Uganda Cooperative Transport Workshop:

Transaid Transport Management Manual and basic costing for

Transport

24th November 2011Caroline Barber – Head of Programmes

Agenda• 09:00 – 09:15 Introducing Transaid

• 09:15 – 10:30 The Transaid TMS manual

• 10:30 – Tea Break (30 mins)

• 11:00 – 13:00 Basic costing for transport operations:– Key concepts– Break out groups to costs own or ‘imagined’ transport operation

• 13:00 - Lunch

• 14:00 – 15:30 Presentations back to group

• 15:30 – Tea Break (15mins)

• 15:45 - Summary – what have we learned and creation of toolkit from this workshop

• 16:00 – 3 day workshop summary and next steps

• 17:00 Close

Introducing Transaid

Transaid History

• Transaid was the idea of HRH The Princess Royal

• Founded by Save the Children and CILT

• Roots from the mid- 1980’s famine crisis in Sub-Sahara Africa

• Independent charity 1998

The Southern Africa Drought

In the early 1990s there was a call for more vehicles to support drought relief activities in Malawi. The problem, the appraisal team realised, was that there was more than sufficient transport available.

The missing element was effective transport management systems.

Vision, mission and goals

Our vision & mission

We aim to reduce poverty and improve livelihoods and quality of life in Africa and across the developing world

“We seek a world where transport contributes fully to a better quality of life”

Our goals

• To improve access to basic services through the development of appropriate transport management systems

• To increase economic opportunities through increasing the capacity of the transport and logistics sector to operate effectively, efficiently and safely

Why we exist

• Transport is essential for life but is unavailable or unaffordable for many people

• Lack of transport denies access to basic needs e.g. health care.

• Little aid money is allocated to training of transport management skills and expertise

(most is spent on infrastructure)

Some Challenges

poor infrastructure poor maintenance

overloaded trucks shortage of skilled drivers

lack of legal enforcement poor transport

management goods costly to move

Where we work

Where we work

• West Africa– Nigeria*– Ghana*

• East Africa– Tanzania* – Uganda

• Southern Africa– Zambia*– Zimbabwe– Madagascar*

*Where we have major projects

Our areas of expertise

• Transport Management

• Professional Driver Training & Road Safety

• Community Managed Transport

• Supply Chain Strengthening (drug distribution)

Our areas of expertise

• Transport Management

• Professional Driver Training & Road Safety

• Community Managed Transport

• Supply Chain Strengthening (drug distribution)

Transport Management - Nigeria

Driver Training - Zambia

Results to date

Emergency Transport Scheme with Nigerian Taxi Union

Transaid’s Transport Management System

(TMS) manual

Introducing the TMS

• Transaid developed a TMS manual over 10 years ago• Over 2500 TMS manuals have been distributed to

over 50 countries since publication• The key purpose is to provide day to day assistance

in the management of transport resources, particular focus within a public health context

• Chapters 1-4 focus on long term processes and strategies

• Chapters 5-9 – tips and tools for more immediate and regular implementation

TMS Self Learning Guide

• In 2009 Transaid developed the TMS into a Self-Learning Guide for Local Transport Managers of Public Health Services

• This was based on Transaid’s extensive work in promoting best practice in transport management throughout Africa and elsewhere.

• This guide presents sound principles of transport management coupled with real-life experience. It was funded by USAID | DELIVER PROJECT (part of John Snow International).

• http://www.transaid.org/projects/transaid-develops-tms-self-learning-manual-with-john-snow-international

Components of the manual

• There are 9 key components to the self learning TMS manual:

1. Operational Management2. Financial Management3. Fleet Management4. Health & Safety5. Human Resources6. Monitoring and Evaluation7. Situational Analysis8. Outsourcing9. Policy and policy development

• TMS manual also includes tools to be used, worked examples and templates that can be photocopied

Module 1. Operational Management

This module focuses on:– Describing key personnel tasks and roles involved

in operational management– Managing transport planning, vehicle distribution

and returns, and fuel supply– Managing key routine operational tasks– Using the appropriate forms to collect

management information – Implementing standard operating procedures

(SOPs)

Module 2. Financial Management

This module focuses on: – Understanding why financial management is

important for TMS in health service delivery– Linking financial management to other

components of TMS– Working out the best economic point of

replacement for a vehicle– Accurately determining budgets that will control

transport costs – Using a trading account to pay for transport costs

more effectively

Module 3. Fleet ManagementThis module focuses on :

