CONSTRUCTION Accounting ARTICLE -
Stay In the Driver’s Seat With Sound Fleet Management
Target Audience: Construction Industry Professionals, Contractors, Construction Business Owners, Construction Accountant Interest, Fleet Managers, Vehicle Operator Managers, Cost-effective Management Interest
One of the many questions that cost-conscious contractors often struggle with is how to manage their company vehicles. How often should you replace them? How can you accurately track hours of use? Are they costing you too much?
Questions such as these can keep you up at night, but they don’t have to. Sound fleet management helps answer critical questions and, ideally, saves you money.
The cost of doing business
The first step to effective fleet management is understanding that all vehicles aren’t created equal. You can charge your customers for the hours a backhoe or bulldozer is used on a project, but you can’t charge them (directly, at least) for the cost of the pickup trucks your foremen use to conduct their business or for the trucks you use to transport materials to and from job sites.
Thus, you have to keep all of your construction company’s vehicles in peak operating condition or risk a “slow leak” in operating expenses. Sure, you can save a few dollars today by putting off maintenance until it absolutely must be done. But you may pay a higher price in the long run by having to cover more extensive repairs or even replace a total loss.
In a perfect world, all your vehicles would be new and in mint condition, requiring only routine maintenance. Obviously, newer vehicles have distinct advantages: lower maintenance costs, increased dependability, current technology and a modern look.
The downside to new vehicles, however, is that they tie up a great deal of capital and may require loans and leases to acquire. Construction is tough on vehicles, so spending the extra money for new ones may not be worth it. Therefore, well-maintained preowned vehicles can often serve just as well, if not better. It’s important to analyze and balance the cost of new vehicles with the anticipated vehicle operating costs: fuel, insurance and other costs.
Less may be more
One immediate solution to help you more cost-effectively manage your vehicle fleet is, simply, to reduce its size. Review your maintenance and use records to see whether leasing certain vehicles would be more economical than owning them. And if you use some vehicles only sporadically, renting may prove more beneficial than ownership.
Technology can also help you more efficiently use, track and maintain your vehicles. Fleet management software, which includes interactive parts catalogs and support systems, is widely available.
In addition to improving maintenance and operational capabilities, these applications can integrate multiple construction companies’ platforms to provide instant updates for joint ventures and subcontractor collaboration.
Also in the works are intelligent automated preventive maintenance and warranty support solutions, as well as remote vehicle-mounted transmitters that feed data to your maintenance and operations staff. With the latter, everyone knows immediately when a backhoe needs repairs that will take it out of service and can schedule accordingly.
The power of information
The single most important key to sound fleet management is information. When you know what a vehicle truly costs, you can determine whether it’s worth keeping. Maintaining accurate maintenance, repair and cost data — and being able to interpret it wisely — will enable you to stay in the driver’s seat.
Find out how our expertise in construction accounting can add value to your business. Email us or call us at 1 (888) 875-9770.
related links
Construction Newsletters & Articles
Specialized Construction Services
Construction Contract Audits
Construction Resources
Auditing & Accounting
Seminars & Events |
