments concerning the
findings are attached.
gain, thanks for this opportunity to comment and for the
cooperation extended by you and your staff.
V
\. Charles L. Miller
Director
CLM: VN
Attachment
HIGHWAYS AERONAUT~ CS MOTOR VEHICLE PUBLIC TRANSIT ADMINISTRATIVE SERVICES TRANSPORTATION PLANNING
FINDING I: APPROXIMATELY 195 CARS AND TRUCKS COULD BE ELIMINATED
FROM ITS FLEET IF ADOT IMPROVED EFFICIENCY AND DID NOT REPLACE
UNDERUTILIZED VEHICLES.
ADOT POSITION: PARTIALLY CONCUR
While we agree the ADOT fleet size can be reduced, we do not
agree with the audit criteria developed by the ~ uditor General's
office for vehicle usage. Vehicles are one of the tools neces-sary
to provide adequate quality control on highway construction
projects. The State Engineer has established an FTE/ vehicle
ratio of 0.75, based on an analysis of required staffing for con-struction
projects. On the basis of this review, ADOT will re-move
a minimum of 138 units from the fleet by December 1, 1987.
We do not concur with the Auditor General's comments that no ac-tion
was taken following the 1983 audit's recommendations. Over
$ 5,400,000 in trucks, graders, and dozers were removed from
ADOT1s fleet between July 1984 and July 1987. In addition
planned purchases of sedans and pickups scheduled for 1983 were
substantially deferred. The recommendations concerning the reduc-tion
of passenger cars and pickups were reviewed after increased
funding for construction was realized during this same period.
On the basis of that review and the pending increase in the con-struction
program, the vehicles identified for removal from the
fleet were not removed. It was determined that these v. ehicles
were necessary in order to staff the increase in construction
personnel.
Since FY 1983 the construction program has increased from $ 85
million in contractor payments to $ 305 million in contractor pay-ments.
Construction FTEs have increased from 529 to 609, short
of the anticipated high of 690. Through the use of innovations
such as contractor staking, end product asphaltic concrete
projects, the use of consultants for contract management, and
increased quality control responsibility by the contractor, we
did not reach the anticipated 690 FTE level and are now prepared
to reduce our construction vehicle fleet accordingly.
It should be noted that mechanisms have been implemented to ad-just
vehicles as the construction program fluctuates over the
next several years.
RESPONSE TO FINDING IIS RECOMMENDATIONS:
1. In addition to removing 138 units from the fleet, ADOT will
continue to monitor and control utilization of the fleet.
Beginning immediately and continuing on a semi- annual basis
beginning January 1, 1988, a summary report, showing addi-tional
reductions or increases to the fleet based on program
needs, will be furnished to the State Engineer and ~ irector.
2. ADOT will require, where appropriate, construction orgs to
pool vehicles; will reassign vehicles to fill critical
needs; will make greater use of the Motor Pool vehicles; and
will encourage the use of other forms of transportation.
3. ADOT has utilization standards, and a management utilization
exception report will be issued quarterly to all managers,
beginning October 1, 1987.
4. The State Engineer, beginning immediately, will review and
establish utilization criteria. Based on that criteria, the
Equipment Services Administrator will have the authority to
remove and reassign vehicles.
FINDING 11: ADOT HAS ALLOWED $ 1 MILLION WORTH OF NEW EQUIPMENT
TO SIT IDLE TOO LONG BEFORE PLACING IT INTO SERVICE; INDIVIDUAL
UNITS HAVE BEEN DELAYED FROM SIX MONTHS TO TWO AND ONE- HALF
YEARS.
ADOT POSITION: CONCUR
ADOT has not placed certain items of equipment into service as
expeditiously as desired. However, it is significant to note
that over 1,700 pieces of equipment, valued at over $ 15 million,
were processed between July 1984 and July 1987. Over 44% of the
fleet now are 1984s or newer.
As a general policy ADOT fully expects new equipment ( depending
on type, complexity, and priority level) to be issued in a
timely fashion ( within one to three months from receipt).
RESPONSE TO FINDING IIIS RECOMMENDATIONS:
la. Two additional employees have been added to the Itget readyn
equipment function to allow processing of more equipment.
New procedures are being instituted to provide a smoother
flow through the preparation process. Even with these im-provements
manufacturerst deliveries cannot be controlled by
ADOT, and it is possible that system overloads may reoccur.
lb. All new equipment is monitored; however, with the addition
of staff the status of each unit now will be examined more
closely on a regular basis. Any required corrective action
will be taken immediately.
2. There will be additional emphasis on planning, and body req-uisitions
will be issued well before receipt of any chassis.
A new procedure based on an I1Equipment Acquisition Planning
Work Sheett1 will be used. This work sheet will detail all
acquisition activities, showing target and actual dates, the
office of primary responsibility for each activity, and con-tractors,
and will document all changes and factors necessi-tating
these changes.
3. Equipment Services will monitor currently delayed equipment
for appropriate replacement timing to assure no equipment is
replaced prior to the lapse of its useful life.
FINDING 111: ADOT COULD REDUCE EQUIPMENT DOWNTIME AND SPEED
REPAIR OF EQUIPMENT CRITICAL TO USERS.
ADOT POSITION: CONCUR
RESPONSE TO FINDING 111' s RECOMMENDATIONS:
la. Procedures are being developed to monitor the workload and
to assure completion within a reasonable time. These pro-cedures
will be completed by March 1, 1988.
lb. Additional study, budgeting and resourses are required be-fore
implementation of this recommendation. The study will
be completed and final recommendations made by March 1,
1988.
lc. This recommendation will be implemented by January 1, 1988.
Id. This recommendation will be implemented by January 1, 1988.
le. Employees are being hired to implement this recommendation
by January 1, 1988.
If. Establishing parts contracts is an on- going operation. By
November 1, 1987 an additional employee will be hired to
assist in assigning parts numbers.
D
lg. All refurbishing decisions are evaluated by the Equipment
Services Administrator. Very few refurbishing projects are
now being undertaken; however, ADOT will review its current
policy in order to assure any appropriate refurbishing is
accomplished in a manner least disruptive to shop repair
operations.