– Avoiding unnecessary vehicle breakdowns; – Improving the use of a fleet and prolonging its

working life – Identifying basic operational and technical

specifications to choose the best vehicles for a fleet

– Recognising the importance of regular planned vehicle maintenance

– Using and developing key maintenance schedules– Managing maintenance activities and the

personnel responsible for them– Safely, effectively, and efficiently managing the

distribution and delivery of supplies

Module 4. Health and Safety• This module focuses on :

– Identifying key health and safety concerns for transport management

– Monitoring and improving health and safety in your own transport management system

– Managing accidents and incidents – Understanding appropriate insurance coverage

Module 5. Human Resources• This module focuses on :

– Explaining the relationship between transport management and human resource development

– Creating an organisational chart, specifications, and job descriptions for the staff in your transport structure

– Describing the basic principles of the recruitment process that is used to begin building an effective transport workforce

– Describing key human resource development processes to help develop and retain a transport workforce

– Linking essential human resource management issues to the development of an overall transport management policy

Module 6. Monitoring and Evaluation• This module focuses on:

– Recognising how to collect and use information for improving transport management and distribution

– Explaining the importance of having a structured transport management information system

– Using Key Performance Indicators (KPIs) for transport management and distribution (We’ll come back to this)

– Presenting, interpreting, comparing, and using KPIs for improving decision making

Module 7. Situational Analysis• This module focuses on:

– Describing the purpose of a situational analysis– Advocating the need for a situational analysis to

senior managers– Planning and implementing a situational analysis– Analysing data from and reporting on a situational

analysis

Module 8. Is outsourcing an option? • This module focuses on :

– Defining outsourcing– Describing the reasons an organisation would

consider outsourcing supply chain activities – Recognising the steps for determining whether

outsourcing is a viable option to address an organization’s identified needs

– Summarising key principles related to contracting and contract management

Module 9: Policy and Policy Development

• This module focuses on : – Explaining why developing and reviewing policies

are important for implementing a TMS – Understanding the difference between policy and

procedures – Identifying who can provide information on

transportation policy issues in need of change and recommend specific changes and how that information is channelled up to the higher level

Tools that can help – Core TMS forms

• Vehicle Check Sheet • Vehicle Log Book • Vehicle Defect Report for Vehicle Operators • Trip Authority • Period Movement Plan • Period Transport Schedule• Seven-day Transport Schedule • Period Transport Report • Period and Safety Issues • Vehicle Inventory • Vehicle Information Sheet • Crash/Incident Report • Crash/Incident Follow-up Report • Vehicle Maintenance Summary • Twelve-month Planning Schedule • Assessor’s Form for Vehicle Operator Assessment • Vehicle Operator Report

Transaid’s 11 KPIs

• Quality information is needed for good decision making at all levels of an operation

• An organisation can only determine if transport policy goals and objectives are reached by monitoring and evaluating performance

• 7 transport Key Performance Indicators

• 4 distribution Key Performance Indicators

KPIs continued….

1. Distance travelled2. Fuel consumption3. Running cost per kilometre4. Vehicle availability5. Vehicle use6. Needs satisfaction7. Safety8. Truck fill9. On-time delivery10. Damages11. Nonconformity

A case study - Transport Management South

Africa and Ghana MoH

Implementing a Transport Management System in South Africa’s Department of Health

PLEASE CLICK TO START

In 1996 the Department of Health in South Africa’s North Western Province had a fleet of 2013 vehicles

Senior management were sensitized, a transport policy was developed, transport officers received job descriptions….

….drivers were trained, Planned Preventative Maintenance systems were implemented….

…old vehicles were disposed of, sustainable procurement plans were developed, monthly transport reports were

produced and distributed…

…Transport Officers started to notice that with better planning less vehicles were required to meet service

delivery demands.

In the first three years the fleet was reduced by 290 vehicles.

In the first 5 years of the project gains in efficiency meant that more than 800 vehicles could be removed from the

fleet without affecting service delivery levels.

By 2003 the fleet was down to less than 40% of its original size.

By 2008 the fleet had maintained an average size of 796 vehicles for 5 years.

