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AGENDA - Special General Committee - 20051128SPECIAL GENERAL COMMITTEE AGENDA 2006 OPERATING BUDGETIST DRAFT 2006 CAPITAL BUDGET 1ST DRAFT N0.05-25 MONDAY, NOVEMBER 28, 2005 8:00 P.M. COUNCIL CNAMBERS AURORA TOWN NALL PUBLIC RELEASE 24/11 /05 TOWN OFAURORA SPECIAL GENERAL COMMITTEE MEETING 2006 - 2008 Capital and Operating Budget - Draft 1 AGENDA NO. 05-25 Monday, November 28, 2005 6:00 p.m. Council Chambers Mayor Jones in the Chair. I DECLARATIONS OF PECUNIARY INTEREST 11 APPROVAL OFAGENDA RECOMMENDED: THAT the content of the Agenda as previously distributed by staff be approved as presented. III DELEGATIONS IV ITEM REQUIRING SEPARATE DISCUSSION 1st Draft— 2006-2008 Capital and Operating Budget Plan (Under Separate Cover) - Protection to Persons and Property - Planning Department - Public Works Department NOTE: To view a complete copy of the 1st Draft — 2006-2008 Capital and Operating Budget Plan, please visit our website www.e-aurora.ca or visit the Aurora Public Library or the Town Hall during business hours. V ADJOURNMENT ADDITIONAL ITEMS TABLED FOR SPECIAL GENERAL COMMITTEE MEETING Monday, November 28, 2005 ➢ Report PW05-028 — Condition Ratings and Reconstruction Funding (Referred to the Budget Discussions at GC — Nov 1 /05) ➢ Report PW05-030 — Fleet Management (Referred to the Budget Discussions at GC — Nov 15/05) ➢ Request for Delegation Status — Mr. Al Wilson, Resident EXTRACT FROM GENERAL COMMITTEE MEETING NO. 05-22 HELD ON TUESDAY, NOVEMBER 1, 2005 & ADOPTED AT COUNCIL ON NOVEMBER 8, 2005 IV ADOPTION OF ITEMS NOT REQUIRING SEPARATE DISCUSSION General Committee recommends: 1. PW05-028 — Town of Aurora Roads — Condition Ratings and Reconstruction Funding THAT Report No. PW05-028 dealing with the condition rating and reconstruction funding for Town of Aurora roads: • be received; and • referred to the 2006 Budget discussions for a determination of the appropriate Pavement Condition Index (PCI) at which the Town's road network will be maintained; and THAT staff be directed to prepare and submit the 10-Year Capital Road Reconstruction Program (2006 — 2015) once Council has given direction regarding the target PCI level at which it wishes to maintain the Town's road network. CARRIED jj�� 4�1� flfk TOWN OF AURORA GENERAL COMMITTEE REPORT No. PW05-028 SUBJECT: Town of Aurora Roads —Condition Ratings and Reconstruction Funding FROM: W. H. Jackson, Director of Public Works DATE: November 1, 2005 RECOMMENDATIONS THAT Report No. PW05-028 dealing with the condition rating and reconstruction funding for Town of Aurora roads: • be received; and referred to the 2006 Budget discussions fora determination of the appropriate Pavement Condition Index (PCI) at which the Town's road network will be maintained; and THAT staff be directed to prepare and submit the 10-Year Capital Road Reconstruction Program (2006 — 2015) once Council has given direction regarding the target PCI level at which it wishes to maintain the Town's road network. BACKGROUND The Town has for several years planned its' road reconstruction projects based on a 10- year program. The two basic inputs to the program are: ➢ the condition rating of the roads; and ➢ the available funding. COMMENTS The purpose of this report is to update Council on the overall condition of our road system and to present information related to the funding requirements to maintain the Town's road network. 1.0 Pavement Management System Pavements, like all infrastructure assets, begin to deteriorate from the moment of construction throughout their design life. The methodology the Town has used since 2002 to rate the condition of its pavements is called the Pavement Condition Index (PCI). This is a visual evaluation method that was developed by the US Army Corps of Engineers. November 1, 2005 - 2 - Report No. PW05-028 The PCI is a 0 to 100-scale measurement of pavement condition based on the theorythat road deterioration dynamics manifest themselves in the surface of the pavement. This is a low -tech, non-proprietary objective technique that is widely accepted for evaluating pavement condition. Nineteen distress factors including, among others, alligator cracking, bleeding, edge cracking, potholes, rutting, block cracking, patching and utility cut patching are identified, rated for severity and measured for quantity. Points are then deducted from 100 (new, perfect pavement) depending on the severity and density measured for the various distress factors. The PCI methodology is a fast and accurate way to effectively evaluate pavement conditions for the purpose of planning for capital improvements and maintenance. Experience with the PCI methodology across North America has resulted in a generally accepted grouping of projects into five categories as listed below in Table No. 1. Table No. 1: PCI Value versus Condition Category PCI VALUE CONDITION CATEGORY 0 — 40 Poor to Failed 41 — 55 Fair 56 — 70 Good 71 — 85 Very Good 86 — 100 Excellent Although using only a single average number to describe the overall condition of a road network is simplistic, it is still an excellent method of obtaining a quick and relatively easily understood snapshot of the pavement condition of Aurora's road network. Staff are of the opinion the residents of Aurora would not likely agree to a situation where the aim is to maintain our road system at a "Fair" or lesser condition. On the other hand, to strive to maintain our system at an "Excellent" rating would be prohibitively costly. Accordingly, it is believed the "Good" to "Very Good" categories are the condition rating we should be aspiring to. The PCI data is entered into a computerized Pavement Management System, known as InfraPave, and based on the PCI data, budget inputs, construction costs, and otherfactors InfraPave generates a recommended road reconstruction program 2.0 Condition Rating of Aurora's Road Network When the PCl/InfraPave pavement management system was implemented in 2002, every paved Town road was inspected and rated. The results of the inspections indicated that in the summer of 2002 the overall average PCI rating for the Town's road network was 72 or "Very Good". To maintain the model, it is necessary to re -inspect the roads periodically to generate new November 1, 2005 - 3 - Report No. PW05-028 PCI's. This allows for the refinement of the predictions the model generates and greater accuracy on the rate of deterioration of the Town's roads. The re -inspections also allow for things the model could not predict (utility cuts made since the last inspection, amount of maintenance work, etc.) to be assessed and factored into the model. The Town's road network was re -inspected during the summer of 2005, and the results of the new inspections show that the overall PCI rating of the network has decreased to 65 in the 3 years between the two inspection cycles. Again, based on experience across North America, a rating between 56 and 70 is considered to be "Good". 