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New Post 1/21/2009 5:40 AM
User is offline rudyard
3 posts
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Shared service: How to calculate vehicle savings  


I am currently undertaking an as-is exercise to capture the cost of a number of services with a view to being able to calculate any possible financial savings of introducing a shared service at some point.  I am trying to capture the vehicle costs however the vehicles are used by the services for activities that would not fall in the scope of the shared service.  I'm unsure how I can capture the as-is cost and what any financial saving would be in relation to the vehicles- I am struggling because….

a). the service would need to have the vehicle even if a shared service was introduced to enable them to undertake the activities that they currently undertake that would be outside of the shared service.

b). I have thought of asking the service to specify a percentage of time that the vehicle is used for all activities that would be in scope for the shared service and then apply this ratio to the total cost of the vehicle and running costs- but if I put this as a saving I’m sure the services would argue that it is not a true saving.

I'd appreciate any comments/views on the above!




New Post 1/22/2009 2:33 AM
User is offline KJ
243 posts
6th Level Poster

Re: Shared service: How to calculate vehicle savings  
Modified By KJ  on 1/22/2009 5:39:15 AM)


These questions smack of cost accounting! Now activity based costing (ABC) and user-pay concepts could be of assistance here!

The issue is how iwll you have an asset that is used equitably. The dept who pays 90% of the service is indirectly subsidising the other groups by "maintaining" the bulk of the  asset! mmmmh interesting.

warm regards,


New Post 1/23/2009 1:59 AM
User is offline Craig Brown
560 posts
4th Level Poster

Re: Shared service: How to calculate vehicle savings  
Modified By Craig Brown  on 1/23/2009 5:01:28 AM)


What sort of benefits are you seeking from your centralising of resources (presuming that this is the physical outcome of moving to shared services.)

Examples of benefits may include;

  1. Cost savings via increased purchasing power through centralised contract management and purchasing in bulk
  2. Increased operations efficiency as they don't have to deal with the admin of the shared services (eg if we take all the cars into a shared seruices dept dozens of admin people save half a day a month in recording miles and reporting expenses, etc
  3. Better support for tools/services.  Example - if all your cars have a common problem the organisation might not notice or may take a long time to notice of they are all managed separately.  If they are together you have a more holistic view and can better manage issues
  4. Better focus by operations people on their day job, as they don't have to be distracted by issues. Got a problem with a car? Check it in and pick up another,  No problem. 
  5. Resource optimisating via resource pooling.  Something called Erlang theory is (was?) used to best manage call routing for call centres, and queue mangement for physical locations.  It's about minimising the wait time between jobs for resources.
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