PLEASE CLICK TO CONTINUE

Throughout the duration of the project the availability of vehicles remained high due to good maintenance

practices….

…vehicle utilization remained steady as Transport Officers used vehicle request forms and scheduling tools to arrange transport and consolidate activities where

possible.

Most importantly, “Needs Satisfaction”, a measure of the ability of the fleet to meet the needs of the Ministry,

remained consistently high throughout the entire project.END

Ghana case study• In 2007 Transaid worked with Ghanaian women market

traders to run a pilot to manage their own transport• Iveco (truck company) donated 4 daily vans and Transaid

conducted some transport management training and helped train female drivers and a Transport Officer

• The project had some success but had many important leanings:

– The vehicle type needs to be absolutely fit for purpose – these were not for the routes they were doing

– The vehicles need to be pooled and high levels of collaboration required between market traders

– The learning curve was very steep – routing, scheduling, budgeting and even learning to drive

– Transaid did not invest enough long term support on the ground to the market traders

– The project insisted on certain provisions which made it difficult to operate in a competitive market – such as insuring vehicles and working reasonable shifts

– While we have fedback the women traders learned a significant amount from the project which is transferable ,it became more profitable for the women to put seats in the vans and run them as minibuses so some have now done this

Zambia case study• Transaid has more recently been working with the Zambia

National Marketeers Credit Association (‘ZANAMACA’) • In 2009 Transaid completed research to developing a

transport project that would benefit Zambian marketeers• 72% of Zambian marketeers are women, many of whom are

widowed, divorced or single and have an average of five dependents to support. Their market trade is their livelihood.

• Transaid partnered with ZANAMACA to carry out an initial assessment of the types of transport currently available to marketeers and to determine the main transport priorities.

• The central Zambian market is based in Lusaka. Many marketeers travel long distances to buy from and sell to the central market, some up to 1,100km, carrying large volumes of goods.

• There is no transport system in place to meet this need, Under Zambian law public transport should only convey passengers, and not commercial goods.

Zambia case study

• Transaid have been trying to source funds to implement a project with ZANAMACA

• Project Aim:• To improve access to markets for Zambian marketeers and their

goods through the implementation of a Transport Management System (‘TMS’).

• Project Objectives• To introduce a tried and tested TMS suited to the market context• To introduce safe, efficient and affordable transport for marketeers

and their goods travelling a minimum of 500km• To increase the capability of ZANAMACA members (marketeers

and their management) to manage activities that support their businesses and livelihoods

Results of Zambia research

• The high costs of marketeers’ transport, the problem of security of goods and the lack of direct readily available transport all negatively impact upon profit for marketeers

• On the long distance one way routes the research showed that per individual marketeer;– The average time per trip was 9.5 hours – Average distance 630kms– Average cost £90.21 or 361,000 Ugandan shillings– Average weight transported per marketer - 1.17 tonnes

The research and cost analysis showed an 20% reduction in the all inclusive cost per km for ZANAMACA to manage their own transport fleet rather than hiring private vehicles. However, it is important to understand the specific assumptions behind this (steady volume all year round, 60% vehicle fill on return journeys and tax free status for vehicles etc.)

Basic costing for Transport

Agenda – session 2

• Basic costing for transport operations:

• 11:00 – 13:00 Basic costing for transport operations:– 11:00 – 12:00 Key concepts, a case study from Ghana and

Zambia and a basic transport budget– 12:00 – 13:00 Break out groups to cost own or ‘imagined’

transport operation

• 13:00 - Lunch

• 14:00 – 14:30 Presentations back to group

• 15:30 – Tea Break (15mins)

• 15:45 - Summary – what have we learned from this exercise and creation of toolkit from this workshop

What this session aims to do

• From your presentations this week it is clear that transport is a challenge for Cooperatives

• Hiring transport is expensive and the vehicles often do not meet your needs

• This session aims to increase your understanding of the key costs to consider when looking at running your own transport

• It may be that managing your own transport is not the right solution for your Coop/Union but hopefully it will help you to think about how to go about a cost benefit analysis so you can compare what you are paying now vs what it would cost to run the transport yourself. When we have this knowledge we can make more informed decisions.

