By Rob Wilson – Director IPWEA FLEET
Fleet Budget Pressures
It’s an unfortunate truth, but the fact is COVID-19 has had, and will continue to have, a significant financial impact on many businesses. The impact may be direct, such as the devastating effects on the auto industry, or indirect such as in local government where various revenue streams have been diminished or been totally negated. The immutable outcome is that businesses will need to re-think their finances and budgets.
What does this mean for fleets and the fleet budget? Most likely, fleet practitioners will find themselves front and centre and required to find savings.
From an operational perspective the fleet practitioner needs to understand their budget. What are the cost drivers of the fleet and where are their opportunities for savings? Budget management needs to be dynamic and take advantage of current opportunities to improve the bottom line. Think about fuel contracts - are they taking advantage of current bearish fuel prices? What about maintenance? If fleet utilisation has reduced, then there may be potential for modified scheduled maintenance and associated savings. The thing is to understand the budget and identify area of potential saving.
Some organisations will be looking to reduce capital expenditure, and this may translate to the fleet replacement program. But beware, extending asset useful lives can increase your operational budget because unscheduled maintenance will increase. Further, operations can be impacted by in-service failures and increased downtime. Fleet practitioners need to have a solid business case to support fleet replacement considering elements such as optimised whole-of-life costs, operational, safety and other risk-based factors. In a time of diminishing capital reserves, funding will go to those with the best business case.
IPWEA FLEET will be running the Fleet Winter Webinars (FWW) commencing 17 June 2020. The series will address topical and relevant issues facing fleet practitioners including: Cost Management, Transitioning to Electric Vehicles, Acquisition of Special Purpose Vehicles and Fleet Performance Management. The FWW series is designed to provide convenient access to professional development and give you practical take-aways you can use in your operation. Register now!