Balfour Beatty, the global infrastructure services group, has awarded Lex Autolease a contract worth more than £100 million to manage its UK company car and light commercial vehicle fleet.
The decision to outsource was based on the potential cost savings, but Lex Autolease believes the move could be the start of a trend for organisations operating business-critical “complex fleets” to outsource to a specialist provider.
The five-year contract sees Lex Autolease assume responsibility for 3,328 company cars and 2,502 light commercial vehicles.
Lex Autolease will supply vehicles on a contract hire basis and provide a comprehensive range of fleet management services, including service and maintenance, accident management and core vehicle hire.
Balfour Beatty Plant & Fleet Services managing director Andy Ormerod said: “We were running the fleet ourselves very effectively, but through partnering with Lex we are able to tap into scale benefits.
“We believe that our partnership will deliver a reduction in baseline costs and indeed have built in incentives to ensure those cost savings are delivered.
“This contract enables us to focus internal fleet resources on our strategic capability of heavy goods vehicle provision and specialist plant and equipment services.”
Lex Autolease secured the contract following an extensive tender process. The company said it has invested significantly in recent years to enhance its capability to manage operationally critical fleets, including launching a bespoke service specifically to meet the needs of businesses with complex fleet requirements.
Corporate relationship director David Currier said: “By listening, learning and sharing experiences with clients, we have developed the knowledge base and systems to manage a portfolio of complex clients with individual needs and requirements.”
The transfer of services has been accelerated by the sale and leaseback of the majority of the fleet, which includes assets from Balfour Beatty’s legacy lease providers, and will be supported by an ongoing programme of specialist consultancy designed to identify and unlock future cost savings.
“All of our supply chain partners have very robust key performance measures in place, which we monitor on a regular basis to ensure excellent service and great value, and we work together to ensure cost savings are unlocked on an ongoing basis,” said Ormerod.
Balfour Beatty is reliant on its vehicle fleet to deliver many of its key services. Its commercial vehicles in particular play a crucial role in maintaining the UK’s infrastructure and as such operate in challenging conditions that require specialist equipment such as tail lifts and access platforms.
Balfour Beatty Plant & Fleet Services will continue to manage a fleet of 800 HGVs in-house, where the fleet department employs a dedicated team of 55 people.
Ormerod said: “Changes were made to our Plant & Fleet Services organisational structure at the end of 2013 as part of our arrangements to outsource commodity plant and fleet assets and the team is working well. We anticipate no further change.”
While he declined to name other customers operating “complex fleets”, Currier said: “This portfolio includes a number of utilities, emergency organisations, infrastructure and construction companies, as well as those transporting goods that may be at risk through accident breakdown or downtime. These businesses have entrusted us to fund and manage their fleets.
“We anticipate more companies with business-critical fleets will recognise the cost- and time-saving benefits that can be achieved by working in partnership with a supplier that understands and can manage their complex fleet requirements beyond the supply of the vehicle.”
Not all companies feel the same way. Fleet News has previously highlighted the decision of Network Rail, which also operates a business-critical complex fleet of almost 8,000 vehicles, to swap finance provided by four leasing partners for its own money and a business managed by an expanded in-house fleet team.
The company, which does draw on support from an external fleet management company, cited its ability to “get better value for money buying cars with our credit rating” as a key reason for the change.
Balfour Beatty Plant & Fleet Services sells its driver risk management services commercially as well as providing them in-house. Asked if the Lex Autolease deal would affect this, Ormerod said: “It is business as usual. The driver risk management service is a strategic differentiator for us and therefore fits with our current model of retaining strategic activity pro-actively supporting the Balfour Beatty UK