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National Express Transit Blog

7 Strategies for Managing Operating Costs for Rural Public Transit

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In order to run an efficient and productive rural public transit system, and one that doesn't consistently overrun the budget, it's important to keep operating costs under control. Without adequate controls on operating costs, rural public transit systems are at risk of running with a high overhead, which can impact not only the current level of service, but also the future of these programs. Balancing the needs of the agency's customers with the costs for those services is one key aspect of effective transit agency management, and learning how to reduce or minimize those operating costs is a crucial skill.

1. Begin with data

As the saying goes, you can't manage what you can't measure, so gathering reliable cost data is an important first step. Having access to cost data that is consistently and accurately reported allows for agencies to assess their current operations and to then measure the effects of any improvements that are made.

2. Standardize cost reporting

Without standardized cost reporting, it can be difficult to analyze true operating costs. Adopting a standard chart of accounts that conforms to the Uniform System of Accounts (USOA), which is the public transportation industry standard for the Federal Transit Administration and National Transit Database, and using the accrual method of accounting, are essential.

3. Compare cost data with peers

Although each rural public transit system has distinctly different particulars in how, when, and where they operate, comparing agency cost data with peer agencies can help managers assess where their organization stands in relation to other similar agencies. Benchmarking operating costs against other agencies can be helpful in finding specific costs, as well as cost categories, that are above those of similar agencies.

4. Analyze current and historical data

By comparing historical cost and performance data with current data, as well as comparing budget figures with actual cost figures over the years, agency managers can identify areas where costs are out of line. This practice can also help to identify cost trends and better predict the future financial performance of the agency.

5. Assess salaries and wages

With salaries and wages making up the largest percentage of operating costs, assessing and evaluating current staff hours and performance, as well as shift scheduling, can be an effective first step in managing operating costs. Implementing and maintaining clear policies for personnel, and regularly evaluating employee performance against those policies, is another cost control tactic, as is regularly adjusting staffing levels based on actual service demands.

6. Review suppliers and contracts

Performing regular audits or analysis of current suppliers and contracts is a great practice to implement, as it can help identify areas where cost savings can be found. When used in conjunction with peer benchmarking, this may uncover instances where bringing a process or task in-house may save money, or where outsourcing the work to a contractor may be more effective and cost-efficient.

7. Analyze vehicle maintenance costs

As with other relevant operating cost data, understanding the true costs of vehicle and facility maintenance can be a key to unlocking more cost savings. Using standardized cost reporting data for fleet asset management costs, most likely using a maintenance cost per revenue mile (or hour), allows for better benchmarking, as well as the tracking of costs before and after any changes are made. 

With many Americans relying more on rural public transit these days, it's imperative that agencies keep their operating costs under control, which can be an effective approach to not only better financial health for those agencies, but also to improving productivity and performance for those riders.

 

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