3.0 Construction Costs Over the last two years there has been a rapid increase in construction costs, much of which is attributed to the excellent economy in the GTA, which is keeping contractors busy, and the rapid increase in the cost of oil. As an example, the Ministry of Transportation's Fuel Cost Index for the price of diesel fuel in the Toronto area rose 28% from September 2004 to September 2005 and was up 74% over the past 2 years. Based on the above factors, staff is assuming an approximate 30% increase in construction costs for most types of projects for 2006 over the estimates that were used in the last version of the 10-Year Plan. 4.0 Historic Funding Levels The Capital Road Reconstruction Budget for the Town over the past 5 years is as shown below: e 2001 - $1.14M • 2002 - $1.16M 2003 - $1.27M 2004 - $1.30M • 2005-$1.45M ($0.99M from current levy plus $0.46M from the Municipal Capital Reserve). As can be seen, the Capital Roads budget has been increasing over the past several years. However, the increases have not been' sufficient to fund the road reconstruction program at the level necessary to keep the overall condition of the road network from declining as noted under Section 2.0 above. In 2002, it was estimated that the 10-year cost to maintain the road network at the then current PCI level of 72 would be $19.2M. The road reconstruction portion of the 10-Year Plan was based, however, on spending a total of $16.9M, for a shortfall of $2.31VI over the 10-year period. The reason for this is that the road reconstruction budget was assumed to increase from the then -current level of $1.16M to $1.9M by 2009, in order to lessen the impacts on the tax rate. The funding levels assumed in the 2003-2012 version of the 10- Year Plan were as shown below in Chart 1. November 1, 2005 - 4 - Report No. PW05-028 Chart 1: 2003 -2012 Road Reconstruction Funding Assumed in 2003 $2.200,000 $2,000,000 $1,800,000 — — -Yearly Funding Assumed $1,600,000 Funding Required to $1,400,000 Maintain Current PCI lM $1,200,000 $1,000,000 �oo� ryooh ryo� �op1 ryoo0 �o(9 ryoN" tip^^ ryoN"' Date Chart 1 shows that the Town acknowledged the need to increase funding for road reconstruction but that the funding levels from 2003 to 2009 would not be sufficient to maintain the then current PCI level. In fact, it was recognized at the time that the funding shortfall over the 10-year period would result in a decrease in the overall network PCI from 72 in 2003 to a predicted 68 in 2012 5.0 Current Funding Levels The current inspections place the overall PCI at 65, which is a significant drop from a PCI of 72, and is attributable to the early years where the largest under funding occurs, as shown in Chart 1. To maintain this PCI level over the next 10-year period it is estimated that road reconstruction spending must be $27.OM, or an increase of 55% over the currently assumed level. Including the other items that are funded through the Capital reconstruction budget, such as Development Charges projects to construct sidewalks on regional roads and a portion of the salaries of the Public Works staff, the 10-year funding for the Capital program must increase to $28.8M. Continuing with the funding assumptions that were utilized in creating the last version of the 10-Year Plan and acknowledging the higher level of funding now required to maintain the current PCI level of 65 will result in a funding scenario as shown in Chart 2. November 1, 2005 - 5 - Report No. PW05-028 Chart 2: 2006 - 2015 Funding using Current Funding Assumptions $3,000,000 —--......���...._._......,._,. $2,800,000 $2,600,000 $2,400,000 pl $2,200,000 �10s —Yearly Funding c $,800,000 Assumed Funding Required to L? $1,600,000 $1,600,000 Maintain Current PC] $1,400,000 $1,200,000 $1,000,000 `Loo �LpS1 V V Lo^O`0 � P y O^ LO, p Lo,�h Date As can be seen from Chart 2, the Town will expend approximately $21.01VI over the next 10 years using the current funding model, with $19.2M of that being for capital road reconstruction projects. Consequently, we are again looking at an underfunding situation, this time in the order of $7.81VI over the 10 year period. Continuing with the current funding model will result in the network's overall PCI decreasing to a predicted 61 by 2015. 6.0 Solutions An increase in proactive maintenance activities will help, and staff is taking steps to increase our maintenance programs. Some crack sealing has already been done this year and a major crack sealing contract is scheduled to go to Council for approval by the end of 2005. However, the overall problem is that the Town simply does not rebuild enough roads to prevent the overall condition of the network from deteriorating. The implications of this shortfall have become more apparent to staff as they have worked with the prediction model over the last couple of years and while doing so gained a greater understanding of how the overall road network functions. 6.1 2006 Capital Road Reconstruction Program The projects contained in the draft 2006 Capital Budget that Council will shortly be considering are those planned for 2006 in the last version of the 10-Year plan (Report No. PW04-019), with the following exceptions: November 1, 2005 .6. Report No. PW05-028 1) Council approved as part of the 2005 Capital Budget the reconstruction of a portion of Fairway Drive, Glenview Drive, Eldon Crescent and a portion of Devlin Place, but deferred the construction of the project until 2006 pending resolution of the request for traffic calming on Fairway Drive. Given the increases in construction prices discussed above, staff must request an increase in the budget for this project. 2) Moorcrest Drive from Batson Drive to Attridge Drive was previously scheduled for 2006 reconstruction. Upon closer review, staff came to the conclusion that only a short section of Moorcrest Drive adjacent to Batson Drive actually requires reconstruction. The project was therefore not included in the 2006 Capital Budget, and the short section of Moorcrest Drive that does require reconstruction will be included with Batson Drive when Batson is reconstructed in a future year. The projects that are included in the draft 2006 Capital Budget are the following: 1) Reconstruction of Hill Drive; 2) Reconstruction of Mark Street, Cedar Crescent, Oak Court, and Birch Court; 3) Construction of sidewalks, bikeways, and illumination along Wellington Street from Bayview Avenue to the new Recreation Centre; 4) Funding for various traffic calming construction projects; and 5) Portions of the salaries of the Public Works staff involved in the Capital Program. The design of the three main projects (1 to 3 above) is underway and all should be ready for tender in early 2006 pending Council approval of the Budget. The current levy cost for the 2006 capital roads program, as contained in the draft 2006 Capital Budget, is $1,971,000. 