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148 
A Transport management guide
Page 80
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COSTS THAT COUNT (5)
by David Lowe, MInstTA, AMBIM I HAVE DEALT previously with standing costs, those which relate to individual vehicles but which have to be met whether the vehicle is working or standing idle; and also with establishment costs, which are those incurred as a result of running a transport operation. Now I come to the costs directly incurred by running the vehicle.
Vehicle running costs which comprise only four items — fuel, tyres, maintenance and lubricants — can be dealt with in two ways; either advance calculations can be made based on previous experinece and estimated performance (such as expected tyre life for example) or the actual expenditure incurred each week on each item can be recorded and divided by the mileage run in the week. This latter method results in wide fluctuations week by week which only become equated over a period of, say, a year. For this reason the former method is used for the purpose of this article. The latter method will be dealt with later in the series.
Fuel costs are relatively easily dealt with provided that where bulk supplies are held on the operator's premises there is a measuring device for the gallonage dispensed and the actual amounts supplied to each vehicle are accurately recorded. The issues from bulk stocks to each vehicle, together with supplies drawn from outside garages, when vehicles are away from base (it is important that drivers produce receipts for such purchases) should be recorded over a given mileage (starting and finishing with a full tank) so that a relatively accurate fuel cost per mile can be obtained.
The calculation of this would be done as follows: 4 weeks, vehicle running at 600 miles per week = 2400 miles fuel consumed 240 gallons (ie 10 mpg) @ 34p per gall (retail price) = £81.60 cost per mile = £81-60 ÷ 2400 = 3.4 pence per mile Tyre costs are dealt with on the basis of an estimation of the expected life of the tyres in terms of mileage run divided by the cost of the tyre. If we take the retail cost of a tyre as being £40 and its anticipated life as 30,000 miles we arrive at a tyre cost of 0-13 per mile per tyre. On a two-axle rigid this represents 0-78 per mile for the vehicle, on a three-axle rigid L30 per mile, on a four-axle rigid 1.56 per mile and, at the extreme on a twin-steer, five-axle attic with 16 wheels a cost of 2.08p per mile would result.
Maintenance forecast
Maintenance costs are not easily forecast because this is an area in which the unexpected may always, in a sense, be expected. However, previous experience, where this is available, should be used as a guide. For our example assume an annual maintenance cost (which includes preparation for, and the cost of, annual testing as well as routine maintenance and repair work) of £750 per annum based on an annual mileage of 30000 which results in a cost of 2.5p per mile for this item.
Lubricants, for the purpose of this excercise, refer only to lubricating oil used for engine, gearbox and axle oil changes. It is not normally a practical proposition to attempt to record or cost the small amounts used for topping up purposes. These amounts, together with the cost of grease, brake fluid and other such consumable lubricating materials should be provided for under the establishment costs relating to the operation of the maintenance workshop. The operator may wish to include the cost of replacement oil filters with this heading as they are so closely related to lubrication costs.
The choice in this, and whether to include the cost of topping up-engine oil (where suitable records are kept) remains with the operator. The CM Tables of Operating Costs, for example, suggest that all engine oil consumption should be costed as a running item but gear oils and grease should be included among the establishment costs.
At this point it is opportune to refer back to the subject of depreciation on which I expressed in part three my preference for including it as a standing cost item calculated on a time basis. As I mentioned, the CM Tables show this item as a running cost, so for the operator who prefei consider the life of his vehicles in tern mileage rather than years, a sample c lat ion will be made.
If we take the same example vehicle previously costing £3500 fitted with a s tyres worth £240 with a prospective r value of £380 and a life expectanc 150,000 miles, we find the amount t depreciated as follows : £3500 — 240 — 380 = 2880 = 1.92 150,000 150,000 per mile.
We therefore arrive at a set of rur cost figures as follows : Running costs (pence per mile) Running costs (pence per mile) Fuel 3.40 Tyres 0.78 Maintenance 2.50 Lubricants 0.30 (an estimate base the Cost Table fig 6.98p per mile
Estimated figures
If depreciation was to be added a running cost of 8.90p per mile woul indicated.
On the basis of weekly running at tht of 600 miles a weekly running cost of I x 600 41.88 or 8.90p x 600 = E would result.
These totals, and you should reme these are examples of estimated figure actual recorded costs, can be added t weekly standing and establishment co! give a total operating cost (the subje next week's article). The point in this mentioned here is, however, to empl. that it is possible to sit down and calo in advance, reasonable estimates of performance on which rate quotation be based.
Having established such estimates possibly quoted rates based on these mates it is then important to checl actual results over a period agains estimates to ensure that job chargi being carried out at realistic and prof levels.
Note: It must be emphasized that the fi used in this and the preceding article examples selected only Jr indicatin method of calculation. They are in tie intended to represent accurate costing should not be taken as such.
Next week: Total Operating Costs,