Construction Vehicles: Assets or Liabilities
6/28/2006
 by Gary Gokey, CSP
Are your company vehicles, either those that are incidental or primary to the business, costing you 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' As a company you 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. 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 vehicles crashes cost companies thousands of dollars annually, both in 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 could 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 (10) year period between 1992 and 2001*, workers' deaths from motor vehicles accidents accounted for twenty-two percent (22%) of all fatalities. This is compared with thirteen percent (13%) fatalities from workplace homicides and ten percent (10%) 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 (1) fatality for every 100,000 full time employees (FTE) - (see Figure #1).
Further fatality data** showed:
- Eighty-nine percent (89%) of victims were male (almost 6 times higher fatality rate then females at 0.3).
- The largest age group for roadway crash fatalities was 35 - 44 years (2,940 deaths), having approximately 25% of crash fatalities. (see Figure #2).
- The age groups of 25 - 34 and 45 - 54 followed closely behind and with twenty-two percent (22%) 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 - 74 years old (3.8 rate).
- The highest percent of fatalities resulted from collisions between vehicles (49%) followed by single -vehicle incidents (26%), 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% of all fatal crashes.
- For the period between 1997 and 2003***, 28% of fatally injured workers were wearing seat belts and for those that weren't wearing seat belts the percentage doubled - 56%.
- Drinking was determined to have been involved in 8% 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 & non-occupational) for the crash victims.
To break these figures down further shows 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.
The four basic steps are:
- Administrative Commitment
- Driver Control
- Vehicles: Selection, Maintenance and Inspections
- Regulatory Compliance
The following information outlines each step along with additional criteria for establishing safety measures and/or best safety practices when dealing with company vehicles.
Step #1: Administrative Commitment
Top management/ownership must be committed to fleet management, showing that they are genuinely concerned for the safety and well-being of all employees within the organization while operating and using company vehicles. This starts with a signed statement of policy from the Company President regarding this commitment. The statement needs to convey the current ownerships' desire that all company assets, including vehicles, will be in a safe operating condition and that those who operating company vehicles will be responsible in assuring they are in such condition. (see Figure #3).
The statement needs to further assure the employee that their safety and well-being while operating a company vehicle is a top priority. This could include comments regarding the company's concern when employee are not only driving for work related activities, but when driving to and from work, especially if take-home use is provided with the company vehicle. Lastly, the statement should emphasize the company's goal, which is to reduce traffic-related deaths and injuries that can occur during use and operation of company vehicles.
Senior management needs to provide leadership, establish policies, and allocate resources (staff and budgeting) in order to set the tone for an effective fleet safety program. Leadership not only includes the authoritative responsibilities, but is also conveyed by example. Senior management will set example by using and practicing defensive driving techniques along with following highway laws, such as posted speed limits, using seatbelts, etc.
The next step in the process is to have written policies and procedures. Policies should be written and spelled out covering issues such as: Safe Use and Operations of Company Vehicles, Drug & Alcohol Usage, Driver Qualifications, Driver Screening, Personal Use, Distractions (electronics, cell phones, eating, etc.), Accident Reporting Procedures, and Disciplinary Measures.
Step #2: Driver Control
The company needs to establish the necessary controls to assure that they are allowing only qualified employees to operate company vehicles. Qualified means not only meeting state and federal regulations for having the proper license to drive, but they also meet other qualifying requirements established by the company.
Other qualifying criteria, in addition to a valid driver's license, include age requirements, physical capabilities, experience, passing company written and road tests, and an acceptable driving history. A drivers' prior driving history should be verified through a current motor vehicle report (MVR) secured through the state where their license was issued.
Specifics regarding your company driver requirements should be spelled out in the fleet policies. 'Acceptable' driving history should also be outlined. What constitutes a 'non-acceptable' driving history should be included in the company policy. Some non-acceptable criteria generally include items for prior convictions within a specified period such as; Driving Under the Influence (DUI's) or Driving While Intoxicated (DWI's). Five (5) years prior is usually the recommended time period for DUI's or DWI's. Suspension or revoked driver's license within the last three years, along with convictions for causing a death while operating a vehicle, hit and run or careless/reckless driving are other infractions that should make the unacceptable category. (see Figure #4).
