As generally understood, the concept of life cycle costing involves the life of the vehicle. Generally overlooked is its relationship to the lives of its passengers.
Principles and Practices
The central principle of life cycle costing is that, while a vehicle that lasts longer may cost more to purchase, it generally costs less to operate. For this to be true, of course, one must spread the purchase price over the vehicle’s life span, along with the appropriate operating costs. An important corollary of this principle is that, when the vehicle’s life is extended beyond a certain point, it costs more to operate it properly than it does to purchase a new one. The pejorative term is ‘properly.
Were one to graph these principles for a new vehicle, the line for maintenance would begin at zero, and slope upward increasingly as the vehicle ages. In contrast, the line for amortization (or depreciation) would descend significantly the moment the vehicle arrives on the purchaser’s lot. Otherwise, this slope is less dramatic, and tends to flatten out somewhat when this line crosses the other one. These lines depict the essence of life cycle costing: After they cross, it is more cost-effective to replace the vehicle. But this is true only if the vehicle is properly maintained.
When one continues to operate the vehicle beyond the point where these lines cross, there are but few explanations for it. One is that the operator does not understand basic arithmetic, or perhaps does not keep track of costs. Another is that he or she does not understand the principles involved. A third is that the acquisition of a new or newer vehicle lies beyond reach, financially. A fourth explanation is far uglier: The operator understands these principles and relationships clearly – but simply chooses to violate and ignore them.
As a matter of logic, these principles can only be violated by two approaches: Non-Payment and Deferred Maintenance. Non-payment rarely occurs because sellers and their agents have a useful tool to enforce it: Repossession. In fact, lessors and financing companies often retain “security deposits” to cover its costs. In contrast, there are few mechanisms to address deferred maintenance. Even annual inspections can be evaded by the operator’s simple failure to register the vehicle. Yet even when inspections occur, few state agencies conduct any follow-up efforts, much less enforcement efforts. Often, the same violations occur year after year.
Heard but Not Seen
One way to recognize a poorly-maintained vehicle is by its sound: As a general rule, the more poorly maintained, the noisier. But this correlation does not lend itself to standards, nor should it. Far more important, the worst ramification of vehicle age and poor maintenance is invisible – at least until a serious accident occurs: The lack of structure. Two recent accidents provide salient illustrations:
- When NTSB investigators examined a school bus whose roof collapsed in a rollover, they were startled to find that it had been held up largely by the sidewalls: Many of the structural frame members had literally rusted away.
- When another investigative team examined a motorcoach that struck a bridge abutment, they found it in pieces – a seeming impossibility for a monocoque vehicle, by definition: Yet parts of the structure seemed to have disappeared.
Glut and Greed
In a nation where practically every business dynamic is driven by unrestrained profit, plenty of money can be made by operating even the most decrepit bus or coach. This reality contributes forcefully to the glut of used motorcoaches on the landscape. This reality is self-enforcing: The older the vehicles become, and the longer their sub-par lives are extended, the more profit can be drained out of them. Of course, this equation is balanced by the risks assumed by these vehicles’ passengers, along with motorists, pedestrians and property owners. Because verdicts are often so capricious, the costs associated with these risks are often not recouped when they materialize as fatalities and injuries.
Clearly, the glut of old motorcoaches affects more than motorcoach manufacturers’ profits, stability and growth. It compromises public safety. It exposes the vehicles’ operators, manufacturers, dealers and lessors to considerable liability. And it tarnishes the industry’s public image. An industry struggling to survive is not well served if the headlines about a few catastrophic accidents suggest the industry’s slogan might be, “Leave the driving to rust!”
Durability and Obsolescence
Another problem with the continued deployment of older vehicles is that they do not contain the numerous advances in safety which technology has progressively provided. A short list of improvements over the past two decades includes ABS brakes, ergonomic driver compartments, motion-sensing detectors, parabolic mirrors and energy-absorbing bumpers – not to mention advances in vehicle structure and suspension systems. Few of these improvements lend themselves to retrofitting as a practical matter, even where they may be physically possible.
To my knowledge, a lawsuit based on the absence of modern safety features has not yet surfaced. But it would be foolish to think it never will. Such a scenario lies two simple elements away from reality: (a) A bus or coach with obsolete features that should not have been on the street for other reasons, and (b) a catastrophic accident which might have been avoided if the vehicle had possessed them.
Pride and Prejudice
It is obviously not true that vehicle age and condition are interchangeable. Some vintage motorcoaches are meticulously maintained. Many in mint condition are exhibited at bus bashes and other forums. But these vehicles are exceptions. In most cases, the lines on the graph tell the tale. Occasionally, the tale involves mayhem.
Another obvious albeit unstudied correlation is that the operation of older vehicles mirrors their generally poor condition. Particularly in the era of deregulation, and more recently with NAFTA, the proliferation of smaller, less-professional operators has been accommodated by the availability of old, cheap buses often sold or leased at bargain-basement prices or rates because they might otherwise be scrapped. Such operators are less likely to comply with regulations, much less adhere to safe operating practices which regulations do not encompass.
This author is not insensitive to the need for competition, the rights of small businesses to compete against large ones, or an individual’s right to enter the market. But these rights and needs must be tempered against the public’s right to safety. They must also be tempered by the liability to which unreasonable risk-takers are almost certain to be exposed.