How to Cut Costs in Transportation
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1 1 How to Cut Costs in Transportation OSBA leads the way to educational excellence by serving Ohio s public school board members and the diverse districts they represent through superior service, unwavering advocacy and creative solutions.
2 Fleet Management Fleet utilization How many buses? Driver management Operational Costs Bus replacement planning Bus maintenance Examine loss of bus value 2
3 Fleet Utilization Optimize bell schedules and routing. Software is available in the cloud and through third parties at low costs to improve even the smallest fleets efficiencies. Use newest buses on longest routes. Warranty coverage protection covers more miles, and better fuel economy lowers operating costs. Evaluate your operation often. 3
4 Cut Service vs. Cutting Cost Bell times between schools to allow buses to maximize bus load. Short routes-buses are limited by time. Long routes-buses are limited by capacity of the bus. Change in bell times for optimizing the number of buses-no service cuts. 4
5 The number of buses is determined by the number of students on the tier/shift with the most students. (highest ridership is normally the elementary tier) Therefore, cutting HS service may not reduce the number of buses the district needs-cutting miles is not the way to cut costs-reducing the number of buses is. Bus operation cost cannot be assessed by miles, too few per year to be reliable. 5
6 Bus cost per student 1 bus making 1 trip to school with 50 students per day = roughly $1,000 per student ($50,000 bus cost per year). 1 bus making 2 trips to school with 75 students per day = $666 per student. 1 bus making 3 trips to school with 100 students per day = $500 per student. 6
7 Vehicle Savings The following calculation is to determine the actual cost saved for each bus taken out of active service School Name Annual Avg Reality Item Cost/bus adjustment savings Reg Bus driver 12, % $ 12, Sub bus driver 1, % $ 1, Fringe $ 20, % $ 20, Personnel $ 33, $ 33, Maint/repair $ 3, % $ 3, Fuel $ 4, % $ 4, Tires/Tubes $ % $ Bus Insure $ % $ Other $ % $ - Operations $ 9, $ 8, savings Cost per bus $ 43, $ 42, Buses removed 1 $ 42, $ 126, $ 210, Note 1: Note 2: Following cost items not considered due to their continued expense: Supervisor Secretary Mechanic Mechanic Helper Bus Aides The reality adjustment impacts the amount of savings that can be expected. 100% would indicate that all savings are likely. Numbers less than 100% would result from reduced savings due to residual cost from maintaining ownership of the bus. 7
8 Bus age not miles Buses age is a better determination of cost than miles. Average miles per year a bus travels between 12,000 to 14,000. Costs need to be assessed on a per bus basis not a mileage basis. To eliminate cost eliminate a BUS. 8
9 Additional Tier costs When changing from single routing to double routing, the district will incur some extra cost on the buses remaining in service in the fleet. These costs are attributable to increased labor expense for the drivers as well as increased operating cost for the additional miles and hours of use for the vehicles. School NAME Annual Avg Reality Item Cost/bus adjustment additional cost Reg Bus driver 12,356 10% $ 1, Note 1 Sub bus driver 0% $ - Fringe 30% 100% $ Personnel $ 12, $ 1, Maint/repair $ 3, % $ Note 2 Fuel $ 4, % $ Note 3 Tires/Tubes $ % $ Note 4 Bus Insure $ % $ - Other $ % $ - Operations $ 9, $ 1, savings Cost per bus $ 2, Note 1: Note 2: Note 3: Note 4: Drivers Time will vary, net increase in time of 10% should cover the extra cost Maintenance would increase some due to increased usage Routes will be shorter, but buses will make 3 trips. Tire usage would increase some, but tire wear is also a function of age 9
10 District: Name Current Plan Anticipated Fleet Cost FY2018 Buses in service for Reg Ed: 19 Bus Costs: $ 967, Other costs Estimated Total Cost budget: $ 967, No change in service for SPED or CTC Students Plan B Anticipated Fleet Cost Savings Buses taken out of service: 1 (Enter a number of buses from the Veh savings page) Bus Savings: $ 42, (looks up $ for the number of buses above) Buses remaining in service: No change in service for SPED or CTC Students Additional Bus Costs: Other costs (enter any additional costs: salary, fuel, unemployment) Total Savings from current budget: $ 42, Plan C Anticipated Fleet Cost Savings Buses taken out of service: 5 (Enter a number of buses from the Veh savings page) Bus Savings: $ 210, (looks up $ for the number of buses above) Buses remaining in service: $ 14 No change in service for SPED or CTC Students Additional Bus Costs: $ 39, Other costs (enter any additional costs: salary, fuel, unemployment) Total Savings from current budget: $ 171, Plan D Anticipated Fleet Cost Savings Buses taken out of service: 3 (Enter a number of buses from the Veh savings page) Bus Savings: $ 126, (looks up $ for the number of buses above) Buses remaining in service: $ 16 No change in service for SPED or CTC Students Additional Bus Costs: $ 44, Other costs (enter any additional costs: salary, fuel, unemployment) Total Savings from current budget: $ 81,
11 More tiers less buses Operating fewer buses can reduce the number of buses in the fleet. Spare buses add expense cost to maintain. Spare buses, being older, break down quicker-adding repair expenses. 11
