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Vehicle Costs in Developing Countries

Vehicle costs typically represent upwards of 20 - 25% of recurrent costs and often an organizations highest capital expenditure. Next to salaries it is often the largest expense a company or organization meets.

Mainly because of the cost in emerging economies of good vehicle management skills, companies or organizations tend to attempt to contain rather than control these costs. Typically a managers accepts what he knows to be overruns in vehicle costs because he/she does not have the time or resources to prevent it.

Many managers make attempts at vehicle management but few truly succeed. Failure mainly occurs for the following reasons:

Over ambition leading to complexity of the system. Typically mangers attempt to go from near zero to total in a single implementation.

Underestimating staff capacity to adopt new systems. Whilst training staff in data entry is generally a challenge in itself turning this data into current and meaningful information is often beyond the average transport administrator.

Failure to use reporting that is meaningful to the average manager. 100's of entries in a Log Book are not meaningful to a manager, a summary of kilometers driven per day in comparison to the rest of his vehicles is.

Believing that it is a systems problem. In most cases poor vehicle management is a people problem. Buying software may, if your overcome all the above, show where your problems are but it will not solve them for you.  

In emerging economies a simple system that works is always more effective than a complex system that half works. There are many elements and levels to vehicle management but a simple an effective system will focus on the following five components of inventory, maintenance, fuel, repairs and reporting.

A proposal for improving your vehicle management can be downloaded here.

 
 

"I went for this package for two reasons- cost and the and the value of having someone independent and experienced producing the reports"  

-N Gomes Director Whatana Investments Mozambique

 
MSSB Consulting, Ireland 2007