ADMINISTRATIVE REPORT

Date: July 7, 1998
Author/Local:Brent Krezan/

8-7789

CC File No. 1186

TO:	Vancouver City Council
FROM:	General Manager of Engineering Services
SUBJECT:	Replacement of the City’s Fleet Management and Fuel Dispensing Systems

RECOMMENDATION

A. THAT Council approve the City entering into a contract, to the satisfaction of the Director of Legal Services, with CCG Systems for the acquisition and installation of software to replace the City’s current fleet system, at a maximum cost of $400,000, as detailed in this report. Implicit in this purchase is a City commitment to ongoing systems maintenance and training costs with CCG Systems of $40,000 annually from within the operating budget.

B. THAT Council approve funding of $700,000 for the fleet system (which includes $150,000 for staff resources and $150,000 for hardware) as a loan from the Capital Financing Fund, to be repaid over 5 years from a surcharge of approximately $0.75 per hour on the Engineering Garage composite labour rate.

C. THAT Council approve the replacement of the City’s fuel dispensing system at a total cost of $300,000 (including $50,000 contingency) funded by a loan from the Capital Finance fund, to be repaid by approximately a one cent per litre fuel surcharge over a five year period.

COUNCIL POLICY

On September 9, 1997, Council approved the “Corporate Information Systems Replacement – Award of Contract,” which included in its budget $700,000 for a fleet management system.

Council approval is required to enter into an agreement for the new fleet management system and to approve funding for a new fuel system.

PURPOSE

The purpose of this report is to request Council approval for the city to enter into a contract with CCG Systems for the purchase and implementation of new fleet management system, to authorize a change in funding source for the fleet system, and to authorize funding for the replacement of the city’s fuel dispensing system. This report reviews the implementation plan, and the resources (human and financial) that will be necessary to put the new systems in place.

BACKGROUND

On July 31, 1997, Council considered a report from the Corporate Management Team that described the outcome of the selection process for new corporate information systems. The outcome of the selection process was that CCG was recommended as the fleet management solution and SAP was recommended as the Financial, Human Resources, and Payroll solution.

Acquiring a replacement for the existing fleet system was one of the project budget items in the “Corporate Information Systems Replacement – Award of Contract” report of September 9, 1997. At that time, it was concluded that the implementation of a new fleet system should be delayed until further review of the capabilities of SAP/R3 software to accommodate fleet management needs could be done. The budget item for fleet management was maintained to ensure funding was available when the decision to proceed had been made, given that the existing fleet system will not function once the new core financial system is implemented.
It was noted in the report that a contract with a fleet system vendor would be subject to Council approval.

DISCUSSION

Since September 9, 1997, staff have reviewed the capabilities of SAP/R3 and determined that SAP/R3 can not presently provide an acceptable fleet management solution. In addition, staff have decided that the most appropriate means of integrating SAP/R3 and CCG/Faster C/S is through manual procedures. The staff effort to perform these manual procedures is less than is currently required to handle the same information because of process improvements enabled by the two new systems.

In their investigations, staff also determined that the fuel system should be interfaced to CCG rather than to SAP because fuel consumption is very central to fleet management. The fuel system monitors vehicle usage (km. or hours) and fuel consumed. The current fuel system was purchased in 1990 and is in need of replacement because it fails frequently. When failure occurs, staff intervention is required. Additionally, the current pumps used at most City fueling facilities are also in need of replacement because they have reached the end of their useful service lives. They are inaccurate, prone to leaks, and are not compatible with currently available fuel systems.

The replacement of the fuel system was not contemplated at the time Council approved the SAP Project budget on September 9, 1997. However, replacing the fuel system at this time will result in a more efficient operation. As the dispensing of fuel is a corporate wide function, the proposed source of funds for the project is a loan from the Capital Finance Fund to be repaid by a one cent per litre fuel surcharge over a six year period. This would distribute the cost of the new system over the entire city fleet, based on usage.

SCHEDULE

In order to implement CCG/Faster C/S in time for the anticipated November “Go Live” date for SAP/R3, we recommend the following schedule:

· Late August – install CCG software
· September - two to four weeks of configuration.
· October – ten days of training.
· October – one month of system testing and practice.
· November – go live.
· December through March – Process improvement implementation.

To meet this schedule will require the full-time commitment of three Equipment Services staff to work with CCG throughout the implementation. These same staff will be required for several months after “Go Live” to ensure that the anticipated benefits from the new fleet system are realized.

BUDGET

Existing Budget $700,000

CCG Software $400,000
Staff Resources $150,000
Hardware $150,000
$700,000

Fuel System $250,000

Contingency $50,000

Total $1,000,000

The existing budget of $700,000 is the budget identified in the “Corporate Information Systems Replacement – Award of Contract” report, which was approved by Council September 9, 1997. The source of funds was to be the Information Technology Long Term Financing fund.

Since that time, the Corporate Management Team has proposed an alternate source of funding to be a loan from the Capital Financing fund, to be repaid by a surcharge on the Engineering composite labour rate. This would result in an increase of about $0.75 per hour in the composite rate for a five year pay back period. This source of funding is considered more appropriate as it will distribute costs to beneficiaries of the system through vehicle rental rates. Although this is a replacement system, some improved functionality, along with other process changes being made in the Garage, will result in savings that will, to some extent, offset these cost increases.

This report recommends that the source of funding be changed as proposed.

EXPLANATION OF BUDGET LINES

The CCG budget item includes the purchase and implementation of CCG’s Faster C/S software, as well as providing staff training sessions.

Staff Resources is composed of the salary and fringe benefits for three Equipment Services staff full time for the duration of the fleet system implementation, salary costs for Tradesmen during training sessions, as well as any additional equipment required.

There will be a $40,000 annual cost for maintenance fees and ongoing training which will be funded within the Operating Budget.

Hardware includes the following items to be purchased through Corporate Information Services:

· A server appropriate to run CCG’s Faster C/S
· Database software and licenses
· 26 PCS to be deployed for the use of mechanics
· Network wiring for mechanic sites

Fuel System includes the cost of new pumps, fuel system controllers, a computer, and fuel dispensing software. A contingency is included in the project budget for small changes in project scope should they be justified later in the project (e.g., incorporating the use of barcode or card swipe technology).

CONCLUSION

It is recommended that funding for the fuel system replacement and the contingency, if required, be funded by a loan from the Capital Finance Fund to be repaid by a one cent per litre surcharge over a five year period.

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(c) 1998 City of Vancouver