Last week I was talking with a fleet safety manager about the intangible costs of collisions for his employer. At BrightFleet we sometimes create an ROI analysis for qualified and interested prospects in order to provide them the financial information that they need to determine in our driver safety training product is a good fit for their company, or to help them “sell” our program “by the numbers” to other stakeholders within their organization that are involved in the buying decision.
Below you can find a summary of the types of direct and indirect costs of accidents that may ultimately affect your organizations bottom line. In addition to the direct or indirect costs, there are also the intangible and nearly impossible to measure costs related to losing an employee to injury or death, and the incalculable costs to their family.
Federal Motor Carrier Safety Administration. “Revenue Necessary To Pay For Accident Losses” Accident Cost Table. 2010. U.S. Department of Transportation. 1 Jan. 2011
This table shows the dollars of revenue required to pay for different amounts of costs for accidents:
| It is necessary for a motor carrier to generate an additional $1,250,000 revenue to pay the cost of a $25,000 accident, assuming an average profit of 2%. The amount of revenue required to pay for losses will vary with the profit margin. | |||||
| YEARLY ACCIDENT COSTS | PROFIT MARGIN | ||||
|---|---|---|---|---|---|
| 1% | 2% | 3% | 4% | 5% | |
| $1,000 $5,000 $10,000 $25,000 $50,000 $100,000 $150,000 $200,000 | $100,000 $500,000 $1,000,000 $2,500,000 $5,000,000 $10,000,000 $15,000,000 $20,000,000 | $50,000 $250,000 $500,000 $1,250,000 $2,500,000 $5,000,000 $7,500,000 $10,000,000 | $33,000 $167,000 $333,000 $833,000 $1,667,000 $3,333,000 $5,000,000 $6,666,000 | $25,000 $125,000 $250,000 $625,000 $1,250,000 $2,500,000 $3,750,000 $5,000,000 | $20,000 $100,000 $200,000 $500,000 $1,000,000 $2,000,000 $3,000,000 $4,000,000 |
| REVENUE REQUIRED TO COVER LOSSES | |||||
Federal Motor Carrier Safety Administration. “Revenue Necessary To Pay For Accident Losses” Accident Cost Table. 2010. U.S. Department of Transportation. (Cited: 1 Jan. 2011)