6.2 Funding for Remainder of 2006 — 2015 Program As can be seen in Charts 1 and 2, one of the main problems with gradually increasing funding for the road reconstruction program' is gapping. While the budget will eventually reach the desired target level, there will be a large shortfall built up during the years it takes to reach the target level. For this reason, it is proposed to increase the capital road reconstruction budget rapidly over a 2 year period in order to reach the target level of spending in 2008. For 2009 and future years, funding would increase at the rate of inflation. Based on the above, the proposed funding for the 2006 — 2015 period is shown below in Chart 3. November 1, 2005 .7. Report No. PW05-028 Chart 3: Proposed 2006 - 2015 Capital Finding $3,500,000 i e $3,000,000 _ — Yearly Funding w $2,500,000 Assumed c $2,000,000 Funding Required U. to Maintain Current $1,500,000 PCI $1,000, 000 �o�o Date FINANCIAL IMPLICATIONS To maintain the Town's road network at the current overall PCI level, spending must increase to $28.8M over the next 10 years. In general, these funds are obtained from the current levy portion of the budget. However, the Town will shortly start receiving some revenues from the Federal government under the fuel tax rebate program. These revenues can be applied to certain types of projects, including the Capital Reconstruction Program, as long as they are not used to lowerthe tax rate. Given that it is proposed to significantly increase the road reconstruction budget over the next 10-year period, application of the gas tax revenue to our road reconstruction program would, it is believed, fall under the criteria for this rebate which will help to reduce the additional funding that will be required if the Town's road network is to be maintained at its current level. OPTIONS Council must decide at what condition level it wishes to see the Town's road network. As noted in this report, the existing pavement condition rating for the Town is 65. This is considered to be in the "Good" category but staff is of the opinion that residents and business people of the Town would not like to see this rating deteriorate much further. Staff have received an increasing number of complaints over the past few years about the poor condition of the Town's roads, and anticipate this will only increase if the condition of the network is allowed to deteriorate further. November 1, 2005 - 8 - Report No. PW05-028 There is a direct relationship between the PCI rating and the cost to maintain that rating. Options for target PCI levels that Council may wish to adopt, and the associated 10 year funding required to achieve those levels, are shown in Table 1. Table 1 — Target PCI Levels and Associated Funding Requirements Network Average PCI Level I Required 10 Year Reconstruction Fundino* 65.4 60 1 Does not include $1.8M required for DC Droiects CONCLUSIONS $16.1 salaries Although the actual amount approved fora particularyear's road reconstruction program is subject to approval by Council during deliberations for the budget for the year, it is necessary to have an overall model of how much funding will be available overthe years to allow for proper on -going road reconstruction planning. As has been shown in the body of this report, the overall condition of the Town's road network is deteriorating because of the shortfall in funding for road reconstruction. Although Council has, in the past, acknowledged this problem and is working toward an increased road reconstruction budget, two factors have combined to adversely impact road reconstruction funding and hence our overall pavement condition rating. The first factor is the gap that exists, especially in the early years of our 10-year plans, between the funding required and the funding provided. In an effort to minimize the adverse impact of increases in road reconstruction funding, Council has "ramped" up this portion of the budget to achieve the required funding level over a period of up to 8 years. Prior to attaining the required funding level, however, there is a yearly shortfall and this is reflected in the reduced pavement condition rating or a deterioration in the condition of our road network. The second factor is the huge jump in prices experienced for road reconstruction projects in recent years. A very busy construction sector in the GTA and significant increases in oil prices particularly over the last year have driven this price increase. This price increase makes it much harder to "catch-up" with our road reconstruction funding requirements. Our present overall pavement condition rating for the Town is 65. This is in the middle of the range that has generally been considered "Good" over the various North American users. To maintain this level over the next 10 years, road reconstruction funding will need to be increased to $28.8M or an average yearly expenditure of $2.88M. Once Council has given direction on the target PCI level that is to be used in preparation of the 10-Year Capital Road Reconstruction Plan (2006 — 2015), staff will prepare and submit the Plan for Council's consideration. November 1, 2005 - 9 - Report No PW05-028 LINK TO STRATEGIC PLAN Goal "C" speaks to continuing the well -planned moderate growth of the Town. This goal is supported by the "Strategic Action" stating that Council will "incorporate measures into Town policies and programs which contribute to a safe living and working environment". The Strategic Plan includes the action to "address matters affecting public safety, property and the environment and will formulate specific measures to deal with them." ATTACHMENTS None. PRE -SUBMISSION REVIEW Management Team Meeting — October 26, 2005 Prepared by. David Atkins, Manager of Engineering Services, ext. 4382 xr W. W. Jackson Director of Public Works EXTRACT FROM GENERAL COMMITTEE MEETING NO. 05-23 HELD ON TUESDAY, NOVEMBER 15, 2005 & ADOPTED AT COUNCIL ON NOVEMBER 22, 2005 VI CONSIDERATION OF ITEMS REQUIRING SEPARATE DISCUSSION 3. PW05-030 — Fleet Management Review General Committee recommends: THAT report PW05-030 detailing the results of the Fleet Management Review, undertaken by IDM Consultants dated October 28, 2005, be accepted by Council; and THAT staff be requested to include in the 2006 budget for discussion an additional: • mechanic position at full time for four months (1/3 FTE); • clerk position at half time for twelve months (1/2 FTE); and THAT staff be requested to report further • on the results of the review on the feasibility and pay -back period for the installation of a dyed diesel tank and dispenser; • before any stand alone Fleet Management System is purchased; • on the feasibility and cost of providing additional repair bays and a wash bay; and THAT staff be requested to implement the balance of the recommendations contained within the above noted IDM Consultants report; and THAT staff be authorized to employ IDM Consultants for implementation of the fleet management improvements utilizing the remaining capital budget funds allocated for the Fleet Management Review completed on October 28, 2005 all as described in report PW05-030. CARRIED TOWN OF AURORA GENERAL COMMITTEE REPORT No. PW05-030 SUBJECT: Fleet Management Review FROM: W. H. Jackson, Director of Public Works DATE: November 15, 2005 RECOMMENDATIONS THAT Report No. PW05-030 detailing the results of the Fleet Management Review, undertaken by IDM Consultants dated October 28, 2005, be accepted by Council; THAT staff be requested to implement the recommendations contained within the above noted !DM Consultants report; THAT staff be requested to include in the 2006 budget for discussion an additional: • mechanic position at full time for four months (113 FTE); and • clerk position at half time for twelve months (112 FTE); THAT staff be requested to report further: • on the results of the review