More and more the industry is learning about, or already practicing, some form of Key Performance Indicators (KPIs) or metrics to improve their transportation department’s overall efficiencies and reduce costs. While a KPI can be something specific such as “runs per bus” or “students per run,” another indicator can be Total Cost of Ownership (TCO).
STN spoke with Paul Start, market growth development manager for Thomas Built Buses, about how TCO can be a KPI, and factors surrounding TCO that transportation directors should consider, such as fuel efficiency, service and maintenance.
Start discussed small steps toward measuring and decreasing TCO that can make a big difference. He said the first and biggest step for all directors/supervisors and fleet managers is to change their mindset from satisfying their individual budgets to working toward one holistic viewpoint, which is TCO.
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School Transportation News: How can transportation directors and/or fleet managers utilize the information they currently have to determine their total cost of ownership? What would be the basic information necessary to begin determining this cost?
Paul Start: The four primary metrics of total cost of ownership are fuel economy, maintenance costs, capital costs and financing.
Fuel economy is quite possibly the most important component of TCO. Fuel economy is basically the amount of fuel burned over a defined distance. Much like the MPG in your car, many factors influence a bus’ fuel economy such as design and aerodynamics of the bus, overall weight, idling time, idle parameters (most buses today have electronic settings anywhere from 1,200 to 1,400 RPM that do not allow the bus to over-idle at a higher RPM level) driving habits, routing, and specifications of the bus.
By far, the cost of fuel over the lifetime of a bus will be the highest expense incurred. Fuel costs continue to rise, and we don’t see that rescinding any time soon. Without changes to driving habits or to the fleet itself, overall TCO will continue to rise.
STN: How does this tie into a school district beginning to implement some form of metrics of key performance indicators?
Start: If fleet managers are interested in purchasing a new bus, Thomas Built Buses has one of the only total cost of ownership tools that allows fleet managers to calculate their TCO built on four pillars: capital cost, financing, preventative maintenance based on the OEM maintenance schedule as published, and fuel economy. From this tool, you can view the total cost per vehicle and total cost per mile for Thomas Built buses compared to other buses on the market. The tool is only available at Thomas Built dealerships at this time.
For fleet managers wishing to take a baseline of their current TCO, they can develop their own tools for recording fuel economy, maintenance costs, capital costs and financing. By slowly incorporating TCO measures into their ongoing maintenance schedules, they can gain a deeper understanding of the total cost of their vehicles and make changes to decrease their TCO overall.
The easiest way to start measuring TCO is to start with fuel economy. Often, fuel economy measurements are listed on the engine electronics. Any fleet manager can walk up to a bus and see how much fuel has been used, as well as see current fuel economy, idling time, etc. This is valuable information that many more fleet managers could start utilizing right away.
STN: Can you offer an example of some steps some Thomas Built customers have taken to save money? What was the problem and what was the solution?
Start: A number of our customers have taken a variety of steps to decrease their TCO. Some customers are replacing older buses with more fuel-efficient models. We also have some schools with newer buses, but they have drivers who were not properly trained on how to operate the newer models. Those drivers are being retrained on how to drive a newer Thomas Built bus, including how to decrease idle times, stop more efficiently, drive to maintain fuel efficiency, etc.
Still, other districts have simply re-engineered their routes to be more fuel-efficient. One of our customers, who worked diligently on decreasing his TCO, ended up saving his district hundreds of thousands of dollars in fuel savings.
We routinely counsel our customers on how even small changes can make a huge difference in their TCO. Durability and performance of parts and service definitely play a role in total cost of ownership. Unfortunately, many transportation or fleet managers order buses and parts based on what they’ve ordered in the past and not based on newer technology. Buses today include much newer technology than they did five, six years ago, including idle parameters, fuel economy modes and the ability to gear their bus/powertrain. Just utilizing newer technologies will help to decrease TCO.
STN: What are those technologies?
Start: For example, Thomas Built Buses now offers SCR (selective catalytic reduction) technology on engines, which reduces the use of EGR (exhaust gas recirculation). With SCR technology, buses do not need to burn extra fuel and regenerate as often.
Thomas Built Buses also offers air disc brakes, which allow for consistent application and result in shorter stopping distances, even wear and a longer brake life. Air disc brakes can be more expensive than air drum brakes up front, but they extend a bus’ brake life two to three times more than normal air drum brake applications. This becomes even more pronounced when you add in a turbo exhaust brake to your engine.
Other features that can help to reduce TCO include bonded windshields, which require replacement about 90 percent less often than traditional windshields; multiplex wires and technologies, which greatly reduce vehicle weight and diagnostic time during electrical failures; LED lights, which last much longer than incandescent lights; corrosion protection for buses in extreme climates, and the list goes on. Simply right-sizing your buses and selecting the most efficient components and parameter settings will not only enhance performance, it will greatly reduce overall operating costs. Specifying rear end ratios, transmission modes, axle/suspension sizing, brake type, etc. based on what the market required 10 years ago is detrimental to both performance and cost.
STN: Anything else you’d like to say about TCO?
Start: In my opinion, measuring TCO is more than just recording metrics. To really start to see a change, fleet managers have to shift their reference point.
For example, some commercial fleet managers drive down their expenses to get to the lowest cost per mile. After all, fewer dollars per mile mean more money in their pockets. However, many school bus fleet managers are focused on meeting or spending just below set budgets (capital, maintenance, fuel, etc.).
What some school bus fleet managers don’t realize is that if they looked at all of their transportation budgets as one larger budget, and worked on decreasing their total cost per mile, they would end up saving more money in the end.
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Editor’s Note: To learn about how transportation directors are utilizing Key Performance Indicators (KPIs), read “Driven by Data” in this month’s issue.
