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Mileage management

Source: Public Sector Executive Nov/Dec 2012

PSE talks to David Nicholas, fleet partnership manager at the Energy Saving Trust, about the principles behind mileage management, and how it could help public sector organisations cut drivers’ fuel usage and costs.

Mileage reimbursement usually depends on self-reporting by drivers – but with more accurate tracking of journeys, and thus mileage claims, costs drop as exaggerated claims are made a thing of the past, and fuel use drops too as drivers choose more efficient routes.

It might seem a radical and intrusive step to take, to monitor drivers’ journeys in this way, but with such huge pressures on budgets and on carbon emissions, any improvement will be welcomed.

Currently, mileage management is taking off predominately in the private sector, but David Nicholas, fleet partnership manager at the Energy Saving Trust, says the principles apply to the public sector too.

He said: “The key principle is behavioural change. In the public sector, most business mobility is in privately owned vehicles and, from the work we do with public sector organisations, that’s where some of the issues come out.

“In my experience they tend to be slightly older vehicles, which has an environmental impact and in terms of the employer’s duty of care around health and safety – is their car appropriate?

“Current systems tend to be penny-to-the-mile reclaim systems, which rely heavily on the driver recording accurate mileage; we know human nature, people will overestimate and underestimate.

“Some people write it down and record it the day they do the journey, others don’t put an expense claim in for three months and try to remember what they did three months back, and there is an element in all organisations where people will deliberately overestimate. That’s just human nature, and possibly more so in the public sector because the reimbursement rates paid are considerably higher than those in the private sector.”

Drop in mileage claims

The evidence so far from organisations that have implemented mileage management systems is a big drop in claims, since exact mileage is checked retrospectively.

Nicholas suggested it’s due to a combination of fewer miles driven, and more accurate claims being made. He said: “That’s obviously financially beneficial for the organisation, and obviously when they’re driving fewer miles, the emissions cut down.

“There’s a variety of systems out there, and the majority work retrospectively.

“The driver can go in every day and update claims, but that claim period closes at the end of the month. It will then go to the driver’s line manager to ensure they’re happy with the claim.”

That means more direct involvement from line managers to look at particular journeys, he said, rather than just signing off or rejecting a whole claim as with many paper-based systems.

“There are one or two USB stick based systems: you put the stick in the car and it tracks you by GPS. Obviously there’s an element of driver acceptance needed in those situations, but basically it will record everywhere you go, and will upload it.” The driver selects which were private journeys, and which were for business.

“The issue at the moment, especially within the NHS, is that a lot of employers are having new expensive systems being put in which allow the drivers to claim mileage but they still don’t require any detail behind it.”

The return on investment that a public sector employer can expect from implementing mileage management depends ultimately on how bad their issues are in the first place, he said.

Implementation time can be anything from a few days to 10 weeks depending on the system used.

Nicholas explained: “The common charging policy is per vehicle, per driver, per month. You can have a basic service where the set-up and implementation is done by the organisation, or you can have the all-singing, all-dancing version where everything’s done for you.”

Costs for those more intensive systems can be “quite an investment”, Nicholas acknowledged, at up to £5 per car per month.

But if a system cuts mileage and costs by 20%, then even at that price, mileage management pays for itself.

In the private sector, Heinz UK, using mileage management as part of a general fleet policy review, has seen its mileage claims fall by 28% across its 410-strong fleet.

Environmental concerns

More accurate mileage management is helpful for public sector bodies needing to calculate – and reduce – their carbon emissions.

Nicholas explained: “Half of the environmental battle is knowing where you are to start with, which is a weakness particularly in the public sector, as it comes back to having the data as a baseline.

“For an average public sector organisation, private vehicles will probably account for about 60% of their fleet emissions – purely because lease cars are being withdrawn and have been over the last few years.

“At the moment, there’s few regulations and little in the way of mandatory reporting in the public sector for emissions, particularly fleet emissions.”

Mileage management can also help with audit over tax affairs.

“When you’re operating a pay and reclaim scheme, or if you have fuel cards and the driver reimburses the cost of their bill, there has to be a robust audit trial to satisfy HMRC.

“What we’re seeing quite a lot now is HMRC inspecting processes. It goes in, and while some organisations are fine, a number aren’t. Using mileage management reduces any risk of being inspected and facing a large fine.”

The final way it can help is in individual driver training, as it can help show whether a particular driver’s fuel efficiency is particularly good or bad.

Nicholas said: “Again, that can lead to both environmental and cost savings, because if the driver can be educated in driving efficiently, they’re going to do more miles to the gallon, use less fuel, and therefore lower the fuel cost to the organisation.”

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