on the feasibility and pay -back period for the installation of a dyed diesel tank and dispenser; • before any stand alone Fleet Management System is purchased; and • on the feasibility and cost of providing additional repair bays and a wash bay, and THAT staff be authorized to employ IDM Consultants for implementation of the fleet management improvements utilizing the remaining capital budget funds allocated for the Fleet Management Review completed on October, 28, 2005 all as described in Report No. PW05-030 BACKGROUND As part of the 2005 Budget deliberations, Council authorized the undertaking of a Fleet Management Review. A Request for Proposals for a Fleet Management Review was issued in April of 2005 and the consulting firm, IDM Consultants, was commissioned to do the study. The final report was submitted October 28, 2005 and a copy of the full report is available for review in the Public Works Department. November 15, 2005 - 2 - Report No. PW05-030 COMMENTS 1. Basis of the Fleet Management Review The goal of fleet management as administered by the Department of Public Works (DPW) is: "To provide responsible, flexible, efficient and comprehensive fleet services to support the delivery of public programs and services': The objectives of DPW fleet *management are to: • minimize life -cycle vehicle and equipment costs; • ensure fiscal performance; • improve customer satisfaction,- * "green" the fleet where appropriate; and • optimize scheduled fleet replacement. The purpose of the Fleet Management Review was to develop strategies to achieve the stated objectives in support of the Goal. 2. Fleet Management Review Study Process The consulting firm of IDM Consultants began work on this project in June 2005. The intent of the study was to analyze the Town's fleet operation from acquisition to disposal, including a review of acquisition, replacement, disposal, specifications, utilization, mechanic productivity, parts management, outsourced repairs, fleet management information, fuel management and fleet maintenance. The methodology used to prepare the analysis involved the following elements: 2.1 Collection of Information from the Town This included our operating and capital budgets, vehicle and equipment lists, preventative maintenance plan, copies of various forms together with 2004 maintenance, fuel and repair costs for vehicles and equipment. 2.2 Inspection of Fleet by Independent Licensed Mechanic To provide a base line evaluation of the condition of our fleet, a representative November 15, 2005 - 3 - Report No. PW05-030 cross-section of the fleet was inspected by a licensed mechanic experienced in Public Works and Parks equipment maintenance. 049[ fiiM'r71=2 1 - Interviews and discussions were conducted with upwards of 15 Public Works, Leisure Services, Financial Services, Purchasing and Information Services staff. 2.4 Outside Information Discussions were held with other municipalities concerning various aspects of their fleet systems including a visit to a municipality with a similar population to Aurora that is in the process of developing a fleet management system. Information obtained via various web sites was also utilized during the conduct of this study. 3.0 Results of the Fleet Management Review Exhibit "A" is the Executive Summary for the Fleet Management Review. As the summary notes, although cost control presently exists and there are "...willing and able people..." working for the Town, there are areas of Fleet Management that require upgrading. Significant among these areas requiring upgrading are: • ensuring sustainability of the Fleet Replacement Reserve; + establishment of a proactive customer response; • development of a Fleet Management System (both in the interim and long term time periods); • establishment of full and equitable cost recovery; • replacement of the existing fuel dispensers and fuel management system; and • consideration of expansion of the garage to 4 bays with an enclosed wash bay. Beyond the areas needing attention, the Consultants found that Aurora generally has "...the appropriate types of equipment..." and "...the quantity of equipment appears to be reasonable when compared to communities of a similar size." Overall, "...the fleet is well maintained ..." with the majority of the 49 units inspected being placed in the Good (49%) or Fair (49%) category with respect to mechanical condition. There is obviously an effort on staff's part to do the right thing in terms of maintenance and cost management but, as noted above, there are areas that require attention both in the immediate term and over the long term. 4.0 Recommendations of the Fleet Management Review Appendix "B" is a list of the recommendations of the Fleet Management Review by priority together with staff's comments. November 15, 2005 - 4 - Report No. PW05-030 There are three time frames provided in the recommendation list: Immediate Term (IT) i.e. less than 1 year; Mid Term (MT) i.e. 2 — 3 years; Long Term (LT) i.e. greater than 3 years. Of the 41 recommendations listed, 25 fall under Immediate Term, 8 fall under Mid Term and 8 fall under Long Term. It is noted, however, that staff believe one of the Mid Term recommendations (No. 5.3.2 dealing with establishing a'/z Full Time Equivalent (FTE) staff position (clerk) to work on fleet management) should more appropriately be placed under the Immediate Term category. In general, the Immediate Term recommendations deal with the need to start collecting data with which the appropriate fleet management decisions can be made. These recommendations talk to the need to review the capital replacement plan and adjust the fleet replacement profile as soon as possible. Certain reporting processes and development of forms are suggested. Implementation of these items will allow collection of the data noted above. The Mid Term recommendations are focused on the continued improvement to the cost profiles of the Town's fleet as well as the heed to evaluate the physical attributes of fleet management outside of vehicles and equipment such as the fuel storage and control plan and the need for additional mechanic bays and wash area. The Long Term recommendations are approaching the steady state condition where there is a history of information available that allows for considered and appropriate decisions. This information is not only used by the Fleet Management group but also the various vehicle user groups to assist in their planning and budgeting as it relates to vehicle and equipment costs. The two recommendations Council may have the most concern with because they add to the Public Works complement are the addition of a mechanic for 4 months during the summer season (1/3 FTE) and a half time fleet clerk (1/2 FTE). In staff's opinion, both of these positions are essential if staff is to implement the other recommendations of the Fleet Management Review. Data collection and dissemination is essential for efficient fleet management, however, data organization and presentation will not happen without the proposed additional half time fleet clerk. Similarly, a much needed increase in the level of service to a major user of vehicles and equipment (Parks Department) cannot occur without the addition of a mechanic for the summer months. 