May 2008, Government Fleet - Feature
How to Handle Accidents, Vibrations, Corrosion, Moisture, and Abuse Damage
By John Dolce
The enemies of vehicle maintenance best practices are the elements of day-to-day topography and operator performance issues.
The manufacturer and mounted equipment installers/engineers prepare vocational vehicles for a multitude of environments and closely watch the warranty claims for vehicle and equipment weak spots. Should there be issues, they review the symptoms, do a post mortem on the parts, determine the root cause, decide if it’s poor work, poor materials, and/or design problems, and initiate correct action.
Should there be a noticeable threshold of failure, they issue a repair campaign or a bulletin. If it hits the recall level of 5 percent, a recall campaign is issued.
When fleet managers "spec" a vehicle, they can put a "defect" limit in the terms and conditions of solicitations. For example, "Should 3 percent of the same components fail within one, three, or five years, this would be a fleet defect and all of the vehicles purchased on this order will be upgraded by the seller at no charge to this fleet with a spare vehicle provided."
This statement can be strengthened or weakened based on past experience and identified at the pre-bid meeting so all bidders are proactive on their solicitation submission. As with warranty and latent defect requirements, they will be negotiable by the fleet prior to formal solicitation at the pre-bid meeting with all bidders aware of the bid’s content.
The decision is to fix a vehicle if it is of suitable use with repairs at 30 percent of residual value. A fleet inspection determines whether it can be safely and reliably put back into the duty cycle.
Calculating Impact Damage
The insurance company wants to spend as little as possible to meet its minimum liability. If a vehicle is hit in the front, rear damage is likely under the sheet metal/plastic. The entire vehicle should be inspected carefully. Fleets know the vehicle’s application-specific duty cycle and years of past usage, repair activity use, and the operating environment can be inspected in suspect areas prior to the three-bid submission.
Deductibles, vehicle usage patterns, and scope of damages determine whether to repair, rebuild, replace, or scrap the unit. Should the cost of estimated accident repair be 50 percent of its residual value, and the vehicle’s use due to its configuration for work methods is low, a "no-fix" decision would occur, thus prompting the fleet to scrap the vehicle and reduce fleet size.
Should the vehicle be of suitable usage with repairs at 30 percent of the vehicle’s residual value and fleet inspection determines 35 percent is needed to safely and reliably repair and put it back into its duty cycle, then the decision is to "fix."
Should the vehicle usage be low due to its configuration, at 30 to 35 percent of its residual value, the better alternative is to upgrade and rebuild it. Extend its life should it fit in the cost estimate of spending 50 percent of residual value with expectations of 75 percent of its lifecycle. That’s a good "rebuild" strategy.
If we estimate a total fix of 60 percent of its residual value, a scrap strategy may be in order. Insurance settlements are separate from fix, rebuild, and scrap settlements because the experience is with your staff’s expertise. We need their input to make a cost-effective decision.