How Accurate Are Your Fleet’s Average Repair Costs?

Average repair costs should be a crucial metric for fleets, influencing key operational decisions as well as repair strategy.  It therefore seems incomprehensible that there is no industry standard for calculating this figure so that fleet managers can make true comparisons with confidence.

If just a few of the larger repairs are missing, the mathematical result can be grossly understated and in this way companies can be easily misled into believing that repair costs are better than they really are.  

So how can fleets verify the accuracy of their average repair costs?

Any assessment of repair costs should be for a finite period and must include all repairs incurred in that timeframe.  The figures used should be the full and actual cost incurred before any commissions or discounts. It should be noted that excessive commissions may in themselves result in raising the average as invoices may be inflated to cushion the impact on repairer profitability.

Not all claims should be included in average repair cost calculations. If there was no damage recorded or if damage was recorded but no repair work was carried out then it could be argued that in calculating average repair costs these cases should be excluded from ‘total number of cases’ when dividing it into ‘total repair costs’.

An accurate calculation must take into account all repairs performed for a particular fleet in a particular period, including smart and express repairs and additionally, any costs that don’t relate to repairs must be excluded.

These are just some of the issues surrounding the reasons why the current calculation of average repair cost is not relied upon more often.  If the figure were valid and reliable, fleet managers could make wiser decisions in the light of knowledge instead of casting around for the truth.

Better decisions about what kind of repairs, bought from where, via whom and on what terms would lead to lower repair costs and subsequently lower insurance premiums.

Lack of clarity in calculating average repair cost will continue to frustrate this procurement objective resulting in fleets acting on hunches and “gut feel”.  In this day and age with all the computing power at our fingertips, decisions should be able to flow from accurate and reliable data.

The fleet industry needs a standard method for calculating average repair costs. Until then RVM is offering companies a free assessment of their average repair costs to confirm accuracy and uncover errors or miscalculations.

How accurate are your average repair costs? For a FREE assessment click here to book an appointment or call 0113 2248888