Fleet Glossary of Terms
Alternatively fuelled vehicles
Traditionally, vehicles have been powered by petrol or diesel engines but alternatively fuelled vehicles are now available which have lower CO2 emissions. Examples include hybrid vehicles and those that use liquefied petroleum gas (LPG), biodiesel, or electrically charged batteries. Electrically powered vehicles rely mainly on electricity produced from fossil fuels to recharge their batteries. CO2 is emitted as the electricity is produced but the car will be emission free.
Professional vehicle auctions are an option for selling vehicles. Many public sector organisations have adopted this disposal method that saves time and effort and helps ensure a competitive sale price. Some specialist auctions only sell cars but others will sell vans, light commercial vehicles, tippers, minibuses, welfare buses, ambulances, 4x4s, heavy commercial vehicles and refuse vehicles. Across the UK there are several commercial auction websites that provide guidance on cost effective vehicle disposal.
This involves the comparison of performance of one organisation with other organisations. Performance is measured according to specified definitions and standards in order that the data is directly comparable.
Benchmarking within fleet management needs to focus not only on financial information but also on environmental issues, fuel usage, service delivery, user feedback and vehicle specifications.
These are defined as any kind of fuel artificially manufactured from living things, or from the waste they produce. In recent years it has come to mean ethanol, biodiesel or other liquid fuels made from crops including corn, sugarcane and rapeseed. The UK Government’s Renewable Transport Fuel Obligation requires at least five per cent of the fuel sold at petrol pumps to be biofuel by 2010.
Vehicle manufacturers’ warranties will usually allow blends of up to five per cent biodiesel to be used in their engines.
Breakdown and recovery
Drivers need to be aware of what they need to do if their vehicle breaks down. Organisations may provide their own breakdown and recovery services but it is usually outsourced to specialist providers.
In the event that a vehicle breaks down, drivers should have a phone number to call and should have the following information to hand: vehicle registration number; location of vehicle; contact telephone number; vehicle make, model and colour; and description of problem. Organisations also need to consider whether their drivers have access to mobile telephones.
This refers to the release of carbon dioxide in the exhaust gases of vehicles. It is measured in g/km.
From 6 April 2002, the Government introduced a reform to company car taxation which linked the Benefit in Kind (BIK) charge for company cars, registered from 1 January 1998, as a percentage of the car’s price and the CO2 emissions. The CO2 figure remains unaltered for the life of the vehicle. The Society of Motor Manufacturers provides a calculation table.
The Energy Saving Trust has produced a guide to help reduce emissions from diesel vehicles.
The CO2 emissions from hybrid vehicles, gas powered (eg LPG) vehicles and from those using biofuels are generally less than from petrol and diesel engines.
Corporate Manslaughter and Corporate Homicide Act 2007
The Act took effect on 6 April 2008. Organisations can be found guilty of corporate manslaughter as a result of serious management failures resulting in a gross breach of their duty of care. A breach of a duty of care can include the failure to provide vehicles used in delivering public services. A useful guide to the corporate manslaughter act 2007 and business vehicle use. Failure to comply with the Act could result in the loss of life, serious injury as well as considerable penalties or fines.
This is the analysis of the costs and benefits associated with a particular course of action or a choice of actions. The costs and benefits are calculated in order to decide on the best course of action or to make a decision about whether to proceed with something. For example an organisation may want to calculate the costs and benefits of fitting tracking devices to gritter vehicles. Costs include the purchase of the tracking device, fitting the device, the ongoing revenue costs and the costs of training employees. Benefits would include improved knowledge about which roads had been gritted and at what time, improved safety for road users and the potential reduction in accidents.
Daily vehicle checks
For safety reasons vehicles should be checked on a daily basis and defects reported immediately. Reporting should be via a daily vehicle defect sheet or equivalent. Depending on the vehicle, checks should include some or all of the following: fuel, oil, water; tyres and wheel nuts; mirrors, indicators, horn; wipers, washers, windscreen; tachograph unit (if relevant); speedometer; brakes and electrical couplings; lights, reflectors; battery; steering, brakes; fire extinguisher; seat belts; and first aid box.