5.0 Next Steps Staff has reviewed the Consultants report and is in agreement with the various recommendations other than the placement of Recommendation No. 5.3.2 "Establish a''/z FTE (Clerk) for Fleet" in the Mid Term category. The text of the Consultants report notes November 15, 2005 - 5 - Report No. PW05-030 that the "...fleet clerical resources are low to non -existing. Fleet management can not occur without data and data will not exist without clerical effort. Clerical resources are especially necessary in this situation where the responsible staff have numerous other responsibilities." Inconsideration of this observation, staff are of the opinion the additional clerical assistance is an Immediate Term item. Other than the above, it is staff's intent (assuming Council approval) to implement the recommendations of the Consultant's report using the time frames suggested by the consultant. As noted earlier in this report, however, the Immediate Term category contains some 25 items and it may prove difficult to implement all of these recommendations given the winter maintenance time constraints and the other duties of the personnel involved in fleet management. In this regard, the 2005 Capital Budget set aside $50,000 for the conduct of the Fleet Management Review. The study is complete and the final cost is $39,100. To ensure implementation of this study proceeds and the initiative to improve on our fleet management performance continues, staff is of the opinion the funds remaining in this capital budget item should be used to further retain the Consultant to assist in certain implementation items. The particular areas of implementation that staff see the Consultant assisting relate to recommendations 4.2.1, 4.4.4, 4.6.3, 4.10.3, 4.11.1, 5.1.1, and 5.2.2 of the Immediate category and, if budget permits, recommendations 4.10.2, 5.1.2 and 5.6.1 of the Mid Term category. OPTIONS There are a number of options available for Council in this regard. Council may wish staff to continue with the existing fleet management process and not implement any of the Consultant's recommendations. Council may wish to select those Consultant recommendations it wishes to see implemented and delete others. It should be noted however, that the recommendations are not mutually exclusive and some build on the momentum and abilities achieved by implementation of other recommendations. The proposed additional personnel will have an immediate and direct impact on the ability of the Fleet Manager to provide a cost efficient and effective operation. Eliminating these two positions will seriously hamper the Fleet Manager in this regard. FINANCIAL IMPLICATIONS The major cost implications associated with the Consultants recommendations for the Immediate Term are the addition of a mechanic for the 4 month summer season at an estimated cost of $14,000 and the addition of FTE Fleet Clerk for 2005 at an estimated $17,600. It should be noted that approximately 1/3 of the costs for both of these positions are chargeable to the water and wastewater self supporting accounts and, accordingly, are not reflected on the current levy portion of the budget. November 15. 2005 - 6 - Report No. PW05-030 In addition to the above two items, the Consultants report identified 4 other "Potential Costs" emanating from their report as noted below: • Replace Gasboy and dispensers $30,000 • Install dyed diesel tank and dispenser $22,000 • Intermediate Fleet Management System $20,000 • Wash-bay/Repair-bay addition $600,000 The Gasboy system and dispensers is our existing gas pump apparatus together with the control mechanism. Staff had identified that the fuel pumps (or dispensers) were to be replaced in our 2005 Budget (Project ID 34206) with a cost of $20,000 and, accordingly, staff will include an additional $10,000 in the 2006 Budget. Staff is of the opinion that the funds for this system should be considered in the same light as the replacement of vehicles and equipment and should be recovered from the vehicle reserve fund, as well as the water/wastewater and stormwater accounts. The decision to install a dyed diesel tank and dispenser is dependant upon the pay back period. Dyed diesel is used in non -licensed vehicles and during those times that an on - road vehicle is only providing power to a subsidiary piece of equipment. Dyed diesel is not subject to Federal taxes hence the saving in using this fuel. One of the Immediate Term recommendations from the study (No. 4.10.3) is to evaluate the potential cost benefit of using this fuel. Accordingly, a further report to Council will be necessary once the evaluation has been undertaken. Preliminary surveys of our neighbouring municipalities show that roughly half are to some degree using dyed diesel and taking advantage of the fuel cost savings. This is also one of the areas identified earlier where the present consultant could assist in implementation of their report. The need for an intermediate fleet management system relates directly to the implementation timetable of the Financial Services Department to -install a comparable system within the Town's newly updated financial systems capabilities. The Consultant was concerned that delay of any significance in acquiring a fleet management system would ultimately delay the benefits associated with such a system. Discussions with the appropriate staff members are on -going in this regard and Council will be informed of the preferred approach once it is finalized. The additional wash-bay/repair-bay is a Mid Term recommendation (No. 4.10.1) and requires further analysis and research. It is noted, however, that an appropriate wash facility has also been identified in the Salt Management Plan that will be before your Council shortly. Staff will report further on this matter as appropriate. CONCLUSIONS A Fleet Management Review has been undertaken utilizing the existing fleet information, costing, condition, garage operations and user commentary. Based on the information November 15, 2005 - 7 - Report No. PW05-030 obtained; the Consultant has made 41 recommendations spaced across three time periods (Immediate, Mid and Long Term). In general, the Consultant found the Town's fleet is managed and maintained as well as can be expected with the processes and tools that are available to staff. Nevertheless, the Consultant has made various recommendations with the view to ultimately creating a much more effective and efficient fleet management operation. Staff participated fully in the conduct of this study and is in agreement with the recommendations with one exception as noted in the body of this report. An implementation process has begun and Council has been asked to endorse the recommendations of the report and allow staff to move quickly ahead with implementation of some of the immediate recommendations by retaining the study Consultant up to a specified upset funding limit. LINK TO STRATEGIC PLAN Goal A — To Maintain a Well Managed and Fiscally Responsible Municipality ATTACHMENTS Appendix "A" — Executive Summary of the Fleet Management Review Appendix "B" — List of Recommendations from the Fleet Management Review. PRE -SUBMISSION REVIEW Management Team Meeting — November 9, 2005 Prepared by. W. H. Jackson, Director of Public Works, Ext.