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CAFM Certification > AM All > Flashcards

AM All Flashcards

1
Q

Questions

A

Answers

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2
Q

1.1.1 According to the experts what is the definition of strategic sourcing? (p.1)

A

Strategic sourcing is an organizational procurement and supply management process used to locate, develop, qualify, and employ suppliers that add maximum value to the buyer’s products or services

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3
Q

1.1.2 What is the main objective of Strategic Sourcing? (p.1)

A

To locate and form relationships with those suppliers that best promote the strategic and operational goals of your organization.

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4
Q

1.1.3 How can Strategic Sourcing be used as an approach to supply chain management? (p.1)

A

This approach formalizes the way information is gathered and used so that an organization can leverage its consolidated purchasing power to find the best values in the marketplace

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5
Q

1.1.4 Why might you want to limit the amount of suppliers to your Fleet? (p.2)

A

If this allows you to gain leverage and purchasing power for the procurement of quality vehicles at the best price

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6
Q

1.1.5 Describe the traditional P2

A

Focus: Cost
Approach: Ad Hoc w/ Suppliers
Playing Field: National
Buyers Motives: Shert Term ( Initial cost )
Suppliers Motives: Turnover
Number of Suppliers: Numerous
Relationship: Contract
Risk: Individual
Activities: Standard

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7
Q

1.1.5 Describe strategic sourcing. P2

A

Focus: Competence
Approach: Network
Playing Field: Global
Buyers Motives: Long Term - TCO
Suppliers Motives: Customer
Number of Suppliers: Few
Relationship: Trust
Risk: Shared
Activities: Specific

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8
Q

1.2.1 What are the benefits of Strategic Sourcing? (p.2)

A

Limited number of Suppliers
New opportunities may arise from strategic sourcing

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9
Q

1.2.2 How can Strategic Sourcing generate benefits to the Fleet department? (p.3)

A

Limited vehicle providers may yield a number of benefits including lower prices for paying in bulk.

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10
Q

1.2.3 Why is it important to measure Supplier Performance? (p.3)

A

Having a system to measure supplier performance in these areas can lead to better decisions when it is time to decide between acquiring a new supplier or staying with the current one.

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11
Q

1.2.4 How does Strategic Sourcing benefit Suppliers? (p.3)

A
  1. Getting larger purchases and more orders from you,
  2. Benefit from improved communication and not having to juggle multiple small contracts with a vast array of customers
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12
Q

1.3.1 What Risks are involved with Strategic Sourcing? (p.3)

A
  1. Overpaying for Initial costs
  2. When supplier requirements are too strict or narrow.
  3. Potential change in Supliers
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13
Q

1.3.2 Describe some of the costs involved with Strategic Sourcing. (p.4)

A

TCO

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14
Q

1.3.3 Why is Strategic Sourcing time consuming? (p.4)

A

because it is more complicated, and requires more knowledgeable and skilled personnel. Also, your organization’s sourcing and purchasing work flows may need to be restructured

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15
Q

1.4.1 What are the four steps in the Strategic Sourcing Process? (p.4-5)

A
  1. Understand the Spend category - identify their purchasing and price constraints, the time
  2. Assess Potential Suppliers: competent, trustworthy, communicative, that offer deals that are valuable and fairly priced
  3. Create a Strategy: Start by identifying how competitive the supplier marketplace is - Ensure that other departments are on board with your supplier choices.
  4. Select a Supplier: Negotiate with potential suppliers for a fair dollar value
  5. Cultivate Relationships: maintain a positive relationship with them
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16
Q

1.4.2 What should your purchasing team do during the first phase of the Strategic Sourcing Process? (p.4)

A

Identify their purchasing and price constraints & the time and money it takes for the supplier to acquire the assets, as well as the historic purchases in asset categories

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17
Q

1.4.3 What do you want in a Strategic Sourcing partner? (p.5)

A

Competent - Trustworthy - Comunicative - Good Deals

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18
Q

1.4.4 How can you create a strategy for Strategic Sourcing? (p.5)

A

• Start by identifying how competitive the supplier marketplace is. In the marketplace different suppliers may become incumbents in trying to obtain a contract to supply your fleet. By showing suppliers the value in your business, new deals can be made and incumbent suppliers will know the importance of sourcing your fleet.

• Ensure that other departments are on board with your supplier choices. Management and financial officers will be relying on you to find the best price for quality goods. Other managers and employees may be focused on finding suppliers that they can build relationships
with or maintaining positive relationships with current suppliers. In making your sourcing decision both of these factors should come into play.

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19
Q

1.4.5 What tool is discussed in order to help select Suppliers? (p.5)

A

Balanced Scorecard

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20
Q

1.5.1 What are Performance Improvement Requirements and how are they used? (p.5)

A

Performance improvements are crucial to keeping the buying and selling processes a positive experience. Some ways to accomplish this are by improving the cycle time, cost, quality, and delivery performance. This can be done both internally with your fleet and by the suppliers.

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21
Q

1.5.2 What type of teams should be created in order to help select suppliers? (p.6)

A

Teams that will organize, evaluate, select, develop, and manage suppliers
Creating cross-functional sourcing teams to complete different supply chain management tasks will ensure positive collaboration

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22
Q

1.5.3 What systems should be developed and how can they help the organization? (p.6)

A

Purchasing systems
1. Will be a notable increase in the emphasis of links between external systems along with networking between purchasing sites with suppliers.
2. lead to an increase in useful technology and information systems

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23
Q

1.5.4 What are team member purchasing responsibilities? (p.6)

A

Assign members of the team to be points of contact with specific suppliers and to research new potential suppliers.
By clearly identifying the responsibilities involved in the purchasing process you will be sure to see positive results.

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24
Q

1.6.1 What is a cross functional sourcing team? (p.7)

A

Assign members of the team to be points of contact with specific suppliers and to research new potential suppliers.

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25
Q

1.6.2 What is the Fleet Managers role in the cross functional sourcing team? (p.7)

A

The manager’s role will be to oversee this cross functional team in thoroughly examining fleet purchasing activities and supplier selection

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26
Q

1.6.3 What is the focus of many purchasing groups and what are the fleet managers’ responsibilities? (p.7)

A
  1. Finding the lowest cost
  2. FM responsible for voicing concerns when non-fleet members of the sourcing team focus only on low cost suppliers without taking other fleet-related concerns into mind.
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27
Q

1.6.4 What is rightsizing the Fleet? (p.7)

A

Sourcing vehicles that are appropriate for specific tasks.

