How to prepare your fleet’s budget
Even though it’s only August, it feels like fall is right around the corner which means time to start budgeting for 2020. Though budgeting isn’t always the most fun part of a fleet manager’s job, it’s definitely an important part.
Proper budgeting can help your fleet be economical and efficient and get the most of your vehicles, tools, and maximize productivity and profits. Budgeting can also help you identify problem vehicles or potential cost increases from extending vehicles past their planned replacement.
With the budgeting season fast approaching, review these steps and tips for a better budget in 2020.
So, what steps are needed to prepare your fleet’s budget?
1. Create a plan
Start with a plan for the allocation of funds, like vehicles, accessories, maintenance, personnel, and so on. Identify your hard and soft costs and create an economic forecast for labor costs, utility costs, fuel, personnel raises, etc.
Most economists recommend assuming a 3-4% increase to cover inflation. Use last year’s plan and current expenditures to determine your fleet’s specific costs and trends. If possible, use up to three years’ worth of data to better understand inflation and changes in your fleet.
A note on spec’ing
Over spec’ing can reduce fuel economy and increase acquisition costs, but under spec’ing can increase maintenance costs and accelerate wear and tear on the vehicle outside its normal operating condition. When it comes to spec’ing, think about your fuel efficiency goals, your average payload, and the average maintenance cost per vehicle, and any upfitting costs and work those into your plan.
2. Get input
Your drivers should have some input in your fleet’s budget as they know how their vehicles perform in the real world, what routing looks like and how it could be improved, as well as other ideas for productivity and upfitting opportunities.
Your maintenance technicians should also be a part of your budget process as they know the history of each vehicle’s maintenance, average costs of regular servicing and repairs, and can probably uncover some operational savings or ways to safely extend vehicle life.
Finally, you’ll want to talk to your administrative staff about budgets as they see contracts and invoices and can give you insight on real costs versus projected.
All of your employees can provide valuable insights to your fleet’s needs and operations, as well as brainstorm ways to cut costs.
3. List out line items
Now that you’ve looked at last year’s budget, talked with your employees, you’re now ready to list out line items for your 2020 budget.
Common line items for a fleet budget include:
- Leasing fleet management costs
- Taxes, fees, and licenses
- Fuel costs
- Maintenance (labor and parts)
- Upfitting or accessories
- Tools and telematics
- Vehicle depreciation
- Safety programs
- Training programs
- Fleet memberships
Set acceptable limits for variances (the difference between projected costs and actual costs) for each line item and a projected line item cost. Leave a column open for actual costs to compare and track.
4. Monitor budget
Finally, you’ll want to set a schedule for monitoring your budget, whether that’s monthly, quarterly, or yearly. More frequent analysis is best in the beginning of the year so you can reallocate funds or make smarter projections based on 2020 actual costs.
Fleet budget tips
Make the most of your 2020 budget with these six cost-saving tips or ways to maximize your budget.
- Limit purchases and monitor fuel station expenses: Using fuel cards? Make sure drivers are only using it for fuel instead of food and fuel. Limit purchases or set cost limits based on fuel costs. Another trick of the trade is to look at those fueling on Fridays and Mondays if drivers can take vehicles home for the weekend, as they may be abusing their fuel card and fueling up personal vehicles and use.
- Focus on driver coaching: Want to save on fuel costs, speeding tickets, and vehicle maintenance? Use your driver coaching to train drivers on better behaviors, like no aggressive driving, harsh accelerating and braking, speeding, or even setting expectations when it comes to idling.
- Invest in the right tools: You already have a line item for tools and tech, so use those budget dollars wisely by investing in telematics and calibrating your vehicles to perform better and use fuel wisely, and provide long-term savings
- Improve routing or assigning vehicles: Have you checked the mileage of your vehicles or reviewed if every driver that has a vehicle needs a vehicle? By combining trips, changing routes, or eliminating unnecessary vehicle use, you can find additional savings.
- Preventative care: Treat your vehicles with care and schedule regular maintenance as it’s more affordable to fix a small problem than a big one!
- Track everything!: You won’t know what to budget for or where to look for savings if you’re not tracking everything in your fleet. Fortunately, many of today’s telematics solutions help keep track of maintenance, fuel use, mileage, driver stops and idle and so on to help you better budget your fleet’s regular operating expenditures.