# 4371 ;a Z� W. H. Jacksorr` Director of Public Works Town of Aurora — Final Report APPENDIX "A" October 2005 Fleet Management Study Executive Summa The Town of Aurora recently consolidated its vehicle and equipment fleets into one, within the Department of Public Works (DPW). The combined fleet consists of approximately 200 units, predominately used for Roads Operations and Parks Operations. Other users are Water/Wastewater, Traffic, Library Square, the Community Centre and the Leisure Complex. By -Law Enforcement and the Aurora/Newmarket Fire Department are customers for fuel only. The fleet is maintained in a two bay section of the DPW building at Scanlon Court. Parks Operations are also located at Scanlon Court. In 2004 the total expenditure for fleets was $1 M. In 2005 the budget for the combined fleet was set at $0.75M. To achieve this aggressive cost control on a consistent basis, the Town commissioned a Fleet Management Review to analyze the entire fleet system from acquisition to disposal. The previous replacement schedules and planned contributions to the replacement reserve were adequate, but various deferments have resulted in the fleet being 1-2 years behind schedule for replacements. A 15 year replacement schedule was developed for the combined fleet. It has been provided separately. The analysis showed a required gross annual reserve input of $485K. This could be reduced to $434K and $401 K respectively with allowances for salvage and fund interest. The analysis also indicates that the reserve fund can maintain a positive cash flow forthe on -going scheduled replacements with the reserve contribution of $401 K per year, Some additional input would be required if it is necessary to replace the majority of the overdue equipment. Further reductions would be possible with a Fleet Management System (FMS) in place to record fleet costs. Currently, there is no system in place to capture the cost of individual units. The financial accounting system records labour, material, parts, fuel, etc. in line item accounts, but has no capability to assign costs to individual vehicles. Without a unit costing system for the fleet, there is no data to analysis for "fleet management" or use in the activity based costing system. It is the Town's intent that all fleet users will reimburse Fleet for the actual costs of owning and maintaining vehicles/equipment and that the fleet budget will net to zero each year. Currently Public Works is over paying for equipment use through the activity based costing (ABC) system. (Using MTO equipment rental rates that do not reflect Aurora's actual equipment cost). Leisure Services cannot participate in the ABC system because there is no usage or cost data (past or current) to develop equipment rental rates. The 2005 Leisure Services budget contains funding for a contribution to reserves but has no funding to reimburse Fleet for fuel, maintenance, insurance, etc. The Fleet garage is staffed with two mechanics. A preventative maintenance system is in place, the fleet is adequately maintained and as of the end of June the expenditure IDM Consultants Town of Aurora — Final Report October 2005 Fleet Management Study for fleet maintenance was within budget. However, due to the lack of a FMS, the maintenance program is reactive instead of proactive. Fleet, for various reasons, is still in the process of adapting to the realities of a diverse customer base. Plans are in process to provide seasonal emphasis to Parks and Roads for service, over -haul programs and a proactive PM program. The completion of a corporately integrated fleet management system is 3 to 5 years away. In the interim Fleet will need to develop temporary (Excel spread sheets) or intermediate (stand alone canned software) methods of collecting and recording fleet data for management analysis, the ABC system and cost recovery from Leisure Services. The fuel dispensing and recording system is beyond efficient support for both the hardware and the software, and needs to be replaced. The existing repair garage bays are too narrow for the larger equipment. The facility does not have a wash -bay, which is necessary for corrosion control, salt management and public image. The recommendations in this report are too numerous to recount in an executive summary but can be summarized as follows; • Make and keep a policy decision to maintain a sustainable Fleet Replacement Reserve and Fleet by making the required annual contribution. • Establish formal proactive Fleet customer specific seasonal service and over- haul programs. • Develop an interim Fleet Management System to bridge to the integrated corporate FMS. Establish full and equitable cost recovery from all Fleet users. • Replace the fuel dispensers and fuel management system with a system that will complement the FMS. • Consider expanding the repair garage from 2 to 4 bays and adding an enclosed wash bay. The Town of Aurora has a Vehicle/Equipment Fleet and expects Fleet Management but Aurora does not have a Fleet Management System and will not achieve effective Fleet Management without an FMS. However Aurora has willing and able people that want a managed fleet, an adequate fleet, a regularly replaced fleet and an.adequately maintained fleet. IDM Consultants APPENDIX "B" — LIST OF RECOMMENDATIONS BY PRIORITY WITH STAFF COMMENTS RECOMMENDATION FROM FLEET MANAGEMENT REVIEW STAFF COMMENTS 4.1.1 [17] to prepare for the annual capital budget, perform an equipment Will undertake this for a least the overdue equipment evaluation on all equipment that is overdue or within 3 years of scheduled and that equipment that is scheduled for replacement. A sample evaluation form is attached in Appendix D. Use the replacement in 2006 and will adjust the 2006 capital evaluations to adjust the individual units in the master Fleet Replacement budget as required. Schedule (FRS) (The Excel spread sheet) and to prepare the capital equipment In subsequent years, will undertake review as noted budget. in recommendation. 4.2.1 [IT] Adjust the Fleet Replacement Profile (FRP) by reconciling the Fleet Will implement this recommendation as time permits. Replacement Schedule (from 4.1) with the current actual fleet condition and It will be difficult to complete this in time for the 2006 needs to establish a baseline FRP and average annual cost for 2006. Analyze the budget deliberations. "Overdue" equipment and adjust the "life" or remove the reserve contribution if there is no intention to replace it. If a capital refurbishment is planned (e.g. Grader) reset the reserve contribution and life accordingly. 