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Saturday, October 11, 2008

Cost Benefit Analysis


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Services Cost/Benefit Worksheet

Example uses 50% Discount Group Rate for 100 vehicles and 100 trailers. Assumes local delivery with Vehicular Accident Frequency Rate of 7.0 and 3 million driven annually.
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Cost of Safety Alert Network Services

of vehicles X annual per vehicle charge =

of trailersi X one-time decaling charge =

Total Cost of Service 

=

Estimated Benefits

Number of 'frequency rate' accidents
ANSI standard frequency rateii X million miles driveniii =

Estimated cost of fleet accidents
# of frequency rate accidents X iv =
Anticipated savings from 10% accident rate and cost reduction (avoided accident cost)
Cost of accidents X =
First-year minimum net savings
Avoided accident cost - =

iA one-time decaling fee of $3.95 is assessed for the number of trailers above the number of covered power units.

iiThe average local delivery ANSI Standard vehicular accident frequency rate ( VAFR) is approximately 7.0. The average VAFR rate for over-the-road operations is approximately 2.0, but the severity rate (the resulting costs of accidents) is higher. If you do not have freq. rate for your company, assume 7 accidents annually for every million miles driven in local driving, (a vehicular accident frequency rate of 7.0) and 2 accidents for every 1 million miles in over-the-road driving.

iiiEstimate of accidents based on million miles driven. Vehicle accident frequency rates (VAFR’s) based on less than 1 million miles driven are of questionable statistical significance. Results could be effected by random fluctuations in variation. Smaller fleets driving less than 1 million miles should use multiple years for calculations. For example, a company with 500,000 miles driven each year should use VAFR for two years of mileage and accidents.

ivPHH Fleet America estimated the average total direct and indirect costs of a commercial fleet accident to be $8,986. Source: CFO magazine, "Damage Control," November, 1993.

Copyright  1995 Performance Development Plus, L.L.C.

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