Basic Transport & Fleet Mngt - AK2015

1
Basic Transport and Fleet
Management in the Public Sector
Facilitator: André Knipe

Basic Transport & Fleet
Management – © A Knipe,
20152
The Basic Experiential Learning Cycle

20153
The Agenda
1. An overview of transport and fleet management
2. Role-players and their responsibilities for transport
and fleet management
3. Transport and fleet management based on asset
management practices
4. Government owned transport
5. Outsourcing of government transport
6. Loss control in transport and fleet management
7. Transport and fleet management performance

20154

20155
1. Overview of Transport and Fleet
Management
 Transport management
– highly operational
– concerned with real-time information, incident control and daily
disciplines
– summarises data for fleet management to interpret in terms of
strategic fleet policies
– handles the daily crises of trucking via technical staff, drivers,
crews and accountants
 Fleet management
– has to do with the strategic decisions that impact upon the
organisation’s fleet asset base

20156
Activity
 Draw a picture to illustrate your
understanding of transport management.

20157
2. Role-players and their
Responsibilities
 Department of Transport (DoT)
– Formulate policies
– Formulate guidelines & best practice documents
– Provide vehicles
 User Department
– Implement policies
– Utilise guidelines & best practice documents, develop
procedures
– Ensure optimal use of vehicles

20158
Responsibilities
 Accounting Officer (Head of the Department)
– Ensure effective, efficient & transparent systems of financial
& risk management & internal control
– Prevent unauthorised, irregular, fruitless & wasteful
expenditure
– Take disciplinary action
– Manage assets
– Budgetary control (prevent unauthorised expenditure
– Report on the use of vehicles
 Chief Financial Officer (CFO)
– Delegated responsibilities

20159
Responsibilities
 Head of Supply Chain Management
– Support CFO
 Transport Officer
– Asset register
– Proper completion & administration of records & returns
– Monthly vehicles performance summaries
– Coordinate use of vehicles
– Provide budget input
– Control maintenance
– Safeguard vehicles
– Acts as a link
– Liaise with other departments
 Drivers and other staff

201510
Activity
 Identify the various role players in transport
and fleet in your workplace; and
 Briefly describe what their responsibilities
are.

201511
3. Transport & Fleet Management based
on Asset Management Practices
 Description of the term “assets”
 Determining the value of assets
 Classification of assets
 Objectives of good asset management

201512
Responsibility For Asset
Management
 Accounting Officer’s responsibility
 CFO’s responsibility – delegations
 Asset Manager’s responsibility – delegations
 Programme Manager’s responsibility
 Line-manager’s responsibility – sec. 45 of
PFMA

201513
Defining the Concept “Asset”
 Term “asset” apply to object with a useful life
of greater than one year
 Useful life limited because of wear and tear =
depreciation
 Physical assets include land, buildings,
equipment, facilities and infrastructure, plant
and equipment and vehicles
 Land in general do not depreciate -
appreciate

201514
Defining the Concept “Asset”
 Asset = resource controlled by entity as
result of past transaction/event – from which
future economic benefits are expected to flow
to entity
 Implication:
– Must have some value for entity in future
– Entity must control/own asset
– Ownership depends on transfer of legal right to
asset to entity

201515
Determining the Value of Assets
 Historical costs – purchase price
 Replacement value – replacement cost
 Market value – selling price

201516
Classification Of Assets
 Fixed assets:
– Tangible – buildings, vehicles, equipment, etc.
– Intangible – patent or copyright
 Current assets:
– Cash in hand
– Cash in bank account
– Stock at hand (warehouse) – consumable items
– Money owed by clients (debtors)

201517
Objective of Asset Management
 To obtain the best possible match / mix of
assets for optimal service delivery and
achievement of institutional objectives
 To ensure that asset consumption is
regarded as real / significant cost of
programme delivery