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28
Q

2.1.1 What is the Advertising cost on a vehicle invoice? (p.12)

A

1 % of MSRP or Flat Dollar amount set by Factory

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29
Q

2.1.2 Define the term Bid Assistance. (p.12)

A

Additional negotiated rebates that may replace or be in addition to Nation Fleet Rebates

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30
Q

2.1.3 What is the Dealer Invoice price and how is it calculated? (p.12)

A

AKA Factory Invoice - Amount the dealer pays the manufacturer for a specific vehicle

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31
Q

2.1.4 What are Factory to Dealer incentives? (p.12)

A

$ paid to Dealer by the Manufaturer to sell specific models

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32
Q

2.1.5 What is meant by the term financing on a Dealer invoice? (p. 12)

A

AKA Floor Plan - Flat dollar amount that is included in the factory invoice.

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33
Q

2.1.6 What are Fleet incentives and who funds them? (p.13)

A

$ given by Manufacturer to Fleet as added incentive - Usually 100% funded by Factory

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34
Q

2.1.7 What is Factory Holdback? (p.13)

A

$ paid to Dealer by Manufacturer by the Factory after the car has been sold. ( Usually quarterly ) / Usually between 2% and 3%

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35
Q

2.1.8 Define the term MSRP. (p.13)

A

The retail selling price of the vehicle as determined by the manufacturer, printed on the label (the Monroney Label) on the window

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36
Q

2.1.9 What is triple net invoice? (p.13)

A

Manufacturer-to-dealer invoice price less holdback less advertising & financing.

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37
Q

2.2.1 What is the most important document in a vehicle purchase? (p.13)

A

Factory Invoice : The price the dealer pays the manufacturer for the vehicle. This is not generally their net cost, which is influenced by the holdback and any factory to dealer incentives

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38
Q

2.2.2 What information do you need to know in order to get the lowest possible price for a vehicle? (p.13)

A

Dealer Cost

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39
Q

2.2.3 What is a good starting price to use for negotiating with a vehicle supplier? (p.13)

A

invoice price

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40
Q

2.2.4 What type of information is contained on a standard factory invoice? (p.13)

A
  1. Price
  2. Features
  3. Details on purchase and Delivery
  4. 2 colums to compare MSRP and Factory Invoce Price
  5. Near the end of the invoice there may be a section detailing the invoice total, holdback, incentive programs and cost categories
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41
Q

2.2.5 What is the most important strategy to use when considering multiple vehicles? (p.14)

A

Be consistent in how you evaluate each invoice, and to use the same starting point for each negotiation.

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42
Q

2.2.6 What is the Formulae for Triple Net? (p.14)

A

Manufacturer-to-dealer invoice – Holdback – Advertising – Financing = Triple Net Cost

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43
Q

2.3.1 How can Fleet sales benefit a car dealer? (p.22)

A
  1. It is often in the dealer’s best interest to sell vehicles to a fleet for a much lower price than to sell the vehicles individually.
  2. Typically, it takes dealers months to sell the same number of vehicles that it would sell to an organization at one time through a fleet
    purchase
  3. If the dealer sells vehicles to a fleet, the potential also exists that the dealer will be able to sell the organization a contract to service
    the fleet, which brings in more income for the dealer.
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44
Q

2.3.10 What warranty considerations does the Fleet manager have to keep in mind during the purchasing process? (p.26)

A
  1. Typically Non-negotialble
  2. There is often no consistency and the formatting and offerings will change based on the vehicle model, year, and manufacturer.
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45
Q

2.3.2 What are some of the vehicle manufacturer’s requirements for Fleet pricing? (p.22)

A
  1. For some manufacturers, a requirement for fleet pricing is to NAFA’s Asset Management purchase five or more vehicles
  2. For others the requirement may be larger, such as a minimum of 10 vehicles
  3. It is possible that the requirement is specified on a term basis such as leasing 15 vehicles one year as well as purchasing/leasing 5 new vehicles each year
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46
Q

2.3.3 What are some of the advantages of purchasing vehicles in bulk? (p.24)

A
  1. Price
  2. Additionally, organizations can generally negotiate good deals through the dealership on servicing their new fleet of vehicles
  3. Top price on a trade-in
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47
Q

2.3.4 Why would an organization want standard vehicle specifications? (p.25)

A

The idea is to develop core specs for vehicles while still allowing for slight variations for factors such as geographical location, terrain, etc.

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48
Q

2.3.5 What are the best practices for lowering costs using standard vehicle specifications? (p.25)

A
  1. Centralize fleet management.
  2. Distinguish “needs” from “wants”. ( seats / 2-wheel vs 4wheel drive / Gasoline / Sandard length pickup box
  3. Conduct annual specification reviews. - FM need to determine what is needed currently and in the future instead of relying on what has been done in the past
  4. Develop standards based on vehicle role and location.
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49
Q

2.3.6 Why is it important to centralize Fleet Management? (p.25)

A

Organizations need to allow only the leader of the organization to be the decision maker when purchasing vehicles

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50
Q

2.3.7 What are potential areas to save costs when identifying needs and wants? (p.25)

A

• Cloth or vinyl seats instead of leather
• Bench seats instead of buckets
• Two-wheel instead of four-wheel drive
• Gasoline instead of diesel
• Four-cylinder engine instead of six or eight cylinders
• Standard length pickup box instead of extended

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51
Q

2.3.8 Describe the two categories of pricing incentives. (p.25)

A

National Fleet Incentives and Competitive Pricing Assistance (CPAs)

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52
Q

2.3.9 What is a good indicator of the true vehicle cost? (p.26)

A

Total Cost of Ownership (TCO

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53
Q

2.4.1 Who can a Fleet manager contact at the dealership for information on the manufacturers Fleet programs? (p.26)

A

Commercial or Government sales person

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54
Q

2.4.2 What does a Fleet manager need in order to receive Fleet discounts? (p.26)

A

Fleet identification number

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55
Q

2.4.3 What is a volume rebate and how can the Fleet manager obtain it? (p.26)

A

If you are buying more than one vehicle, ask if there is a volume rebate available.
- The factory may give you a discount for purchasing multiple units at once

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56
Q

2.5.1 List the advantages of ordering vehicles from the factory. (p.27)

A

• Personalized customization
• Can specify the vehicle to fit specific needs
• Better pricing offered by the dealer
• Opportunities to add or delete options that are not available in a retail sale

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57
Q

2.5.2 What are some of the disadvantages of ordering vehicles from the factory? (p.27)

A

• Longer wait times
• Incentives may be lost during waiting periods
• Production windows may close unexpectedly and the Factory may reject order
• Some options or popular models may not be available for Fleet orders