4.2.2 [IT] Review and adjust the 2005 replacement cost estimates used in the Will implement this recommendation immediately. FRS to make them as representative as is practical of the equipment format and attachments required in Aurora for 2006. Continue to use the simplified system of up -dating the replacement costs to the current budget year. _ 4.3.1 [IT] Revise the budget line items for 2006 as indicated in Figure 10, to Will work with the Financial Services Department to enable reconciliation and management control. implement this recommendation as soon as possible. Figure 10 — Recommended Fleet Budget Line Items Sala Salary Current Descriptions Recommended Accounts Comments Benefits Benefits Wage Recovery Wage Recovery Internal Equipment Internal Equipment Rental Recovery (current) Rental through time cards for activitv based costin Water and Sewer. Recovery (proposed) on a "time and materials" basis from Parks and Leisure. Fuel All fuel (and only fuel). Fuel Recovery Fuel recovered from non -fleet vehicles. Net fuel expense would be the fuel used by Fleet Vehicle Supplies Vehicle Supplies/Materials Anything that is not "Parts" or "Fuel' Vehicle Supplies- Vehicle Supplies/Materials Supplies/materials Recovery Recovery recovered from non - fleet vehicles. Net expense would be the supplies/materials used by Fleet Operating Materials In-house Parts Any parts purchased to be held in the parts room for Fleet use. Direct Purchase Parts Parts that are purchased and installed as part of a Vehicle labour, for an out - sourced repair/service. Tools Tools Purchase and repair of Fleet owned tools. Equipment Repairs Equipment Repairs (Shop) Purchase, service and repair of shop equipment. E.g. Grinder, welder, hoist, dia nostic, etc. Insurance Fees Insurance Fees Contribution to Contribution Reserves Reserves(RL efc) Contribution to Water I Contribution to Note: Proposed changes are in bold italics. 4.4.1 [IT] Continue using the activity based costing system and MTO standard Will continue as noted. rates to recover fleet costs from Roads/Traffic/Water/Sewer for 2005 and 2006. 4.4.2 [IT] Obtain a monthly "Equipment Use Report' from Accounting. This report Will work with the Financial Services Del: does not exist but the data is in the system and can be accessed. The suggested implement this recommendation in 2006. report format is as follows; Figure 11— Equipment Rent and Use Report Equipment Current Month Last 12 Months Number to 3 Etc. Note: "Last 1Z' includes the current month and thus the report can be easily used for budget projections. The December report automatically becomes the yearend annual report Total Hours I xxxx I xxxx I xxxx I xxxxx 4.4.4 [IT] Develop the procedures to cost recover from Parks/Leisure for 2006 as Will develop these procedures for implementation in follows; 2006. • Adopt a Mechanic's time sheet that lists each vehicle worked on with the corresponding hours. Maintain a mechanic Shop Rate that includes the basic mechanic overheads — vacation, statutory holidays, other paid absences, allowances, etc. (This will be developed else where in this report.) • Mechanics to list all in-house parts (but not direct purchase parts) and price on the Work Order. • Mechanics to code all direct -purchase parts packing slips and out - sourced repair invoices to the equipment number. • Calculate the annual fixed costs — license, insurance and reserve contribution - associated with Parks/Leisure equipment and divide by 12. The monthly cost could change slightly as vehicles are added to and removed from the fleet. • Fuel is currently itemized and totaled through the GasBoy system. • Develop a system of Excel spreadsheet files to record Mechanic Hours, In-house parts, Direct -purchase parts and Out -sourced repair for Parks/Leisure equipment on a daily basis. At month end summarize the cost totals for hours (at the shop rate), parts, out - sourced repairs and fuel and forward to Accounting to debit Parks/Leisure and credit the Fleet Internal Equipment Recovery account. Note: This is intended to be a monthly summary of the five cost components discussed above, not itemized per vehicle/equipment. The majority of the above actions are currently being carried out to some degree. They are not being recorded in an organized manner to allow effective use. 4.4.6 [IT] that an allowance of $310,000 for Internal Equipment Recovery is This budget requirement will be forwarded to the carried in the Parks/Leisure 2006 budget. This figure is an order of magnitude Department of Leisure Services and the Financial number and will be refined when the available information from 2005 is analyzed. Services Department. The components are; • Reserve contribution ........ $161,000 • Labour ...........................$ 30,000 • Fuel .............................. $ 35,000 • Parts/Supplies/Repairs ..... $ 84,000 Allowances are made in the reserve contribution for salvage and fund interest. 4.5.1 [IT] Budget to replace the fuel management system during 2006 A capital budget item has been included in the 2006 bud et to implement this recommendation. 4.5.2 [IT] Develop a month end report that reconciles Fuel delivered with Fuel A report will be developed to implement this pumped (dispenser total meter) with Fuel put into vehicles/equipment recommendation in 2006. 4.6.1 [IT] Install a visual manual PM scheduling board prominently in the garage, The visual board and user contact will be established maintain it daily and contact the user when a vehicle is over due for service. as soon as possible in 2006. 4.6.2 [IT] Assign a member of the Fleet staff to read and record the kilometer and This relates to Recommendation 5.3.2 regarding the hour meters on all applicable vehicles/equipment quarterly, at least. This can be need for a part time (112 time) Fleet Clerk. used to check the usage based PM schedule for over due units. 5 4.6.3 [IT] Specify durable hour meters on all motorized vehicles/equipment that Will implement this recommendation for 2006. are large enough to accommodate the device. Purchase a quantity for stock for units that do not have a working hour meter and install during a scheduled inspection. 4.7.1 [IT] Continue to operate the fleet in-house parts room on a pre charged Will continue to operate as stated. basis. Use a dedicated account, as recommended in the Fleet Operating Budget section to enable reconciliation and potential management. 4.8.1 [IT] Continue out -sourcing for specialty repairs and peak volume. Will continue to out -source as stated. 4.9.1 [IT] The Fleet Manager will sign -off on all vehicle and equipment Implementation of this recommendation is scheduled specifications, both tender and quotation, and forward them to Purchasing. for 2007. • The fleet Manager is to be responsible for the preparation of all specifications and tenders for vehicles up to and including 2 Ton trucks. • The user group will prepare the specifications for specialty vehicles such as aerial/flusher/garbage/sign trucks. • The user group will prepare the specifications for user group specific equipment. E.g. Sweeper, mower, tractor, trailer, roller, chipper, small equipment, etc. 4.10.3 [IT] Analyze the potential cost benefit of reclaiming or avoiding the road tax This recommendation will be undertaken as soon as on fuel used in off -road applications. possible in 2006. 4.11.1 [IT] that a combination time sheet/work control sheet be developed for the The appropriate document will be developed for use mechanics that will record the information needed by payroll/accounting/DPW beginning January 1, 2006. administration and be a traceable record of service and repairs. 4.11.2 [IT] that a two digit system of repair codes be adopted for use beginning in A two digit system of repair codes will be 2006. A sample is attached as Appendix G. implemented beginning January 1, 2006. 