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April 28, 2011
Fuel represents the highest business cost behind labor for organizations in construction and other fuel-dependent services.
Construction firms face additional pressure in the post-recession economy to manage costs, meet budgets and keep a firm hand on projects. Understandably, as fuel prices continue to rise, everyone wants to reduce their exposure to rising costs.
In order to help businesses put a leash on fuel costs, we’ve compiled the top 10 ways to reduce costs associated with using fuel. Some will be a little surprising depending on your experience with managing fuel.
1. Reduce labor waste.
Labor and fuel are the two highest operating costs for most construction companies. But every time you send operators and equipment off site to get fuel, you are paying for 30 minutes of equipment and manpower but earning nothing for it. Having fuel delivered direct to equipment means your workers start each day full and never have to stop.
2. Increase hourly productivity.
This part is easy if you’re getting an extra 30 minutes each day by having fuel delivered direct to equipment. Increasing your productive hours by 30 minutes per unit, per day, every day creates a 6 percent increase in operational efficiency. Multiply all those half hours by your operating cost per hour and you can see how you can finish projects faster and cheaper.
3. Reduce theft from tanks.
This is the one that everyone knows happens but no one wants to talk about. Theft from tanks is common, whether from employees helping themselves to a few gallons or organized criminals with siphons and tanks. Improve the security of your investment with secure delivery and a remote monitoring system.
4. Reduce downtime.
The efficiency of having a tank on site can be compromised by the time your operators spend waiting to fuel. Have a look and if it’s taking more than 15 minutes when you’re watching, you can be sure it takes longer when you’re not. You might consider replacing the tank with direct-to-equipment fueling and putting all those paid fuel breaks back into revenue-generating work time.
5. Reduce overtime.
Ever notice that fuel breaks tend to happen at the end of the day, around the same time that overtime rates kick in? Pure coincidence. But if you leave the fueling to a company like 4Refuel, who provides direct-to-equipment fuel service, then your crews spend their time completing projects, not getting fuel.
6. Reduce environmental cleanup costs.
Environmental contamination is a messy and expensive situation you don’t want any part of. Filling equipment from tanks or from slip tanks can expose you to costly cleanups. Make sure your crew is properly trained in fuel handling and cleanup procedures and that all the correct equipment is easily at hand by each fuel tank. Or use a professional fuel delivery service.
7. Reduce time lost to accidents.
Downtime, sick days, medical insurance and lawsuits can take your mind and resources off projects and create delays and set-backs. Even minor accidents resulting from handling fuel can have an impact. Where possible, use professional site services for fuel handling and delivery to equipment.
8. Reduce administrative costs of tracking purchases.
How much time is spent chasing receipts, verifying purchases, reviewing expense reports and then manually entering data from every fuel purchase into a spreadsheet? Some fuel delivery services have automated transaction tracking so you can click a button to get detailed reports on all your fuel costs. One leading system is called Fuel Management Online.
9. Reduce cost overruns by tracking fuel costs by project.
Another feature of online fuel management systems is being able to report costs, manage budgets and control fuel expenditures. The online system by 4Refuel lets you set budget parameters and track performance against them even analyze fuel consumption by unit.
10. Reduce late payment costs.
A cool new feature in online reporting is the invoice query tool. This lets you review each invoice, compare it to each docket (also viewable online) and track it against your equipment list. If there’s an error, instead of risking late payment fees, you can query online and then make an online payment. This means you spend more time running a profitable business and less time paying invoices.
It’s not hard to reduce your fuel costs, but you need to make a plan and find someone to support it. A fuel management company is a good place to start. Many of these 10 cost-saving tips can be implemented by making your fuel strategy more efficient. Online reporting is the second half of the equation that gives you instant control over your fuel investment.
Look up fuel management solutions online and educate yourself or speak to a fuel management company to kick-start your cost-saving plan.
Jack Lee is executive chairman and founder of 4Refuel the largest on-site fuel management company in Canada and a global leader in technology designed to help businesses reduce their fuel expenses. Its U.S. corporate offices are located in Lynnwood.