THE HIGHWAY DESIGN AND MAINTENANCE STANDARDS SERIES Vehicle (w Co "'4 Public Disclosure Authorized 9952 Public Disclosure Authorized Public Disclosure Authorized , .0.. * ... ..... ... Public Disclosure Authorized AWorld Bank Publication I I I I I THE HIGHWAY DESIGN AND MAINTENANCE STANDARDS SERIES Vehicle Operating Costs Evidence from Developing Countries Andrew Chesher and Robert Harrison Publishedfor The WorldBank The Johns Hopkins University Press Baltimore and London © 1987 The International Bank for Reconstruction and Development / The World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. All rights reserved Manufactured in the United States of America The Johns Hopkins University Press Baltimore, Maryland 21211 First printing December 1987 The findings, interpretations, and conclusions expressed in this study are the results of research supported by the World Bank, but they are entirely those of the authors and should not be attributed in any manner to the World Bank, to its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent. Library of Congress Cataloging-in-PublicationData Chesher, Andrew, 1948- Vehicle Operating Costs: evidence from developing countries by Andrew Chesher and Robert Harrison. p. cm. - (The Highway design and maintenance standards series) Bibliography:p. 1. Motor vehicles-Developing countries-Cost of operation. I. Harrison, Robert, 1943- . II. Title. III. Series. TL151.5.C48 1987 361.6'1'072-dcl9 87-22178 ISBN 0-8018-3588-7 Foreword An effective road transportation network is an important factor in economic and social development. It is also costly. Road construction and maintenance consume a large proportion of the national budget, while the costs borne by the road-using public for vehicle operation and depreciation are even greater. It is therefore vitally important that policies be pursued which, within financial and other constraints, minimize total transport costs for the individual road links and for the road network as a whole. To do this meaningfully, particularly when dealing with large and diverse road networks, alternatives must be compared and the tradeoffs between them carefully assessed. This in turn requires the ability to quantify and predict performance and cost functions for the desired period of analysis. Because of the need for such quantitative functions, the World Bank initiated a study in 1969 that later became a large-scale program of collaborative research with leading research institutions and road agencies in several countries. This Highway Design and Maintenance Standards Study (HDM) has focused both on the rigorous empirical quantification of the tradeoffs between the costs of road construction, road maintenance, and vehicle operation and on the development of planning models incorporating total life-cyclecost simulation as a basis for highways decisionmaking. This volume is one in a series that documents the results of the HDM study. The other volumes are: Vehicle Speeds and Operating Costs Models for Road Planning and Management Road Deterioration and Maintenance Effects Models for Planning and Management The Highway Design and Maintenance Standards Model Volume 1. Description of the HDM-III Model The Highway Design and Maintenance Standards Model Volume 2. User's Manual for the HDM-III Model Road-user costs are by far the largest cost element in road transport. Improvements in road conditions, although costly, can yet pay substantial dividends by reducing vehicle operating costs and hence generate large net benefits to the national economy as a whole. Thus, expressing vehicle operating costs in relation to road characteristics-geometry and pavement condition-is the logical approach. For certain cost components, especially fuel consumption, the required data can be obtained through controlled experiments, whereas for others, especially vehicle maintenance costs, extensive road user surveys are needed. Both approaches were used in the HDM studies in Kenya, Brazil, and India and in the study in the Caribbean sponsored by the British Transport and Road Research Laboratory. The resulting body of knowledge on road-user costs is enormous. It covers conditions on three continents, with diverse highway conditions, and in radically different economic environments. This volume considers vehicle operating cost equations in an economic context and analyzes experimental and survey data through statistical means. The findings are interpreted not only in the mechanistic sense, but also in the sense of understanding how economic influences bear on a firm's operating decisions. Firms' responses to highway conditions depend not only on vehicle design and performance, but also on the costs incurred under alternative operating policies and thus on the prices of inputs and on the nature of the competitive market in which transport services are sold. These