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Using the new CM cost tables

30th July 1971, Page 28
30th July 1971
Page 28
Page 28, 30th July 1971 — Using the new CM cost tables
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Which of the following most accurately describes the problem?

AS ANNOUNCED last week, copies of the 1971 Commercial Motor Tables of Operating Costs are now available by post from IPC Business Press (S. and ID.) Ltd, 40' Bowling Green Lane, London Ed. price 60p including packing and postage.

This publication contains detailed castings covering a representative range of 40 goods vehicles and 19 passenger vehicles operated over a selection of appropriate average weekly mileages. Also included are two ready-reckoners to help users of the Tables to calculate standing costs and fuel costs, a recommended cost system and a list of organizations associated with road transport.

Costs shown in this new edition are those prevailing on June 1. As revealed last week there have been substantial increases since last year in nine out or the '10 items of cost into which the total expenditure in operating a commercial vehicle can be usefully divided.

The overall increase, however, is not a fixed amount or percentage. To quote again the 'example used last week to elaborate this point a 7-ton goods vehicle averaging 600 miles a week now costs 13.05p a mile to operate. Compared with a year ago this represents an increase of 12.12 per cent. But at 400 miles a week the corresponding increase is 12.74 per cent: conversely at 800 miles a week the increase is 11.61 per cent. Why is there a fluctuation in the amount of increase in the cost of operating this 7-tonner according to the average weekly mileage?

To answer this it is necessary to examine the principles on which the Tables are compiled.

Vehicle operation involves two fundamental elements—time and mileage. Similarly, all expenditure incurred in the operation of commercial vehicles can be divided into two corresponding groups— standing costs (the time element) and running costs (the mileage element). Standing costs are first expressed in time form, eg per hour, per week, etc, and running costs as a cost per mile.

The addition of standing costs and running costs gives the total operating cost. But 1:icause this implies the addition of what are basically time costs and mileage costs, operating costs can only be expressed as a cost per mile when the period of operation and the mileage run is known or is agreed as being a reasonable estimate.

Because standing costs arise whether a vehicle is operated or not while running costs accumulate directly (or nearly so) in relation to mileage run, the greater the mileage nm over a given period, say a week. the lower the cost per mile. This is because the total amount orstanding costs per week, for example, remains the same whether the weekly mileage is high or low. But the higher the mileage the 'smaller will be the proportion of standing costs in the total operating cost.

Costs only A proviso needs to be added. We are here only concerned with the cost of operating the vehicle and not with its revenue earning capacity. Obviously it would be irrational to consider the alteration in total operating costs by increasing the mileage without regard to the profitability of that extra mileage by way of loads carried and revenue earned.

Another factor arises regarding the ratio of standing costs. If when comparing one year's costings with another there has been a• greater proportional increase in standing costs than in running costs then this' will have effect on the overall percentage increase in the operating costs per mile. As mentioned earlier this percentage will be higher when the mileage is low and conversely lower when the mileage is high.

In the examples quoted a period of one week has been used. This period has not been chosen incidentally. If an operator is to put his castings to good use then it is imperative that they should be up-to-date costings. It is also imperative that prompt action should be taken when costings reveal shortcomings which obviously cannot be done if the costings themselves are not up to date. For this reason the CM Tables are compiled on a weekly basis to encourage prompt and regular attention to this all-important gector of road transport operation.

Small companies have always been predominant in road transport and it is for these firms, first of all, that the Tables are compiled. Owners of such companies often have the necessary expertise to operate and maintain vehicles satisfactorily. But apart from employing an accountant to complete their annual tax return few have had much experience in vehicle costing. For this reason the CM Tables are kept as simple as possible and are deliberately limited to the cost of operating vehicles.

A second type of user of the Tables can be operators who are experienced in some types of vehicle but now wish to expand the services they provide by adding types of vehicles to their fleets on which they have no costing information of their own but which is available in the Tables.

Impartial yardstick

A third group of users is composed of operators—not necessarily small companies this time—who keep accurate costings of their own but find it useful to check the trends (rather than the precise amounts) in their costings with an impartial yardstick such as the CM Tables.

In the case of all three groups it needs to be emphasized, however, that careful and up-to-date costings of one's own operation must irfevitably be more likely to give an accurate record for that particular series of operations than standard costings however well compiled, but such individual castings remain of limited use in determining whether efficiency is high or low until they can be compared with alternative castings. And a cheap way to make such a comparison is to spend 50p (60p post free) on a copy of the latest edition of the CM Tables. On the facing page is published an example of the 1971 Tables, in this case the one relating to coaches.


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