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58
Q

2.5.3 Why might ordering from the factory be cheaper than ordering from stock? (p.28)

A
  1. When a dealer places a fleet order to the factory, the dealer does not have to worry about the vehicle sitting on the lot or trying to find a buyer
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59
Q

2.5.4 What might make ordering from the dealership cheaper? (p.28)

A

Dealer incentives such as limited time warranties may also expire while your vehicle is being built in the factory. The expiration of these short term incentives is another way that ordering directly from the factory may be more expensive

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60
Q

2.6.1 What is the basic rue for negotiating vehicle price? (p.28)

A
  1. Ensuring you use the same terms and the same starting point as the dealer
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61
Q

2.6.2 What should the Fleet manager do in order to get the best price? (p.28)

A
  1. To get the best price you should consolidate volume whenever possible
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62
Q

2.6.3 What are the two approaches to negotiating? (p.28)

A
  1. Start at Dealer Invoice and work down
  2. Start at Triple Net Invoice and work up
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63
Q

2.6.4 What is an alternative to negotiating vehicle prices? (p.28)

A

Bidding

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64
Q

3.1.1 What is a Vehicle selector list? (p.31)

A

A predetermined list of vehicles that drivers or others can choose from to meet their vehicle requirements

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65
Q

3.1.2 What are some questions that managers should address in order to help them in the vehicle selection process? (p.31)

A

• How many choices of vehicles exist?
• What is important to management?
• How much input do drivers have?
• Can drivers purchase options?
• Philosophy – work or perk?

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66
Q

3.1.3 Why can offering too many choices be a disadvantage? (p.31)

A
  1. Greater administrative burden
  2. If fewer options are available and a fleet is more consistent, greater discounts will be offered when purchasing
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67
Q

3.1.4 List some of the factors a Fleet Manager may consider in the vehicle selection process. (p.32)

A
  1. Fleet managers will need to determine what factors in vehicle selection are important to their organization’s leadership.
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68
Q

3.1.5 How can a Fleet manager get driver input and what information should they ask for? (p.32)

A
  1. Annual survey or through a fleet steering committee
  2. Preferences on color, vehicle model, and options for the vehicle including entertainment features, style upgrades, GPS and towing capabilities
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69
Q

3.1.6 What are some considerations to be made when deciding whether the vehicle should be work or perk oriented? (p. 32)

A
  1. If a fleet manager wants to allow the vehicle for the driver’s own convenience or luxury, a manager needs to decide which features will or will not be paid for by the organization.
  2. If the decision is made to allow the driver to purchase luxury options it needs to be discussed before the vehicle is purchased.
  3. Depending on the organization philosophy, the driver’s responsibilities, and human resource factor, an organization may place more or less emphasis on the “perk” when making vehicle selection.
  4. A public entity would typically lean more towards the work end of the spectrum.
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70
Q

3.3.1 What are some concerns of stakeholders in the organization when developing selection criteria? (p.33)

A

vehicles will be most appropriate for a specific task

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71
Q

3.3.10 How can the Fleet Manager manipulate the results of a selection matrix? (p.38)

A

Changing weight

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72
Q

3.3.2 List the four steps in the selector development process. (p.34)

A
  1. Identify Selection criteria
  2. Rank Criteria
  3. Assign a weight to criteria
  4. Conduct a trial Veh selection
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73
Q

3.3.3 What stakeholders should the Fleet manager seek feedback from? (p.34)

A
  1. Drivers
  2. Staff
  3. Customers
  4. Organizational leadership
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74
Q

3.3.4 List some factors that might impact the vehicle selection criteria. (p.34)

A
  1. Terrain the vehicle will typically travel upon, vehicle duty cycle (8, 10, 12 hour days)
  2. Environmental factors (snow, heat, dust, etc)
  3. Cost of purchase, vehicle life cycle costs
  4. Safety
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75
Q

3.3.5 What are quantifiable and non-quantifiable factors? (p.34)

A

Quantifiable: Can be measured - such as cost, warranty, maintenance, and environment
Non-Quantifiable: Measured through subjective methods - safety, image, and morale

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76
Q

3.3.6 What should the Fleet Manager keep in mind while ranking selection criteria? (p.35)

A

Managers should aim to keep the big picture of the organization in mind when ranking the criteria by knowing what is important to the organization and which criteria will return the most value

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77
Q

3.3.7 What should the Fleet Manager consider while assigning a weight to the selection criteria? (p.35)

A
  1. Consider the criteria and quantify how much more important each successive factor is to the fleet
  2. The manager will not only determine the difference in weight, but also quantify which criteria have the same relative importance and assign weights accordingly
  3. When ranking and assigning weights to the criteria is complete, the fleet manager needs to get management’s approval for the assigned value
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78
Q

3.3.8 How does the Fleet Manager test vehicle options against the selection criteria? (p.36)

A

Conduct a trial comparison w/ 2-3 vehicles

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79
Q

3.3.9 How does the Fleet Manager determine a points total in the selection process? (p.37)

A

The fleet manager then scores each vehicle from 1 to 3 in each of the selection criteria and multiplies that score by the applicable weight to determine a point total.

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80
Q

3.4.1 Who should be included in a user input group and what are the responsibilities of the group? (p.38)

A
  1. Drivers, managers, supervisors, and maintenance workers that have the authority to make recommendations
  2. User input groups should evaluate the new products and options while keeping clear records of their notes in order to summarize and present for consideration.
  3. The input group can use benchmarking or surveying similar organizations to use their successes and failures to improve the outcomes
    for your organization
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81
Q

3.4.2 How should the Fleet Manager treat the input provided by several input groups? (p.26-38)

A

In the end it is the fleet manager who makes the final recommendation on which vehicles to order and what crucial business steps to take.

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82
Q

3.4.3 Who makes the final decision on which vehicle to purchase? (p.38)

A

FM

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83
Q

3.4.4 What should be done once the final decision on vehicle selection has been made? (p.38)

A

FM needs to reconnect with the group that provided input. - the final decision needs to be explained to ensure that the user group understands their input was considered

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84
Q

3.5.1 What is Lifecycle Cost Analysis? (p.40)

A
  1. AKA (TCO)
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85
Q

3.5.2 How is Lifecycle Cost Calculated? (p.40)

A

Initial Cost + Operating & Maintenance Costs – Salvage Value = LIFE CYCLE COST

86
Q

3.5.3 What is the major advantage of Lifecycle Cost Analysis? (p.40)

A

It accounts for the operating costs of ownership and salvage values, yielding a better picture of the true costs of owning the equipment.