• Hopefully it will give you more experience of the types of costs to consider and therefore a stronger negotiating position with transport providers

What this exercise will not do

• It will not give you all the answers….!• There are many ways to create transport budgets,

this exercise will not give you a ‘one size fits all’ solution – rather it is to share approaches and concepts to start thinking in a more focused way about financial management and transport and if you chose to, to go away and work on more detailed business plans (which I am happy to have a look at)

• It is also important to consider all the other advantages and disadvantages of running your own transport – cost is just one of many factors!

Key Concepts – Costing for Transport

• What types of costs should we consider• Fixed and variable - what these terms mean• What are the key elements of each and how do we

start to build up a budget

What Costs do we need to think about for transport operations?

• The cost of purchasing vehicles (i.e., the initial capital cost) Other costs are incurred to maintain and protect vehicles after they have been purchased. These costs include—

• Depreciation, which is used to determine financing requirements for replacing a vehicle at the end of its economically viable life

• Fixed costs (which do not vary with the level of activity), including annual vehicle licenses, taxes, and insurance.

• Variable costs (which vary based on vehicle use), including— – Running costs (costs related to the distance a vehicle

travels): fuel, maintenance, and tyres. – Indirect costs (costs that do not affect running costs):

crashes, breakdowns, and fines. • Human resource costs, including: Fixed costs, such as

salaries. Variable costs, like per diem. • Any overheads (office costs)

Fixed or ‘standing’ costs

• Costs which do not vary with the level of activity:

• Depreciation• Insurance• Tax• Is there anything like an O’licence in Uganda?

Variable costs

• Costs which vary based on vehicle use– Running costs: (i.e., costs related to the distance a

vehicle travels• Fuel • Maintenance (repairs and maintenance) older the kit higher r&m• Tyres (either outright purchase or contract)• Specialist kit - chilled vehicles – cost of gas or diesel for chiller• Specialist – cleaning (for example diary, livestock,

petrochemicals)

– Indirect costs (i.e., costs that do not affect running costs)

• Crashes (can benchmark from other operations – estimate x per km

or per period but so much depends on training, urban or trunking)• Breakdowns • Fines

HR and Overhead costs

• Fixed element – salary – drivers/transport officer?• Variable – per diems or allowances

• Other considerations when budgeting for HR:– Pension?– Absence, Sickness, Holiday (ASH) – for example 5 days a week x 52

weeks = 260 days a year. How many days holiday or leave (x weeks?) have to budget for other leaves of absence – sickness, funerals

– In UK ASH is usually 15-17% in transport industry

• Overheads– Do you have an office or parking area you are hiring? Office costs and

rent?– Mgt team– Training– Uniforms? Protective clothing– Mobile credit

Costing the ZANAMACA new transport service – 1 yr operating budget

• How did we get to these figures?

• Refer to basic costing model and discuss....(go to excel file)

Break out group exercise

• Take 1 hour to ‘cost’ your transport operation / or create an imaginary transport operation and ‘cost’ it;

• After lunch…

– Present back to the group (10 min presentation) on:

– the key fixed and variable costs using given headings

– We will input these into the model to arrive at your all inclusive cost per km for your transport operation

Why is it useful to know what the cost of operating you own transport is?

• If we know it costs us X per km to operate our vehicles then we can answer these questions:

1. What does it cost to hire a 17ton vehicle per km? We can now compare a trip of 200kms operated by a truck operator to a cost of running it ourselves at XX.

2. It also helps us to understand what we should be charging our members to cover our transport costs including vehicle depreciation (remember this model does not build in profit for the operator!)

3. Two notes of caution:– this cost of XX for 200kms assumes you have a return trip or

backload. If you don't the vehicle will run empty and to get from bulking point to market and back will now cost double hence the need to find backloads!

– The budget you have created needs to be updated frequently as costs change and key assumptions like numbers of kms and fuel price changes!

Your presentations

Break out group exercise (2)

• What did we learn from doing the exercise ourselves?

• What did we learn from each others presentations?

Next steps – toolkit development

• One of this workshop outputs is a toolkit, which:

– Highlights case studies of cooperatives that provide transport services for their members

– Captures the experience of these co-operatives in delivering such services

– Identifies common themes and lessons from these experiences

– Develops technical guidelines for co-operatives on how to improve transport services for their members

– Is there anything that you would like us to try and include in the toolkit?

Thank you for your attention and your participation Cooperators!