Transport Asset Management

Transport Asset  Management (TAM)

Some partners, particularly Ministries of Health, do not have a viable vehicle fleet and do not have capital to buy vehicles at once for health care delivery. To answer this, Riders developed the Transport Asset Management model (TAM) to serve these partners. TAM is designed specifically for large-scale national replication and is based on a leasing model. It is based on the same cost-per-kilometre calculations and same training, vehicle management and maintenance systems as TRM but, in addition, Riders owns as well as manages the assets. As this involves an external lender, payment of the running costs has to be in advance, three months is desirable so that we do not default on payment to the lenders or impact donors.
The advantage to Riders’ partners is that they do not need to find the capital to buy vehicles and motorcycles, and all functions related to fleet management can still be contracted out to Riders. Riders is fully responsible the vehicles in all stages of their lives from procurement to ultimate control in deciding the optimum time to retire and replace them.
TAM does not involve extra cost. All the cost factors – capital cost of vehicles, management, maintenance, fuel, lubricants, replacement parts etc – are currently present even in the most haphazard and short-lived fleet exercise. However, TAM protects and maximises the use of all these costs which means that because the vehicles last much longer the costs of running the fleet are in fact considerably lower. So, the partner and their supporters get the benefit of uninterrupted transport use while saving money.

Financial model- Cost Per Kilometre (cpk)

Running vehicles costs money, the best way to recover the costs is by using an activity-based costing (ABC) mechanism. For the purposes of this financial model, ABC is used to calculate all costs associated with purchasing, managing and maintaining each vehicle. Riders allocates the costs based on kilometres travelled by each vehicle. Distance travelled is the key activity as it determines the maintenance, interventions, and fuel required.
To determine the monthly per-kilometre cost a vehicle’s odometer is taken and calculate vehicle mileage since its last reading. The monthly cost is based on upon vehicle mileage rather than for specific labour and parts. Riders has been successful with the CPK charging mechanism because the financial model allows Riders to forecast the maintenance needs of vehicles with a high degree of accuracy. Costing by the kilometre also creates disincentives for abuse or over-usage of vehicles because every kilometre travelled produces additional charges. Agencies quickly adapt to the reality that effective transport actually costing money.
Six components comprise the building blocks for the total CPK calculator. Each component has its own CPK which contributes to the total CPK for the vehicle. The first five of these components already exist for Riders’ TRM model and relate to the management and maintenance of the vehicles as defined in a TRM contract. The sixth component represents the costs of leasing. The six components are:

  • Interventions (parts and tyres)
  • Fuel
  • Direct staffing (technicians and drivers)
  • Direct management (staffing and overhead costs)
  • Insurance
  • Leasing costs (capital and interest)

Key attributes of the Transport Resources management (TRM), Transport Asset Management (TAM) and Interval Servicing Financial models

 

Managed vehicles

TAM

TRM New vehicle

TRM old vehicle

Interval Servicing

Viable vehicle (needed to guarantee reliability of the vehicle for the customer and predictable maintenance costs for us)

Y

Y

Y

Y

Preventive maintenance schedule adhered to (contract needed to ensure this)

Y

Y

Y

Y

Contract

Y

Y

Y

Y

Pricing mechanism

cpk

cpk

cpk

Per service/

 

hourly based

Vehicle repairs

N

N

Y

Y

Road safety (training, accident management, ongoing driver/rider assessments and coaching)

Y

Y

Y

Y

Fuel provided

Y

Y/N

Y/N

N

Vehicle provided

Y

N

N

N

Driver provided

Y

optional

optional

N

Pay for higher order replacement if they break within contract

Y

Y

Y

N

Guarantee to fix anything that goes wrong at no extra charge

Y/N

Y/N

N

N

Guarantee conditional Zero breakdown

Y

Y

N

N

Provide training in PLANS/FFLOWERS and driving/riding tips when vehicle comes for service –

Y

Y

Y

Y