Improving BEST: How to cut running cost of Mumbai’s public transporter? Part 3
The BrihanMumbai Electric Supply & Transport (BEST), Mumbai's bus operator, does not publish detailed cost accounting to enable proper analysis of costs. Although this is no surprise, we need to  understand costs in order to fix the BEST and make it profitable again. So I have done by best by relying on publicly available data, which is rather sketchy, and does not allow for detailed analysis. 
 
Brief analysis
The expense structure of BEST is quite unique - running expenses and maintenance costs are 60%, Fuel, lubes, oil & consumables account for 20%. Interest, general administration expenses, interim relief payment and gratuity are about 5% each. It will be interesting to note a further breakup of manpower costs, and running expenses and maintenance costs.
 
Manpower
As of 2012-13, BEST had 36,796 employees including 13,252 bus conductors, 13,305 bus drivers, 1,880 operational staff, 5,514 engineering, and 2,847 general administration staff. This staff was operating 4,167 buses in FY2012-13. That is driver-conductor per bus ratio is 6.4 per bus - which is slightly more than three shifts. Fundamentally, this number should be 6. At six, the buses will be running 24x7 on most routes - less on some routes and some buffer manpower to ensure absenteeism.  Overall, the employee to bus ratio comes to 8.8, which is definitely high. 
 
For comparison, Singapore's Mass Rapid Transit (MRT) has 1,400 buses and 2,880 employees giving a ratio of two (estimated from annual reports). There are reasons for higher manpower intensity of BEST. SMRT does not need conductors and has low but high skilled staff of maintenance personnel. Whereas, BEST also undertakes diverse activities like body modifications, and tyre-re-treading. BEST needs to bring this ratio down gradually.
 
Manpower costs 
It is not clear where the manpower costs are included. If we assume average monthly salary of Rs20,000 per employee, we reach a figure of Rs800 crore. This blended average salary is just for reference purpose. The only head that can accommodate this big sum is the running expenses, repairs & maintenance figure, which amounts to Rs1,440 crore.
 
At this level, the manpower costs itself are very high. On a per bus basis, we have manpower cost of Rs19.2 lakh and revenue per bus is Rs30 lakh. If the manpower costs are higher than the problem is compounded. High cost, and large manpower pool is definitely not desirable. If it is indeed higher cost then substantial voluntary retirement scheme (VRS) based pruning will be required. 
 
Running expenses, Repairs & maintenance
The main head of running expenses, repairs & maintenance amounts to Rs1,440 crore. This figure does not include running expenses of fuel, lubricants, oils, and consumable parts. As those are accounted separately. As discussed, it possibly includes salaries of employees. Therefore, we conclude that the maintenance cost amounts to Rs640 crore over 4,167 buses implying maintenance cost per bus of Rs15 lakh. This number is quite excessive. With these figures, a diverse fleet and crude fabrication the cost actually builds up. For comparison, a Volvo city bus costs about Rs85 lakh, a 50-seater-bus costs about Rs35 lakh, so BEST can buy 700 Volvo buses or 1,800 normal buses in the amount it spends on maintenance. With proper tendering, it may cost even less. In other words, every three years, BEST can effectively renew its entire fleet. 
 
Other costs
BEST also incurs substantial costs for experiments that are useless. BEST recently fitted many non-AC buses with automatic door assembly. These assemblies, from the looks of them, were made by BEST themselves and were shoddy. And I do not find any non-AC bus using the automatic door closing. Same is the case of in bus TV. Those TVs have shoddy programming and are not leveraged to the maximum. Another case in point is the electronic displays for bus number and destination, which have quite a high breakdown rate. 
 
It is possible that because of corruption, the costs are high. The BEST employees openly talk of corruption in maintenance department. The parts procured from original equipment manufacturers (OEMs) are sold in black markets and substandard parts are affixed. This pilferage has multiple effects. It reduces the efficiency of the buses, causes more breakdowns and decreases the life of buses. Such corruption is not possible without largescale involvement of the officials. 
 
Reducing the costs
BEST needs a proper cost-reduction strategy. Haphazard initiatives will not yield results. For example, manpower pruning cannot happen along with old ways of working. Thus, you cannot have customised bus bodies and large maintenance shops and less manpower. The whole strategy needs to be reworked. With the amount BEST spends on maintenance, it may be better to purchase completely built up buses from manufacturers with proper performance guarantee or buy bus capacity rather than buses themselves. A sustained application of Total Productivity Management system is needed to reduce costs and improve yields. 
 
Summary
Cost reduction is well understood concept in management. We need not reinvent the wheel. A judicious, persistent and dogged application of cost reduction should improve the situation.
 
Note: The data is taken from BEST administrative report, which is of 2012-13 and financial statements of 2013-14 and 2014-15.
 
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(Rahul Prakash Deodhar is a lawyer, investor and author with experience spanning manufacturing, consulting, investment banking firms. He has advised a wide range of clients including Fortune 500 companies, public and private sector banks, hedge funds and private equity funds among others. He has developed econometric models for demand forecasting in real estate, metals, airlines, and shipping. He designed MIS and planning and budgeting systems, sales networks, and operations for large corporates. He has worked with Aditya Birla Group, CRISIL and Morgan Stanley. He is author of two books – Subverting Capitalism and Democracy and Understanding Firms. He can be reached at [email protected] or at his website www.rahuldeodhar.com.)
 
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Security researcher found bugs in Google's bug tracker
A security researcher has discovered bugs in Google's platform that deals with bugs and unpatched vulnerabilities, leading him to gain access to the company's sensitive internal systems.
 
According to a report in Motherboard in Wednesday, Alex Birsan found vulnerabilities inside the Google Issue Tracker - used internally to track bugs and feature requests during product development.
 
The largest one of these was one that allowed the researcher to access the internal platform at all. The company has quickly patched the bugs found by Birsan and there's no evidence anyone else found the bugs and exploited them, the report added.
 
Birsan found three bugs in the platform.
 
"Exploiting this bug gives you access to every vulnerability report anyone sends to Google until they catch on to the fact that you're spying on them," Birsan told Motherboard.
 
"They are all patched now and he received rewards of $3,133.7, $5,000, and $7,500 for reporting them to Google," the report said.
 
Issue Tracker is available outside of Google for use by external public and partner users who need to collaborate with Google teams on specific projects.
 
The platform has access control permissions that govern which users can find, view, create and modify issues for each project.
 
"We appreciate Alex's report. We've patched the vulnerabilities that he reported, as well as their variants," a Google spokesperson was quoted as saying.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article. 
  

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NTT DoCoMo receives USD1.2 bn as arbitration award from Tata Sons
Japanese telecom major NTT DoCoMo has received 144.9 bn yen (USD 1.2 billion) from Tata Sons following which it has transferred its shares in Tata Teleservices to Tata Sons.
 
"NTT DoCoMo has received from Tata Sons Limited payment of the award amount in accordance with the High Court of Delhi's decision regarding DoCoMo's stake in Tata Teleservices Limited," DoCoMo said in a statement on its website on Tuesday. DoCoMo had in May announced the court's decision.
 
"Concurrent with the receipt of the above amount, all shares in Tata Teleservices Limited held by DoCoMo have been transferred to Tata Sons and companies designated by Tata Sons," the statement said.
 
Earlier, NTT DoCoMo had decided to sell its entire 26.5% stake in Tata Teleservices and withdraw from mobile telephony in India.
 
The legal tussle between NTT DoCoMo and Tata Teleservices continued for almost three years. The Delhi High Court this April had allowed Tata Sons to pay NTT Docomo $1.17 billion arbitration award for termination of their telecom joint venture.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article. 

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