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Office of the City Auditor

Vehicle Preventive Maintenance, Internal Audit Report
October 2001

October 30, 2001

Stockton City Council

INTERNAL AUDIT SUMMARY: VEHICLE PREVENTIVE MAINTENANCE

In accordance with our 2001-2002 audit plan, we have completed a limited scope audit of vehicle preventive maintenance in accordance with Generally Accepted Government Auditing Standards.

One of the audit objectives was to determine whether preventive maintenance inspections are performed on City vehicles in accordance with established procedures and standards . Another was to determine compliance with mandated maintenance requirements for certain type of vehicles.

At the request of the Public Works Director, we conducted an informal survey of user departments. In our interviews of personnel in-charge of vehicles in City departments, there was consensus in their expression of overall satisfaction with the preventive maintenance service provided by Fleet Management. Fleet Management also received a satisfactory rating from the California Highway Patrol inspectors on the last 3 bi-annual inspections of City vehicles selected at random.

In our review of open job orders, we found that most vehicles were brought in for service in a timely manner. However, even with established notification procedures, we noted some vehicles were brought in for maintenance service beyond the mileage schedule established by Fleet Management and the manufacturer.

We reviewed a sample of completed job orders for preventive maintenance inspections to determine the average time of completion. In examining details of job orders where the time exceeded the average, we found cases where repair work had been done with the time and materials charged to the preventive maintenance job orders. While there is a need for improved record keeping practices, this suggests that Fleet makes on-the-spot repairs when needed, a commendable action. We also commend management for being receptive to an objective evaluation of operations and for recognizing the importance of internal controls. Additional information about our audit can be found in the attached INTERNAL AUDIT REPORT.

original signed by:

F. MICHAEL TAYLOR, CIA
CITY AUDITOR

TABLE OF CONTENTS

Vehicle Preventive Maintenance

Summary Letter

Audit Report

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .1

Scope and Objectives . . . . . . . . . . . . . . . . . . . . . . . . . 2

Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Noteworthy Accomplishments . . . . . . . . . . . . . . . . . . . . 5

INTERNAL AUDIT REPORT
VEHICLE PREVENTIVE MAINTENANCE

In accordance with our 2000 - 2001 audit plan, we have completed a limited scope audit of Fleet Management's vehicle preventive maintenance in accordance with Generally Accepted Government Auditing Standards.

The mission of Fleet Management (Fleet) is to:

• Provide user departments with safe, reliable vehicles and equipment at the lowest cost and with least interference to operations.

• Ensure compliance with prevailing laws and regulations relating to fleet and fueling station activities.

• Provide training to City employees to help them qualify for their commercial driver's license.

Fleet maintains approximately 976 City vehicles with a total value net of depreciation of about $13,000,000. Every truck over 26,001 gross vehicle rated weight, cranes, fire trucks and vehicles with air brakes are required to be inspected every 90 days by the motor carrier. The California Highway Patrol conducts the bi-annual inspection of vehicles and motor carrier terminals.

Fleet is part of the Operations and Maintenance Division of Public Works Department, with 31 budgeted positions that include 25 light and heavy duty mechanics who work on 2 shifts. Preventive maintenance is performed at the corporation yard where Fleet has a shop for cars and light trucks and a heavy equipment shop built for heavy duty vehicles. It also has a set-up shop to equip police patrol cars with specialized equipment, a blacksmith shop to modify and custom fit parts, a body shop, paint shop, and tire shop.

When the City acquires a new or used vehicle, the information about the vehicle is taken from documents received from the Purchasing Division and from the delivery inspection report of the mechanic. The information is entered into the Fleet Management System, an HTE application that Fleet started using in 1993. The City Manager's Administrative Directive MAN-016, Assignment of City Vehicles, places the responsibility for regular preventive maintenance with any City employee assigned a City vehicle.

Fleet's maintenance program schedules preventive maintenance inspections (PMI) of light duty vehicles based on miles driven and heavy duty vehicles based on hours operated. PMI involves visual inspection of the overall condition of the vehicle, an inspection of the engine compartment, and an under carriage inspection of the vehicle. Preventive maintenance is categorized into 3 levels of inspections. PMI-A is performed every 5,000 miles and includes oil, filter change and chassis lubrication. PMI-B is performed at 20,000 miles, and PMI-C at 40,000 miles. Both PMI-B and PMI-C include the servicing of transmissions, differentials, and cooling systems.

The service intervals established by Fleet are more stringent than the manufacturer's recommended maintenance at 7,500, 30,000, and 60,000 miles. To notify employees when vehicles become due for maintenance inspection, Fleet generates a Preliminary Scheduled Maintenance Report every two weeks. The report indicates the date and mileage when the last maintenance was performed, and the current mileage.

