Increasing the competitiveness of maintenance contract rates by using an alternative methodology for the calculation of average vehicle maintenance costs

Abstract

Companies tend to outsource transport to fleet management companies to increase efficiencies if transport is a non-core activity. The provision of fleet management services on contract introduces a certain amount of financial risk to the fleet management company, specifically fixed rate maintenance contracts. The quoted rate needs to be sufficient and also competitive in the market. Currently the quoted maintenance rates are based on the maintenance specifications of the manufacturer and the risk management approach of the fleet management company. This is usually reflected in a contingency that is included in the quoted maintenance rate. An alternative methodology for calculating the average maintenance cost for a vehicle fleet is proposed based on the actual maintenance expenditures of the vehicles and accepted statistical techniques. The proposed methodology results in accurate estimates (and associated confidence limits) of the true average maintenance cost and can beused as a basis for the maintenance quote.