5.1.1 [IT] Initiate the various recommendations made elsewhere in this report to Will implement as above. acquire the limited available fleet data in the interim to acquiring a FMS. 5.2.1 [IT] Provide increased maintenance mechanic coverage during the Additional mechanic assistance is included in the aftemoon/evening period of the Park's Operations summer maintenance peak, to 2006 budget specifically to deal with the summer prepare equipment for the next day. This could be accomplished by staggered Park's operations. hours, overtime or a temporary seasonal employee. 5.2.2 [IT] Plan formal seasonal maintenance programs for Parks/Leisure Formal maintenance programs for Parks/Leisure and equipment in March/April and for Roads equipment in September/October. The Roads will be developed in 2006 as recommended. planning portion is to involve the Parks' or Roads' staff as applicable, which are to be consulted before carrying out major unforeseen repair expenditures. 5.3.1 [IT] the establishment of a working Lead Hand mechanic would provide Will initiate discussions with Human Resources and organizational consistency (with the three Lead Hands currently reporting to the the Union toward implementation of this Supervisor), responsibility/effectiveness/customer focus, and keep the Supervisor recommendation as soon as possible in 2006. in a supervisory role instead of hands-on. 5.4.1 [IT] Establish a Fleet Advisory Committee chaired by the Director of Public Will establish the Fleet Advisory Committee in 2006. Works with two members each from PW and Leisure Services, and one member from Fleet. Representatives from Corporate Services, Financial Services, etc. would be invited by the Chairman as appropriate. This committee should meet quarterly and review planning level items such as; • Proposed replacement program • Seasonal maintenance programs • Vehicle standards • Strategies for cost control • Criteria/Strategies for rent or lease vs own • Vehicle use policy 5.5.1 [IT] the business case for all vehicle/equipment leasing or renting is to be This activity will form part of the Fleet Advisory approved by the director responsible for fleet, the Director of Public Works. Committee and will be vetted through the Financial ,. Services De artment. 4.1.2[M7] Develop Aurora specific useful life criteria and adopt a more detailed Will implement this recommendation as the and informative equipment evaluation form. A sample is attached in Appendix E. information re life cycle becomes available. 4.2.3 [MT] in 2006, develop a formula for calculating reserve contributions that Will implement this recommendation includes salvage and fund interest. the Financial Services Department. 4.4.3 [MT] Develop a report for hours only, with 12 columns for a rolling 12-month Will implement this recommendation as the display and a last 12 month column. This report would enable Fleet and information becomes available. Operations to see seasonal use patterns for planning purposes. It could also be a tool for the equipment users to plan work and reconcile equipment needs. Figure 12 — Equipment Annual Use Profile Report .. ©=Fri 151M with 4.10.1 [MT] Construct an addition to the end of the building to provide four repair Will review this recommendation and present budget bays and a wash bay. A suggested solution is attached as Appendix F. scenarios for the 2007 budget. 4.10.2 [MT] Investigate and prepare a business plan for DPW fuel storage and Will undertake this investigation during 2006 for input control systems that will consider; to the 2007 budget. • Remaining life of the underground tanks • Liability of an in-house system • Remaining life of the dispensers • Necessity to replace the fuel management system ( see section 4.5) • Cost benefit of in-house vs out -sourcing to local service stations Note: The current cost of replacing a two tank, two dispenser fuel system (including, control, dispensing, tanks, environmental safety and removal of old under ground tanks), is in the $250,000 range. 5.1.2 [MT] CONSIDER obtaining a stand alone "canned" fleet management Will discuss this matter with the Financial Services system to use while the planned integrated system is developed and installed. Department to ascertain most effective and efficient These systems can be obtained for as little as $10,000 plus hardware and staff method of providing Fleet with the necessary time. management system. Logic — It will take a minimum of two years from scheduled start to obtain any meaningful data, which puts fleet data 3 to 5 years away. If a canned system was A simple system will be implemented at the start of used from the start of 2006, Fleet will have 3 to 5 years of data and experience at 2006 to ensure collection of data has begun. switch -over to the integrated system. If they wait they will have no data. 5.3.2 [MT] Establish a''/2 FTE (clerk) for Fleet. This is really an Immediate Term requirement and this position has been included in the 2006 budget estimates. 5.6.1 [MT] that a Fleet Policy Manual be developed. A Fleet Policy Manual will be developed to include all of the suggested requirements. 4.1.3[LT Goal] When a fleet management costing system is in place, use the data Will implement this recommendation as the fleet to develop life cycle cost criteria for equipment replacement decisions. management costing system becomes available. 4.2.4 [LT Goal] when accurate complete fleet cost and use data are available, Will implement this recommendation as the complete develop a reserve contribution formula that considers inflation, salvage, interest fleet cost and use data becomes available. and use factors 4.4.5 [LT Goal] Develop Fleet Management System (FMS) reports that will Will implement this recommendation following include the requirements of 4.4.4 above plus be itemized by unit. implementation of appropriate cost recovery procedures 4.6.4 [LT Goal] to have exception reports in the FMS that will issue automatically Will develop the criteria to identify exceptions and as required to alert fleet management of variances. alert fleet management as appropriate. 4.7.2 [LT Goal] When the Inventory Module of the FMS is available the in-house Will implement this recommendation when Inventory parts account could be used as a holding account. The mechanics could withdraw Module of the FMS is available. stock via a terminal in the parts room. This would simultaneously credit the holding account, debit vehicle parts and char a the cost to the vehicle in FMS. It G] is anticipated that the fleet will be too small to justify a stock keeper for the foreseeable future. An Ontario municipality with a 450 unit fleet uses a similar system. 4.9.2 [LT Goal] When the FMS can provide effective information; the Fleet When available, appropriate fleet data will be Manager will provide fleet data for the user groups to consider in planning for provided to all user groups. equipment 5.1.3 [LT Goal] Install a complete, corporately integrated, computerized Fleet Will coordinate with the Financial Services Management System. Department with respect to implementation of this recommendation. 5.5.2 [LT Goal] Track leasefrent units in the FMS for cost comparison Will make cost comparison as noted. K11