Truck Fleet Costs

Dr. B. C. Paul 2000 Revised 2008, 2009

Note This presentation includes screen shots from the
Caterpillar Performance Handbook, Catapillars FPC Program,
Western Mine Cost Service Costing Manuals, the U.S. Bureau of
Labor Statistics Web Site, and other materials and
spreadsheets compiled by the Author

Truck Production Costs

Divided into Ownership and
Operating Costs
Ownership includes

Annualized Investment Costs

Taxes and Insurance
Tax advantages

Operating Costs are Incurred as

Vehicle performs service

Operating Costs
Fuel
Tires
Lubricants
Repair
Operators

Setting Costs In FPC

On Fleet Input Tab
Use the Hourly
Cost Button

Sub Menu Divides Owning

and Operating Cost

Using Menu Requires a lot

of side calculations
Latest Editions of Cat Handbook
Has removed cost estimating
Sections. Have to revert to
Earlier issues (which we have
Online)
Lets Go for Fuel First

Getting Fuel Consumption

Rates

We get
About
17 gallons/hr
Our truck is
A 777

We assumed
$2.0/gal.
17*$2=
$34/hr

Our Conditions are Medium

Info from 29th Ed Cat Handbook

A Comment on Fuel Costs

We are assuming a truck fleet for Iran and

middle eastern fuel costs are low
We can see diesel fuel posting regularly
but our gas station prices are with tax
Off highway diesel does not have the highway
tax
It is colored red and called Red Dog
Can estimate by removing tax from typical
posted prices

Companies vary with respect to issues like bulk

buying and delivery cost that can swing things
several pennies more

Input Our Fuel Cost

Lets go for the Lube

Filter, Oil and Grease

Enter the
Lube/Filter/Grease

Terex rule of thumb was

High and 10% of fuel

Undercarriage is a dozer
Or tracked machine
Thing 0 here
Repair Reserve Next

Vehicle Life Impacts

Repair Costs
Table from Cat Handbook
29th Edition (online)

Cat 777 will last 40,000 to

60,000 hours
Under Average Conditions
About 50,000

Repair Reserve Tables

Cat 777 has a base
Repair reserve cost
Of $10/hour

Actual cost Varies with

Life of Machine
If we go for
A 50,000 hour
Life we will
Pay about
1.5 times what
Is in the table
Or $15/hour

Enter Our Data

Lets do Tires
Next

Need to Get Tire Life

Where most tires wear out
But some cut is zone B
An average is 3,000 hours
If retread cost is about 1.5
Times normal tire and
Life is about 1.75
Cat Handbook does not
Give a cost.

Western Mine Cost Service

Has Books of Costs

Including Tires in the

Supply section

This resource is
Available online for
Students or by
Subscription fee for
Commercial users.

Find Our 100 Ton Cat 777

Lists about $8,881

A Calculation of Tire Cost

6 tires * $8,900 each is $53,400
Because of heating
considerations Im not
retreading

$53,400 / 3,000 hours = 17.8/hour

Adding into FPC

Now Lets Go for
Operator

Western Mine Cost Service

Has Labor Surveys

Production Truck
Drivers getting
About $15.6

Another Source Is the US

Bureau of Labor Statistics
Note that I can pull
Pay and Benefit by
Area and Occupation

Industries Are Listed By

NAICS Code Numbers

Find the Best Match

Looks like mine

Machine operators
In quarries average
$15.9 /hr

Comment on Estimating

In addition to books, manuals and

internet sources
Remember the Buddy Network
Excerpts from Trade Journals
Your Companies Own Historical Cost
Records
Local Union Contracts or State Wage
Scales
Vendor Quotes

Cooking Our Estimate

In our problem we are given that they will

use Women truck drivers because if the
Israelis launch an air strike they want
something that is disposable (and teaching
cows to drive was not successful)
Normally there are other costs
Unemployment, workers comp, social security,
vacation, health etc.
You can calculate specifically or use rule of
thumb estimating
40-60% burden
Ill go at low end for quarry

1.4 * $15.75 = $22.05

Input and Switch to

Ownership

Hmm Looks like

It costs about
$70.2/hr to run.