87
Q

3.6.1 How are contracts awarded in the public and private sectors? (p.43)

A

Competitive Bidding

88
Q

3.6.2 What is an organization legally bound to do when beginning the competitive procurement process? (p.43)

A

• Fully disclose all known information which would potentially influence a Bidder in deciding whether to bid and what price to bid
• Treat all Bidders fairly and equally throughout the process, from qualification through evaluation to final award
• Award a contract which is substantially similar to what was originally sought in the Invitation / Request
• Avoid all undisclosed preferences and potential conflicts of interest between Bidders and evaluators
• Act in good faith to all bidders throughout the competitive bid process
• Reject any bid (no matter how attractive) which is substantially non-compliant
• Negotiate no changes to scope of work, price, or any other major component with any bidder without offering every other bidder the
same opportunity.

89
Q

3.6.3 What is the FASB and what do they do? (p.44)

A
  1. Financial Accounting Standards Board
  2. Organization that regulates the financial accounting and reporting aspects of a transaction.
  3. They provide standards that investors and financial report users rely upon to help in decision-making.
  4. Publishes rules relating to how vehicle purchases and leases are reported on financial statements.
90
Q

3.6.4 What do lease accounting standards require the leaser to do? (p.44)

A

Currently lease accounting standards require leasers to classify the lease as a sales type:
lease, direct financing lease, leveraged lease, or operating lease

91
Q

4.1.1 What is the critical first step in the selection process? (p.45)

A

Identify the requirement for the vehicle - Know your fleet

92
Q

4.1.2 What two objectives must be balanced during the selection process? (p.45)

A

Acquire vehicles and equipment that meet operational needs at the lowest life cycle cost

93
Q

4.2.1 What questions should the Fleet Manager ask in order to help determine vehicle requirements? (p.45)

A

What sorts of tasks will they need to perform?
Will the vehicle often be carrying backseat passengers?
What sorts of cargo will be carried?
What distances will this vehicle drive?

94
Q

4.2.10 What are some of the criteria used to evaluate a response to an RFP? (p.48)

A

The components of an RFP typically include:
a. statement and scope of work
b. specifications
c. schedules or timelines
d. contract type
e. data requirements
f. terms and conditions
g. description of goods and/or services to be procured
h. general criteria used in evaluation procedure
i. special contractual requirements
j. technical goals
k. instructions for preparation of technical, management, and/or cost proposals

95
Q

4.2.11 What is an RFI and when should it be used? (p.49)

A
  1. Request for Information
  2. May be sent to all vendors in order to develop the pre-qualified vendor list thereby limiting the number of full proposals which must
    be fully evaluated by the review team
  3. This is particularly true for complex or high-value purchases involving multiple rounds of proposing, presentation, evaluation, and negotiation culminating in submission of their best technical and financial proposal, commonly referred to as a Best and Final Offer (BAFO).
96
Q

4.2.12 What is an RFT and when should it be used? (p.49)

A

When the government, infrastructure and utility sectors may be required by law to use a similarly structured process called a Request
for Tenders (RFT
An RFT is usually expected to conform to some legally standardized structure designed to ensure impartiality.

97
Q

4.2.13 What are cooperative purchasing contracts? (p.49)

A

Established by one of the processes above and allows other organizations to buy from it without a re-bid (e.g., County buying off a State contract).

98
Q

4.2.2 What tools can the Fleet Manager use in order to save time in identifying vehicle requirements? (p.45)

A
  1. Send out a survey to users to identify what they will be doing with the new vehicles you order.
  2. You could also sit down and personally interview the primary user of the vehicle
99
Q

4.2.3 What is the role of the Fleet Manager in the decision on vehicle specifications? (p.46)

A

As the fleet manager it is your ultimate decision when deciding what specifications each vehicle entering the fleet must have
- Crucial to receive suggestions and hear out the needs from those who will be working with the new vehicles

100
Q

4.2.4 What are some common errors that are made while purchasing specialty vehicles? (p.46)

A

• Working out of order
When starting to write a specification for a work truck it is often better to start with the body rather than the chassis, or framework.

• Duplicating old units
The current work trucks might not have the power or efficiency to do certain tasks.

• Guessing

101
Q

4.2.5 What are the common terms for solicitation styles used by organizations in order to procure goods and services from vendors? (p.47)

A

These solicitations for bids can be grouped into two basic types:
1. A request for quotations (RFQ) - most appropriate when the goods or services being procured are clearly defined and information desired from potential vendors is primarily the cost.
2. A request for proposals (RFP} - most appropriate when the need fulfilled by the goods or services being procured can be defined but the organization would like to collect creative solutions and price quotes from potential vendors.

102
Q

4.2.6 What is an RFQ and when should it be used? (p.47)

A

A request for quotations (RFQ) - most appropriate when the goods or services being procured are clearly defined and information desired from potential vendors is primarily the cost.

103
Q

4.2.7 What information is required in an RFQ? (p.47)

A

Required delivery schedule, payment terms, quality level, and contract length.

104
Q

4.2.8 What is an RFP and when should it be used? (p.48)

A

A request for proposals (RFP} - most appropriate when the need fulfilled by the goods or services being procured can be defined but the organization would like to collect creative solutions and price quotes from potential vendors.

105
Q

4.2.9 List the typical components of an RFP. (p.48)

A

a. statement and scope of work
b. specifications
c. schedules or timelines
d. contract type
e. data requirements
f. terms and conditions
g. description of goods and/or services to be procured
h. general criteria used in evaluation procedure
i. special contractual requirements
j. technical goals
k. instructions for preparation of technical, management, and/or cost proposals

106
Q

4.3.1 What are the three types of specifications and what do they have in common? (p.49)

A

Performance, design, and proprietary (or name brand)

107
Q

4.3.10 What role does lifecycle cost play in the decision making process? (p.52)

A

“Lowest cost” responsive bidder may include objective measures of life cycle cost elements not just purchase price

108
Q

4.3.11 What is the ABA model procurement code? (p.52)

A

Contains recommended wording which is widely adopted particularly by states and local government jurisdictions
The Code and Companion Model Procurement Regulations promote transparency, fairness and competitiveness through adoption of best practices

109
Q

4.3.12 What are Fleet Standardization provisions? (p.53)

A

Standardization on makes/models may reduce costs for maintenance (e.g., diagnostic software, specialty tools, technician training) and driver training

