Total Cost of Ownership
TCO is a financial method intended to help you calculate the direct and indirect costs of acquiring a vehicle. The formula to calculate the costs of purchasing a vehicle is as follows:
When budgeting for the purchase of vehicles, often organisations (only) include the capital costs of the vehicle. As a result, they do not have the budget to train drivers and follow their maintenance schedule which leads to an increase in the number of road traffic incidents and vehicle break-down. You are advised to sit together with your programme staff and agree to include the direct and indirect fleet costs in the relief programme proposals sent to donors.
If you are considering purchasing new vehicles and you are unsure of the duration of the Coronavirus response, it would be wise to examine your organisation’s disposal policy and plan how you will dispose of them. This will give you an idea of when vehicles have reached the end of their lifecycle as well as the methods available to dispose vehicles. Occasionally, national regulations for disposal of property can facilitate or hinder the disposal of your vehicles; it is important to understand how the procedure works and what obstacles it will be present when it is time to dispose of the vehicles. You should consult with other humanitarian organisations in your country to determine how they dispose of vehicles.