|
CITY OF VANCOUVER ADMINISTRATIVE REPORT |
Date: |
February 21, 2005 | |
Author: |
I. Vohra/C. Hosein | |
Phone No.: |
7615/7616 | |
RTS No.: |
04838 | |
CC File No.: |
5106 | |
Meeting Date: |
March 15, 2005 |
TO: |
Vancouver City Council |
FROM: |
Director of Facility Design and Management, and General Manager of Engineering Services |
SUBJECT: |
Building Services Fleet Adjustment |
RECOMMENDATION
A. THAT Council approve the allocation of $141,100 from the Truck and Equipment Replacement Reserve (Plant Account) to fund the capital costs for the addition of four (4) minivans and one (1) compact sedan vehicle to the existing Building Services Fleet to replace the existing five (5) leased units.
B. THAT the estimated annual rent of $39,960 with Engineering Services be provided from the existing Building Services Operating Budget.
GENERAL MANAGER'S COMMENTS
The General Manager of Corporate Services RECOMMENDS approval of A and B.
COUNCIL POLICY
Council approves expenditures from Reserves, including the Truck and Equipment Replacement Reserve (Plant Account).
PURPOSE
The purpose of this report is to seek Council's authority to purchase five (5) vehicles for Building Services Fleet as a replacement for five (5) leased vehicles.
BACKGROUND
Currently, Building Services has 14 vehicles in its fleet, nine (9) are City-owned vehicles and five (5) are leased at a total annual operating budget of $148,300. The vehicles are required to transport maintenance staff and materials for maintenance work in City buildings.
DISCUSSION
Building Services has re-evaluated its fleet and has determined that smaller vehicles are better suited for their current needs. By replacing the five (5) leased panel vans with four (4) minivans and one (1) passenger sedan, operations can continue more effectively and at a lower operating cost.
The decision to downsize the vehicles was based on the following:
· Not all technical/trade staff are required to carry a large stock of material, equipment, etc., with them when they service different location/properties
· Minivans require less parking space, especially in back lanes
· Fuel and maintenance cost savings
· Easy to drive and park
The compact sedan will be used by trades, supervisors and managers to quickly trouble-shoot problems when not required to carry any material or equipment. It also provides a pool vehicle for staff for meetings at the many facilities that Building Services oversees. This vehicle will also require less parking space (front and back lane) and is less expensive to operate.
FINANCIAL IMPLICATIONS
A cost analysis has indicated that it is more economical to purchase smaller vehicles than it is to lease large vehicles, resulting in a net savings of $22,000 annually in replacement, maintenance, fuel and insurance costs. The savings are due to two factors: smaller vehicles result in lower operating costs and vehicles that are purchased result in lower internal rental rates when compared to lease rates. The current leased vehicles are on a month-to-month basis, hence the leases can be terminated without penalty and within short notice. It is thus recommended that the five (5) leased vans be replaced as follows.
New Vehicle |
Capital Cost (including outfitting) |
Annual Rental and Operating Cost | |
1 |
Minivan |
$30,400 |
$7,800 |
2 |
Minivan |
30,400 |
9,000 |
3 |
Minivan |
30,400 |
9,360 |
4 |
Minivan |
30,400 |
8,280 |
5 |
Compact Sedan |
19,500 |
5,520 |
Total |
$141,100 |
$39,960 |
CONCLUSION
The 2005 annual budget for Building Services Fleet is $148,300 of which $62,000 is for five (5) leased vehicles. These costs include the lease, maintenance, insurance and fuel. The estimated total annual costs will be reduced to $39,960, as noted above, if the vehicle purchase is funded from the Truck and Equipment Replacement Reserve (Plant Account) and Building Services repays the capital costs over the life of these vehicles through internal rental rates. The net impact would be an estimated savings of $22,000 to the Building Services annual operating budget commencing in 2005.
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