Costs Analysis Made Easy AtILL 0 F various communications which
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1 have received concerning The Comtnercial Motor Operating Costs Record, only one has, so far, justified being dealt with at length in these columns. A reader who commenced, last month, to use the Record, has sent me copies of the second half of each page, relating to the cost of operating four 2-3-ton vehicles.
Table I is a reproduction of one of the four extracts. The others are similar, except that one of them, relating to a vehicle recently acquired, contained cost data for only four weeks. The one reproduced embodies figures for cost of operation over a period of Tii weeks. The full page of the Record has not been sent to me. A complete sheet appears as Table II.
Comparing Tables I and II, it will immediately be apparent that my inquirer has sent me only the bottom half of the page. I am, therefore, without direct information as to the number of miles and number of hours worked per week. I have been able easily to calculate these data and the information is embodied in Table III, which I have compiled as a result of a careful analysis of all the figures sent to me.
The inquirer required answers to three questions. First, would I, after examination of the costs as set out, still recommend, as in the introduction to The COMmarcial Motor Operating Costs Record, that he should calculate his charges by the simple process of doubling the standing costs to arrive at the charge per hour and adding to that a figure per mile, arrived at by adding id. to id. to the actual cost per mile, as shown by the figures? In his view, he said, a proper basis of charge would be 3s. -6d. per hour, plus 4d. per mile.
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Secondly, was it safe to take five weeks' figures as a basis for these calculations? Thirdly, would the figures: for the oldest vehicle, which hi' seen two years' service, - be fair? I will leave the first question until the last. eat In answer to the second and third questions, these -records have been specially planned to permit their use ' from the very first week of the information being , collected and entered. That was my principal object in designing the Record at all. I wanted to be able -to bring to the mind of the operator, at the earliest possible date, what his costs were going to be, as well as provide means for him to write down his costs.
Provision is made for recording in the first week every one of the 10 items of operating cost. In Table I there are actual figures for petrol and oil. There are figures, estimated in advance, for probable expenditure on tyres and depreciation, and there is proper allowance for maintenance. That completes the five running costs. In the case of the five standing charges, the weekly amounts which must be set aside for tax, insurance, garage rent
and interest on first cost are set out, leaving only the actual figure for wages to be added.
The first question raises a point which I have not hitherto dealt with in " Solving the Problems of the Carrier "--at least, not directly. Those who have attended any of the lectures which I am delivering throughout the country, however, will recognize the underlying suggestion as part of the scheme for the simple assessment of charges which I explain. It is also set out in the introduction to The Commercial Motor Operating Costs Record.
According to this scheme, I treat the figure for standing charges in a manner similar to that which is current in many manufacturing industries, that is to say, I double it. I thus arrive at a charge per hour which will cover three items; namely, the actual standing charge of the vehicle, the overheads and a minimum net profit.
A farthing or a halfpenny is added to the running cost per mile. Without such an addition, an operator covering a big mileage per day would not obtain that reasonable advantage in respect of profit which he deserves, as compared with a man doing a very small mileage per day.
This scheme of assessing rates and charges, although it may seem somewhat empirical, is, nevertheless, .so closely related to actual figures that I have found it to apply in 99 cases out of 100. Readers should purchase a copy of the Operating Costs ReCnrd and work out their charges on this basis. Much useful information can be obtained by analysing the data as in Table III. • If the figures for several vehicles, all of the same size and on similar work, be set down side by side, it is easy to make comparisons and to pick out any discrepancy which may suggest the need for investigation.
In this case, there is a remarkably close relationship between the performances of the four vehicles. Only in oil consumption is there any marked difference. The old vehicle, the first on the list, runs only 128 m.p.g. of lubricating oil and, if it were not for the fact that this operator pays only 2s. per gallon, his cost per mile for lubricating oil would be Id.; as it is, it is nearly id. However, as that is an old machine and has probably covered about 30,000 miles, a rebore or at least new piston rings are possibly required. The same cannot be said of the second vehicle on the list, a comparatively new machine, which, nevertheless, runs only 345 m.p.g. A comparison between that machine and the next vehicle of about the same size seems to show that something is amiss with the former, for the third one does over 1,000 m.p.g. I should be inclined to look into the question of oil supplies for the second machine.
Incidentally, it should be borne in mind that these figures for oil consumption are not complete. There will come a time, or there should come a time, in the comparatively near future, when the crankcase will have to be emptied and refined. In that week there will be a particularly heavy expenditure on oil.
A notably interesting column is No. 10. I expect that few of those who have not calculated the figure will realize how low is the average mileage per hour of their
vehicles. The best of• these is No. 1 and that does not reach 7 m.p.h. No. 4 covers only just over 5 m.p.h.
Column No. 11, which gives the total operating cost per mile, should be an eye-opener to these many hauliers who still imagine that they can hire out 2-3-tonners for Ocl. per mile and make a profit. They should refer to column No. 16, wherein is set down the actual minimum charge necessary to earn a reasonable profit.
Column No. 12 should similarly provide food for thought to those who hire out 2-3-ton lorries to municipalities and county councils at 3s. or 3s. 6d. an hour. The figures in column No. 12 show the bare cost of operation per hour for these 2-3-ton lorries. The minimum charge per hour under the conditions named is set out in column No, 15. Figs. 1, 2, 3 and 4 are interesting as showing how the mileage and hours fluctuate week
by week. S.T.R.