Three years ago in 2006, the management of Anglian Water’s fleet was almost entirely outsourced to its contract hire provider. Fleet manager Nigel Allen’s role was overseeing supplier relationships with the help of an assistant.
Today, Allen runs a fleet department of seven people and manages the entire fleet operation from acquisition through maintenance to disposal. The tipping point for the change was the decision in 2006 to go back to outright purchasing vans.
“Owning the asset gives flexibility when we dispose of it. We can increase or reduce the size of the fleet without needing to have contract termination talks,” says Allen.
“For instance, if residuals on three-year-olds improve then it might be a good time to get out. That reduces our wholelife costs.”
He adds: “We manage and maintain the fleet more efficiently in-house than going out-of-house.”
Allen became fleet manager in 1997 after eight years as workshop manager. His Anglian Water career extends to more than 31 years.
“Fleet manager was a natural step up from the workshop,” he says. “It’s an interesting job – the amazing variety of the fleet means there’s always something different.”
His 2,000 vehicles include 600 cars (of which 480 are business need), 1,200 vans and 89 4x4s. The balance is trucks above 3.5 tonnes.
The fleet is solus Vauxhall for vans and business use cars (all Ecoflex) and Mitsubishi for 4x4s. Non essential users choose from GM brands Vauxhall, Saab and Chevrolet with a handful of other makes on the fleet.
“You get a better deal going solus. We analyse the figures every two years and benchmark against other manufacturers – it still stacks up,” Allen says.
Although most of the vans are now outright purchase, the majority of the cars are contract hire. Car replacement cycles have recently extended from three to four years, while the vans are moving from four to five years.
“In a fleet of our size we can go to five or six years on vans – there’s very little residual values risk,” Allen says.
Anglian Water is Vauxhall-approved for warranty repair work, a status that enabled it to negotiate a four-year manufacturer warranty on Vauxhall cars and vans back in 2006.
“We are a benchmark for them on warranty levels and costs,” says Allen. “We aren’t seeing an increase in warranty costs from extending cover from three to four years.”
He would like to see Vauxhall extend the warranty on vans further, to five years/100,000 miles on major components.
Over the past four years, Anglian Water has seen off three different accident management companies and since July has taken the operation in-house. Allen is scathing about the service he’s received.
“They don’t manage the repair of the vehicle professionally – they don’t do what they say they will,” he says.
“We brought it back in house which cuts out management fees and we manage the repair smarter and more quickly. Repairers do the estimate but if the car is driveable we only bring it in when they are ready to do the repair. It saves costs and reduces downtime.”
The process is overseen by a member of Allen’s fleet team following an 18-month trial during which the role ran in tandem with the accident management company to assess the level of work involved.
“We have one estimate per day out of a fleet of 2,000, including minor bumps – that’s low on our benchmarking comparison,” says Allen.
Benchmarking features heavily in the management of the Anglian Water fleet – Allen shares performance data with seven other utilities companies, including BT and Royal Mail, in a scheme run by the Freight Transport Association.
Core to his internal management is control of residual values, fuel costs and maintenance costs. He uses Mate-Book to measure the performance of his seven workshops on costs and labour rates with national averages, constantly reassessing in-house versus outsourcing.
“We’re constantly reviewing and checking what’s going on,” Allen says. “On average it’s £5-10 cheaper per vehicle per month for us doing it ourselves. It works best when you own the buildings like we do – if you rent then there’s additional cost to add in.”
For funding, Allen gets two or three competitive quotes for each contract hire purchase, primarily using ING and ALD, although he’s close to finalising an agreement with Lombard.
“It’s about the order books,” Allen says. “If one of them has stacks of Vauxhall Insignias, what risk will they take?”
He is currently reviewing the fleet strategy for the next five years, due for implementation next year.
The process includes assessing the wholelife cost of every vehicle and ensuring the business has the best model for every job. After 12 years in the job, Allen is confident the review will be more about tweaks than revolution.
“We’ve been outright purchase, then lease, then outright purchase, then lease and now we are a bit of both,” Allen says. “We’ve done sale and leaseback, leased our workshops and brought them back in-house.
“We’ve tried everything and this process we have now is the best one – we can prove it with the figures.”
Vehicle fitment recycling: “Four years ago we appointed Bott so we could recycle all our vehicle fit outs and fit them to new vehicles. We will feel the benefits in 2010 when we start refurbishing and refitting – we expect a 40% saving on fit out costs.”
Vehicle utilisation: “We introduced Tuffbook two years ago which is managed from a call centre in Lincoln. Engineers send status updates to the system and when they are free, it sends the next job to them pulled from live data. It eliminates the ‘back to base’ mileage. In one sense, it increases our mileage because we can do more jobs in a day – it improves vehicle utilisation. Miles per job is less.
Engine management: “We are trialling an engine remapping system which improves output to an optimum level which raises both power and fuel economy. It doesn’t affect the warranty. Even a 1mpg improvement will make a big saving when we spend £8m on fuel a year.”
Downsizing: “We put the tax tables for each vehicle on our intranet site so staff can see the tax benefits of downsizing from, for example, Vectras to Astras. It’s a double win for us because we get better fuel economy and a low contract hire lease rate. We set a policy of 150g/km fleet average three years ago; last year we capped CO2 at 150g/km.”
Alternative fuels: “We started trialling the Mercedes-Benz CNG vehicle two months ago. It runs on biogas which is what we have at our sewage works. We already use it to generate power; we are looking at whether it’s viable to us for vehicle fuel. We stopped running LPG vans (Vauxhall, Renault and VW) three years ago because of technical issues and poor back up.”
Residual values: “We’ve been tracking the increases against the manufacturers’ price increases and they don’t reflect it. They have crept up but not by as much. On a three-year contract that makes a big difference – possibly £30 per month higher lease. We are looking at whether we increase replacement cycles even further to reduce that impact. The difference in maintenance costs moving from four to five years, or five to six years isn’t as big an increase as you might think.”
Name Anglian Water
Fleet manager: Nigel Allen
Fleet size: 2,000 vehicles
Funding methods cars: operating lease; vans - outright purchase
Replacement cycle: four years
Funding provider: ING, ALD
Marques Vans and essential user cars: solus Vauxhall; 4x4s – solus Mitsubishi; non-essential cars – GM/Saab
CO2 caps: 150g/km on cars