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TRANSPORT MANAGEMENT

by Joseph Abio Nartey

• Former transport manager of Guinness Ghana Breweries Limited

• Author of:1. A Handbook on driving2. Questions and answers for passing your

driving test• Holds MBA Marketing (University of

Leicester, UK.)

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LEARNING OBJECTIVES

• Understand basic management principles applying to individuals, small and large organizations’ transport.

• Grasp the basics of transport management functions

• Recognize professional skills required of managers

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CONTENTS• PART 1: OVERVIEW OF TRANSPORT

MANAGEMENT

• PART 2: TRANSPORT PLANNING, OPERATIONS & CONTROL

• PART3: COSTING IN TRANSPORT OPERATIONS

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PART 1: OVERVIEW OF TRANSPORT MANAGEMENT

• Chapter 1:Transport modes

• Chapter 2: Overview of the road transport system:

• Chapter 3: 4E concepts of road safety

• Chapter 4: Key stakeholders of road transport

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PART 1: OVERVIEW OF TRANSPORT MANAGEMENT

• Transport

Functions

• •Moving• •Supporting• •Motivating

• Management

Functions

• •Controlling• •Directing• •Organizing• •Planning• •Staffing

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PART 1: OVERVIEW OF TRANSPORT MANAGEMENT

What is transport management?

• TM is defined as “the managing of the coordinating of movements of people, products, services, information from one destination to another point to support economic activities and to motivate people”.

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Levels/structures of management

• Top Level managers: consists of board of directors. They take strategic decisions.

• Middle Level managers: consists of general, branch and dept. managers. They take tactical decisions in conformance.

• First Level managers: consists of supervisors, section leaders, foremen, transport mgr. etc.

• Structure depends on size, age, culture, resources, etc.

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Chapter 1: Transport modes:

• Road,

• Air,

• Rail,

• Water (sea & lake),

• Pipelines,

• Space

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Chapter 2: Overview of the road transport system:

• Major players of the road transport:– The drivers– The vehicles– The road networks– The transport operators: VIPs, AO, STC,

Metromass, GPRTUs, etc.– The other road users

• The weather environment (day, night, rain, wind, etc.)

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Chapter 3: 4Es concept of road safety

• Engineering: Urban roads, highways

• Education: NRSC, Media

• Enforcement: DVLA, MTTD

• Emergency: Ambulance, Fire service

• Road safety triangle: environment, vehicle and the driver

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Chapter 4: Key stakeholders of road transport

• Motor traffic and transport unit (MTTD) of the police service- Law enforcement

• The driver and vehicle licensing authority (DVLA)-Vehicle roadworthy& licensing

• The national road safety commission (NRSC)-Supports driver education

• Ghana Police Service (Ghana Police) – Enforcement of the road traffic act- 2008 & 2012

• The national insurance commission (NIC)- Motor insurance

• The internal revenue services (IRS)-Vehicle tax• The district and metropolitan assemblies (DMAs) -

District/metro taxation• Repair Workshops/Garages-

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Discussion

• State and explain four reasons, why should you maintain a cordial relationships with your key stakeholders as a transport manager/officer?

• Please use 15 minutes to reflect over the question and then send your answer to email: joseph@ghanadrivingtest.com

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PART 2: TRANSPORT PLANNING, OPERATIONS & CONTROL:2hrs

• Chapter 5: Operational management

• Chapter 6: Fleet management

• Chapter 7: Human resources management

• Chapter 8: Policy and policy development

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Chapter 5: Operational management

Tasks and Responsibilities: comprises the day-to-day management of the physical, technical and human resources required to operate vehicle fleet: (Operators & Management)

1. Vehicle Operators: the key people responsible for the effective, safe, and economic operation of a vehicle. In this guide, VOs refer to both professional drivers and drivers who use vehicles to carry out official duties. Refer eg to next page.

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• Task Responsibility

• Level Frequency

Post • Create, update, and publish the Vehicle Inventory All As needed TA

• Create, update, and publish the Vehicle Information Sheet All As needed TA

• Day-to-day operational management All Daily TO

• Receive Period Movement Plans All Every period TO

• Prepare Period Transport Schedules All Every period TO

•

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Chapter 5: Operational management

• The VO is responsible for: • The Vehicle • Health and Safety • Vehicle Checks • Policy Support: using correct forms and

documents; being legally fit to drive and possessing a valid license; keeping within the regulations of the trip authority; not changing the authorized route; and not carrying unauthorized passengers.

