Fleet Financial and Business Management

Mercury advises venture capital, private equity firms and other investors that require specialized expertise in fleet management. This includes providing information on best management practices, fleet industry trends, and fleet market demographics needed to assess specific investment opportunities.

Our services to investor clients include:

• Fleet cost analysis, reduction, and containment studies

  Close (X)

  Few organizations retain Mercury with the sole objective of lowering the costs they incur in operating their vehicle and equipment fleet. The ultimate objective of almost every consulting assignment is to enable our clients to achieve the best possible level of vehicle availability, reliability, and performance at the lowest possible cost. But dramatic drop-offs in short-term budgets and in long-term recurring costs virtually always result.

  Understanding Cost Distinctions
  Mercury's clients often ask that we help them assess the cost-competitiveness for their fleet operation. We frequently find that fleet managers lack a full understanding of their program's costs, cost analysis techniques, and the financial management principles that apply to fleet operations. There are many different ways that cost information can be characterized, interpreted, used, or misused.

  For example, the following types of costs all accrue in fleet management operations. It is important to Mercury's consultants that our clients understand the distinctions and similarities among these costs. The distinctions and similarities affect management and customer attitudes toward the fleet operation and can have a profound impact on the organization's cost competitiveness:

  • Fixed costs versus variable costs
  • Capital costs versus operating costs
  • Average versus marginal costs
  • Avoidable versus unavoidable costs
  • Direct and indirect costs
  • Fiscal and economic costs

  The Fleet Operation's Financial Structure
  Mercury consultants also address the organization's financial structure when analyzing for cost competitiveness. Key factors we consider include:

  • An internal service fund, which enables the organization to identify costs associated with supporting the fleet operation, bring accuracy to overhead cost calculations, and other benefits.
  • Accurate charge-back rates, which make vehicle users accountable and lead to cost consciousness throughout the organization.

  Vehicle management organizations that know their costs and have an appropriate financial structure are always well positioned to justify to decision makers and constituents that they are providing a high level of service at a competitive price.

• Development of strategic business plans
• Business process reengineering and implementation
• Charge-back system review and rate development

  Close (X)

  Accurate charge-back rates are indispensable to sound fiscal management of your vehicle fleet. Mercury's consultants have enabled many customers to save millions of dollars through reductions in annual operating costs and increased productivity as a direct result of incorporating a sound, well-documented charge-back rate into their fleet operations.

  The charge-back accurately recognizes and allocates to each user the costs of operating, maintaining, and replacing the vehicles they use. Like Adam Smith's powerful "invisible hand" of the free marketplace, the charge-back system brings many benefits to both individual users and to the fleet organization.

  Users who are responsible for the costs they incur tend to make informed decisions about their own consumption of fleet resources, gain a clear understanding of the services they receive, and can hold fleet management accountable for delivering as promised.

  The fleet organization that implements a charge-back system immediately becomes more cost competitive and able to balance its budget. Management also gains a full understanding of its total costs and can make better and more economical choices about its fleet size and composition, operator policies and practices, and overall fiscal management.

  Mercury's services in the area of charge-back system development and implementation include:

  • Charge-back system design
  • Activity-based costing development
  • Repair technician and shop rate development
  • Parts and fuel markup-rate calculation
  • Replacement planning charge-back rate design
  • Usage-based, fixed-fee, and hybrid rate evaluation
  • Cost competitiveness review and benchmarking
  • Rate reduction strategies
  • Staffing level optimization
• Internal service fund audits and replacement reserve fund rightsizing

  Close (X)

  Fleet replacement is a complex, multi-faceted undertaking that can involve millions of dollars annually. A properly designed and administered replacement reserve fund brings many distinct advantages to the fleet operation. It can enable the organization to avoid the higher costs and diminished service levels that often creep in when the organization relies on ad hoc appropriations and best guesses on funds availability. It can also separate the process of fleet replacement from the organization's annual budgeting wars.

  Mercury's consultants are experts in both designing replacement funds and in auditing their solvency and adequacy to meet your future replacement purchasing needs. This type of audit is important particularly for fleet organizations that serve the public sector. These organizations must demonstrate responsible stewardship of public funds, maintenance of an adequately sized replacement reserve fund, and compliance with regulations such as the federal Office of Management and Budget costing guidelines.

  In addition to providing objective, unbiased certification of the replacement reserve fund's solvency, Mercury's replacement reserve fund services can:

  • Recommend the proper level of internal lease charges that build up the reserve fund by spreading each vehicle's true capital costs over its expected service life.
  • Analyze and project fleet replacement funding needs over several years and design the cash flow that matches year-to-year funding requirements so that the fund remains solvent without accumulating a large cash balance.

For more information on our consulting services and business solutions, please contact us via our online form, by email at , or by phone at 301.519.0535.