OPERATORS FIGURES FOB i:OACH OPERATING COSTS
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mir last week's article contained criticisms of some figures for costs and charges relating to buses and coaches, compiled by the Midland Regional Transport Commissioner, Sir Arnold Musto, C.I.E., M.Inst.C.E. I came to the following conclusions:-The amount allowed in the document for depreciation should be increased by 150 per cent.; that for maintenance by 75 per cent.; that for tyres by 100 per cent.; that for standing charges by 4 pet cent.; and wages by 5s. per week.
In the figures quoted by the Commissioner, no provision whatever was made for administrative expenses and overheads. 'These, therefore, must be added to his totals and I suggest that the ratio of profit on expenditure should be 20 per cent, and not 10 per cent, as suggested by him.
Tables I and II are extracted from the Commissioner's figures and give what he considers to be details of working costs and what charges large operators should make for the hire of their vehicles. These Tables, read conjunction with what I wrote in the previous article, pre selfexplanatory.
It is of interest, before proceeding farther, to take a set of figures from one of these Tables and apply the modification which I suggest' above to see what is the outcome, The figures are as follow (they relate to a 26-seater coach covering 400 miles per week);-
This compares with Sir Arnold Musto's figure, shown in Table I, of 10.90d: per mile. Incidentally, it should be noted that the bare running costs for this vehicle, according to the above figures, are 10.8-d. per mile, only a fraction of a penny less than the amount the R.T.C. thinks sufficient remuneration to the operator who is running this vehicle.
I now propose to give figures that are known to apply in practice. These may serve as a basis for fair charges for vehicles engaged on the class of work in mind, namely, contract hire for the convenience of workpeople between their homes and the sites on which they are temporarily employed. I have taken 26-seater and 32-seater coaches as types so that the figures which I give can be compared with those in Tables I and II.
The Field of Applicability of the Administrative Charges In Table III I have set out the -overheads or administrative charges. These figures do not relate to any particular establishment. They have been collected from various sources and the point to be noted is that they apply more particularly to operators having not more than 20 vehicles. It was from this Table that I took the figure, quoted an the previous article, of 24 to 28 per week for administrative expenditure. The average is 26 per week-2300 per annum --and that is the figure which I have used in its appropriate place in the subsequent tables of cost.
Now, with regard to Tables IV to VII inclusive. The general layout is familiar to readers of these articles. It follows the practice which I have found to bc. most satisfactory and which I have applied with success over a number of years. The figure for Road Fund licence is that which would apply if the licence be taken out for a full year. If the licence be paid quarterly that item would be subject to an increase of 10 per cent. Other licences, that is to say the P.S.V. and R.S., are, it should be noted, included in the administrative expenditure.
Depreciation is calculated on a mileage basis. It assumes a useful life of 200,000 miles and a residual value, at the end of that period, of 10 per cent, of the purchase price. Allowance for obsolescence in respect of vehicles which cover comparatively small annual mileages, is made in the following manner.
The basic fi-ure, calcuTated op the 200,1100 miles life as above, is assumed to apply if the vehicle covers 48,000
miles per annum. If that mileage be not covered then the basic figure is increased by 5 per cent, for every 2,000 miles per annum less than 48,000.
Chassis of only first-class make can be depreciated over so long a mileage. The data given refer to only vehicles of this type; they are, however, broadly applicable. Lowpriced vehicles can be depreciated over 90,000 to 100,000 miles.
Pre-war prices of coaches were for 26-seaters, 21,000, and for 32-seaters, £1,500. So far as present-day prices have been made public, it appears that they show an increase on pre-war costs of 30 to 50 per cent. Taking an average increase of 40 per cent, that would make to-day's cost of new vehicles equivalent to those purchased pre-war, as follows:
26-seater, £1,400; 32seater, £2,100.
In calculating the figures for interest on first cost, pre-war figures have been assumed, but in calculating depreciation present day costs have been taken as a basis, The justification for this is that depreciation in such affairs as these must be regarded as the equivalent to a sinking fund-something to be put aside towards the purchase of new vehicles. If that view be accepted, as I think it must, then the item depreciation must be calculated on the basis of what the replacement vehicle will cost and not on the price paid for the existing machine.
Maintenance is divided into two parts, labelled specifically " routine " and " repairs." Routine maintenance comprises those operations which are carried out at specific periods in respect of time, without regard to mileage. Repair maintenance operations are those which are carried out at mileage periods.
Tyre cost is calculated on the basis of 24,000 miles for the life of tyres. In peace-time it was customary to take the figure of 30,000 miles. To-day, however, tyre qualities are not what they used to be. Moreover, a good deal of the work which motor coaches are doing to-day compares
closely with that of lorries, in that they have to leave main roads and travel over unmade roads to reach their destinations. Operators are sxperiencing considerable trouble with their tyres on this account and, in some cases, the mileages obtainable have fallen very low. Incidentally, this characteristic of the use of coaches to-day has tended to increase the cost of maintenance (repairs).
For wages a net figure of £5 5s. per week has been taken, but this is augmented to the £5 10s. per week shown in the schedule so that provision may be made for National Health Insurance, National Unemployment Insurance, insurance under the Workmen's Compensation Act, and provision for holidays with pay.
The fixed charges are calculated, in the first place, on a 52-week year and, subsequently, modified in view of the fact that the average expectation of use of a vehicle, even if fully engaged, is 48 weeks per annum.
In assessing the amounts which should be quoted for contracts of varying weekly mileages, a profit of 20 per cent, has been added to the gross expenditure. This is a minimum, having in mind the conditions under which the work is carried out and the uncertain nature of the contracts, which are not for any extensive period but liable to be terminated at a day's notice.
All the figures quoted are on the basis of present-day costs of labour and materials. As those costs vary they are subject to modification. S.T.R.