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What is it?
rfillS week's problem is presented to mc in the form of the following queries: "What is covered by the term Maintenance in ' The Commercial Motor ' Tables of Operating Costs? I have several 'vehicles and
keep a mechanic to do repairs. Should his wages be charged to Maintenance? There does not appear to be any provision for advertising expenditure in the Tables. To what should it be charged?"
Regarding advertising expenditure, provision is made for this in establishment costs. It does not appear as a separate item in the Tables, neither are establishment costs set down independently. Provision is made for establishment costs in arriving at the "Haulier's Figures (Charges)" in this way. Taking the costs figures for a 6-tonner. in Table 3, the total cost of operation per week for a vehicle of that size, running 600 miles, is given as £21 9s. Od. The corresponding amount which the haulier should charge. for such a vehicle running that distance is given as £30 Is. Od. The difference between these two amounts is to cover establishment costs and profit. The allowance for establishment costs is £3 12s. Od., leaving £5 is profit.
If we add the operating cost to the establishment cost, we get the operator's total weekly expenditure, which. is 125 Is. ld. Profit is calculated at 20 per cent, on the expenditure, and that is approximately £5, as just given. The first question, "What is• covered by the term Maintenance?" gives me plenty of Scope. .
What Maintenance Means
Referring to the Tables, the meaning of Maintenance (d) and Maintenance (e) are given as follows: Maintenance (d) is intended to cover what may be called routine maintenance operations, more specifically to be defined as those which are carried out periodically on a time basis irrespective of mileage, and include such operations as washing, greasing, repainting, varnishing, and so on.
[Cis obviously difficult, with an average figure, to give all the variations in this item. For example, it is impossible to reconcile the costs of an operator who washes his vehicles once a Month and never repaints them, with those of another who may have his vehicles washed daily, revarnished at intervals of not more than a year, and repainted every Other year. This figure, therefore, represents the average
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out-goings of an operator who is particular about this matter.
Maintenance (e) [night be more accurately described as expenditure on repairs and overhauls. The amount quoted is a reasonable average as shown by the costs sheets of operators. It will be a help, perhaps, if I take some figures and give some idea as to how the figiires which appear in the Tables have been assessed.
I will take as an example a 6-ton petrol-engined vehicle. Dealing first with Maintenance (d), I will take it that washing, polishing and greasing are carried out once a week, and for that I take an average figure of bs. 6d. Further, I assume that the body is revarnished the first year at a cost of £10, and repainted the second year at a cost of £2Q; I then have an average figure:per annum for this revarnishing and repainting 'of £15. This works out at 6s. a week, so that, according to these figures; the total cost
per week of Maintenance :(d) is 12s. 6d. _ , •
Regarded as a Running Cost This, in fact, is a standing charge, but it has been customary alWayS-to regard maintenance as a running cost. 1 have for that realpit:.inade a habit of putting this amongst the running coStS, whirlk means that the cost per Mile must be much more WhenaVehicle itinS:Only.a"feWl.thiles per week than when a• vehicle covers a big ,mileage.' ,-)f the weekly -Mileage be 200, the cost per mile is .75d.; but if ihe.vehiele runs 1,000 miles 'per ixeelc;.the cost pet mileis only 0.15d. If reference be made to the Tables it will be found that those are the figures given. It wilt also be noted that the amount diminishes steadily as the mileage per week increases; on 300 miles it is 0.50d., on 400 miles .0.38d., and so on. This variation in the maintenance cost is one of several reasons why the total running cost per mile
diminishes as the weekly 'mileage increases. .
Turning now to maintenance (e), this covers expenditure on all those preventive maintenance operations which have so often been described in detail. The following is a brief summary of the items; with approximate indications' of the
,Every 4,000 mileS the 'following operations.are carried out:--clean plugs and adjust points; check electrical .equipment; adjust tappets; cheek water-pump gland; check clutch mechanism; drain sump and re-fill, check petrol filters; test brakes and adjust; give attention to sundry small items.
To perform these 3perations will probably take 2i manhours, the charge, including overheads, will be approximately 18s. The cost of lubricating oil and sundry items will be about 15s., giving a total expenditure of £1 13s. every 4,000 miles If we divide £1 13s. by 4,000, we get 0.10d., and this is one contribution towards expenditure on Maintenance (e).
At 12,000, miles a more extensive schedule of operations is called for, including decarbonizing and the items that go with it, the fitting of new brake facings, checking up transmission, steering gear and differential. The total cost of labour on this may be anything from £4 to £6. I will take an average of £5. The cost of a new set of plugs, grease and sundries will amount, approximately to £1. 10s., making £6 10s., a recurring expense every 12,000 miles. It is to be noted that this is additional to the cost already incurred under the 4,000-miles schedule. The expenditure of 16 10s. per 12,000 miles is equivalent to 0.13d. per mile.
Attention at 24,000 Miles
At 24,000 miles, in addition to the work already noted as being necessary at 4,000 miles and 12,000 miles, there is a fairly long schedule of maintenance operations, some of which involve considerable expenditure both on labour and on materials. The cylinder bore is to be measured, new radiator-hose connections fitted, radiator and water jackets flushed out, brake drums removed and checked, probably new brake facings to be fitted, and the brake connections to be overhauled. The last-named will almost certainly call for new parts. The gearbox and rear axle are to be drained,, washed out and replenished, and certain body repairs are indicated.