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Chapter 5: Operational management• 2. Management Roles: It shows and list

the roles and responsibilities in a TMS and thus helps determine an appropriate personnel structure for an operational management system. This table has two main columns:

• Task: main operational management tasks.

• Responsibilities: how tasks are assigned to the staff.

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Chapter 5: Operational management

• Vehicle Planning: the Main Steps: Planning mechanisms and technical procedures for all vehicle use are necessary to ensure that vehicles are used in an efficient and cost-effective manner.

• key responsibilities including: » analyzing trip authorities’ forms in for authorization

and correct recording of all trips; » allocating vehicles to authorized personnel; » negotiating with other managers who sign trip

authorities for joint trips; and » ensuring that procedures for the emergency use of

vehicles are followed.

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Chapter 5: Operational management

Vehicle planning follows a three-step process:

• Period Movement Plan

• Period Transport Schedule

• Seven-day Transport Schedule

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Chapter 5: Operational management• Step 1: Period Movement Plan:

Reporting periods are often monthly or quarterly

• Step 2: Period Transport Schedule: it is used to allocate planned trips to specific vehicles. The Transport Officer uses data from the movement plans to prepare a period transport schedule

• Step 3: Seven-day Transport Schedule: On the last day of the working week, the Transport Officer prepares the seven-day transport schedule

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Vehicle Planning: Other Procedures • Issue and Return of Vehicles: The vehicle

check sheet is an important management tool that shows responsibility for the vehicle, and all documentation and equipment as it passes from one authorized user to another

• Monitoring Results: At the end of each week and period, the TO compares actual transport movements with what was planned, noting everything that affected the schedule. They record successes and achievements as well as problems

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Chapter 6: Fleet management

• Operational controls: Operational controls link staff management activities and vehicle management planning

through Standard Operating Procedures (SOPs) • Standard Operating Procedures (SOPs): An

SOP is simply a document that states how specific activities should be carried out. All SOPs should be kept in a file wherever vehicles are located and made accessible to all staff members.

• The next page is a summary list of the specific types of SOPs. The size and complexity of an organization will determine exactly which SOPs are appropriate.

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Standard Operating Procedures/Practices (SOPs):

1. Transport HR File: The transport HR policy establishes the personnel structure for all aspects of the transport management.

2. Vehicle Usage Planning Policy: The vehicle usage planning policy defines clear guidelines for the procedures and responsibilities involved in vehicle planning and use

3. Vehicle Allocation Form: The vehicle allocation policy should comprise procedures for vehicle assignment, including specific guidelines for new vehicles

4. Issuing Vehicle Form: The vehicle issuing policy comprises clear statements about issuing and handling over vehicles, including the mandatory use of the vehicle checklist sheet, and responsibilities for log sheets, keys, warning triangles, etc.

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Standard Operating Procedures/ Practices (SOPs):

5. Fueling Coupons/ Fuel

Cards: The vehicle fueling policy covers fuel suppliers, documents to be used for fuel requisition and issue, and responsibilities for fuel vouchers and cards (if applicable)

6. Accident/Theft safety

report form: This details about the safe operation of vehicles and crash/incident reporting

7. Vehicle Log Book (or Log Sheet): It should detail responsibilities for the analysis of log sheet data and subsequent reporting, and highlight the importance of having a working vehicle odometer

8.Vehicle Fleet Audit Sheet

9. Valuation/disposals form

10. Vehicle maintenance requisition form/sheet

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Standard Operating Procedures/ Practices (SOPs):

11.Car Hiring request form

12.Vehicle purchasing/ replacement form

13.Driver training request form

14.Vehicle database report

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Standard Operating Procedures/ Practices (SOPs):

Other SOPs are:

• Vehicle roadworthiness

• Vehicle insurance

• Planned preventive vehicle maintenance schedule

• Vehicle running budget

• Vehicle running quarterly report

• Development of approved workshops/garages

• Vehicle policy development

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Chapter 6: Fleet management• Good management means making the

best use of vehicles to meet a department’s priorities.

