Pointers on Estimating for Furniture Removals
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Dealing, in the First Place, with Some Differences of Opinion as to the Proper Basis of Calculation of Rates Per Hour
THE secretary of the National Association of Furniture Warehousmen and Removers, Mr. Edwin A. Harris, has kindly sent me a copy of that association's standard form for estimating and acceptance of estimate for furniture removal and/or warehousing. The two forms are issued as one but are perforated so that the customer retains the estimate and the contractor retains the signed acceptance. It should be particularly noted that in signing acceptance the customer signs as agreeing to the conditions specified in the estimate and printed on the hack thereof.
Actually, the conditions are printed in duplicate, one set on the back of the estimate form and one set on the back of the acceptance form.
There are 29 clauses and, in substance, they are the same as the set of conditions held by me when I wrote the previous article on this subject. There appears to be no material difference except that the point I raised about the mirrors over mantelpieces does not apply.
It is necessary to recapitulate •a little -before proceeding to discuss the problem of rates and charges which was
raised at the conclusion of the previous article. That problem was to assess the cost of the various items in a week's work of a furniture van, which was as follows: Monday: Travel from headquarters to a point 20 miles away; load, proceed to a house 10 miles from the loading point, unload, return to garage-total time, 11 hours. Tuesday: Van idle. Wednesday: Travel to a point tive miles away, load, proceed to another point 10 miles farther, unload, return to garage-time, again, 11 hours. Thursday: Proceed to a point eight miles away, load, travel 50 miles, put up for the night, Friday: Unload and return to headquarters empty-total time, 10 hours on Thursday, 8 hours on Friday. Saturday: Vehicle idle.
For a vehicle of 1,000 cubic ft. capacity I showed that the rates should be calculated on the basis of 5s. 9d. per hour plus 61d. per mile, assuming a 48-hour week over which to spread the fixed charges, but that it need only be 5s. 3d. per hour plus 61d. per mile if I assume that the fixed charges he spread over a 60-hour week.
Figures for a Vehicle of 1,500 cubic ft. Capacity
The other set of figures refers to a vehicle of 1,500 cubic It. capacity and the corresponding figures were shown to be 7s. 6d. per hour and 8d. per mile for a 48-hour week, and 6s. 8d. per hour and 8d. per mile for a 60-hour week.
I did not use the two sets of figures to make the problem difficult. I set them out because I wanted to clear away a difficulty which has arisen time and tirne•again in the discussion of rates and charges with operators. I have been accustomed to take the standard week of 48 hours when assessing fixed charges per hour, and I think I am right. Many operators have disputed that and claim that, as they are in the habit of working 60 hours per week, fixed charges shbuld be spread' over 60 hours.
' In order to make my point I have taken this example, an actual case of what happens, or what used to happen at any rate in pre-war days, in connection with furniture removal. If the reader takes the trouble to count up the number of hours worked by this vehicle in a week he. will find that it is not 60, not even 48, but only 40. Now, it is obviously notpracticable to work out a basis for rates every week according to the number of hours a vehicle works, but I do think it is wrong to take a maximum week, a 60-hour week, as a basit,...and . apply that throughout.
The only sensible way to deal with this problem is to take the results of a year's working, spread the fixed costs over that period and obtain from those data the cost and charge per hour. In point of fact I have found that, in most cases of haulage of this kind, especially local haulage, the result is the same as if I had taken a 48-hour week and • assessed my costs and charges on that.
For the time being I will leave that point, possibly to come back to it later, and will deal with the problem before erne, using the figures for a 48-hour week and, as the vehicle concerned in this problem is one of 1.000 cubic It. capacity, , I shall take the rate as being 5s. 9d. per hour plus 61d. per mile.
On the first day the rate is made up of 11 times 5s. 9d.. which is'23 3s. 3d.. plus 60 miles at 61d. (21 I Is. 3d. to the nearest penny), a total of.24 14s, 6d.
