Maintenance - labour costs

The first question to be answered is, "who does the repair work?".

1. The owner in a one-man or small business.
2. Employed mechanics in a workshop.
3. An outside repair garage.

Leaving alternative number 3 aside for the moment, with alternatives 1 and 2 the first problem in establishing labour costs is to determine the rate per hour that is to be recorded.

The owner-driver will consider time spent on maintenance to be a necessity but he is unlikely to get down to putting a price on it. One of three alternatives is open to him:

1. To calculate his current or desired personal drawings from the business and reduce it to a value per hour for the average number of hours worked in a week.
   Unfortunately, this is likely to result in a low hourly figure because it is rare to find, in a one-man business, the proprietor drawing a salary commensurate with the time and effort invested.
2. He can use the same hourly rate that he would be charged by a commercial, retail repair garage if he took the vehicle there for repair.
3. He could apply the rate that he would have to pay per hour if he employed a full time mechanic. This, like the first alternative, would not produce a truly representative cost because it overlooks the cost of overheads in the employment of a mechanic and his place of work (the workshop).
   

Alternative number 2 provides the best solution and the easiest, so assume this is adopted and the rate is found to be currently standing at K500.00 per hour.
When sufficient vehicles are operated to justify a workshop being established and the employment of full time mechanics the calculation of a labour rate becomes more difficult but, nevertheless, once it has been calculated it will be more accurate than any 'borrowed' figure.

In this event more than just the mechanics' gross wages will contribute to the hourly labour cost. The contributors to hourly rate are given below.

1. Mechanics' gross wages.
2. Provision for holiday pay.
3. Provision for productivity bonus.
4. Employer's National Insurance contribution.
5. Employer's pension provision.
6. Employer's compulsory liability insurance.
7. Training levy.
8. Overalls and protective clothing.

Returning to the point where an acceptable labour rate of K500.00 was established, all that is needed to complete the task is a system for recording the time spent working on the vehicle or, if more than one, on individual vehicles.

Repair workshop job cards Most repair workshops use some form of job card system; the card remaining with a vehicle while it is in the workshop so the mechanic working on it can record the following information:

1. Tick-off jobs specified on the card as requiring attention.
2. Record other work carried out.
3. Comment on work likely to be needed on a future occasion.
4. Detail-the new parts fitted and other materials used.
5. Report On his findings following a road test.
6. RECORD THE TIME SPENT WORKING ON THE VEHICLE.

A typical job card is shown below indicating work to be done and work performed.

In the maintenance cost analysis labour costs can be entered as shown below.

The next step is to summarise both material and labour costs to provide a vehicle maintenance cost that can be carried forward into the total vehicle running costs and later into the total operating cost.

From the example records the following figures emerge:

Maintenance costs per kilometre
Combined with the appropriate mileage figures for the period taken from the fuel record the information can provide a maintenance cost per kilometre as follows:

Annual Maintenance Cost Summary
Month	Total Milage	Maintenance Cost	Cost Per Kilometre
August	5,067	4,671.00	0.92
September	3,085	-	-
October	4,420	3,765.00	0.85
	12,572	8,436	0.67

Clearly these figures show a distorted picture over such a short sample period but extended over a year's life they could reflect far more accurately the true maintenance costs incurred for the vehicle.