A disposal policy sets out how an organisation can dispose of vehicles it no longer requires.
The policy considers: movement to a disposal site; depreciation; damage; insurance; commission; preparation; sales administration; security; parking; unexpired road tax; auction fees; and speed of sale, as a general rule, costs are minimised the faster a vehicle is sold.
There are rules that restrict the number of hours that drivers are allowed to operate vehicles within a given period of time. Rules about domestic hours apply to drivers on journeys within the UK who are exempt or excluded from EU rules. The rules do not apply to the police and fire brigades.
The rules include a driving limit of 10 hours in any period of 24 hours and a duty limit of 11 hours in any period of 24 hours.
Drivers and vehicle users should be provided with a handbook which contains all of the information they need to operate vehicles safely and efficiently. This should be supplemented by driver and user training. All drivers should be given a copy of the handbook and they should be required to sign a declaration to say they have received it. They should read and understand the handbook and keep it with them when using fleet vehicles. The handbook should contain: details of the risks associated with driving; organisation’s policy on driving eg use of mobile phones or satellite navigation equipment; general advice on safe driving eg on topics such as driver tiredness; advice on efficient or defensive driving which aims to save fuel and reduce the likelihood of accidents; advice on what to do in the event of an accident; and emergency contact details for breakdown, tyres and windscreen.
Driver licence checks
Driver licences should be checked as a part of staff recruitment, as well as on an ongoing basis (ideally every twelve months). The Energy Saving Trust has produced a document providing detailed guidance. A number of organisations provide on-line driver licence checks. For a fee, information can be provided by private sector organisations automatically if a driver loses their licence but fails to inform their employer.
Organisations should record details about each driver. These records include:
driver licence and endorsement details; training undertaken; accident history; whether a fuel card has been issued;
entitlement to drive specific vehicle types; and information to support car schemes such as car grade and driver’s financial contribution. Several public sector organisations use fleet management software to manage driver records.
Organisations have a duty of care to train drivers and other vehicle users in order to improve their performance and keep themselves and other road users safe. Organisations need to determine what training is provided – for example, all drivers could be given generic training with those operating specialist vehicles given more advanced training. Training can be provided in-house or can be outsourced. The training should include:
safe and fuel efficient driving training; use of ancillary equipment such as water hoses on fire engines and grit spreading equipment; manual handling; operation of tail lifts – Gwent Healthcare NHS Trust conducts this training for its staff; legislation updates – organisations such as the Freight Transport Association (FTA) are a useful source of information. Details of the high level requirements of legislation should be included in updates in newsletters. familiarisation with new vehicles; 4x4 training; trailer towing; Blue Light training; and the Minibus Driver Assessment Scheme (MIDAS) – Blaenau Gwent CBC has in-house trainers.
Early termination cost
The contract covering the lease of a vehicle is valid for a specified time period. If an organisation wants to cancel a contract before the end date, the leasing company will usually make a penalty charge for the early return of the vehicle.
Excessive mileage charges
The contract covering the lease or hire of a vehicle is likely to include a mileage limit. If at the end of the lease or hire period the mileage exceeds the limit specified in the contract, the lease or hire company will charge for excessive mileage. The charge will be levied at a specified rate per mile over the limit. Organisations need to be as accurate as possible when agreeing the mileage limit contained within the terms of the lease or rental. However, it can be difficult to set an appropriate mileage limit because the use of the vehicle can change during the lease or hire period. Organisations can therefore consider rotating their vehicles in order to even out mileages.
Fit for purpose
This describes to a vehicle which is designed specifically for the role in which it is to be used.
Fleet asset register
This register includes details of all vehicles in the fleet including type of vehicle, registration number, date entering the fleet and planned replacement date. The information may be stored on a computerised fleet maintenance software package and linked to maintenance schedules and insurance details including accident history. It is important to keep the register up to date and to ensure that different departments within an organisation have access to the same, up-to-date version of the register.