Number of Men Employed is an important Factor
_A point arises here which, 1,ecause of the number of men which may be entploxedi.iS.more important in connection with fufniture removing than are most haulage operations, namely, that there is an hour's overtime to be allowed for. With only one man that would be something short of 6d.. and might be overlooked, but because, when we investigate the full charge, there may be three or four men, we cannot afford to overlook it. Therefore, 6d. must he added for overtime, making a total of .24 15s..
On the second day the vehicle earnings are nil. On the third day the van again runs for It hours, for which the charge must be as before, 23 3s. 3d. Acid, for 30 miles at 61d., the'stim of 15s. 8d. and 6d. for overtime again, then the total is 23 19s. 5d.
On the fourth 'day there are 10 hours to charge at 5s. 9d. (42 T7s. 6d.), plus 58 miles at 61d. (£1 10s. 3d.) and 9s. subsistence, a total of £4 16s. 9d,
On the fifth day, eight hours at 5s. 9d., which is £2 6s., plus 58 miles at 61d., which is 21 10s. 3d., gives a total . of 23 16s. 3d.
On Saturday no work is done' by the vehicle.
It is important to assess the' net profit earned by this vehicle during the week and to *get at that we must go back to the figures for fixed costs and actual running cdsts, given in the previous article.
The fixed costs, including establishment as well as standing charges' per week, total £11 10s. The running costs are 5.19d. per mile and for 206 miles, the total dis
tance covered during -the week, that is 24 9s. Id. Add Is. for overtime and 9s. for subsistence and we get 216 9s. Id. for the week's expenditure.
The earnings, as may be seen by adding the figures set out above, total 417 7s. 5d., so that there is a profit of. only 18s, 4d. throughout the week.
It is of interest to suppose that on the second day, instead of having nothing to do, the vehicle was on a job which took eight hours and involved running 60 miles. The revenue would be eight hours at 5s. 9d. (22 6s.) and 60 miles at 61d. (21 lie. 3d.), a total of 23 17s. 3d. If that were to be added to the 217 7s. 5d. earned we should get a total for the week of 221 4s. 8d.
The only extra cost is that of the 60 miles at 5.19d.. which, to the nearest penny, is 21 Gs., thus increasing the week's -expenditure from 2.16 9s. Id. to £17 15s. Id., so that the net profit foethe week is now 23 9s. 7d.
Before leaving.this aspect of the matter, to deal with the problem on lines more' strictly applicable to the conditions of furniture removal, it is of' interest to apply the same reasoning and calculations to vehicle of 1.500 cubic ft. capacity instead of 1,000 cubic ft. In this connection, the rate per hour is 7s. 6d. and the rate per mile 8d.
For the first day, therefore, the revenue would be 11 times 7s. 6d., which is 24 2s. 6d., plus 60 miles at 8d. (22), and overtime 6d., a total of £6 3s.
On the third day, 11 hours.at 7s. 6d. is, again, 24 2s. 6d., SO miles at 8d. is 21, and overtime 6d., a total of 25 3s.
On the fourth day, 10 hours at 7s. 6d, (23 15s.), 58miles at 8d. (21 18s. 8d.), and subsistence 9s., gives a total of 26 2s. 8d,
On the fifth day, eight hours at 7s. 6d. is 23, and 58 miles at 8d. is 21 18s. 8d., so that the total is £4 18s. 8d, This vehicle, therefore, on the above assessment, earns £22 7s. 4d, in the week. The cost to the operator is 215 for fixed expenditure, that is to say standing charges and establishment wits, plus 25 1 Is. 10d. • for 206 miles at 6.69d. per mile, 9s, for subsistence and Is. for overtime, a total of 221 Is. 10d., leaving a net profit of only £1 5s. 6d.
If, like the other vehicle, this one was able to put in another day's work on the Tuesday, it would have earned eight times 7s. 6d. for eight hours work, which is 23, plus 6'0 miles at 8d., which is 132, making a total of 25 and bringing the earnings to 227 7s. 4d. per week.
The expenditure is increased by 60 miles at 6.69d., which is 21 13s. 6d., so that the total expenditure becomejs 222 I5s. 4d. and the net profit £4 12s.
Now, to treat the matter on lines more directly applicable to furniture removing.