As part of driver controls, driver agreements should be used. These are contracts are signed between the company and employees who drive for work purposes, whether driving company owned vehicles or their own vehicles in the course of work duties. These contracts state that the employee acknowledges awareness to and has an understanding of the company's fleet safety policies/procedures, expectations of driving performance, vehicle maintenance/inspections requirements, and disciplinary action for violation of company fleet policies.
Step #3 Vehicles: Selection, Maintenance and Inspections
Company vehicles should be properly selected based on type and usage. A vehicle safety features should be included in the selection process. Vehicles that carry a high rating for crash worthiness, ease of repairs, and overall safety should be given top priority when purchasing vehicles for company use.
Maintenance intervals should be established and conveyed to the drivers. Tracking and follow-up with the drivers to assure that these intervals are met reinforces the company's commitment of having safe, well-kept vehicles in the hands of those operating them. Like maintaining company vehicles, inspecting them on a regular basis is equally important. States generally require annual inspection of vehicles, but your program should not rely solely on these inspections. Documented inspections by drivers at scheduled intervals, with spot checks by management or designated individuals, assures basic vehicle elements are properly functioning or defects/problems will be reported in a timely fashion in order for repairs to be made, possibly preventing a costly accident.
Step #4 Regulatory Compliance
Determine whether the company vehicles fall under the scope of Federal Motor Carrier Safety Regulations because of their usage, vehicle size (weight), and/or materials transported, handled or towed' Drivers of company vehicles, based on the factors previously noted, may be required to carry a commercial driver's license (CDL). Additional endorsements for the CDL may also be required for specific driving operations, including chauffeuring more than 15 people.
Beyond just the drivers licensing requirements, there are other documentation requirements necessary to comply with the D.O.T. regulations. This documentation includes previous employment verification, drug and alcohol screening, and driving history verification.
There you have it, fleet management as easy as 1-2-3-4. Fleet management like other exposures your company may have or encounter from the business activities conducted, takes planning, monitoring, reviewing, and implementing controls to avoid accidents that could hardship on the company's bottom line.
If you have a fleet management program in place with similar criteria to the basic steps outlined here, you know that you have in place an effective program providing you are committed to it as part of your overall business plan. You know that you did everything reasonably expected to assure that drivers for your company are qualified, trained and experienced. You know those drivers are operating safely maintained vehicles and are in compliance with State, Federal and Local regulations. And you know the comfort level you have handing over a set of keys to an employee that will driving on behalf of the company.
Many issues and concerns were raised regarding your company fleet and the programs that should be in place to effectively manage this exposure. Although mentioned that fleet safety was easy as counting one through four, you know the work and commitment it takes to effectively control your fleet exposure and risks involved with operating them. Thinking you may need to review your fleet management program to determine just where you are' Besides this information, there's additional help available. The American Society of Safety Engineers (ASSE) recently developed information regarding fleet management. The American National Standards Institute (ANSI) just approved and released this as a new approved standard - Z15.1 - 2006: Safe Practices for Motor Vehicle Operations. This standard is intended to help companies reduce roadway crashes and the high costs associated with them. It provides guidelines for developing a motor vehicle safety program for companies having a few vehicles or for those having hundreds. Information on this new standard or how to acquire this can be found on ANSI's website: www.ansi.org.
Sources:
*Bureau of Labor Statistics (BLS) - Census of Fatal Occupational Injuries (COFI)
** Bureau of Labor Statistics (BLS): Census of Fatal Occupational Injuries (COFI)
***National Highway Traffic Safety Administration: Fatality Analysis Reporting Systems (FARS)
*** National Highway Traffic Safety Administration: DOT HS #809-682
About Gary Gokey
Gary H. Gokey, CSP, ARM (email) is a safety advisor at Safety Management Group (smgindy.com) in Carmel, Indiana. He holds a Certified Safety Professional (CSP) designation along with an Associate in Risk Management (ARM) certificate. Gary's experience includes 24 years of risk/loss prevention services in the insurance industry.
|