Fleet maintenance records
These records include details of safety inspections, routine maintenance, vehicle defect reports and repairs to vehicles. Complete and up-to-date fleet records help an organisation to minimise cost, validate warranties and defend legal action should it arise. O Licence holders need to keep records for 15 months during which time the Vehicle and Operator Services Agency (VOSA) can inspect the records.
The fleet manager is usually responsible for the full fleet management life cycle described in this good guide. The role may include fleet engineering and the job title may reflect this. If there is no fleet manager, responsibilities for the fleet are allocated to others within the organisation.
Drivers pay for fuel using these cards and their organisations are then charged for the fuel at discounted rates usually at the end of every month. Cards are available from major oil companies and other commercial organisations. The use of fuel cards allows organisations to monitor fuel use as the associated system can generate usage reports and highlight unusual purchases or trends.
Fuel duty is a tax levied by the Government on the price of vehicle fuel.
Fuel management programme
Fuel can account for up to 30 per cent of fleet operating costs. The implementation of a fuel management programme can help to reduce fuel consumption and cost. This is particularly important as fuel prices continue to rise. Such programmes include driver training in fuel efficient driving techniques, accurate recording of fuel economy, driver league tables on fuel economy, a fuel supplier review, an increase in information on fuel usage and a publicity campaign to raise awareness of the importance of fuel efficiency. A comprehensive fuel management programme is not a short-term solution because measurable improvements are not usually evident until at least six to eighteen months after implementation.
Fuel can account for up to 30 per cent of fleet operating costs so controlling fuel use is vital. Fuel efficiency should be a major factor in vehicle selection. Organisations can reduce fuel usage by improving journey planning, modifying driver behaviour via training and introducing fuel management systems to monitor the use of fuel.
Some organisations have successfully used speed limiters and have reduced fuel consumption by around 20 per cent.
Gas powered vehicles
LPG is an alternative fuel that can be used in vehicles, usually alongside petrol. The cost of LPG is currently about half that of petrol and diesel but conversion costs can be high. A vehicle powered by LPG produces less harmful emissions than one using either petrol or diesel. However, the availability of LPG across Wales, and its reliability, have resulted in some organisations discontinuing trials. It is often easy to convert vehicles to run on LPG but it is important to select appropriate vehicles for conversion, ensure trials are undertaken and check manufacturers’ warranty details.
This refers to the use of employees’ own cars for business purposes. These cars tend to be older than hired or leased cars with higher CO2 emissions. The use of the grey fleet can result in higher travel costs and the significant transactional costs of processing individual expense claims. The Office of Government Commerce (OGC) has produced guidance on the appropriate use of the grey fleet. A key issue for organisations to consider are corporate manslaughter issues as the employer has a duty of care to ensure these vehicles are safe.
Health and Safety
The Health and Safety Executive and Department of Transport have jointly produced a booklet entitled Driving at work: Managing work-related road safety at work. See also corporate manslaughter.
These vehicles tend to use petrol engines as the main source of power but also have an electric motor to assist powering the vehicle in certain driving conditions. All hybrids use regenerative braking, which means that energy generated when braking is used to charge the battery. Hybrids achieve reduced emissions due to a reduction in the need for gear changes, especially in urban traffic. Hybrid vehicles have reduced vehicle excise duty and they attract a lower personal benefit in kind tax liability.
The most common driving infringements are when the driver takes insufficient breaks, incorrectly completes the tachograph, fails to provide all mileage information or produces dirty or damaged charts. It is the responsibility of the employer to train drivers and discuss how infringements can be avoided. Analysis of tachograph charts may identify infringements of driving regulations.
In-house maintenance facilities
This refers to workshop facilities owned and operated by an organisation. Advantages include improved flexibility, availability and expertise on specific types of vehicles. Disadvantages include equipment and staff overheads and a requirement to update skills to keep up with technological advances.