It is not easy to assess the cost of all these operations, and the following estimates are, in all probability, open to criticism. I take the cost of radiator connections as 10s., the fitting of a water pump £2, brake facings and brake connections, £4, body repairs £2 10s., and oil and grease 10s. That makes. £9 10s. for material. I estimate that labour costs will amount to a further £3 10s., which gives me a total of £13, an expenditure incurred every 24,000 miles. The cost per, mile is 0.13d. At 48,000 miles a thorough overhaul of chassis and bodywork, including fitting of a reconditioned engine, will be necessary. I take it that the cost of a new engine will be £75, chassis parts £40, materials for body repairs £15, and labour charges, £40, amounting in all to £170, which, over 48,000 miles, is equal to 0.85d. per mile. The total of all the amounts quoted is 1.21d., which compares with 1.23d, given,in the Tables.
Regarding the figures on maintenance which appear in the Tables, I am often' told that they are absurdly high, and if a man who is running a 6-tonner 400 miles a week looks up my figures and finds that I-have given him 0.38d. for Maintenance (d) and 1.23d. for Maintenance (e) a total of 1.61d., he says, "That is more than lid. a mile or £125 a year for maintenance. Do you mean to tell me that I spend £125 a year on maintenance for one vehicle? it is ridiculous." He may have several reasons for his disagreement. In all probability he has not the least idea of his maintenance cost, for the simple reason that he has not kept accurate records of his expenditure. If, on the other hand, his costs actually prove to he below those which I quote, arid if he does keep an accurate record, then either he has very good drivers, or the work upon which the vehicle is engaged is easy.
In pre-war days an operatot . using one of the lighter types of 6-tonner would purchase a new vehicle every year. The mileage covered would be in the region of 40,000 to 45,000 per annum. By this procedure of disposing of his vehicles annually he would save the final item of expenditure in the foregoing schedule, that of £170 at 48,000 miles for general overhaul. This would mean that he would reduce my total of 1.23d. by 0.85d., his cost per mile for Maintenance (e) then being only 0.38d. There is, of course, an off-set to this economy in the way of the depreciation account, but I will not take that aspect of the subject at the moment. One concern which adopted the practice once tried the experiment of keeping its vehicles for a year-and-a-half before disposing of them, The extra cost of maintenance was, to use the company's own term, "prohibitive."
On the other hand, it has been suggested to me that a fair figure for cost-per-mile of maintenance of a lightweight-type 5-6-tonner is 3d. On this basis a vehicle running no more than 24.000 miles per annum would mean the spending of £300 per year on maintenance.
have before me some figures for 'maintenance costs of a 6-ton vehicle. At the time of the compilation of the figures it had run 125,000 miles at a total cost for maintenance of £266 13s. 4d. That expenditure had been incurred in lb years so that obviously the vehicle had been driven hard. The amount mentioned, spread over 125,000 miles, works out at a little over id. per mile. Although I give the figures, and know them to be correct, I do not attach a great deal 3f importance to them as indicating the probable total cost of maintenance per mile for this, or any other vehicle of the same size and type.
I could go farther and say I am certain, that in the next 125,000 miles, this operator will spend much more than double that amount per mile, but even at that his maintenance cost will still be less than average, As I have already hinted, one good reason why I get so many criticisms of my figures for maintenance costs is that few operators really know what they should be. Even in those cases where there is some attempt to keep records, they are rarely complete. So many little things have to be paid for that they are liable to be overlooked and so are not recorded.
Knowledge in Retrospect Above all, there is the peculiar and difficult condition that the full maintenance cost of any vehicle cannot be ascertained until it has been scrapped; until that happens no one knows what the correct figure should be. The operator who gave me a figure of a id. per mile showed me his recorded figures and I accept them as correct. But if he uses that figure of id. per mile as representing his all-in cost, he is making a big mistake, and he is more liable to do that if he has not previously had any experience of the cost of maintenance of that particular vehicle.
I have to admit that it is by no means easy to keep an accurate record of the cost of maintenance, and especially is this so when the operator has his own maintenance department. In these circumstances if an operator wishes to know exactly what his maintenance is costing him, he will have to cost the whole department separately.
Besides charging direct cost of labour and materials, he will have to arrange to include the cost of overheads and the establishment cost of his maintenance department, treating it as a separate business.' The rent and rates of that part of his premises devoted to maintenance must be taken separately. Then there are power, lighting and heating, as well as the depreciation of his' garage equipment, interest on capital invested in spare parts, and so on. All these must be
added to the wage costs For example, in this case, the inquirer states that he employs one mechanic, and there is probably a boy as well. The wages of the two might amount to 5s. per hour.
Supposing that the items I have just mentioned add up to £200 a year or 5s. per hour. The proper way to deal with that expenditure is to add it to the amount paid in wages, so that the labour charge in connection with his maintenance will be 10s. per hour and not 5s. per hour as represented by labour only. The figure will, of course, vary according to the ±,I7e and nature of the operator's business.
That, at least, is the simplest way of dealing with the problem. It gets away from having to add a percentage to the price of materials in order to provide for overheads. S.T.R.