201518
Asset Register: Establishment,
Maintenance and Updating
 Core mechanism for good asset management
 Established as part of the computerised financial management
system
 Should be an integrated system and not transversal system
that communicate through interfaces
 Should enable CFO to compile financial statements timeously
when required
 When updated?
– New assets acquired
– Former assets disposed off
– Every 6 months after asset verification
– After movement of assets

201519
Requirement for Asset
Management
 An asset register which must contain the
following information:
– Detail of purchasing transaction
– Description of the asset
– Accountability information
– Performance information
– Financial information – depreciation
– Disposal information

201520
Asset Management Process
 Includes number of inter-related processes:
– Asset planning (Demand)
– Procurement of assets (Acquisition)
– Operation/Maintenance of assets (Logistics)
– Replacement or Disposal of assets (Disposal)

201521
1 Asset Planning
 Full integration of physical assets strategic plan into
overall strategic plan
 Principle: do not hold assets unless it is reasonably
necessary for economical, effective & efficient
delivery of programmes
 Alternative strategies:
– Leasing
– Time-sharing
– Contracting out

201522
The Physical Asset Strategic And
Operational Plan
 Essentially subset of primary strategic and
operational plan of an organisation
 Requirements:
– Must be consistent with primary strategic plan and
MTEF
– Must cover period of three years
– Updated annually on rolling basis

201523
The Physical Asset Strategic And
Operational Plan
 Make provision for:
– Analysis of key issues that may influence requirements for
assets in medium/long term
– Analysis of appropriateness of existing assets for realising
strategic objectives of organisation
– Identifying need for new assets – strategies to meet need
– Developing strategies for maintaining assets
– Identifying need for replacement of assets
– Developing strategies for disposing of assets that are
surplus (depreciation)

201524
2 Purchasing of Assets
 Procurement according to bidding &
provisioning administration procedures

201525
3 Operation And Maintenance Of
Assets
 Efficient & effective operation related to assignment of
responsibility for:
– Monitor performance against planned/rated performance
– Maintaining asset in sound working condition
 Operational & maintenance plans assign responsibility for:
– Control of, access to & security of assets
– Programme of regular preventative maintenance
– Collecting data for monitoring of performance
– Initiating prompt corrective maintenance
– Training staff
– Keeping appropriate records

201526
Asset Maintenance
 Contributing factor i.t.o. good asset
performance
 Should develop asset operation and
maintenance plan for each asset
 To ensure that:
– Assets remain appropriate i.t.o requirements
– Are optimally utilised
– Maintained at lowest possible costs

201527
Asset Maintenance
 Asset operation and maintenance plan is
dynamic – should be reviewed regularly
 Establishes standards for:
– Level of use
– Condition
– Maintenance
– Performance of assets

201528
Asset Maintenance
 Maintenance plan provides basis for
managing work & monitoring maintenance
performance
 Indicate maintenance requirements
 Include statement of resources:
– To undertake maintenance function
– Number/type of maintenance contracts/suppliers
– Expected funds – capital/recurrent costs

201529
Asset Maintenance
 Maintenance data captured as work is
performed
 Kept records of maintenance history for
planning purposes
 Used to prepare annual maintenance plan

201530
4 Replacement or Disposal of Assets
 Decision: whether or not service potential of asset
should be replaced, upgraded or reduced
 Unserviceable/redundant/obsolete assets
 Methods:
– Transfer to another department at market-related value
– Transfer to another department for free
– Selling per bid or auction
– (Issue voucher)

201531
Disposal And Replacement Of Assets
 Asset disposal terminates control over asset
 Generate need for replacement
 Crucial component of asset life cycle
 Reasons: surplus, unserviceable assets
 Requires disposal plan

201532
 Disposal Plan (includes):
– Rationale for disposal
– Anticipated time
– Method
– Expected proceeds

201533
 Disposal decision:
– Asset register – starting point
– Depreciation (accumulated)
– Condition of asset
– Performance of asset

201534
Activity
 Draw a simple diagram to illustrate the
vehicle life cycle. You can use the basic
asset management life cycle as a basis for
your diagram.