An insurance policy is a contract between a party at risk and an insurer. The insurer agrees to bear all or part of the specified risks in exchange for a payment known as the insurance ‘premium’. Some organisations may choose to ‘self-insure’ by setting aside funds which will be used in the event of an accident. Whichever method is chosen, motor vehicle insurance is compulsory. The Association of British Insurers provides guidance on vehicle insurance requirements.
Journey times and routes can be planned to limit journeys, mileage and duration. Staff and managers who are aware of the need to reduce mileage and duration should ask if the journey is required. A range of options can be consideredas part of a ‘travel ierarchy’ including: the use of telephones or video conferencing; travelling with others; using a pool or hire car; and using public transport. Commercial route planning software is an option for planning complex journeys and services.
Before deciding to lease a vehicle, the ‘whole-life cost’ should be calculated and compared to other procurement options. If leasing is the cheapest option, whole-life costing can then be used to identify the optimum lease period and supplier. The terms of a lease are likely to involve a fixed monthly payment in return for use of the vehicle. The contract is likely to specify certain conditions on the use of the vehicle, such as a pre-agreed mileage limit with a penalty fee charged for every mile driven over this limit. It is therefore crucial to estimate the mileage as accurately as possible.
Fleet managers need to keep themselves and other staff up to date with legislative changes within fleet operations. Recent legislative changes include the Corporate Manslaughter and Corporate Homicide Act 2007 and amendments to EU drivers’ record rules. Future legislation includes Driver Training Directive in September 2008 passenger vehicle drivers and Euro 5 emission standards for cars and vans in September 2009 for goods vehicle drivers.
This is an agreement between an organisation that runs a fleet of vehicles and a maintenance provider. The contract should set out the details of an agreed programme of maintenance on each vehicle within the fleet, specifying, for example, the frequency of maintenance and agreed levels of support provided. For hired and leased vehicles, maintenance is usually part of the fixed monthly charge but this is not always the case.
Maintenance service intervals
This is the length of time between vehicle services and inspections. For O Licence holders this time period must be declared and adhered to. Typically, O Licence vehicles over 3,500 kg must be inspected every six weeks.
For cars, the service interval usually follows manufacturers’ guidelines.
Managing vehicle keys
To avoid the theft of vehicles or theft from vehicles, keys should be kept securely and issued to drivers when required. Spare keys should also be kept securely. Keys should only be issued to drivers who have been trained to drive particular vehicles, and this should form part of the workplace transport safety policy.
The Ministry of Transport (MOT) test ensures vehicles are safe and roadworthy. Vehicles under 3,500kg gross weight, such as cars and small vans, are tested annually but do not require an MOT for the first three years of their life. Vehicles over 3,500 kg gross weight which are not exempt from testing are tested annually at either a goods vehicle testing station or a designated operator workshop.
Any organisation which operates goods vehicles for commercial purposes on UK roads requires an O Licence. Vehicles of more than 3.5 tonnes gross plated weight must be maintained under the O Licence.
The following vehicles are exempt from the O Licence:
Police – all vehicles; Fire – all vehicles; Ambulance – all vehicles; and Local authorities’ vehicles used for snow clearance or the distribution of salt on roads. If an O Licence is held it is important to keep it up to date with details including a named officer, numbers of vehicles and trailers and details of the maintenance arrangements. This covers public sector bodies. Anyone operating small goods vehicles, defined as one with a gross plated weight of not more than 3.5 tonnes (or 1,552 kg unladen if there is no plated weight) is excluded.
Optimum replacement time
This is the point in a vehicle’s life when the costs of retaining the vehicle outweigh the benefits. Typically this could be when warranties run out or when an MOT test is required (three years for cars).
If a vehicle is being returned to the leasing company, good planning is required to ensure that the replacement vehicle is ordered in sufficient time. If this does not happen additional monthly payments will be charged and potentially excessive mileage charges made. Organisations should identify the optimum replacement time by undertaking a ‘whole-life costing’ exercise.
