Costs Cost structure The cost structure of a public transport service is complex. Some costs are fixed in the medium term, regardless of the level of activity. Some vary with the number of buses in the fleet, and some with the number of kilometers or hours operated.
It’s important to understand the characteristics of the various cost elements in order to be able to establish, with reasonable accuracy, the cost of any activity. For example, the cost of operating the full service on a particular route, or the cost of an individual journey in the bus timetable.
Level of cost detail in the financial model
Presenting the appropriate level of operating cost and capital cost detail in the financial model will depend, in part, on how the bus operator’s accounting system captures operating and capital costs. The authority has to organize the costs provided by the bus operator into a cost structure that can readily construct and measure financial benchmarks and indicators.
The financial model may include a cost worksheet for each route. This enables the authority to analyze the routes or route combinations they may contract to the private sector and the operating cost efficiency it expects to gain from private operations.
The authority can evaluate the financial position of each route or route combination to help design the tenders for route or area contracts.
Reliability of cost data
Another important factor in cost assessment is the reliability of the cost information. Usually, the authority will have to rely on the operators’ management information systems or their financial reports for cost data.
See also
Capital costs
Operating costs
Authority costs