201535
Safe-guarding Of Assets
 Properly arranged/stored/preserved
 Storage spaces must be safeguarded pro-
actively

201536
Assets Verification/Audit
 Conducted on all vehicles at least once every
year
 AO to indicate how audit be carried out
 Concerns:
– Discrepancies
– Redundant & obsolete items
– Disposal

201537
Asset Audits And Spot Checks
 Purpose:
– To verify existence of assets
– To determine condition of assets
– To determine performance of assets

201538
 Depends on:
– Type of assets
– Extent (number) of assets
– Personnel available
– Status of asset register
– Asset verification programme
– Demographics

201539
 Asset Verification Program include time
schedule for:
– Preparation – records and training
– Execution – actual verification
– Investigation of discrepancies
– Reporting

201540
 Asset Verification Report:
– Submitted at least annually
– Must indicate unserviceable, repairable,
redundant or obsolete assets
– Number and value of assets surplus/deficient
– Compliance with previous year’s recommended
preventative measures

201541
Activity
 Discuss how you check (safeguard) the
vehicles that you are responsible for every
day/week/month?

201542
Alternatives To Asset Ownership
 Principle choice is whether to lease or buy
 Leasing represents choice between
‘operating’ and ‘finance’ leases
 Finance lease – transfer risk and benefits of
ownership to entity
 Operating lease – provide greater flexibility

201543
Alternatives To Asset Ownership
 Reason for non-asset solutions:
– Current asset base of entity is growing & steadily
ageing
– Changing expectations & technological
advancements
– Asset requirements can change
– Expenditure on fixed assets constrains
expenditure in other areas

201544

201545
4. Government Owned Transport
 General rules relating to the usage of government
owned transport
 Indemnity clauses applicable to all users
 Record-keeping of official transport
– Trip authority
– Itineraries
– Monthly log sheets & returns
– Government Vehicle Management Register
– Equipment Record Card
– Accident Report
– Returns

201546
Government Owned Transport (cont.)
 Parking of government owned vehicles
 Insurance
 Accident procedure
 Fuel card control
 Repairs & replacement of tyres & spare parts

201547
Activity
 What are the most important rules that users
have to follow when using government
transport?

201548
5. Outsourcing Of
Government Transport
 Outsourcing contract include:
– Structure of service provider
– Details of service areas covered by contract
– Handling of trips
– Delegations
– Identification of controls
– Vehicle delivery procedure
– Vehicle return procedure
– Vehicle transfer procedure

201549
Outsourcing Of
Government Transport (cont.)
 Outsourcing contract include:
– Vehicle termination procedure
– Fuel consumption
– Fuel card administration
– Procedure – traffic fines
– Maintenance/repairs process
– Licensing
– Cross border transportation
– Emergency procedures
– Disciplinary procedures
– Penalties

201550
Managing Transport & Fleet Services
Effectively
1. Establish and maintain policies and procedures for
use of vehicles
2. Provide systems to keep records of activities of
vehicles
3. Establish an organisational structure within which
vehicles can operate
4. Provisioning of human resource capacity and skills
to operate vehicles
5. Manage the expenditure for and income/revenue
from vehicles
6. Management of vehicles and equipment

201551
Activity
 Discuss how you can manage the transport
function more effectively?

201552
6. Loss Control
1. Preventing fraud and corruption in transport and
fleet management
2. Preventing the abuse of government vehicles
3. Preventing damages to government vehicles
4. Preventing losses caused by theft and criminal
activities
5. Preventing losses caused by negligence of officials
6. Dealing with losses as a result of vis major
circumstances

201553
Definition Of Risk Management
A comprehensive and systematic
approach aimed at identifying,
measuring and controlling
an entity’s exposure to accidental loss,
theft and liability involving human,
financial, physical and
natural resources

201554
Risk Management Fundamentals
 What is Risk?
– The impact of uncertain future events that could
influence the achievement of an organisation’s
objectives
– Risk creates uncertainty and makes planning
difficult

