Construction Vehicles: Assets or Liabilities?

Are your company vehicles incidental or primary to the business? Do they cost too much money to operate or are they actually a benefit to your overall business operations?

There are two distinct groups of company vehicles-primary and incidental. The primary vehicles are those that can be used to generate income for your business by being able to establish charges for their usage, which is billed to the customer. Incidental fleets or vehicles are those units that generate no operating charges, yet are essential for company personnel to conduct business, such as those company-owned vehicles that are assigned to job foremen, superintendents, project engineers, sales, maintenance staff or material delivery personnel.

These vehicles may be costing your company more than the fuel, insurance and upkeep that it takes to maintain them.  Did you know that in addition to the normal expected costs, job-related vehicle accidents are the leading cause of work-related fatalities and lost-time injuries, which cost companies millions of dollars in additional expenses?  Your company may have a safety program in place with policies and procedures intended to protect your employees from workplace hazards and exposures related to the job activities associated with your operations.  But does your company safety program, or risk control measures, address the necessary steps to afford the same level of controls and protection for the company vehicles that are provided to employees in order to carry out their day-to-day activities?

Many times the importance for safety as related to company fleets, especially the incidental type, is not considered a top priority in the company’s safety program. Yet statistics relating to job-related motor vehicle crashes cost companies thousands of dollars annually, both from direct and indirect costs. The direct costs are those related to the insurance coverage, whereas the indirect costs are those that cannot be covered and/or recovered through insurance programs. These costs could include costs relating to insurance deductibles, delays in meeting schedules due to loss or damage to equipment from an accident, replacement of employees that may have been injured in an auto-related accident, additional administrative time for paper work or investigations regarding the accident and other such factors that insurance does not cover. Of course, if litigation is involved as the result of the accident, then the costs paid directly could result in possible financial hardships for the company.

Statistics show that motor vehicle accidents are the leading cause of on-the-job fatalities. In the ten year period between 1992 and 2001*, workers’ deaths from motor vehicles accidents accounted for 22 percent of all fatalities. This is compared with 13 percent fatalities from workplace homicides and 10 percent from falls. Work-related deaths from on-the-job motor vehicle accidents increased over this decade, despite declines in the overall number and rate of occupational fatalities from other causes. Fatality rates showed little change, staying steady at approximately one fatality for every 100,000 full time employees (FTE).

Further fatality data showed:

• Eighty-nine percent of victims were male (almost six times higher fatality rate then females at 0.3).
• The largest age group for roadway crash fatalities was 35 to 44 years (2,940 deaths), having approximately 25 percent of crash fatalities. (Figure 2)
• The age groups of 25 to 34 and 45 to 54 followed closely behind and with 22 percent each, with a combined fatality total of 5,803 victims.
• Drivers above 75-years-old had the crash-related fatality rate of 6.4 per 100,000 FTE’s, which was followed by the age group of 65 to 74 (3.8 rate).
• The highest percent of fatalities resulted from collisions between vehicles (49 percent) followed by single-vehicle incidents (26 percent), which did not involve a collision with another vehicle or with a pedestrian.
• Collisions between a vehicle and a stationary object in the roadside were the cause of 18 percent of all fatal crashes.
• For the period between 1997 and 2003***, 28 percent of fatally injured workers were wearing seat belts and for those that weren’t wearing seat belts the percentage doubled to 56 percent.
• Drinking was determined to have been involved in 8 percent of the crashes involving a fatality during this same time period.

There are several costs related to on-the-job vehicle crashes. Indirect costs to employers, due to the loss or absence of any employee from work, for the year 2000 accounted for $4.6 billion. This is in addition to an estimated $61 billion for lost wages and benefits (occupational and non-occupational) for the crash victims.

Breaking these figures down further indicates that an on-the-job related motor vehicle crash with an injury costs an employer an average of $74,000. The average is multiplied by a factor greater than 6.7 when a fatality is involved. In such a case, the costs can exceed over $500,000 for a fatal work-related crash.

As you can see, the statistics and costs related to work-related highway crashes are staggering.  What can be done about work-related automobile accidents and the impact they have on your company? Having an active fleet safety program for addressing various aspects associated with the operation of company vehicles is the foundation for controlling automobile accidents and the costs related with them.

A basic four-step fleet program is recommended. Of course each step is not straight forward, as each step would include sub-categories that need to be addressed to make your fleet program effective. Each step and its sub-categories outline procedures and define control measures to adequately address fleet management.

Construction Business Owner, May 2006