Truck Fleet Costs
©Dr. B. C. Paul 2000 Revised 2008, 2009
Note – This presentation includes screen shots from the
Caterpillar Performance Handbook, Catapillar’s 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 I’m 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
• I’ll 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 I’ll 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
• I’ll 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!