201555
 Risk directly impacts on the service delivery
objective of municipalities, because it
manifests as the chance of a loss due to
adverse events:
– Interruptions to service delivery and loss of
revenue (income statement, liquidity)
– Consequences of loss of revenue on
sustainability (balance sheet, performance
against budget, funding position)
– Perceptions of stakeholders (reputation)

201556
 Risk Management focuses on the ability of
the organisation to meet objectives in the
future by identifying risk and making
decisions to manage these risks
 Risk Management starts with the strategic
planning process

201557
Legal Mandate – Legislative
Requirements
 Section 38(1)(a) – PFMA,
 “the accounting officer for a department …
has and maintains :
– Effective, efficient and transparency systems of
financial and risk management and internal
control; and
– A system of internal audit under the control and
direction of an audit committee…”

201558
Requirements (Cont.)
 Section 45(a) – PFMA
 “An official in a department, _ _ _ _ :
 Must ensure that the system of _ _ _ _
internal control _ _ _ _ is carried out within
the area of responsibility of that official;”

201559
Requirements (Cont.)
 Section 3.2.1 and 27.2.1 of the Treasury Regulations of 2005
(issued i.t.o. the PFMA)
 “The accounting officer/authority must ensure that a risk
assessment is conducted regularly to identify emerging risks of
the institution/public entity. A risk management strategy, which
must include a fraud prevention plan, must be used to direct
internal audit effort and priority, and to determine the skills
required of managers and staff to improve controls and to
manage these risks. The strategy must be clearly
communicated to all officials to ensure that the risk
management strategy is incorporated into the language and
culture of the institution/public entity.

201560
Key Role Players
 ACCOUNTING OFFICER
– The accounting officer is responsible for
managing the financial administration of the and
must for this purpose take all reasonable steps to
ensure:
 that the organisation has and maintains effective,
efficient and transparent systems of financial and risk
management and internal control; and
 of internal audit operating in accordance with any
prescribed norms and standards

201561
Key Role Players
 INTERNAL AUDITOR
– The internal audit unit must
 Prepare a risk- based audit plan and internal audit
program for each financial year;
 Advice the accounting officer and report to the audit
committee on the implementation of the internal audit
plan and matters relating to risk and risk management.

201562
Key Role Players
 In other words - Everyone is responsible!
– Accounting officer – Management of risk
– Audit Committee – Oversight and assurance
– Internal Audit – Independent monitoring, objective review
– Risk Officer (CRO) – Coordinate and integrate risk
management activities
– Executives and Management – Management of risk,
decision making
– Employees – Implementation, vigilance

201563
Risk Management Process
 Phases in Risk Management Process:
– Risk Identification
– Risk Assessment
– Risk Response
– Risk Control
– Risk Financing

201564
Key Risks Associated With In-effective
Risk Management
 Inappropriate internal controls
 Risk management not incorporated in
organisation’s culture
 Reactive responses, not pro-active
 Inadequate plans
 Inappropriate controls
 Changing/new risks not considered &
managed

201565
Risk Management Evaluation
 The measurement of risk is not an easy step;
it is the most difficult and least precise step in
the art of risk management

201566
Risk Management and
Internal Controls
 Internal control
– Definition of the concept “internal control”
– Types of internal controls
– Need to maintain internal control
– Factors influencing the control process
 Link between internal control and risk
management

201567
Activity
 Illustrate your group’s understanding of
transport and fleet risk management.

201568
Transport And Fleet Management
Performance
 Assessing the state of transport and fleet
management in the public sector
 Determining the public sector’s ability to
improve Transport and Fleet Management

201569
Transport And Fleet Management
Performance
 Establishing measures to determine
economy, efficiency and effectiveness of
Transport and Fleet Management
– Components of performance management
– Value-for-money chain
– Performance indicators

201570
Activity
 Discuss how you would improve transport
and fleet management effectiveness in your
organisation.

201571

72
André Knipe
+27 (0)72 417 4084
knipeandre@gmail.com

Basic Transport & Fleet Mngt - AK2015

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