110
Q

4.3.13 What benefits can be achieved by standardizing your fleet procurement specifications? (p.53)

A

Cost Saving

111
Q

4.3.14 What are some of the advantages of standardization? (p.53)

A
  1. Improved Maintenance Efficiency
  2. Fewer Diagnostic and Specialty Tools
  3. Smaller Parts and Bulk Fluid Inventory
  4. Increased Operational Efficiency and Safety
  5. Closer Vendor Relations
  6. Proven Reliability
  7. Potentially Less Time Spent on Specifications and Bid Evaluations
  8. Fewer Contracts and Invoices to Process
112
Q

4.3.15 What are the disadvantages of standardizing procurement? (p.55)

A
  1. Potential Loss of Competition
  2. Potential Missed Innovation
  3. Risk of “Lemons”
  4. Appearance of Collusion
113
Q

4.3.16 What are some considerations for standardizing the “right way”? (p.55)

A
  1. EVERYTHING about standardizing the fleet must be done openly,above-board and in full view of the applicable stakeholders
  2. Potential vendors need to be included in the process when the evaluation rules are established and their concerns addressed—but not necessarily acquiesced to. A formal pre-bid conference is a good venue to meet this requirement.
  3. Consider standardization for one segment of the fleet at a time
  4. Standardization should be based on a demonstrable savings in the life cycle cost
    5.
114
Q

4.3.17 What is a multi-year procurement agreement and why should your organization establish one? (p.56)

A

Establishing a multi-year procurement agreement based on this competitive bid outcome, when permitted, simplifies the standardization process.
A multi-year agreement would include a cost escalation clause, take advantage of all new incentives, and have an easy-out provision for both parties

115
Q

4.3.2 What do good specifications need? (p.50)

A
  1. Specifications need to have enough detail to avoid confusion
116
Q

4.3.3 What are performance specifications? List some examples. (p.50)

A

A description of a vehicle’s minimum operating requirements can include gross weight, speed, acceleration, minimum grade it must negotiate, passenger/weight/volume carrying capacity, fuel economy, emissions levels, axle loads and distribution, and compliance with industrial or governmental standards and/or statutes such as SAE, OSHA, or DOT

117
Q

4.3.4 What is the advantage to using performance specifications? (p.50)

A

Performance specifications will likely result in the most competition of the three basic types as vendors are free to select and configure the product able to meet the minimum operating requirements at the lowest cost of those criteria to be used for the evaluation

118
Q

4.3.5 What are Design specifications? Give some examples. (p.51)

A

Design specifications may include a description of a vehicle’s physical dimensions, structural properties (e.g., moments of inertia, resistance to bending, tensile or yield strengths) or other engineering parameters and performance (e.g., power or torque)

119
Q

4.3.6 When are design specifications used? (p.51)

A
  1. Design specifications are normally used for specialty/custom vehicles
  2. vehicles built in multiple stages where a body and ancillary equipment are mounted on a cab and chassis (e.g., mass transit bus, dump truck).
120
Q

4.3.7 What are proprietary specifications? List some examples. (p.51)

A

Make and Model / A description of a vehicle’s required equipment that is specific to a particular manufacturer.

121
Q

4.3.8 What are some advantages and disadvantages of proprietary specifications? (p.51)

A

Advantage:
they may also be used to establish a known commodity that works for the fleet
Disadvantage:
Proprietary specifications are the easiest to write but can be the most difficult to evaluate for bid award if the “or equal” provision is included to allow competition against the known commodity

122
Q

4.3.9 What is the Hybrid approach to specification writing? (p.52)

A

Hybrid specifications that combine features of the three distinct types above (performance, design, and proprietary) are common
Specifications may include a single type but are more commonly a combination of two or even all three types

123
Q

4.4.1 What are pre-bid meetings and what steps should be taken to ensure that they are successful? (p.56)

A

Pre-bid meetings may be either mandatory or non-mandatory when procuring vehicles
• Find a member of your team to take written notes during the meeting to ensure proper documentation and recording of all necessary
information.
• Set up a time and place for the bid opening.
• Create an attendance record for attendees of the meeting.

124
Q

4.4.2 Why is it beneficial to visit a vendor before purchasing the vehicle? (p.57)

A

This gives you an opportunity to really understand the source of your purchase as well as getting a real feel for the vehicle

125
Q

4.4.3 Describe the post-bid evaluation process. (p.57)

A

After making a decision, prepare a Bid Evaluation Report and spell out reasons for rejecting each bid you did not take.
Additionally, include qualifications, alternatives, technical comparisons, and responsive bid comparison.

126
Q

4.4.4 What is a performance bond? (p.57)

A

Financial guarantee up-front protecting the buyer from vendor non-compliance.
A performance bond typically raises cost by 1-2% of the contract price

127
Q

4.4.5 What items are included in most specifications? (p.57)

A

Cab, Engine & Transmission,
Electrical, Fuel, Brake System, Axles, Tires and Wheels, General (safety
standards, cylinder removal process, vehicle camera), Body Dimensions,
Body Construction, Hopper, Packing/Ejecting Mechanism, Lifting Arms,
Controls, Hydraulics, Paint, Mounting, Warranty, and Optional Equipmen

128
Q

5.1.1 What are two different types of plans for employee reimbursement? (p.65)

A
  1. Monthly Allowance
  2. Accountable Plan
129
Q

5.1.2 Why is an Accountable reimbursement plan beneficial to both the employer and employee? (p.65)

A

Since reimbursements paid under Accountable Plans are excluded from gross income and are not reported on an employee’s W-2, they are usually the most desirable type of program from both the company’s and driver’s standpoints.

130
Q

5.1.3 What three rules must be followed in order to have an accountable reimbursement plan? (p.65-66)

A
  1. The expenses must have a business connection.
  2. The driver must provide adequate accounting for their expenses within a reasonable period of time (generally, within 120 days
  3. “Excess Payments” must be returned.
131
Q

5.1.4 List three examples of accountable plans. (p.66)

A

• Flat rate
-Company pays a driver $800 to cover their vehicle expenses
-Driver has $600 in substantiated business expense and returns the excess $200
• Cents per mile
-Company pays driver at or under the current IRS Optional Standard Mileage Rate
• Qualifying Fixed and Variable Rate (FAVR) Plans

132
Q

5.1.5 What are non-accountable reimbursement plans? Give an example. (p.66)

A
  1. These are plans that don’t meet one or more of the criteria required to be a tax-free reimbursement
  2. Most common being “flat rate” vehicle reimbursement programs.
    Example of Non-Accountable Plan:
    • Flat rate
    • Company pays a driver $800 to cover their vehicle expenses
    • Driver does not substantiate their expense or return any excess fund
133
Q

5.1.6 What are the pros and cons of a cents-per-mile reimbursement program? (p.67)

A

Pros
• Easy to administer
• Tax-free (if under the IRS Optional Standard Mileage Rate)
• Is a government approved rate
Cons
• Is not geographically sensitive
• Does not properly account for mileage (depreciation)
• Under-pays low mileage drivers
• Over-pays high mileage drivers
• Provides an incentive to report miles
• Lags the marketplace by a year
• Not intended as an accurate reimbursement for business use of a personal vehicle

134
Q

5.1.7 What is the IRS rate and why do many organizations use it? (p.67)

A

IRS’s Optional Standard Mileage Rate for Business (IRS rate) which is updated each year with a new Revenue Procedure number
It is easy to administer and explain, and takes some of the “randomness” out of the reimbursement program.