One of My First Issues in

How Long it Will Last

Input My Knowns
I already scheduled
2772 hrs per year
With 80% availability
In my example

I also know the truck should last about 50,000 hours

At 2,218 hours per year that about 22.5 years

Getting My Truck Cost

Using Western
Mine Cost
Service

Looks like Ill be

About $1,062,000
For my Cat 777

Price and Tires

Truck weighs 161,000 lbs or
1,610 units of 100 lbs use $4/100
Weight rule to estimate freight about
$7,000 double for assembly

Most Prices are Quoted at the

Factory Your have freight
And assembly (I added a little
Extra as you saw)

Tires are a wear item so often

They are deducted from the price
To avoid double counting

The Issue of Taxes and

Insurance
Rule of thumb is that Tax and Insurance
Are about 5% (2.5% each) of
Average Annual Investment
(I wish they would call it average annual value)
As vehicles values go down so does tax on insurance
Average value of calculation is
(N+1)/2N * Cost where N is life
Substitute and crank
33/64*$1,600,000 = $825,000 * 0.025 = $20,625

Griping About FPC

FPC does not handle time value
of money
Taxes and Insurance are high in
the early years and low in the
late years

A mathematical average does not

show what this can do when
investors are looking for a return
on money

The Interest Problem

If money is borrowed most of

the interest comes early
Ill show a method for getting time
value of money into it even if FPC
tries to ignore it.

From Engineering Economics Get

the Interest Rate Comparison
Spreadsheet
Standard Fixed Period Compound Interest Loan

9
1
0.09
1
0.09
10
1600000
0
0
0
0
0

Interest Rate
Number of Compounding Periods/Year
Period interest rate (as a decimal)
Number of Payments/Year
Payment Interest Rate (as a decimal)
Years for Loan Payoff
Loan Amount
Down Payment Required
Set Up Fees
Set Up Fees Rolled into Loan
Points Up Front
Points Rolled into Loan

249312.1 Initial Guess for Payment

249312.1
249312.8
893121.7
0

Payment Amount
Final Payment Amount
Interest Paid
Fees Paid

Put in that I borrow

Money at 9% over
10 years to pay for
The Truck
0 Points Cost
0 Points Cost

The Spreadsheet Gives a

Yearly History of Interest
Payments
Period
1
2
3
4
5
6
7
8
9
10
11
12

Debt
1600000
1494688
1379898
1254776
1118394
969737.6
807701.8
631082.9
438568.3
228727.3
0
0

Interest
144000
134521.9
124190.8
112929.9
100655.5
87276.38
72693.17
56797.46
39471.14
20585.46
0
0

Payment
249312.1
249312.1
249312.1
249312.1
249312.1
249312.1
249312.1
249312.1
249312.1
249312.8
0
0

Principal
105312.1
114790.2
125121.3
136382.2
148656.6
162035.7
176618.9
192514.6
209841
228727.3
0
0

Use Excels Copy function

And copy the interest
Column and paste it into
Class Assistant
(Another Engineering
Economics Spreadsheet)

Paste My Interest Cash

Flow Into the Cash Flow
Analyzer in Class Assistant

Get the Total Life Cycle

Cost of the Interest
A typical mine looks
For 15% rate of return
The truck goes into
Almost immediate
Service time zero
Lasts for 32 years
An equivalent stream
Of interest over 32
Years is $79,378

Plug it Into FPC

I could have done
The total life
Cycle cost trick to
The Insurance
And Property Tax
Too

At this point I know it costs me

$107.85/hr to own the truck

When I Click Ok on the Subscreen

I Know Have Total Hourly Cost for
My Truck
See! There it is!

That Was For My Fleet 2

Since I have Fleet 1
And Fleet 3
I can switch to those
Fleets and just type
In my known hourly
Cost for a Cat 785
There.
Now I need to do this
For Loaders!