Take, for example, the case of the smaller van, with which, in addition to driver. there is a foreman and porter employed. We must now set out the figures for cost again, making provision for the addition of the wages of these two men, then adding the profit percentage to get at the figures lot what the minimum earnings should be.
In a Grade I area, which is the one I have been considering, the wages of a fore man in the furniture-removal industry are 2,4 2s. ad. per week and the wages of a porter are 23 17s. 6d. per week. Adding
allowances to these amounts, to provide for the various employees' insurances and provision for holidays with pay, brings the gross wages to £4 7s, 6d. and 24 2s. 6d., a total of 28 10s.
Adding -that amount to the 211 10s. for fixed charges already agreed for the vehicle with driver, we now get a grand total of fixed cost of £20 per week. Adding for profit at 20 per cent, gives another 24, making 224 in all.
Now then, to suns up the minimum revenues on the above basis. The total of 224 per week for fixed charges is 10s. per hour. For the first day, then, the charge should he for 11 hours at 10s., which is 25 10s. Add 21 11s. 3d., as before, for the mileage at 60, per mile and Is. 61. now for overtime for three men instead of one, then the revenue must, for that day, be 27 2s. 9ch
Similarly, on the third day (the second day being an idle day) -11 hours at 10s. is 25 10s., 30 miles at 61d. 15s, 8d., and overtime Is, 6d., making a total of 26 7s, 2d.
On the fourth day, 10 hours at 10s. is 25, and 58 miles at61c1. per mile is al 10s, 3d. (to the nearest penny), to which we must add 21 7s. for subsistence for three men at 9s, per night each; the total is 27 17s. 3d.
On the fifth day eight hours are run, and that at 10s. per hour is 24. Add 21 10s. 3d. for mileage and we get a total
of 25 10s. 3d. The total earnings are, thus, £26 17s. 5d., but against that must be set the net cost which is as above: Fixed charges 220, cost of 206 miles, at 5.1d. per mile, 24 9s. Id., overtime 3s., and subsistence 21 7s., a total of 225 19s. Id., leaving a profit for the week of only 18s. 4d.
To show, again, What a tremendous difference is made to the profit by filling up the odd idle day, suppose, on that ,day, that the vehicle worked for eight hours and covered 60 miles, the additioned revenue would be '25 us. 3d., making the total earnings for the week £32 8s.. 8d.
The extra cost would be that for the 60 miles at 5.19d., . which is 21 6s., and that, added to the figure already set down for the weekly cost (225 19s. id.), brings the total cost to 227 5s, Id„ and the net profit to 2,5 3s. 7d.
I should, perhaps, make it clear that there is nothing niore than the net cost of the mileage run to be added hecausel of the other items, wages, standing charges and so on are included in the 220 set out.
In. the case of the larger vehicle, it is quite likely that more men wotild be employed, as it takes a lot more labour to fill a 1,500 cubic ft, van than it does to fill 1,000 cubic ft. For the sake of argument, I am going to assume-,that there are four :nen in addition to the driver, the total wages bill for those four men being 217. On that basis the assess' rnent of charges would be as follows:-For fixed expenditure per week £15, for the extraswage 217 (total 232), and for profit at 20 per cent. on that, £6 10s., making 238 10s. in all, and that, over a 48-hour week, is 16s. per hour in round figures. There is, perhaps, no point in going throngh the figures for the larger vehicle in the same detail as I have already done for the smaller machine, it being sufficient to point out that when the question ofssubsistence arises on the fourth day it will be for five men at 9s. each, making £2 5s. instead of RI 7s. It will be shown that the total earnings asessed as above are 241 5s, 4d. and that the cost, assessed in a similar way, is 239 198. 10d., leaving the meagre profit of 21 Ss, 6d. cm the week's working. If, again, the second day, hitherto idle, be worked on the Same basis as previously, the week's takings are increased to £48 15s. 4J., as against a net cost of 240 15s. 4d., leaving a profit of 28.
There is an alternative and, perhaps, better way of assessing rates and costs in this class of work, and with that I propose to deal in a subsequent article. S.T.R.