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Problems of the

21st December 1934
Page 50
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Page 50, 21st December 1934 — Problems of the
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Which of the following most accurately describes the problem?

HAULIER and CARRIER FROM time to time I receive an unusual number of inquiries as to the best method of keeping records of cost of operation. Generally, there does not appear to be any particular reason for the predominance of this type of inquiry amongst the many I receive. The present series is, I imagine, one of the by-products

of the operation of the Road and Rail Traffic Act. I have dealt with the subject once or twice before and usually, as in this case, I prefer to bring it forward so

that operators may, if they desire to revise their existing methods or begin to keep proper records, do so on January 1.

It is seldom that any published scheme of accountalic.y makes such provision for the keeping of records of motor-vehicle operating costs which is not subject -to this criticism : that it fails to answer the purpose of the man

who wishes properly to be able to isolate the cost of operating any particular vehicle in his fleet. Most accountants are concerned with the cost of transport as a whole.and, from their point of view, it is unnecessary so to arrange the accounts that vehicle can be compared with vehicle in respect of its cost of operation. That . facility for comparison is, to my mind, one of the first essentials. It is important for a variety of reasons, of which I need indicate only one or two.

The first of these reasons arises in connection with the purchase of new vehicles. The operator wishes to know whether any particular make or type of vehicle is ib be preferred, because of its low cost of operation. If all his operating costs be lumped together and the only records show the stun total of expenditure on the fleet, the information • by which a preferred class of vehicle can be selected is unavailable.

Again, it is frequently desirable to be able to check nal the work of one driver against that of another, to learn whether one man is more or less efficient than another, so that inefficiency can be corrected accordingly. To that end • also, then, records should be such as to enable the performance of individual vehicles to be segregated.

Furthermore, the fleet operator, at any rate, desires to try out new inventions and alternative fuels. In nine cases out of 10, the object of these new inventions or fuels is to lower the cost of operation. Proper appreciation of the advantages or defects of the innovations is impossible unless there is data available for purposes of comparison.

The first point on which I insist, therefore, in this scheme for recording costs of vehicle operation, is that every unit of the fleet must be regarded separately. Notes must be made of the expenditure on that vehicle in such a way that, at any time, it is possible to know not only what a vehicle costs, but whether it is costing, more or less than another of the same capacity..

I do not go so far, at this stage, at any rate, as to assume that because, in such cost records, one make of vehicle appears to be more expensive than another, the • less costly unit is necessarily to be preferred. Cost is only one item of several which have to be taken into consideration when weighing up the comparative merits of motor vehicles.

The next matter calling for consideration is : how frequently should the essential data be compiled and at what period should it be totalled or summarized? These two matters are interdependent. The answer to the first question is: " If that condition can be met, the answer to the second is "monthly." If, however, for insurmountable reasons—for example, the vehicle may not return to headquarters each day—it is impossible daily to collect the cost data, it should still be obtained in such a form that the cost each day is shown ; the summary and total should be made weekly.

The reason for this is one which will be recognized and accepted by every transport manager of experience, namely, that one important use to which cost records should be put is that of checking the efficiency of the operation of a vehicle. A defect is almost immediately reflected in the figures for operating cost. The more frequently the data are examined the more quickly does any defect, incipient or actual, come to light and, therefore, the more readily it can be amended, and cost of operation kept to a minimum.

Next comes the question : what are the' essential items? This, in the first case, can be quickly and simply answered by reference to The Commercial Motor Tables of Operating Costs. The items in those Tables form the basis of a rational system of cost recording. They are 10 in number, divided into two sets of five. One set relates to running costs ; that is to say, items of expenditure directly affected by weekly mileage, whilst the other five are standing charges and relate to expenditure which is not so affected.

The operator who proposes to begin to keep cost records—and if he does not already do so, he could not take a wiser step—should first go to the nearest stationers and purchase some analysis sheets.

The first and second columns of a typical sheet are fairly wide, but the others are all just big enough to accommodate items of £ s. d. In an analysis sheet of this description which I have before me, there are 30 of the narrow columns, sufficient for our purpose, with some left over for supplementary calculations.

Each vehicle must be allotted its own analysis sheet and the first thing to be noted upon the top is some reference identifying the vehicle. Probably each sheet will suffice for a month of daily entries and it will be convenient, therefore, to write across the top the month to which the entries on the sheet relate.

Now for the items. The date obviously is one. The mileage covered during that day is another. Some reference to the load carried will be helpful and, for preference, the wide column in the analysis sheet can be devoted to that purpose. Then come the references to the 10 items above mentioned, which will require considerably more than 10 columns. Taking them one by one, the first is fuel, which may be coal, coke, petrol or oil. Record should be made, first, of the quantity used each day; second, of the price at which it is purchased and, thirdly, of the coa of the quantity actually used.

Lubricating oil should be dealt with similarly.

Then comes a column for tyres, and this may con veniently be duplicated, one of the two columns thus allocated being used for actual expenditure and the other for estimated cost. The fourth item, maintenance, will require a considerable amount of subdivision, especially where the operator runs his own maintenance depart

ment, for, in that case, he will want columns for labour, for repairs, for general maintenance, also materials for repairs and for general maintenance. A fifth column may, in many cases, be advisable for an estimated figure for maintenance. The next item is depreciation, which

is an estimated figure.

The remaining five items I shall deal with in a subse quent article. S.T.R.

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