AT THE HEART OF THE ROAD TRANSPORT INDUSTRY.

Call our Sales Team on 0208 912 2120

Counting the cost of maintenance

25th July 1996, Page 36
25th July 1996
Page 36
Page 37
Page 36, 25th July 1996 — Counting the cost of maintenance
Close
Noticed an error?
If you've noticed an error in this article please click here to report it so we can fix it.

Which of the following most accurately describes the problem?

ig1 t stands to reason," says Joe Soap Haulier. "With Bloggs & Co CV Servicing down the road charging

£ 25 an hour, of course it cheaper for me to have my own workshop."

This sort of claim is rarely based on hard financial evidence, but it's surprising how often there is at least some truth in it.

For any road haulage fleet, whether operated for hire-or-reward or own-account, earlier articles in this series have stressed the crucial significance of maximising vehicle use in order to minimise the impact of the many time-related costs (see Fleet Focus, CM 21-27 September 1995).

Spreading these costs as widely, and therefore as thinly as possible, depends on two factors: • Getting more work to occupy as much working time as possible; • Ensuring that within that working time each vehicle is fit for work with minimal down-time.

This second factor—keeping vehicles on the road—is dependent on effective maintenance and repair procedures.

To examine the validity of the case for having an in-house workshop, we can look at the case of a typical haulage company operating 10 rigids of various types and sizes; 12 artics at 38 tonnes; and 25 assorted trailers. In doing this it is important to understand that actual figures vary considerably case by case.

These figures will doubtless differ from your own, but the principles remain the same and your own figures should simply be substituted for those in our example.

In this imaginary fleet, the fleet engineer has estimated that he would have to budget for approximately 4,700 hours work by local garages to cover servicing and inspections, annual tests and unscheduled repairs. If the charges from Bloggs & Co of £25 an hour are typical, that means the company would have to pay some £120,000 a year in external labour charges.

The costs of this company's workshop are shown in the table below In this case the in-house workshop is cheaper than buying time from external contractors. It is not always so, and in any case you should always examine the figures and all the circumstances very carefully. Our hypothetical haulier had to consider the following points:

1 If he placed all his work externally could he save the fleet engineer's salary? Even with well established arrangements with external contractors, a haulier still has a legal responsibility for his 0-licence and for the safety of his vehicles.

You must ensure that in the absence of a fleet engineer there would still be somebody else with senior status within your company capable of safeguarding your position and ensuring that the performance of a maintenance contractor is satisfactory and cost effective.

2 Are three fitters really needed? If each produces, for example, 1,700 potential working hours a year, the apparent potential of 5,100 hours is considerably more than you have been budgeting to buy externally.

In this case the fitters also looked after two or three airs and, more significantly, the flow of vehicles requiring attention is rarely smooth (one of the unwritten rules of transport being that breakdowns always occur at the most awkward moments). The trick is to forget paid hours and concentrate on effective hours. Around 1,700 effective hours are assumed to be needed for each fitter but arrangements are needed: • To determine the true level of effective hours, identifying any shortfall from the budgeted 1,700; • To ensure that the number of effective hours taken for any particular job is in line with the accepted standards for that job, such as manufacturers' times or the Institute of Road Transport Engineers guidelines. If these performances are not being monitored the workshop is not being managed effectively.

3 Remember that a cost comparison must always allow for some purchase of external time: problems are bound to arise which the workforce does not have the resources to handle. There may also be times when the workshop needs access to the increasingly sophisticated and costly diagnostic systems required for modern vehicles.

4 If the workshop is part of your operating centre it is not always possible to save rent and rates by finding an alternative use for the space it takes up.

• It is probable that you will need the van even if you close the workshop.

6 It is certain that there will be ongoing administrative costs of dealing with accounts and communications with outside contractors.

7 In our example the fleet engineer reckoned that he was buying spares for some £10,000 a year less than he would pay to external contractors.

8 Also, tyres were already covered and would continue to be covered by a thirdparty company which provides nationwide coverage.

Taking into account all these factors the managers of this transport company would conclude that, on the basis of cash outlays alone, there was ample justification for keeping its in-house workshop.

This conclusion was strongly reinforcerd when full records were kept for a test period of two months and it was discovered that getting vehicles to and from third party repairers, combined with time spent waiting for attention in the depot, would have represented significant time penalties. During the test period it was estimated that this time penalty would have amounted to as much as 12 hours per week, of which some 40% represented a direct reduction to a vehicle's ability to pay for its keep. When everything had been considered objectively, the balance favoured an in-house workshop.

Nonetheless the haulier was not justified in making the bold statement with which this article began.

When he made it, he did not know how much his workshop was actually costing him and how effectively it was using the time of his three fitters.

Also, during the exercise to see how using external garages would have penalised vehicle utilisation, it became clear that spreading the fitters' time across an extended day was a desirable move. Routine maintenance and minor repairs could be undertaken during hours when the vehicles were not required for work. It was estimated that fleet productivity would increase by some 3%: a particularly welcome effective reduction in costs at a time when rate increases are so hard to achieve.

However, if Joe Soap Haulier started with an untested assertion, it must in fairness be said that there is a widespread tendency to assume that "outsourcing" is both convenient and exist-effective for anything other than core activities.

The bottom line is that wise hauliers will decide how to run their maintenance by

carefully weighing up all the pros am With margins as tight as they an making the right decision could have reaching effect on the entire operation.


comments powered by Disqus