12 Drivers are part of utilization Foster a culture that is supportive of the important customer-facing role that drivers serve will help reduce driver turnover. Diligent management of labor costs. Paying people fairly is both a science and an art. An example of bad art is in pay methods that provide no encouragement for productivity. 12
13 Driver utilization continued Negotiating the number of hours worked (guarantees) can cause difficulties with optimizing the correct number of buses required. Not many employees will be accepting of what they may view as increased workload. Few employees will refuse an increase in hours. 13
14 Driver utilization continued Know the cost of compliance. Low-compliance increases cost and expenses due to poor safety practices and extra vehicle wear and tear. Disjointed practices have a negative impact on having a positive, sustainable, and compliant culture. Encourage professional development. 14
15 What are operational costs? Repair and maintenance Fuel Tires Insurance Bus garage utilities Other supplies for buses 15
16 Fiscal Year ODE Statewide Regular Education Data Description Statewide costs Per bus cost Maintenance-Repair $39,611, $3, Fuel $49,507, $3, Tires $5,891, $ Bus Insurance $8,562, $ Other Supplies $36,401, $2, Total Expenses $139, 975, $10,
17 Keeping Records Districts must record operational data to evaluate what each bus costs and should record these costs per bus. Repairs and Preventive Maintenance Tires Transportation Supplies Fuel 17
18 Total Bus Cost Fuel Other Preventative Maintenance Repair 18
19 Bus maintenance Use the best maintenance option. It s hard to justify in-house maintenance with less than 12 units. Options for outsourced service: 1. Contract with another district-who s bus gets priority for service or repairs? 2. Commercially or local truck garage-while buses are constructed on a medium duty truck chassis, the bus has mandatory elements of repair that it must be equal to or better for parts replacement. 19
20 Bus maintenance continued Use warranty programs. Warranty coverage can reduce the costliest repairs. Negotiation with OEM to perform warranty repairs-upfront when purchasing. Shop for parts pricing-same part may have a lower cost from a different vendor. Overstocking of parts may cause the district to have obsolete parts after bus/s are disposed of. Keep good records of costs per bus. 20
21 High cost of repairs Costs can double from 9 years old to 12 years. Evaluate major repair costs before the repairs are started. The bus does not gain in value for undergoing major repairs-the bus value is based on age. 21
22 Replace old with new to save money Replacing old buses with a new bus can reduce operational cost of fuel and repairs. Preventive service cost per bus is $650-$750 per year in-house. Outsourced service $1,100-$1,200. Consider expected repair cost vs. operational savings of new bus. 22
23 When replacing buses Buy equipment with the best specifications for your district. Plan bus replacement schedules, do not wait until the CFO says there are funds available use a formal lifecycle plan and Management needs to lay out the plan. 23
24 Replacing old buses reduces costs New buses can be purchased with a10-year complete engine warranty and a seven-year transmission warranty. A new bus will reduce repair expense by an average of $3,000 - $4,000 per year per bus, add fuel savings of nearly 50% - $5,000 to $6,000 EACH YEAR. $25,000 to $30,000 over 5 years. 24
25 WORKSHEET FOR INFORMATIONAL PURPOSE ONLY The information listed below provides general estimates based on experience with other districts, prices, interest rates and terms. The listed estimates do not represent a guarantee and are provided only to assist the district in its budget planning process. Number of Buses 3 Buses 4 buses 3 Buses 4 buses 5 Buses Amount to Finance* $255, $340, $255, $340, $425, Down Payment* $3, $4, $3, $4, $5, Net Amount to Finance $252, $336, $252, $336, $420, Term** 3 years 3 years 4 years 4 years 5 years Finance Rate* 2.9% 2.9% 3.1% 3.1% 3.25% Annual Payment *** $87, $117, $67, $89, $91, Monthly* $7, $9, $5, $7, $7, Total Cost*** $263, $351, $268, $357, $455, * To be determined by bid **To be determined by bid specification from district ***To be determined by bid with district approval of bid 25
26 Bus bus fleet age Optimizing the bus routes and reducing the number of buses used can reduce the average age of the fleet by 3 years 10.5 average to 7.5 if reducing a 25 bus fleet to 21 but maintaining the same purchase plan. Reducing fleet age reduces costs per bus, trade in value rises, the net costs of new buses continues to decline. 26
27 School buses lost value New buses lose 50% of their value in the first 5 years. The bus then loses 10% of the remaining value in each year thereafter. In business, this is called depreciation. 27
28 Bus Value
29 16-year old bus In this picture, plastic is starting to fail because of age. > The tab is missing to keep electrical connection together, this is part of ABS braking. 29
30 14-year old bus 30
31 8-year old bus s fuel tank 31
32 7-year old bus 32
33 At the end of the day or the next levy campaign, the community will appreciate good: Fleet utilization-using the optimum number of buses to provide good service levels to parents, Driver management-having professional drivers to transport their children, Knowing that bus replacement planning is part of reducing the operational costs, and school management has been diligent. 33
34 Thank you! Ohio Visit our website at: 34
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