135
Q

5.2.1 Under which circumstances is it preferable to have employees provide their own vehicles? (p.68-69)

A

• Temporary or intermittent requirements
• Low-mileage drivers
• Lack of infrastructure to support an employer provided pool
• Strong employee preference

136
Q

5.2.2 In what situations should employee provided vehicles not be considered? (p.69)

A

• The type of vehicle required is other than those normally owned by employees. For example, the requirement for off-road travel or trans-
portation of heavy or oversized loads would usually preclude the use of employee provided vehicles.
• Seeing employees taking the vehicles they use for business home at night would negatively impact public perception and the image of the
organization.

137
Q

5.2.3 How can temporary or intermittent vehicle requirements be met? (p.69)

A

Rental - Loan from POOL - Driver reimbursement

138
Q

5.2.4 Under what circumstances can employee reimbursement be preferred even when employer provided vehicles are less expensive? (p.69-70)

A

a. The organization has limited funds available for purchase and does not want to lease vehicles.
b. Public perception may prevent an organization from allowing employees to commute with their employer provided vehicles.
c. Parking space or overnight security restrictions may prevent overnight and partial day storage of the employer’s vehicles. In this case, the employer may opt to eliminate its fleet vehicles and reimburse employees for the business use of theirs.
d. d. Strong employee preference

139
Q

5.2.6 When might a Fleet Manager consider renting a vehicle? (p.71)

A

In some cases your fleet may not have the number of vehicles or the right vehicles required to fulfill certain tasks.

140
Q

5.3.1 What are some of the requirements of vehicle purchasing? (p.72)

A

Requires a considerable capital outlay
- Ffocus on a variety of administrative tasks: initial licensing and renewals, personal property tax payments, title retention and remarketing of vehicles

141
Q

5.3.10 How can the Fleet Manager get funding from Federal Agencies? (p.74)

A
  1. This type of funding is typically available for purchasing or modifying vehicles to mitigate environmental impact.
  2. To find these grants, Fleet Managers should monitor the agency websites, network with State Clean Citie Coalitions, and listen to vendors. 3. Vendors can be a good source for where to obtain grant money
142
Q

5.3.11 How can the Fleet Manager secure funding from the state? (p.74)

A
  1. Clean air vehicle grant funding is more prevalent at the state level
  2. National Association of State Energy Officials (NASEO) releases a directory of State Energy Offices (SEOs) for clarity
143
Q

5.3.12 How can liens affect Fleet Managers who finance their vehicles? (p.74)

A

The vehicle may not be sold until The lender is paid off and The lien released

144
Q

5.3.13 What are some administrative issues that arise from unpaid tickets? (p.74)

A

Liens - Registration Blocking - Registration Suspension

145
Q

5.3.2 What are some advantages of vehicle ownership? (p.72)

A
  1. Tax relief on depreciation
  2. Pricing leverage with dealers
  3. Maximization of resale proceeds.
  4. Retaining the salvage value is one of the key advantages of ownership.
146
Q

5.3.3 When might it be preferable to order vehicles from the dealers stock? (p.72)

A
  1. Dealerships want to sell their vehicles to customers by making them attractive with add-ons such as heated seats, satellite radios, and unneeded warranty and package options.
147
Q

5.3.4 What are some advantages and disadvantages to purchasing from dealer stock? (p.72)

A

Dis: ordering from the dealer can actually be more expensive due to dealer markup
Ad: When it comes down to timing issues however stock will be the best bet

148
Q

5.3.5 What capital considerations should the Fleet Manager make? (p.72)

A
  1. Money is a finite resource and may be better invested in other assets such as hiring staff, advertising, or paying down debt
149
Q

5.3.6 How does Return on Investment affect the purchase decision for both public and private fleets? (p.73)

A

If the profit margin is greater than the cost of capital then it makes more sense to use internal funds to generate additional revenue and borrow the money for vehicles

150
Q

5.3.7 What is the true cost of capital? (p.73)

A

dependent on how the organization finances its assets (vehicles).
Finance through retained earnings or does the organization finance the fleet through debt
RE: internal capital, investments, rate of return, history, credit worthiness, bond rating, etc.
* The organizations true cost of capital is based on the weighted average of these costs.

151
Q

5.3.8 What are the Sales tax implications of both purchasing and leasing vehicles? (p.73)

A

When leasing most states charge sales tax on the monthly lease payment.

152
Q

5.3.9 What are some of the more common funding sources? (p.73-74)

A

Internal Funds - Borrowing - Leasing - Govt funding / Grants

153
Q

5.4.1 Define the term Lease. (p.74)

A

A rental that, by contract, is clearly defined as to length, cost and stipulations.

154
Q

5.4.10 What is a Terminal Rental Adjustment Clause (TRAC)? (p.77)

A

Most open-end leases also contain what is known as a TRAC clause that ties the lessee to whatever difference may exist between the book and selling values of the unit upon remarketing.

155
Q

5.4.11 How can the Fleet Manager determine the mileage criterion to be used in the leasing agreement? (p.78)

A

If there is not a vehicle on which to base an accurate comparison then discuss with the user and his/her management to try and be as accurate as
possible

156
Q

5.4.12 What are the differences between a floating and fixed financing rate? (p.78)

A

With floating rate financing, base rates are set each billing cycle, based on the prevailing rates at the time. As interest rates fluctuate, so do monthly lease payments.

157
Q

5.4.13 What is the difference between on and off the balance sheet accounting? (p.79)

A

The main difference between on or off balance sheet accounting is how assets are treated
1. Are they considered an asset and financially depreciated, or are they considered an operating expense
2. With on balance sheet accounting the organization is depreciating the asset and the asset holds a residual value (it could be sold to raise capital).
3. With off balance sheet accounting, the asset is recorded as an operating expense and has the potential for an improved return-on-investment due to fewer owned assets.