Over specified fleet
If a vehicle is over specified it means that it has unnecessary features as a result of ineffective procurement. For example, vehicles could have unnecessary extras fitted or have too large an engine. As well as incurring unnecessary expenditure, over specification can lead to unnecessary fuel consumption and higher than necessary maintenance costs. When deciding on vehicle specification an appropriate cross-section of users should be involved to ensure optimal vehicle specification. Similarly, the software package used to support the fleet may be over specified and have unused features.
Personal use of an organisation’s vehicle includes use that is not business-related such as commuting to the driver’s workplace which is generally a taxable benefit in kind. The rules on private use should be included in the driver handbook. Business use of an organisation’s vehicle is use of the vehicle to perform some aspect of a job required by an employer. It can include making deliveries or collections and travelling between offices and sites during the working period. Professional organisations – these organisations provide information, guidance and networking opportunities to fleet managers and users. Examples include:
The Freight Transport Association (FTA);
Road Haulage Association (RHA); and
Institute of Road Transport Engineers (IRTE).
PG9 certificates are normally issued by a Vehicle Operator Services Agency vehicle examiner for more serious vehicle defects which may affect the roadworthiness of the vehicle or render it unsafe. The issue of this certificate will mean that the organisation is prohibited from using the vehicle until the defects are remedied. Some police officers are trained and authorised to issue PG9s. If the prohibition is immediate, the vehicle cannot be moved on the public highway. Depending on the seriousness of the defect, prohibition of the vehicle can be delayed for up to 10 days allowing the vehicle to be moved on the public highway until the date specified. To remove the prohibition, the vehicle must pass an MOT test. The MOT certificate and PG9 must then be presented at a local police station so that a clearance notice can be issued.
Tyre regrooving is the recutting of a worn tyre to ensure it has adequate tread depth. This adds life to a tyre without the need to purchase a new one. Regrooving must be undertaken in line with the manufacturer’s guidance.
The policy should be widely understood. It may be related to time and mileage eg cars could be replaced after three years or 60,000 miles, or low mileage vehicles can be kept for a longer period. The replacement policy will link closely to the fleet management budgets and financial policies so that replacement vehicles can be procured cost effectively. Any slippage can result in excess costs being incurred either through maintenance or excess mileage charges.
This is the predicted value of a vehicle when it reaches the end of its life.
Retreads or remoulds
Tyre retreading is the replacement of a worn tread rather than replacement of the entire tyre. Costs are approximately 60 per cent of a new tyre. However, retreads must be compatible with the manufacturer’s guidance.
Goods vehicles with a design weight over 3.5 tonnes and buses with more than eight passenger seats (regardless of weight) registered on or after 1 January 2005, are required to be fitted with a road speed limiter. The limiter will restrict the maximum powered speed to 56 mph (90 km/h) for goods vehicles, and 62 mph (100 km/h) for buses.
This refers to the short term hire of a vehicle to cover gaps in the provision of a fleet or to cover seasonal demand. The vehicles hired will usually be modern with low mileages and low CO2 emissions.
To operate effectively, organisations need an approved Fleet Management Strategy which links to their corporate objectives and other areas of asset management such as buildings and ICT.
The Fleet Management Strategy should include:
business need for a fleet; service provision; vehicle acquisition and disposal policy; performance monitoring;
environmental issues; fuel use; working across internal departments; working with partner organisations; and
These record distance travelled, speed, driving time, other periods of work or attendance at work by the driver and breaks from work and daily rest periods. Analogue tachographs record the information on a paper chart and digital tachographs record the information electronically. All vehicles which require tachographs, registered after 1 May 2006, are fitted with digital tachographs. O Licence operators are required to monitor the outputs of tachographs to ensure compliance, for example, with the driver hours rules.
The range of technological equipment and devices available for use within the fleet is advancing constantly. Such advancements include:
engines that emit less CO2; electric and hybrid vehicles; vehicle tracking devices; vehicle mounted cameras;
more efficient tyres; and vehicle design to improve safety in the event of accidents.
