20, Aug, 2018

Constructing a better vehicle fleet

In the construction industry, winning work has never been more onerous, complex or competitive. And once you’ve decided to bid on a project, you’ll have no idea whether the result will go your way or what compromises you’ll have to make to win. But winning is just the start. Project over-runs and unforeseen capex can unexpectedly erode your margins. And then, there is the question of what to do with those expensive resources no longer needed once a project is completed…?

This dilemma is forcing many construction firms to ask: where are the improvements that can increase my chances of winning, and then actually delivering projects profitably?

Maybe improvements to your vehicle fleet could provide the answer. ORIX is an industry leading fleet manager to the construction industry and, based on our experience, we know that many fleets are oversized, lack flexibility and central oversight, while tolerating an uncomfortable level of risk. Better fleet management might just be the competitive advantage you need to increase your win rate and margins.

When ORIX meets with our construction clients, we focus on four key areas which deliver the most value:

Increased flexibility
Need to find 50 vehicles for a project that starts in 12 weeks – No problem. When it comes to RFPs, you win some, you lose some, but you’ll need to consider resourcing all before you know the result. ORIX has developed a number of solutions that allow our construction clients to maintain a guaranteed vehicle core, while providing flexibility at the margins. Flexibility like renting versus leasing for short term projects. In for the long haul? How do you choose between operating v finance lease? And no two projects are the same. Can you access the asset mix you need in terms of models and variants when you need them? Ultimately can your FMO evolve to stay relevant as your business changes?

Greater Transparency
Greater transparency means fewer information gaps across your fleet. Areas for cost and operational improvements are easily identified and resolved, and areas applying best practice can be replicated elsewhere.

Firms that put in place the right systems, such as ORIX’s OneView, not only have a better understanding of current operations, they can more accurately estimate resourcing requirements and costs when competing for new work. Greater transparency gives you what your teams need locally, while retaining head office oversight. As one of Australia’s Most Innovative Companies for two years running (2017 and 2018 Australian Financial Review’s Most Innovative Companies List), you can leverage our technologies to your advantage.

Cost optimisation
When trying to reduce fleet costs, you can either tinker at the edges or do what has the biggest impact, that is, fleet consolidation. From partnering with construction clients, we see that 90% of the time our clients have significant scope to consolidate their fleet. What’s also clear from our experience is the need for construction firms to focus on Total Cost of Ownership (TCO), not just initial vehicle costs. Saving a few thousand off the sticker price of a vehicle may feel good, but could ultimately cost you thousands more over the life of the vehicle.

It might also be a good idea to every now and again check your assumptions of “fit for purpose” vehicle selection. Brand loyalty sometimes masquerades as fitness leading to more expensive options being taken.

Reduce Risk
What’s the difference in risk to a construction firm with a 4 year old vehicle versus a 7 year old vehicle? Slightly higher running costs? Sure. Delays due to higher maintenance needs? Maybe. But the real difference will become apparent if the older vehicle becomes involved in an accident. As work vehicles are considered an extension of the work place, what’s your level of confidence that the older vehicle has been maintained properly for seven years?

Behavioural risk is also a common issue that can have significant consequences for projects. Are you identifying and fixing unsafe driver behaviour? Do your vehicle policies have the necessary rigour to reduce cost and prevent employees taking advantage?

Is it time you booked your fleet in for a service?
With so many competing priorities, many construction companies simply don’t have the time or the specialist resources to review their fleets. That’s where ORIX can help. We have the resources, solutions and industry knowledge that have allowed us to assist several construction clients move toward best practice fleet management. Our objective is to give our construction clients confidence that their vehicle fleet is appropriately resourced and ready to go, no matter what or when a project demands.