Optimizing Bus Warranty (2014)

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

35 identify warranty coverage periods and vigorously seek reimbursement. Warranty staffing depends on agency size, with the smaller agencies surveyed having no full-time staff; the majority using one or two personnel dedicated part-time to warranty. Larger agencies surveyed tend to have full-time warranty staff. More than 25% of all responding agencies do not provide warranty administrative training; that number grows to 50% for small agencies. For those that do train their warranty staff, about half provide less than an hour of warranty training per employee, a small amount given the amount of revenue that could be generated from a better informed and prepared workforce. Regardless of staffing and training levels, most surveyed agencies admit there are times when warranty repairs are made but a claim is not submitted. A more streamlined, Internet- based electronic process for submitting claims would result in more warranty reimbursements. A majority of surveyed agencies favor this approach. Information obtained through the survey also showed that agencies are nearly equally split between submitting war- ranty claims using an electronic format and those using more traditional “pen and paper” methods. Innovative techniques for submitting claims include the use of digital photographs, Internet-based claims processing, software that flags warranty work, suggestions that an electronic bulletin board be estab- lished to share warranty information, reviewing claims with vendors on a regular basis, and the use of e-mail to track claim status with vendors. It was also revealed that many agencies are not taking full advantage of provisions contained in the SBPG. Although it recommends that agencies add fringe benefits and overhead to calculate warranty labor rates, nearly one-third of those surveyed do not. Only one-quarter of surveyed agencies charge 15% handling for warranty parts as recommended by the SBPG. Efficient methods to optimize warranty reimburse- ment as presented by participating agencies include the use of strong contractual language, excellent record keeping, online tracking of submitted claims, and employee dedication to warranty reimbursement. A process to track warranty was found to be an essential element to optimizing warranty. Nearly one-half of the agen- cies surveyed use a combination of manual (pen and paper) and electronic data accounting methods to track warranty; Warranty coverage is an important but seldom investigated topic. This is the first known study that examines transit bus warranty, presents relevant FTA and APTA materials, reports how a sampling of agencies address various aspects of their warranty program, and highlights successful agency practices. This chapter presents key findings and offers suggestions. KEY FINDINGS Although no publications were found documenting how transit agencies handle warranties, other documents offer some guidance. They reveal that FTA requires grantees to have an aggressive warranty recovery program to ensure that the cost of repairs made during the warranty period are absorbed by the equipment manufacturer, not by agencies and FTA. APTA’s Standard Bus Procurement Guideline (SBPG) is considered an industry standard by FTA for agencies to reference when developing their own warranty programs. A maintenance plan developed by the Texas Department of Transportation serves as an example to satisfy FTA requirements that warranty is maintained by adhering to the manufacturer’s preventive maintenance recommendations. Survey results present collective agency practices regard- ing several warranty topics. For warranty recovery programs, all surveyed agencies use elements of the SBPG as a basis for crafting their own programs. When it comes to practices regarding warranty time and mileage coverage periods, most surveyed agencies use the standard SBPG periods, with half preferring options for extended engine and transmission war- ranty coverage. This chapter also noted that the vast majority of those surveyed use their own technicians to make some warranty repairs and call in vendors to make others. The top three bus components or systems where vendors are called in to make the warranty repairs are engines, transmissions, and air conditioning. Despite using warranty repairs as a training exercise when time permits, most agencies admit their tech- nicians are only marginally prepared to make repairs after warranty coverage ends, because of the dependence on vendors to make those repairs. Survey results concerning warranty management focuses on an agency’s ability to aggressively pursue a warranty claim. It depends on the dedication an agency has to managing its warranty program; a program that engages technicians and multiple agency departments to accurately and efficiently chapter six CONCLUSIONS

36 the remaining half are nearly evenly divided on exclusively using manual or electronic methods. It is interesting to note that fewer than 20% of responding agencies admit to having an excellent process for tracking warranty coverage periods and identifying warranty repairs. Nearly half of participat- ing agencies acknowledge that their process could use some improvement. Specific vendor topics are also addressed. Regarding war- ranty claims being completely rejected by vendors, two-thirds of respondents reported this being the case with 10% or less of their warranty claims, and one-third state that vendors reject between 10% and 30% of warranty claims. Of responding agencies that had warranty claims denied, nearly 80% have been successful in overturning the vendor’s original denial by having solid documentation and other evidence. Regarding fleet defects, one-third of all surveyed agencies were not familiar with all aspects of the SBPG definition. A third of all surveyed agencies also experienced vendors going out of business while products were still covered under warranty. Agencies offer their own advice to help optimize warranty: • Create a comprehensive warranty policy. • Develop strong relationships with manufacturer and component suppliers. • Keep technicians informed of warranty coverage periods and emphasize that they need to be proactive with regard to warranty administration. • Motivate staff to initiate, track, and follow up on war- ranty claims. • Allow staff to see the payoff for time and efforts spent on warranty claims. • Do not let warranty claims become a nuisance. • Have the industry adopt a standard for warranty claim forms and electronic, Internet-based submittal procedures through APTA’s SBPG. • Obtain extended warranty coverage as long as it can be justified. • Include vendor training in your procurment specifications. • Be extremely vigilant in the claims process. • Be sure to include handling fees in all warranty contracts. • Hold vendors to what is agreed upon contractually. • The return on investment for warranty recovery is huge; it’s worth having a dedicated team recovering warranty. • Start a network for all transit agencies to join and collabo- rate regarding bus warranty. • Communicate warranty terms and conditions clearly and concisely in your specifications. • Make sure your contract specification is strong, reason- able, and enforceable. • Have enough warranty staff to ensure claim processing within the time requirements of the vendors. • Conduct an overall bus inspection just before the warranty period expires. Case examples present more detailed information. Agen- cies with a smaller number of vehicles to keep track of, as described in the Rockford Mass Transit District case example can monitor warranty more easily by simply “memorizing” coverage periods and terms, and using basic computer-based spreadsheets to satisfy FTA and internal agency reporting requirements. Potomac and Rappahannock Transportation Commission is an example of a medium-sized agency where its growing fleet size compelled them to transition from manual warranty tracking methods to more extensive use of computer-based programs. Larger agencies such as Dallas Area Rapid Transit with hundreds of vehicles, however, require more sophisticated tracking programs with the capability to flag warranties and issue a variety of reports to ensure vendors are charged for warranty-related work. SUGGESTIONS FOR FURTHER RESEARCH The following items are offered for future study: • Agencies might become more thoroughly familiar with FTA warranty requirements and the SBPG to more aggressively pursue warranty recovery. • The guidelines might be enhanced to include a standard- ized, Internet-based warranty claim form to help stream- line the process. • The guidelines might also be improved to clarify how diagnostic time is to be charged for warranty repairs, to standardize vendor reporting of the warranty repairs made, and to revisit the 15% parts handling charge to be more representative for all agencies. • An electronic bulletin board might be established where agencies could collectively discuss warranty-related topics.