1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168 
RATES AND COSTS
Page 124
Page 125
If you've noticed an error in this article please click here to report it so we can fix it.
A haulier's knowledge of the cost of operating a vehicle is particularly important when undertaking municipal contracts.
OR a variety of reasons public expenditure through the medium of national and local government continues to increase. Much of this expenditure is concerned with housing, road construction and other public work, all of which require a high proportion of road transport. Because of the preoccupation with overall administration of major schemes it is common practice for the local governments concerned or their agents to hire rather than operate their own vehicles.
Whilst there are parallels to this procedure in private enterprise, a distinction as regards municipal contracts is that because public money is involved the authorities concerned must make doubly sure that no element of favouritism, or seeming favouritism, enters into the award of haulage contracts. Accordingly it is common practice for such authorities to solicit tenders for major haulage contracts.
As regards the amount of such haulage work available throughout the country the major road construction and improvements naturally attract prior attention and of themselves constitute a major source of revenue for the hauliers involved. But it should not be overlooked that whilst less spectacular, expenditure on maintenance of existing roads, housing sites and other public work is substantial. Similarly many of the essential services provided by local government are so commonplace that they barely attract public attention, but by their sheer repetitiveness constitute a substantial amount of work for the selected haulier year in and year out.
But whilst this continuity of work which many local councils can offer to hauliers is to their benefit, it does also require careful examination of costing before the haulier undertakes to do such work. Admittedly such careful, consideration should always be a prerequisite to undertaking any haulage work, although unfortunately this is not always the case. But at least in the case of "spot" hire for a particular job or trip, even if the haulier subsequently finds that he has lost on the deal, he can at least make the necessary readjustment on the next occasion.
However, where relatively long-term contracts are entered into with a local council then that contract remains to be honoured both at the agreed figure and for the agreed period, excluding any substantial changes in prices outside the jurisdiction of either party. It is therefore doubly necessary for the haulier to endeavour to anticipate every possible contingency that might arise over the duration of the contract and which could have effect on operating costs.
The actual form on which a tender for municipal haulage work is required to be made will probably follow the line of the accountancy procedure adopted by the local council concerned. This in turn may not match the method of vehicle costing undertaken by the haulier. But whilst it will be necessary for him to meet the requirements of his potential customer in this respect, this does not invalidate the basic principle on which the haulier arrives at his costings and subsequent charges.
These basic principles, including the major provision of operating costs into the two groups of standing costs and running costs, are of particular importance when applied to municipal work. The type of work already specified as major examples of municipal expenditure is carried out almost wholly out of doors and therefore dependent to a large degree on weather conditions. This factor, together with others, can result in a higher proportion of standing time in relation to running costs than would apply in general haulage.
-Many short trips
Additionally, even when conditions are favourable and a full day's work can be accomplished, much of the work undertaken by municipal authorities involves a large number of relatively short trips so that the mileage at the end of the day and successively at the end of the week is small.
This factor alone can have a marked effect on operating costs. Thus, quoting a random example, a 3-tonner fitted with a platform body and diesel engine when averaging a modest 600 miles a week for a six-day week would cost 13.60d. a mile to operate. excluding any addition in respect of overhead costs or profit margins. If, however, the same vehicle is employed on a five-day week contract and only knocking up 40 miles a day, or 200 miles a week, then the operating cost per mile is more than doubled at 28.46d. Moreover, if earnings are relative to mileage run only, then by the same token the haulier's return per vehicle will correspondingly be limited, even though he may be covering his operating costs.
As with the obtaining of any other type of haulage work obviously it is to a haulier's advantage, if he is anxious to secure such contracts, to make regular visits of the authorities concerned and at the same time make himself known to the responsible officials concerned. This would not preclude the subsequent pletion of tenders when the occasion arose, but it would ide useful background information as to the type of service authority was particularly anxious to obtain.
Then the announcement of applications for tenders is made by local authority invariably a closing date is stated. Although latively minor point it is well worth the haulier making his ication as soon as possible before that date so as to allow a gin of time if it were found that his tender was not complete iaccurate in some minor detail.
ny specialized vehicles lany specialized vehicles are operated by municipalities of :h the majority are of little or no use outside local governit work. It follows therefore that if a haulier is asked to pro: such a vehicle special regard must be given to the fact when Lnging the terms of the contract. In normal circumstances the : of depreciation is obtained by first deducting the equivalent of the original set of tyres from the initial price of the ice, with a further deduction in respect of the estimated dual value.
his latter deduction is considered justified on the grounds that he standard of service required is such that it justifies the vision of a new vehicle in the first instance then it will be ical to allow that same vehicle to be run virtually to a point lestruction when no residual value would remain.
-lowever, with a vehicle so specialized that it has no likely use er than for the purpose for which it was first obtained, then re will be no residual value. Additionally, whatever its life ;ht reasonably be reckoned at from an engineering standpoint, in the costing angle such a vehicle would have to be written completely over whatever period was specified in the contract. e terms of the contract normally would take this fact into :ount in order to attract competitive tenders. But if on any -ticular occasion it did not, then the haulier would have to ard against arriving at a position of having a highly specialized iicle on his hands for which he had little or no use.
Earlier it was mentioned that a fair proportion of municipal ilage work involved a succession of short trips. In such circumnces terminal facilities—or the lack of them—are of particular portance, and the haulier concerned should assess this factor .h particular care before submitting a tender. In contrast it must admitted that on some of the large public work schemes the flow materials is so well organized that little difficulty arises on this score.
In the interest of simplicity the local authority may request that the proposed charge should be in such a form that it can readily be computed relative to any work done. The haulier, for his part, would best be safeguarded by calculating his charges on a combination of both time and mileage. But where some other form of charging is insisted upon then an adequate amount in respect of the time factor should he built into whatever standard method of charge is required.
In this respect the accumulation of dead mileage—that is, mileage from the haulier's own depot to wherever the public work is being undertaken—could be greater than might apply with industrial customers in central areas and it could also increase in major road and other large-scale work which proceeds outwards from a central point.
As an example of the balance between standing costs and running costs as the mileage increases, the cost of operating the 3-tonner already mentioned will now be considered in detail. With an unladen weight of 2 tons 8 cwt. the annual licence duty would amount to £54, the equivalent of £1 2s. 5d. a week in respect of licences. The cost of wages to the employer will be reckoned at £11 16s. 9d. a week inclusive of insurance contributions and an adjustment to permit holidays with pay. But this amount is based on a standard minimum week and additions for overtime would have to be made in accordance with individual circumstances.
Rent and rates in respect of garaging are reckoned at £1 Is. Od. a week, whilst the premium for comprehensive insurance in a medium-risk area results in an equivalent weekly cost of £1 16s. 8d. Interest at the rate of 7+ per cent on the initial outlay of £1,029 adds £1 10s. Ild. The total for these five items of standing costs is therefore £17 7s. 9d. a week. But when expressed as cost per mile the amount obviously will decrease as the mileage increases.
Dealing briefly with the corresponding five items of running costs, and assuming a medium average weekly mileage of 400, the running cost per mile would be: fuel 2.47d., lubricants 0.26d., tyres 0.82d., maintenance 1.94d., depreciation 1.32d.: total 6.81d.
The addition of standing and running costs gives a total operating cost per mile at varying average mileages per week as follows: 200 miles 28.46d.; 400 miles 17.24d.; 600 miles 13.60d.; 800 miles 11.86d.; and 1,000 miles 10.81d.
The whole of the figures so far given relate solely to the direct cost of operating this 3-tonner. To these would have to be added overhead costs and profit margin appropriate to the particular circumstances before a charge was submitted to a customer.