The tender process involves the invitation of bids from suppliers to provide a certain vehicle or service. The tender may need to be placed in the Official Journal of the European Union (OJEU). Once the tender offers are received they are reviewed to ensure they meet the required criteria. Following internal consultation a decision is taken on selection. Purchases through central contracts such as those facilitated by Value Wales already comply with the OJEU requirements.
See journey planning.
Organisations can benefit by seeking the views of drivers and other users of vehicles when considering vehicle purchase, improvement and replacement. These views are usually best gathered through user groups.
The availability of a vehicle will be affected by factors such as maintenance requirements, workload exceeding fleet capacity and vehicles not being in the right location. Mechanisms can be used to maximise vehicle availability including allocating vehicles to specific drivers or jobs, using tracking devices to obtain the precise location of vehicles and maintaining vehicles outside their working hours.
Drivers should report vehicle defects using a vehicle defect form. Some defects will require immediate attention although it might be appropriate to wait for the next scheduled maintenance before addressing more minor defects.
As part of the Vehicle Defect Rectification Scheme (VDRS), the Police may stop a vehicle which they suspect has an illegal defect. The driver then has 14 days to rectify the defect to avoid prosecution. This does not apply if the vehicle has been involved in an accident, has four or more defects or the police officer considers the defect so severe that it falls outside the scheme.
This refers to the period of time when a vehicle is unavailable. This may be due to factors such as planned or unplanned maintenance, tyre repair or windscreen replacement. To use the vehicle efficiently, downtime can be minimised by planning maintenance effectively. This can involve organising workshop hours so that maintenance takes place outside the hours during which the vehicle is required.
Vehicle Excise Duty (VED)
This duty is based on CO2 emissions and fuel type and is charged annually.
A discounted VED rate is available for vehicles that qualify for a Reduced Pollution Certificate (RPC) because of their low emissions. A vehicle registered before 1 October 2006 and adapted to achieve a higher emission standard, by fitting a particulate trap to the exhaust system or fitting a new engine, may receive a RPC. Vehicles fitted with Euro 5 engines with nitrous oxide sensing, which controls torque limitation, can also benefit from a RPC as long as they are registered in the UK by 1 October 2009. Vehicles exempt from VED are fire service vehicles, ambulances, NHS vehicles and police vehicles.
Vehicles may be moved between locations to even out the mileage. This is more likely to happen with operational vehicles and pool vehicles rather than cars allocated to individuals.
Tracking devices can be attached to vehicles to allow their geographical position to be monitored using satellite technology. Vehicle positions can be updated as often as every 60 seconds. The systems allow a journey history to be recorded and stored for future analysis. Such systems are useful for checking whether vehicles are being used appropriately ie during permitted hours or for identifying the closest vehicle to provide a service, for example an emergency repair. Modern vehicle tracking systems also include communication systems.
This is measured by calculating the actual time the vehicle is in use as a proportion of the time the vehicle is available for use. If vehicles are parked for long periods during normal working hours then utilisation will be low. This measure may be used to help determine the size of fleet actually required.
Video conferencing uses audio and video technology to allow people in different locations to hold a ‘virtual’ meeting. This should provide an accurate simulation of a normal meeting environment, enabling both parties to see, hear and present material, just as if they were in the same room. Video conferencing can speed up business processes and procedures in the same way that the fax and the e-mail have revolutionised the way we share information. The most obvious quantifiable saving is the cost of travel and the cost of the time wasted during travel.
When purchasing vehicles, organisations should consider the ‘whole life cost’ of all options. This includes:
cost of procurement/tendering; lease cost or depreciation; maintenance; fuel/mileage; taxation; insurance; monthly payment; disposal value; early termination cost; internal/external fittings; and decals or paint. Procurement decisions should also include non-financial factors such as the availability of support and other quality issues. Whole-life costing also helps to identify the optimum replacement time.