The departments or divisions whose vehicles are on the report are notified through the inter-office mail. Also, each vehicle has a sticker to remind the driver when the next maintenance is due. In order to limit disruption of work due to required preventive maintenance on emergency or single use vehicles, Fleet provides priority for these vehicles and offers Saturday service. Service can also be done when an employee is off-duty.

When an employee responsible for a vehicle does not make an appointment with Fleet to schedule maintenance, Fleet places a follow-up call to the employee or the supervisor reminding them to bring the vehicle in for preventive maintenance. The mileage of a vehicle in the system is updated each time the vehicle gets fuel from a City pump equipped with an automated fuel system (gasboy), and each time the vehicle is serviced by Fleet.

The scope of the audit covers the period from when preventive maintenance records were entered into the application system in 1993, through completion of the audit.

One of the audit objectives was to determine whether preventive maintenance is provided to City vehicles in accordance with standards and procedures established by management. Another objective was to determine whether the mandated maintenance performed on certain type of vehicles is performed in compliance with applicable laws and regulations. We also conducted an informal survey on customer satisfaction with user departments.

Our audit was performed using the standard office methodology of documenting and evaluating internal controls. We gained an understanding of the purpose, objectives and procedures for the vehicle preventive maintenance program through interviews, observations, and review of records and information in the Fleet Management System.

We also conducted a risk assessment and identified potential threats that could result in higher non-productive periods for City employees, time consuming and more expensive repairs, unsatisfactory customer service, and management being unable to achieve its objectives.

We then took a sample of vehicles and reviewed the preventive maintenance records and compliance with mandated requirements. We also conducted an informal survey of operating units in different departments to determine customer satisfaction with preventive maintenance inspections.

Survey of User Departments

Our interview of personnel in-charge of vehicles in each department disclosed that there was a consensus of overall satisfaction with the preventive maintenance services provided by Fleet.

Mandated Maintenance Requirements

California Highway Patrol inspectors conduct bi-annual inspection of vehicles selected at random to check compliance with vehicle code. On the last 3 consecutive bi-annual inspections, Fleet received a satisfactory rating.

Operating Procedures

The administrative directive from the City Manager MAN-016 on Assignment of City Vehicles, provides that an employee assigned a City vehicle comply with the City of Stockton Procedures Manual for the Maintenance and Repair of Automotive Equipment. The manual belongs to Public Works Department and had not been updated since 1989. Although the manual mainly deals with internal procedures within Fleet, there is a section pertaining to driver's responsibilities in the maintenance and repair program, and pertinent information for each employee using City vehicle to know.

Management Response

Public Works Procedures Manual for Maintenance and Repair of Automotive Equipment is currently being revised. Copies will be sent to Duplicating for distribution City-wide.

Timeliness of Preventive Maintenance Inspections

In our review of the Open Job Order Report dated 5-17-01, we noted on some vehicles, the maintenance inspection was completed beyond Fleet's and the manufacturer's mileage criteria. Some employees are not scheduling their assigned vehicles for preventive maintenance inspection in a timely manner. This could result in unsafe or unreliable vehicles and unnecessary repair expenses.

Management Response

When it is determined a vehicle has not been scheduled at the appropriate interval, the Fleet Manager will issue a memo to employee assigned to the vehicle, and copy the department head and the City Manager. If after two weeks maintenance has not been scheduled, a follow-up memo will be issued to the employee's department head from the City Manager. The memo will indicate possible disciplinary action.

Completion Time of Preventive Maintenance Inspections

To determine the average time of completion for preventive maintenance inspections, we reviewed a sample of job orders. In examining details of job orders where the time exceeded the average, we found cases where repair work was performed and the time and materials charged to the preventive maintenance job orders. This suggests that Fleet makes on-the-spot repairs when they are needed, which is a commendable action. Combining preventive maintenance and repair work on a single job, however, distorts data in the electronic system.

Management Response

Division head and Fleet Manager will meet with entire Fleet staff and indicate importance of recording preventive maintenance and other necessary repairs. Procedures will be developed by entire staff in written form. All employees including supervisors, will be subject to disciplinary action if new procedures are not followed.

Fleet now has four locations for City fuel pumps with the automated fuel system. These are located at the corporation yard, police facility, fire company 2, and at the Municipal Utilities Department. Another fuel location is planned for North Stockton. The system allows any City vehicle to fuel at any of the locations.

Fleet has been performing smog checks on City vehicles. With the completion of the truck shop, Fleet was able to perform smoke test for heavy trucks and crane inspections. They continue to improve customer service and provide safe and reliable vehicles.

Management in the Public Works Department and Fleet in particular has been proactive in their approach to finding ways to improve preventive maintenance services to user departments. We commend management for being receptive to an objective evaluation of functions and operating procedures, and for recognizing the importance of internal controls in operations.

We would like to express our appreciation to management in the Public Works Department for their cooperation and assistance in this audit, and in particular to the Fleet Manager and his staff for making time for the audit and providing access to relevant information.