Nelson Marlborough District Health Board (NMDHB) was looking for ways to reduce its budget deficit in much the same as other Government Agencies. Options that could make operational savings and not impact patient health care were a priority.
The DHB wanted to know if their 243 vehicle fleet was being utilized at an appropriate level. The vehicle fleet was a major cost component next to staff salary and building costs so any sizeable savings would have a noticeable impact on the NMDHB deficit.
Approximately 80% of NMDHB vehicle ownership costs related to just possessing the vehicle regardless of how far each vehicle drove each year. Depreciation and capital charges alone consumed around 70% of the budget. Given these facts, it was clear to Hospital Services Manager, Sandy Russell, who was sponsoring the project, that the number one way to reduce fleet ownership costs was to review utilization levels and dispose of any surplus vehicles to remove the associated fixed costs.
The DHB examined the available fleet management information and came to realize that inaccurate log book records, mileage data and fuel data was of little value when trying to understand how many vehicles were being used for the DHB’s operation. After talking to a number of Fleet Management organizations, NMDHB realized there were no better tools available in the market to undertake the task than those already on hand.
Coincidentally at this time, Derrick Bishop was developing a specialized Fleet Utilization Audit system for large fleet owners. Derrick had been involved in Health sector fleet utilization audits in the past where mileage standards and log book data were the only available options. The so-called ‘best practice’ approaches did not produce a satisfactory result despite the high resource burden and costs involved in auditing a fleet.
Additional interest from NASA and the US Navy convinced Derrick there was a significant opportunity to help these large fleet owners optimize vehicle numbers. True best practice needed to be implemented with electronically collected data, a change management focus and be affordable to make the innovation work.
Bishop Fleet Optimization (BFO) was born with NMDHB as its first customer. Derrick realized early on that the key to effective fleet utilization was accurate current data provision that ideally did not rely on people to collect it. GPS technology with a 5-week equipment hire option was the obvious choice but current systems could not acquire a satellite fix through buildings or so-called “urban canyons”. Some GPS technology even 
struggled to get a fix through the leaves of a tree meaning large data gaps would occur.
Once collected, the data also had to be transformed into management information that was useful to fleet managers and owners. A specialist, flexible database analysis tool was required. Again, nothing was available off-the-shelf for the job so it had to be developed from scratch. After 8 years of R&D, the BFO M-VOS GPS data logger was rolled out along with the BFO QueryBuilder internet-based analysis tool. The NMDHB team provided practical feedback to fine tune QueryBuilder so the reports matched what was required by fleet staff dealing with day-to-day operational issues.
BFO M-VOS loggers were installed in 209 NMDHB vehicles in early 2009 for a 5-week data collection period. The loggers collected utilization data every 5 seconds whenever a vehicle moved. The self-install GPS loggers were locked into the vehicle 12V power sockets by NMDHB fleet staff after receiving a 20-minute training session from Derrick. “The most difficult part of this exercise was making sure vehicles were available for the 1-minute installation” says Derrick. Weekend and after hours installations made the process easier.
A communication document was delivered to all affected staff prior to the installation outlining what was happening, why and when the audit would be undertaken. The whole communication process to staff was easy from the DHB perspective, as BFO had developed simple clear templates for all project activity including collecting fleet data and communication plans. Some managers and staff were initially anxious about the project but this was overcome by senior management being clear and transparent about the reasons for the audit.
The key project objectives were to:
- Optimize the NMDHB vehicle count and composition at each site
- Group NMDHB vehicles into interdepartmental pools where appropriate to support optimal vehicle numbers while still maintaining 100% vehicle availability for staff
- Develop and implement efficient transportation options between Nelson and Wairau hospitals that are located 120km [75 miles] apart
- Assess the fleet car cost breakeven compared to taxi and hire car options.
The results of the exercise exceeded all expectations. NMDHB staff were finally able to understand accurately how the vehicle fleet was being used. Interactive information could now be viewed on graphs as well as visually on Google Earth. BFO’s QueryBuilder produced a number 
of reports showing concurrent vehicle use at a site, by department, cost center and vehicle type down to the individual vehicle level. Map overlays showing activity for individual vehicles, vehicle groups or the entire fleet could be generated for analysis. Decision-making was highly visual making the process transparent and easy to explain to managers and their staff.
“The processed information was a powerful tool in assisting with fleet management as well as changing the behavior of fleet users” said Sandy Russell. “Before the project we had ideas about how our vehicles were being used, but no clear, easy to see picture of what was actually happening. QueryBuilder changed all that”. Concurrent usage graphs showed that by removing the current departmental system of vehicle ownership and creating centralized vehicle pools, a total of 52 vehicles (25%) of the 209 vehicles audited could be safely removed from the fleet with no reduction in service quality. This simply reduced vehicle availability to 100%. Of the two major hospital sites included in the project, Nelson could reduce its fleet from 47 to 33 (30%), and Wairau from 46 to 28 (39%). NMDHB has removed more than 80% of the vehicles recommended for removal saving more than $1M. BFO recommendations also included possible locations for the super pools at both sites.
The data collected also identified numerous opportunities for improving travel efficiency. This included recommendations to relocate particular departments so they are closer to the clients they serviced saving fuel and staff travel time. A major opportunity to improve travel between Nelson and Wairau Hospitals was identified using the QueryBuilder inter-city reporting function. Staff often made a 3 hour return trip between the two sites on a daily basis in multiple vehicles. A regular van service was introduced based on the BFO findings.
Concurrent usage graphs also identified morning versus afternoon use patterns for particular departments. Some departments had developed work patterns where vehicles were predominantly used in the morning with little afternoon use. This had been a custom with staff for many years. Opportunities to stagger vehicle use across the day meant NMDHB was now able to identify the behavior and explore ways to improve utilization and 
delivery the same service with fewer vehicles.
Two other significant findings were an analysis of short trips followed by long parking durations and DHB vehicles overnight use. A BFO QueryBuilder ‘Short Trip – Long Park’ report identified examples where vehicles had been driven to a location [e.g. an airport] and then left for between 5 to 10 hours. A taxi fare was most likely a better option so the fleet vehicle can be used by other staff.
Non-business vehicle use was of concern to the CFO as this attracted fringe benefit tax issues to the DHB. The DHB was able to identify examples of practices that did not meet the DHB’s vehicle use policy. A focus on educating staff on vehicle use policy has significantly reduced such incidents.
The most significant part of any business project comes when findings require behavioral change from staff involved. The DHB was determined that the BFO findings would be fully implemented despite misgivings from some of the staff. A staff communication program commenced outlining the proposed changes and the reasons for these changes. BFO first presented the finding to the Executive team. Department Managers were then able to interactively review the findings on QueryBuilder. Departmental Managers and staff were given time to consider the proposals and the opportunity to respond where concerns still existed. Some of the staff suggestions were included in the final implementation plan. As a result of negotiations with staff over 81% of BFO’s recommendations were implemented. The implementation also included some changes to vehicle use policy.
“As a typical State Health provider, we are always looking for ways to better use the limited resources we have available” says Sandy Russell. “Fleet costs are a significant area that we have never been able to effectively deal with before using traditional utilization analysis methods. We’ve used those methods before and they are time consuming, costly and you can rarely convince staff of the validity of findings. BFO’s approach has turned all that around for us, we now have definitive results as well as a tool to tell us how many vehicles we need and where they should be positioned. Staff may not be entirely happy, but they now accept the findings for what they are. We have managed to improve our utilization levels substantially while reducing our vehicle count by over 20%. Implementing a booking system along with the new pooling system has removed a major headache from the DHB’s operation while reducing our costs.”
