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What to Quote for Tipper Hire

5th October 1951, Page 64
5th October 1951
Page 64
Page 67
Page 64, 5th October 1951 — What to Quote for Tipper Hire
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Which of the following most accurately describes the problem?

"The Commercial Motor" Costs Expert Continues his Comparisons with Figures given in RH /MN FOLLOW1NG the publication of RH/D,'20 in its revised form, I am drawing up a set of figures of my own which can be compared with those in the official publication. Those who asked me to do this had two objectives in mind. They wanted an independent assessment of the rates and they wished to have details of the figures for costs of operation which formed the basis for the charges, so that they could compare the data with their own.

In the first article, published last week. I gave detailed figures for the operating costs of flat and sided lorries. I set out figures for the costs of operation, standing charges, overheads and running costs, and calculated from them a series of figures for time and mileage charges which were set out in Table 11, which is republished with this article. Before proceeding further with these figures, I think it may be advisable to prepare some data for tipping vehicles which are more costly to operate than sided lorries and, therefore, justify a greater charge for hire. The first cost of a tipper is greater than that of a platform lorry. Furthermore, the running costs are higher. In the first, place, nearly all tipping gears are operated by running the engine and thus more fuel is consumed. The operation of a tipper always involves excessive stress and strain on the chassis and• the body. The cost of maintenance is therefore greater. The lyres also are liable to more rapid wear Row this all works out is best shown by reference to Table III, which corresponds to Table I published in the previous article. Table 1 contained figures for the operating costs of sided lorries and in Table In there are corresponding figures for the costs of tipping vehicles. The figures in the two tables should be carefully compared by the reader. It may be helpful to describe how the costs of operation are arrived at and, as previously, I propose to take a 5-tonner as an example.

,First of all, the initial cost which 1 have found to he 11,000 against £950. The difference is not as great as might have been expected, having in mind the expense of a tipping gear and the subfrarne by which it is supported. Actually, most sided lorries have a longer wheelbase necessitating a longer frame, a longer propeller shaft and so on, and the extra cost of those items goes a long way to offset the additional cost involved in the tipping gear.

Proceeding as before. I first deduct, as shown in the tables, a set of tyres at £160, leaving £840. From that sum I deduct the residual value, the value when the vehicle is sold. I take that to be rather more than 10 per cent, of the net value, say £90, leaving £750 for calculating depreciation.

Depreciation is treated in two ways, partly on a time basis and partly on mileage. I have assumed a life of four years and 100,000 miles. One half of £750 is £375, and that spread over four years is approximately £94 per annum.

That sum is debited among the standing charges. 1 divide £375 by 100,000. and I get 0.90d. per mile for depreciation which goes into the tables as a running cost, I have assessed the tax at £35, in which I am perhaps being a little optimistic as regards unladen weight. There are, however, numbers of 5-ton tippers which come under the 3-ton unladen weight figure, and I am going to take that as being applicable in this case. The wages and garage rent are the same as for the sided lorry, namely, £327 12s. and £26 per annum respectively.

Insurance costs a little more at £28, against 1:26 10s. Interest, of course, is more because of the increased price, being £30 compared with £28 10s. Maintenance (d), routine maintenance, is inevitably a little more in the case of a tipper than in the case of the sided vehicle, if only for the fact that the tipping gear requires attention.

6 tons 7 tons s. d., s. d.

have assumed that the overheads of £150 per annum are the same for both vehicles.

The running costs are greater in respect of every item, as will be seen by comparison with the figures given in the tables. The net result is that the running cost per mile is 9.05d., in the case of the tipper against 8.22d. in the case of the sided vehicle.

The next thing to do is to assess time and mileage figures and that involves consideration of the allowance to be made for profit. Here, some recognition is to be made of the fact that provision is made in RH/D/20 for two sets of hire charges per hour, one when the vehicle is hired per week, the other when it is hired per day. It is reasonable to differentiate between the charges made under those two conditions, as in the case of weekly hire the operator can regard the job as being steady and regular, and he may therefore be content with 15 per cent, as a minimum profit margin. For daily hire it is usual to take a profit margin of at least 20 per cent.

Profit Ratio

So far as the 5-tonner is epncerned,-1 have 6s. 7,,td. as the total cost per hr. For daily hire I add 20 per cent., which is nearly is. 5d., giving me.,8s. as the charge per hr. For weekly hire I add only 15 per cent. to 6s. 7.0., and get 7s. 7d. as the time charge per hr. for that vehicle. .

• Similarly with the running costs; if I add 2.0 per cent. to 9.05d., l get 11d. per mile, to the nearest farthing, as being the proper charge per mile for daily hire, and if I add

15 per cent. to 9.05d. I get 101d. per mile as the proper charge for weekly hire.

One further step is needed in order to be .able to align my figures with those of RH/D/20, made necessary because the quotations are not directly on the basis of time and mileage but rather on the basis of an hourly charge without refetence to mileage, except that it is assumed that the distance covered is 5 m.p.h. and the charge is assessed on that assumption with a figure for excess distance covered in working hours.

It will help the reader to understand these figures if he refers to Table V in which I have set out results of such a calculation. Sticking to the 5-ton tipper for weekly hire I have, using the time and mileage figures in Table IV, 7s. 7d. per hr and told. per mile. For 5 miles at 10-.1-.d., the charge is 4s. 40,, and that added to the 7s. 7d. per hr. gives us. Hid. I have taken 12s. per hr. as a fair minimum :barge. In the case of daily hire, I have 8s. per hr. and 11d. per mile as my basic figures. For 5 miles at lid., the charge is 4s. 7d. Adding that to 8s. gives inc ,12s. 7d.,`which is the figure set down in the table as the charge per hr. for daily hire.

There are still two more calculations to make. First of • all, the charge for excess mileage over 5 m.p.h. It is sufficiently accurate to take the iactual rhileage charge for weekly hire from Table IV, and this is set down in the last column of Table V-10i-d, per mile for the 5-tonner.

Less Than Normal

The other calculation relates to the figures in the column headed "Hrs. in excess of 44 in the week. Per hr." The charge per hr. for this work is, as can be seen, less than the normal. That is because provision has already been made in the normal charge for the 44-hr. week, to cover certain standing charges. For example, the Road Fund tax is assumed to be dealt with in that way, so also are garage rent, insurance, interest on first cost and depreciation. The items that still remain to be paid after the 44 hrs. are completed are wages-at overtimes rates-Tne additional maintenance (d) and some extra overheads. Just what the precise amounts of overheads and maintenance (d) are cannot be stated with any degree of accuracy, and the figures set out in Table V under those headings are empirical, but reflect the experience of most hauliers, Table VI is an extract from RH/D/20, and the figures therein can be compared directly with those set out in Table V. It will be noted that in the footnote at the bottom of Table VI it is reckoned that the charge to be made when an additional man is employed is 2s. 9d. per hr. That in my view is insufficient; the actual wage paid to a mate would be £5 12s. per week, which is approximately 2s. 6d. per hr. It is essential to add to that amount to cover overheads and profit, and the minimum charge for the services of a second man should, in my opinion, be 3s. 6d. per hour, and that I have shown in Table V.

S.T.R. A37

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Organisations: Road Fund

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