• Specification, Selection, and Procurement of Vehicles are important from time to time

• Maintenance and Repair of Vehicles: eg,

1. Schedule routine maintenance

2. Routine daily checks

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Planned Preventive Maintenance • Regardless of the age and quality of a fleet,

PPM reduces overall running costs:

• Daily Checks

• Defect Identification report/ fleet audit report

• Regular Servicing

• Planning Service Schedules and Intervals

• Managing the Maintenance Schedule

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VEHICLE RUNNING COST

• Veh.Insurance =GH¢44,107.52 (5.70%)• Repair&maintenance=GH¢176,835.51 (22.86%) • Fuel =GH¢481,367.62 (62.22%)• Tyres =GH¢15,110.57 (1.95%)• Veh. Hire =GH¢41,646.40 (5.38%)• Other exp. =GH¢14,589.31 (1.89%)

F08 TOTAL =GH¢773,656.93 FLEET SIZE =163AVE. RUNNING COST= GH¢4746.36AVE.R&M RATIO =GH¢1084.88

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VEHICLE RUNNING COST

• SUMMARYInsurance= 5.70%R&m =22.86%Fuel =62.22%Tyres =1.95%Hire = 5.38%Others=1.89%

I NSURANCER&MFUELTYRESHI REOTHERS

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VEHICLE RUNNING COST F06-F08

050

100150200250300350400450500

F06 F07 F08 F09

FLEET SIZER&MFUEL

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Managing the Maintenance Schedule • Four information sources are used to manage

vehicle maintenance and repair:

1. The vehicle defect report

2. The vehicle maintenance summary

3. The twelve-month planning schedule

4. The seven-day transport schedule

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Maintenance Options • There are three possible maintenance

options:

1. In-house maintenance.

2. Outsourced maintenance.

3. Maintenance by a private contractor through a vehicle contract agreement

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Warranty on New Vehicles • All new vehicles will have a manufacturer’s

warranty built into the purchase agreetment. This may include cost-free servicing (excluding consumables) for a defined period

• Find out

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Chapter 7: Human resources management

• Organizational Structure• Staff Management and Capacity• Organizational Charts • Person Specifications • Job Descriptions • Recruitment Processes • A Competent, Committed Workforce • Incentive Schemes

• Staff Reviews: Vehicle Operator Assessment

• Staff Development and Training • Locally Applied Guidelines

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Chapter 8: Policy and policy development

• Policies vs. Procedures: Policies are principles that direct actions for achieving long-term goals. SOPs provide the instructions needed to implement and translate policy into action

• Policy Structure for TMS

• TMS Stakeholder Role In Policy Development and Review

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PART3: COSTING IN TRANSPORT OPERATIONS

• Chapter 9: Financial management

• Chapter 10: SHE Issues• Chapter 11: Monitoring and Evaluation:

feedback system• Chapter 12: Third Party services providers: Is

outsourcing an option? (make or buy options).

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Chapter 9: Financial management1. Transport Costing:• The initial capital cost- vehicle purchasing cost• Depreciation- used to determine financing

requirements at end of vehicle effective life-span • Fixed costs- including annual vehicle licenses,

taxes, and insurance.• Variable costs- Running costs and Indirect costs• Human resource costs- Fixed costs, such as

salaries and variable costs, like per diem

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Calculating Depreciation Cost • Formula Vehicle replacement cost ÷

economically viable life (km traveled) = depreciation cost (per km)

• Example For a vehicle whose replacement cost is Ghc20,000, planned to travel between 100,000 to 250,000km

• 20,000 ÷ 100,000 km = Ghc0.20

• 20,000 ÷ 150,000 km = Ghc0.13

• 20,000 ÷ 200,000 km = Ghc0.10

• 20,000 ÷ 250,000 km = Ghc0.08

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All-inclusive/km Costs Over Time

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Annual Budget and Core Financial

Management 1. What to Include in the Budget

2. A trading account- an account dedicated to transport

3. Main Budget items:• Depreciation• Fuel• Repair & maintenance• Insurance• Tyres• Batteries• Other expenses

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Chapter 10: SHE Issues• SHE Issues are Safety, health and

environmental issues- this is to avoid death and injury from traffic accidents as well as damage to the environment and property