considerations are of crucial importance when the cost relationships are applied in new environments with different price configurations. A particularly important application of this principle is in the evaluation of depreciation and interest costs. These costs are difficult to determine through experimen- tation and surveys, but they can be assessed through judicious use of data on maintenance and other costs, as well as in light of factors such as tariffs, taxes, and legislation. iii This volume is to some extent a companion to Vehicle Speeds and Operating Costs:Models for Road Planning and Management, which is based on an aggregate-mechanistic methodology that considers vehicle operating cost equations essentially in a mechanistic context. These two approaches are complementary and elucidate different aspects and different components of the road-user cost complex. Most of the relationships described in this volume are included in the HDM-III model, sometimes as alternatives to relationships derived on a different basis. But they can also be used on their own and are particularly helpful for comparing the relationships in the various studies that were derived on different premises. In this sense, they help to explain such differences and the technical, economic, political, and other factors that caused them. Clell G. Harral Per E. Fossberg Principal Transport Economist Highways Adviser iv Contents Preface ix Part I. Vehicle Operating Costs: Background, Theory, and Estimation I Chapter 1. Vehicle Operating Cost Studies 3 Chapter 2. Vehicle Operating Costs: Theory and Estimation 11 2.1 VehicleOperating Costs: Theory 13 2.1.1 Choice of scrapping date 17 2.1.2 Choice of utilisation and fleet size 23 2.1.3 The effect of highway conditions on the cost of provision of transportation 25 2.2 Statistical Analysis of User Cost Data 28 Appendix. A Model for VehicleOperating Costs 34 A2.1 Optimal replacement policy, vehicle value, depreciation, and interest costs 35 A2.2 Choice of utilisation and fleet size 38 A2.3 The sensitivity of costs to highway conditions 39 Part II. Estimates of Cost Components 43 Chapter 3. The User Cost Studies 45 3.1 The Background to the Studies 45 3.2 Research Organisation 57 3.2.1 The Kenyan study,1971-75 57 3.2.2 The Brazilian study, 1975-82 58 3.2.3 The Caribbean study, 1977-82 60 3.2.4 TheIndianstudy, 1977-82 62 3.3 Data Collection 65 3.3.1 Usercostdata 65 3.3.2 The measurement of highway characteristics 68 Chapter 4. Vehicle Speeds 75 4.1 The Brazil Speed Model 76 4.2 Car and Light Goods VehicleSpeeds 79 4.3 Bus Speeds 88 4.4 Truck Speeds 89 4.4.1 Medium trucks 92 4.4.2 Heavy and articulated trucks 95 4.5 Concluding Remarks 95 Appendix. VehicleSpeed Equations 100 A4.1 Kenya 100 A4.2 Caribbean 102 A4.3 Brazil 103 A4.4 India 113 V Chapter 5. Fuel and Lubricant Costs 117 5.1 Fuel Consumption Models 118 5.2 Fuel Consumption Equations and Predictions: Cars and Light Goods Vehicles 121 5.3 Fuel Consumption Equations and Predictions: Buses and Trucks 129 5.4 Fuel Consumption: Concluding Remarks 142 5.5 Lubricant Costs 142 Appendix A. Fuel Consumption Equations as Reported by the Four Studies 146 A5.1 Kenya 146 A5.2 Caribbean 148 A5.3 Brazil 150 A5.4 India 155 Appendix B. Engine Oil Consumption Equations as Reported by the Four Studies 161 B5.1 Kenya and Caribbean 161 B5.2 Brazil 161 B5.3 India 162 Appendix C. Tables of Speed and Fuel Consumption Predictions 165 Chapter 6. Tire Costs 193 6.1 TireCostData 196 6.2 EstimationofTireCostEquations 198 6.3 Tire Consumption: Cars and Light Goods Vehicles 200 6.4 Tire Costs: Buses and Trucks 204 6.5 Concluding Remarks 215 Appendix. Tire Equations as Reported in the Four Studies 217 A6.1 Kenya 217 A6.2 Caribbean 218 A6.3 Brazil 219 A6.4 India 222 Chapter 7. Maintenance Costs 227 7.1 Collection of Maintenance Cost Data 230 7.2 Statistical Analysisof Maintenance Cost Data 232 7.3 Maintenance Parts Costs: Estimated Equations 233 7.3.1 Maintenance parts costs: cars and light goods vehicles 234 7.3.2 Maintenance parts costs: buses 242 7.3.3 Maintenance parts costs: trucks 247 7.4 Maintenance Labor Costs: Estimated Equations 255 7.5 The Effect of Highway Geometry on Maintenance Costs 260 7.6 Concluding Remarks 266 Appendix A. Maintenance Parts Equations as Reported by the Four Studies 270 A7.1 Kenya 270 A7.2 Caribbean 272 A7.3 Brazil 273 A7.4 India 277 vi Appendix B. Maintenance Labor Equations as Reported by the Four Studies 281 B7.1 Kenya 281 B7.2 Caribbean 282 B7.3 Brazil 282 B7.4 India 283 Part III. Total Vehicle Operating Costs 287 Chapter 8. The Calculation of Transport Costs 289 8.1 Relationships between VehicleValue and VehicleAge 291 8.2 VehicleUtilisation 298 8.3 Depreciation, Interest, andMaintenanceCosts 301 Appendix A. Relationships between VehicleValues and VehicleAge 310 A8.1 Kenya 310 A8.2 Caribbean 310 A8.3 Brazil 311 A8.4 India 312 Appendix B.