One of the dangers to the industry in the future, in a declining fuel volume market, is that cost pressures drive down standards.
There is a race to the bottom on price that will ultimately increase the risks of things going wrong in terms of the contractors being used.
It’s very common within Eurotank for us to be discussing feedback we are given from customers on significantly lower prices they are given by other contractors. We are often scratching our heads at how it is possible to be ‘significantly’ cheaper than we are.
Very often it turns out that the specification of what is being contracted is significantly different between suppliers. Examples that spring to mind include the feedback that we were 30% more expensive for a re-pipe and re-pump cost than another supplier. Usually, we won’t get the opportunity to find out how, but on this occasion, we were provided with the rival quote spec and quickly established that our quote included the cost of the pumps and the other one didn’t!
This is an extreme example but there are countless times when retailers are perhaps only looking at the price at the bottom rather than the detail within the quote. Perhaps the quote is deliberately vague or perhaps the retailer doesn’t really understand the detail and terminology.
It’s taken over 20 years for me to fully understand the business and even I am still learning every day so it’s not surprising that customers, whose specialist knowledge is related to retailing, are not experts in the fuel system and construction sectors.
There are lots of ways that costs can be cut to reduce prices but they are likely to cost the site operator a lot more in the future. Things like drainage channels not being shouldered in concrete or single sheets of steel mesh in the reinforced concrete are things we have seen. Other things like basing quotations on a schedule of work that will cause a lot of costly disruption to live sites is another hidden danger, where the retailer can save money upfront, but it will cost them 10 times more in lost business from disruption.
If you don’t have a trusted contractor who you know will look after you and you’ve established their pricing is competitive, it’s important to scope out your own jobs so that contractors are tendering against your specification not theirs. As the site operator, you become legally responsible for any work taking place on your site so a good understanding of health & safety regulations and how a fuel system works is important to helping you know what questions to ask.
My final point is that the industry does not police itself. The HSE have very little interest in our sector and random visits are almost unheard of. The Environmental Health Officers who have responsibilities in this area as well are not at all active in my experience, and the Petroleum Officers’ budgets have been cut so much that there is little activity there as well.
Being a contractor is a tough game. There is so much competition and for those contractors who try to do everything right and to the correct standards, also being the cheapest is a big challenge.