• Crash and Incident Procedures for Vehicles- theft, hijacking, vehicle losses, and damage: Report on the SOP forms immediately

• Fuel and Other Storage

• Asset Security and Transport Insurance

• Workshops/ Garages

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Chapter 11: Monitoring and Evaluation

• M &E is a feedback system, comparing the actual with the target plans and taking corrective actions to get back on track

• Key Performance Indicators (KPIs):• KPI 1—Distance Travelled= current odometer reading – prior odometer reading

• KPI 2—Fuel Consumption =total distance travelled ÷ total fuel used

• KPI 3 - Running Cost per Kilometre= ( [quantity of fuel used x fuel price] + [maintenance

cost + cost of tires] ) ÷ (total kilometres travelled) • KPI 4 – Availability % = ( [total days in the period - total days in the garage] ÷ [total

days in the period] ) x 100 = availability (%) • KPI 5 – Use %= (total days used % ÷ total days available) x 100

• KPI 6 - Needs Satisfaction %= (number of trips made ÷ number of trip requests for official work received) x 100

• KPI 7 – Safety= number of crashes, incidents, or critical safety defects per vehicle

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KPI 2—Fuel Consumption

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Chapter 12: Third Party services providers: Is outsourcing an option? (make or buy

options:• Outsourcing is when an organization

contracts with an outside service provider to carry out tasks (usually non-core tasks) that were previously performed in-house.

• Cost-benefit Analysis • Situational Analysis• Implementing Outsourcing: Financing,

service provider reputation and availability, spare parts, etc.

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Transportation Management Cost Items:

• Transportation Management Cost Items Costs to Outsource Current Internal Costs* Internal Costs to Achieve Desired Improvements

• Tendering Contract management Services Contingency for poor performance Capital Potential others Infrastructure (i.e., furnishing vehicles or storage facilities to the service provider) Severance pay and other costs related to staff lay-offs Employee and administrative Equipment, including maintenance Buildings, including running costs Fuel Per diem and lodging for drivers and other traveling personnel Potential others Inventory (when outsourcing inventory management

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Answer all questions

1. Explain the three steps involved in vehicle planning: (Step 1) Period movement plan, (Step 2) Period transport schedule, and

(Step 3) Seven-day transport schedule 2. What are the two components of the all-inclusive cost per km?.

Briefly explain them. 3. Calculate the depreciation cost per km for a USD40,000 vehicle

expected to travel 150,000km. (Show your calculation method and

the answer.)

4. What does PPM mean and what are its three components? 5. State the FIVE main functions of management

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Answer all questions

6. Name four of the safety equipment that a vehicle should have.

7. What type of insurance generally meets minimum coverage requirements?

8. Name and explain the seven transport key performance indicators

(KPIs) 9. State and explain the three main functions of

transportation

10. State and explain the three levels of management

ANSWERS

• Send your answers to email: joseph.ghanadrivingtest.com

OR

write to JOSEPH ABIO NARTEY

P.O.BOXNT 67, NEWTOWN ACCRA

TEL: 0243354542/027609479

Fb: josephabio.nartey

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Answers1. Period movement plan: a plan that details proposed dates, the

number of people travelling, and the places to be visited. • Period transport schedule: a schedule used to allocate planned trips

to specific vehicles.

• Seven-day transport schedule: a schedule used to give the most up-to-date information possible about planned trips and the vehicles to be used on them, including updates (as often as daily) that reflect changes to the period transport schedule.

2. Depreciation and Running cost

3. 40,000 (Vehicle replacement cost) ÷ 150,000 (economically viable life/km travelled) = USD 0.27 (depreciation cost per km)

4. Planned Preventive Maintenance

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Answers

5. Directing, Controlling, Organising, Planning and Staffing

6. Warning triangle, fire extinguisher, spare tyre, and a jack

7. Third party insurance

8. Transport KPIs: Distance travelled, Fuel consumption, Running cost/km, Availability%, Use%, Needs satisfaction%, and Safety report.

9. Movement, supporting and motivation

10.Top level- strategic decisions, Middle level-tactical decisions and Frontline level-operational decisions