Safe and fiscally sound
06 April 2016
Author: Jack Carfrae
There has been no shortage of talk about the need to keep working drivers safe, but spending money and resources on preventative measures is still not an easy justification to a finance director. However, there's an enormous cost-saving case for fleet safety initiatives if you can reveal the wider expenses that come with leaving drivers exposed to risk.
"In the cold commercial world, safety comes with either a cost or a saving depending on what side of the fence you're on," says Selwyn Cooper, Volvo's head of business sales. "If you research the true cost of accidents, they're significantly higher than the obvious ones.
You've got replacement vehicles, lost productivity, insurance costs, admin and management time - but the biggest one is staff absence. You lose that productivity immediately if a key member of staff is taken out and it could end up between four to 30 times the metal cost of the accident."
Making money back through safety is "a two-part thing", according to Cooper, who argues that robust policies and management are the first things a fleet needs, followed by speccing vehicles appropriately: "If safer driving stands to reduce costs then poor management of driver safety can be a substantial cost. Because many of the costs are hidden, I don't think that many businesses, particularly smaller ones in the SME sector, realise and invest in making those savings. It might be difficult to quantify exactly what the savings are through preventing accidents, but they all go directly to a business's bottom line - or they can rob from it
A choice list containing vehicles fitted with relevant safety technology is just as much a part of making the savings. Yes, you have to pay, but low-speed accident damage is frequent and expensive, so technology that curbs it will likely make its money back and some. Autonomous emergency braking (AEB) systems, for example, have been proven to cut rear-end crashes by 38%, according to European new car safety assessors Euro NCAP, so they're arguably a no-brainer.
"All of our cars [driven by IAM staff] have five [Euro NCAP] stars. They all have reversing sensors and some have reversing cameras," says Rebecca Ashton, commercial learning and development manager at the Institute of Advanced Motorists. "Also think about visibility when you're test-driving a car; things like A-pillars and the size of the wing mirrors - are they going to make manoeuvring easier or more difficult depending on what the car is going to be used for?"
"[Leasing firm] Arval is one of the business champions in this area," says Melvyn Hodgetts of corporate road safety specialist Driving for Better Business. "They spec all of their vehicles with reversing sensors and their accident damage costs have dropped to next to nothing.
"There are four factors you should look at: the vehicles, the driver, the journeys and the management. [Examining those] should tell you what kinds of interventions you need to make and where."
Ashton adds that targeted driver training also cuts down on the most common types of accident damage: "Parking and confined space manoeuvres are where a lot of bumps happen and they cost quite a lot of money when the vehicle goes back to the leasing company. Put some thought into where and how people are parking and if they're choosing their neighbours in the car park sensibly, and it can make a huge difference to recharge values - and the training is paid for time and time again."
Hide and seek
Breaking down the hidden cost of accidents and repairs can produce some surprises and generate serious leverage for implementing safety procedures.
"Once you've worked out your losses, you could multiply them by eight and get your hidden costs," says Melvyn Hodgetts of Driving for Better Business. "Look at the cost of replacing a wing mirror, for example: you've got to get the car to a workshop, then it's with a mechanic for an hour, so that's potentially two hours out of your day when the car isn't earning you money. There are labour and parts costs and the potential knock-on effect on residual values, so once you start putting that together, what appears to be a £50 wing mirror could easily cost £500.
"A lot of the true and actual costs are hidden away and people don't even think about them. If you carry out the exercise of calculating them, you realise there's a very large sum of money to be had."
Driving for Better Business recently launched FleetSafetyBenchmarking.net, an online tool that allows businesses to assess their fleet safety performance against that of other companies. Users fill out a questionnaire that, when completed, provides feedback, scores and comparisons against other firms. It also includes links to best-practice methods and examples of how fellow businesses have successfully implemented fleet safety initiatives.
"You need to know what costs to capture, which is why it's worth having a look at what other people have already done," adds Hodgetts.