158
Q

5.4.14 List some of the Leasing fees that the Fleet Manager should be aware of. (p.79)

A

• Administrative Fee
• Interest Markup
• Issuance Fees
• Interest Rounding
• Interim Interest
• Interim Rent – Front end of lease
• Interim Rent – Back end of lease
• Fully depreciated lease admin fee
- Variable Interest: interest rates based on conditions that may have nothing to do with leasing (for example, lease rates may spike if you cancel use of a maintenance program

159
Q

5.4.2 What is the difference in cost between leasing and purchasing vehicles? (p.75)

A

purchasing is typically less expensive in the long-term than leasing

160
Q

5.4.3 What are the four questions to ask in order to classify a lease? (p.75)

A

• Does the ownership (title) transfer at the end of the lease?
• Does the lease contain an option to purchase the asset at a bargain price?
• Is the term of the lease at least 75% of the estimated economic life of the asset?
• Is the present value of the future minimum lease payments at least 90% of the fair market value of the asset?

161
Q

5.4.4 What is an operating lease? List some of the benefits it provides. (p.75

A

Want to use and return at end of lease

162
Q

5.4.5 Who bears the risk in open-end and closed-end operating leases? (p.76)

A

Open End: Lessee
Closed End: Lessor

163
Q

5.4.6 What is a Capital lease? (p.76)

A

classified and accounted for by the lessee as a purchase and by the lessor as a sale or financing transaction
may also be known as a finance lease or direct lease

164
Q

5.4.7 Define the two types of Capital leases. (p.76)

A

Finance Lease – Finance leases are full-payout, non-cancellable agreements in which the lessee is responsible for vehicle maintenance, taxes and insurance.
Direct Financing Lease (Direct Lease) – direct lease is a financial arrangement and contract through which the lessor (a financial institu-
tion, a leasing company or similar entity other than a manufacturer or agrees to furnish, and the lessee agrees to hold assets for a set period of time, at an agreed upon price, and in accordance with specified terms and condition

165
Q

6.1.1 What is vehicle commissioning? (p.80)

A

Receiving, licensing, decaling, entering in FMIS

166
Q

6.1.2 Describe some of the common activities involved with commissioning a vehicle. (p.80-81)

A
  1. Licensing
  2. Titling
  3. Decalling
  4. Information System Input
  5. Asset tagging
  6. Inspection
  7. Warranty Registration
167
Q

6.1.3 What are some of the unique requirements that are common to government fleets? (p.81)

A
  1. Environmental testing.
  2. Licensing
168
Q

6.1.4 What are some of the unique requirements that are common to leased private sector vehicles? (p.82)

A
  1. Driver Assignment
  2. Up Front Fees
  3. Inspections
  4. Customized Invoices
  5. Fuel Management
169
Q

6.1.5 What additional activities are required when commissioning a utility fleet? (p.83)

A
  1. Permits. Necessary operating permits must be obtained. Due to the nature of utility equipment, state or provincial permits may be required.
  2. Regulatory compliance. Determine Federal, State and Provincial regulatory requirements and ensure compliance
170
Q

6.1.6 What are some of the unique requirements that are common to law enforcement fleets? (p.83)

A
  1. The Life Cycle specific law enforcement vehicle equipment (light bars, jail partitions, prisoner restraint systems, gun mounts)
  2. UPfitting
  3. Specific Department needs
  4. Vehicle Codes
  5. License plates
171
Q

6.2.1 What is vehicle upfitting? (p.84)

A

Upfitting is the process of optimizing vehicle design for the most effective overall productivity and cost

172
Q

6.2.2 How can the Fleet Manager determine what upfitting is required on a certain vehicle? (p.84)

A

The end user of the vehicle will be the best person to give you information on what will be needed in the upfitting for the vehicle.

173
Q

6.2.3 What resale considerations should be made before the vehicle is upfitted? (p.84-85)

A

Passenger area installation of radios, brackets, lights, and other equipment should be performed in a manner to minimize visible damage to preserve resale value.

174
Q

6.2.4 What are some common errors that are made in the upfitting process? (p.85)

A

• A chassis arrives to the upfitter with the wrong specs adding 1 inch to the height of the vehicle which forces a change in the body specs.
• A cargo van is delivered without the proper shelving system and fails to meet the driver’s requirements for performance.
• A liftgate is installed with a platform too small to safely handle the load it was intended to carry

175
Q

6.2.5 What should the Fleet Manager do after purchasing upfitted vehicles? (p.85)

A
  1. Setup an “early alert” system to recogineze problems for upfitting
  2. After arrival, inspection needs to ensure items installed correctly
176
Q

6.3.1 What are the two aspects of Fleet rightsizing? (p.85)

A
  1. Utilization
  2. Sizing the Vehicle
177
Q

6.3.2 What are utilization thresholds and how are they used? (p.85-86)

A
  1. Used to Determine if a vehicle is needed
  2. Fleet utilization can be measured in miles or hours or days or trips completed or jobs completed, or any combination of these measurements
178
Q

6.3.3 What are the effects of over-utilizing and under-utilizing assets? (p.86)

A

Maintenance

179
Q

6.4.1 Under what circumstances might the Fleet Manager consider pooling resources? (p.86-87)

A
  1. Organization will need a vehicle for a specific job that is not frequently needed.
180
Q

6.4.2 What is an alternative to acquisition for a temporary need or ow frequency job? (p.87)

A

Create an employee pool/sharing program.

181
Q

6.4.3 How can a Fleet Manager control access to a fleet pool? (p.87)

A

Schedule to keep it fair

182
Q

6.4.4 How can the Fleet Manager monitor the usage of the fleet pool? (p.87)

A
  1. It’s important that the manager checks usage of fleet vehicles both quarterly and annually to monitor how regularly fleet vehicles are being used
  2. If a unit is not being used frequently during certain periods of the year or is not being used to its full potential, then you should consider pooling or sharing the vehicle that is being underutilized
183
Q

6.5.1 What should the Fleet Manager consider while designing the layout of the fleets facilities? (p.88)

A
  1. layout’s ability to handle alternative fuels; pay attention to exterior location, ventilation, spacing, fire codes and other regulations before building.
184
Q

6.5.2 What should the Fleet Manager consider while deciding the location of fleet facilities? (p.88)

A
  1. Facility that is large enough but not too far removed from commonly used roads or cities
185
Q

6.5.3 What is the Fleet Managers role in managing equipment? (p.88)

A
  1. Oversee
  2. Responsibility to uphold safety plans and training.
186
Q

6.6.1 What checks should the Fleet Manager do when hiring new drivers? (p.88)

A

MVR

187
Q

6.6.2 What can the Fleet Manager do to help manage risk? (p.88)

A
  1. Proper and complete driver training is also an important step to managing driving risk
  2. Ensure that your driver has the appropriate license before beginning work
188
Q

