What is the true cost of utility damage prevention? Contrary to conventional wisdom, it’s far more than the simple ticket price paid to contract with the lowest-bidding utility locating firm. In fact, attempting to contain damage prevention costs by negotiating the lowest rate per locate can greatly increase a utility’s exposure to other risks that in the end will prove far more costly. To accurately assess the total cost of utility damage prevention, many utilities understand what it costs to do the job right – and how much more it costs to do it wrong.
What Drives Total Cost?
Would you rather pay for good insurance or a bad accident? Choosing a utility damage prevention partner is not unlike choosing a property insurance policy. If you are fortunate enough to never have an accident, or live in the path of a tornado or hurricane, all will be fine. But if you do experience property damage, it’s a smarter decision to pay a slightly higher insurance premium to be sure that the company you chose can protect you against both the hard and soft costs associated with a devastating event.
Having adequate and effective insurance is only one component of total cost management. In managing damage prevention costs, many companies heed some long-held tenets of good business.
You get what you pay for.
Difficult competitive bidding situations have resulted in some locating companies offering rates that fail to cover the cost of providing safe, reliable, and accurate service. That cost is more than direct labor cost (which includes recruiting, training, and retention). Ticket prices paid to utility locating companies must also support:
- Field Equipment Acquisition,
- Vehicle Acquisition and Maintenance,
- Communications Technology,
- Ticket and Mobile Workforce Management Systems,
- Cost of damages (including repair, loss of service, customer service, customer loyalty, claims investigation and processing, public relations),
- Quality Assurance and Training
- Insurance, and
- Contract Administration
When utilities pay ticket prices that do not adequately value these costs, locating companies are forced to underinvest in these areas, get out of the business entirely, or both. In any of these scenarios, utilities suffer. Locating companies who cannot cover their costs frequently offer inferior service on their way to going out of business. When a utility locating company goes out of business, its clients must find a substitute provider and protect themselves against the higher risk of damages that may result from the inferior service that the now defunct company provided.
Over the past several years, the number of locating companies with a national footprint has continued to shrink, primarily because the “low bid” mentality advocated by some utility contract administrators does not adequately value the total cost reduction ideal. In many cases where companies have sacrificed "Best Value" in favor of "Best Cost", they have incurred a higher total cost of service.
An ounce of prevention is worth a pound of cure.
Although the utility locating industry as a whole maintains an accuracy standard of 99.6 percent (or one liable damage per 1000 locates) even one damage can be catastrophic. For example, when a gas line running beneath a major highway is punctured due to incorrect markings, utilities incur costs that go far beyond the simple loss of service caused by this event. Damage to a company’s image due to unfavorable press and public outrage can easily have a lasting impact on its competitive position. And the federal and state fines that can result from a utility service disruption often drive the total cost of the event even higher. While no locating company can operate without some risk of damages, locate companies that are able to adequately cover service costs will be better able to maintain and exceed this high accuracy standard. More importantly, they will be financially capable of investing in training, technology, and customer-focused quality-of-service initiatives that will help drive down the total cost of the service they provide for their clients.
It costs less to keep an existing customer than to gain a new one.
Even if the utility damage is relatively minor, leaving a single customer without service, such failures contribute greatly to customer dissatisfaction. In today’s deregulated environment, utilities must often lease or share service lines with their competitors, a situation that makes customer satisfaction even more complex and harder to maintain. And when customers are dissatisfied, they are easy to lose and costly to replace. Businesses that retain a steady base of satisfied, loyal customers can afford to spend less on marketing, advertising and sales incentives and often have more efficient, effective customer service departments.
Value Means More than Price
Because “lowest-bid” clearly doesn’t mean “lowest cost” nor does it mean “best value”, utilities should select locating companies based on their ability to offer greatest value – the highest quality service at a fair rate. To offer value, a locating company must continually invest in the areas that make the greatest contribution to their ability to work on time and damage-free – the twin benchmarks of underground utility protection. These include:
Trained, reliable personnel
The job of locating underground utilities today requires more skill and technological sophistication than ever. With the proliferation and increasing sophistication of utility connections caused by economic development and technology advances, the job of locating utilities requires more skill, not less. Locating companies must be willing and able to attract and retain enough skilled technicians to provide accurate and prompt service. UtiliQuest ensures ongoing availability of qualified, committed field technicians by maintaining an employee support and training program that is second to none.
Recent advances in wireless technology now allow field technicians to work smarter, better and faster. Through its investment in Q Manager - a wireless mobile workforce management system, UtiliQuest has defined a new standard for productivity, accuracy, management and data collection in the utility damage prevention industry. By making communication with field technicians easier and faster, UtiliQuest can offer utilities mutually beneficial contracts that promise: A higher percentage of on-time locates, more accurate manifests, more accurate billing, greater flexibility in assigning technicians, faster payment and resolution for damage claims, and increased supervisory control. With this system, UtiliQuest can evaluate productivity, zero in on root causes of damages, identify field training requirements and locate process improvements. What’s the result…An improved bottom-line for both UtiliQuest and its clients.
Trust, communication, cooperation, and mutually beneficial business arrangements are the foundation of reduced total cost.
The ability to foster trust, communication and cooperation with excavators, utility owners and regulatory bodies is integral to a locating company’s ability to provide accurate, reliable service. The wireless technology UtiliQuest has introduced provides additional benefits to partners in the overall utility protection community by:
- Collecting, analyzing and sharing operational data that will help improve training and education,
- Serving as a living laboratory for utility protection technology,
- Providing a core platform for offering additional value-added services such as remote auditing, web-based access to tickets and point of service screening, and offering an interface point for other utility protection technology, including web-based or web-distributed facility records.
A New Model for Utility Damage Prevention
Through value-based investments like Q Manager, UtiliQuest is positioned to offer a new service model for utility companies. This model is based on collaboration, trust, mutual benefit and performance-based contracts - not adversarial relationships and a low-bid mentality. Utilities can trust UtiliQuest to offer quality service at rates that allow continued investment in quality, improvement and high performance in an environment where utilities face increasing competitive pressures. Because they can count on UtiliQuest to control damages with an eye toward minimizing total cost, utilities can invest more of their time and resources in expanding their capacity and customer base.