6.7.1 What responsibilities in the Fleet department fall under HR? (p.89)

A
  1. Proper staffing
  2. Recruitment
  3. Reward systems and incentives
189
Q

6.7.2 Describe the steps involved in proper fleet staffing. (p.89)

A
  1. Having the right tools, or employees, to fill your toolbox.
  2. Advertise the positions truly and effectively
  3. Employee retention
190
Q

7.2.1 What 6 activities are common when decommissioning a vehicle from the fleet? (p.93)

A
  1. Title Transfer
  2. Equipment Removal
  3. Fuel Sysem removal
  4. Certification
  5. Inspection
  6. Information System
191
Q

7.2.2 What are some considerations that should be made when decommissioning a vehicle from a public fleet? (p.93)

A
  1. Public Image - Identifying decals, license plates and other markings should be completely removed.
  2. Liability - The government has a legal and moral obligation to use utmost care in identifying assets which should not be resold to the public and should be sold for salvage or destroyed
192
Q

7.2.3 What are some considerations that should be made when decommissioning a vehicle from a private fleet? (p.94)

A
  1. Turn-Ins at Dealer process
  2. The vehicle being decommissioned will go through an inspection process by the driver
  3. Many times, the decommissioned vehicle may be dropped directly at an auction by the driver, with the same visual inspections being completed
  4. Decommissioned vehicles may go through a detailing
  5. Decommissioned vehicles may be offered for sale by the disposal entity to the driver of the vehicle
193
Q

7.2.4 What are some considerations that should be made when decommissioning a vehicle from a utility fleet? (p.94)

A

(1) Testing. Vehicles with aerial devices should be tested to ensure compliance with Federal, State and Provincial standards.
(2) Maintenance records. On decommissioning, maintenance records of the vehicle should be copied and stored to prove that all necessary
maintenance was performed during the life of the vehicle.
(3) Warning labels. A final check should be done during decommissioning to ensure that adequate warning labels are still affixed to any
vehicles being remarketed.

194
Q

7.2.5 What are some considerations that should be made when decommissioning a vehicle from a law enforcement fleet? (p.95)

A
  1. Equipment Life cycles: Each piece of equipment mounted in or on a law enforcement vehicle has its own life cycle
  2. Stripping
  3. License plates:
  4. Preparation for disposal
195
Q

7.3.1 What is vehicle reconditioning? (p.95)

A
  1. Anything from simply washing a car to performing major mechanical and body work
  2. A general rule is that the reconditioning work must return at least 3 times the cost of reconditioning
196
Q

7.4.1 What should a remarketing policy contain concerning the sale of vehicles to employees? (p.96)

A
  1. It should address pricing of vehicles sold to employees,
  2. Sales to employee’s immediate family
  3. Approval of repairs for a certain period prior to sale
  4. Time to pick up after sale, and other entity specific consideration
197
Q

7.5.1 What is the Employee remarketing method and what are the benefits of using it? p.96)

A
  1. One of the least expensive methods is selling to Employees
    a. Maintenance is upkept
    b. particular concern is setting the price of the vehicle. Setting the price too low reduces the company’s return but setting it too high can delay the sale and be perceived as trying to “gouge” employees
198
Q

7.5.2 What is the Auction remarketing method and what are the benefits of using it? (p.97)

A
  1. On Site:
    a. This requires setting up your fleet location to be a sales point for both your own vehicles and those of other sellers.
    b. requires significant space as well as accepting the liability of storing other company’s vehicles on your property. 2. Off Site:
199
Q

7.5.3 What is the trade remarketing method and what are the benefits of using it? (p.97)

A

This practice is used by most dealers anywhere for both fleet managers and the general public buying new cars and trading in their old ones
One advantage of using this channel is that use of space is minimized as one vehicle is removed from the lot and one is added for a net gain of 0

200
Q

7.5.4 What is the retail remarketing method and what are the benefits of using it? (p.97)

A

Though retail can bring in higher revenues it does require added time, costs, and expertise

201
Q

7.5.5 What is the direct remarketing method and what are the benefits of using it? (p.98)

A

Direct sales involves finding a certain target whether it be an organization, demographic, or individual

202
Q

7.5.6 What is the third party remarketing method and what are the benefits of using it? (p.98)

A

Third party is one of the easiest ways of selling vehicles however it may give the lowest return
Selling through a third party is the best option when vehicles need to be moved quickly

203
Q

7.5.7 What is the Internet remarketing method and what are the benefits of using it? (p.98)

A

A significant advantage of this method is that the market is expanded globally.

204
Q

7.5.8 What is upstream remarketing and what are the benefits of using it? (p.98)

A

This involves selling vehicles as a dealer or while still in service
The Fleet Manager begins to know when the buyer is looking for vehicles, and can target the vehicles to this buyer to maximize revenue.

205
Q

7.6.1 What is the difference between effective depreciation and book depreciation? (p.101)

A

Effective depreciation, the actual value of the vehicle consumed in use (net acquisition cost - net resale value)
Book depreciation is the total acquisition cost - estimated residual value of the vehicle at replacement

206
Q

7.7.1 What is the goal of a fleet manager when selecting a vehicle? (p.102)

A

The ultimate goal of a fleet manager is to buy a vehicle that does the job, has the highest resale value, and has the lowest operating cost.

207
Q

7.7.2 What are the two factors that dictate effective depreciation? (p.102)

A

the expected “useful” life of the vehicle and the approximate market value of the vehicle at lease-end

208
Q

7.7.3 In general, what are the differences in planned vehicle life between government fleets, private fleets, executive fleets and leased fleets? (p.102)

A
  1. Government fleets: this period may be longer.
  2. Private fleets: 36 months is the average period
  3. Executive fleets: 36- or 40-month lease is typical
  4. Leased Fleets: a longer write off period is the norm, since it will help lower payments.
209
Q

7.7.4 What should be considered when deciding to sell a vehicle in order to minimize effective depreciation? (p.103)

A

vehicle’s age, mileage, condition, time of year, regional differences, etc., in order to optimize value and, thus, minimize depreciation

210
Q

7.7.5 Know how sale price volatility can affect various vehicle classes. (p.103)

A
  1. compact cars tend to have a wider seasonal swing in prices than do mid-sized cars
  2. Over the past few years, luxury cars exhibit the greatest price stability
  3. Vans and minivan prices represent one of the weakest segments in the used-vehicle markets since the late 1990s

CAFM Certification (29 decks)

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