Business Development and Contracts

Business Development and Contracts

Jens Plambeck

Director Strategic Development Stockholm County Council Transport Administration

April 2013

22/04/23

1Transport AdministrationStockholm County Council

Agenda

Facts and figures

Earlier contracts

New approach

Conclusions – so far

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The public transport system in short

Contractstraffic op. and maintenance:

13,5 bn SEK/year

Boardings:2,5 million/day

Bus line 4has as many

passengers/day as SJ

About 80%of the system

runs on renewable fuel

80% market share in the

morning peak in Stockholm

About our passengers

74% satisfied customers

739 000passengersevery day

10 000 ”färdtjänst”

travelsevery day

sl.se has130 000 visitors

every day

The infrastructure in shortThe infrastructure in short

900 000 m2

property1 000

rolling stock244

stations167

bridges

233 kmtrack

Infrastructurevalue

100 bn SEK

32depots

1993 – 2002 From “in-house” to outsourcing Main target – low cost

Lowest price in procurements Contracts based on production Procurement effect~10%

Results of early procurements Contracts where under priced Focus only on cost reduction Quality issues Did not align with all out targets No economic incentives Lack of customer focus Lack of systematic work and focus

on

enhancing the system efficiency

The history of our traffic contracts 2002-2012

More of economic incentives Heavy focus on customer satisfaction Increased degree of co-

operation

Transport AdministrationStockholm County Council

7

Strategic analysis

Passengers

Traffic supply

Customer satisfaction

SL employees

Total cost

Population

Costs, SL employees and customer satisfaction has increased during the period 2000-2009

The number of passengers has not increased enough in relation to costs, satisfied customers of even the population growth…


Case 1: The metro contract development- E17

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Development – dotted line shows the start of the new contract Facts

Operator MTR

Reimbursement model Production based

contract

Incentive share 6%

Responsibility Traffic operations Maintenance Depot operations• Passenger environment• Customer service

Costs per year (MSEK) 2524

Contract E17 - Metro

Costs Passengers

Customer satisfaction

(CS)

Newcontract

CS


9

thinking new…


Strategic principals – a selection Supplier perspective

Increased responsibility to the market

Financial incentives towards our goals

Correct risk sharing

Function related demands

Increased cooperation

Proactively work from the early stages

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The remuneration of the newer traffic contracts is based to a large extent on the incentives to achieve targets

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Share of incentives in 11 traffic management contracts

Completed Existing New contracts


The degree of responsibilities passed to the operator has increased along with the incentive share

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Incitamentsandel vs ansvarsförskjutning till trafikoperatörer i 11 stycken trafikdriftsavtal

Share of incentives vs increased responsibility in 11 traffic management contracts

High

Low

Responsibilityto the operator

High

Incen

tive s

hare

Verified Paid Boardings (VPB)

contracts


Low

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Consultation and

coordination

Follow-up

Traffic planning

Environment & Energy

Traffic information

Security and safety

Passenger environment

Stops

Technical systems

Vehicles(Buses)

Real estate(depots)

Areas of responsibility

Handicap avvailability

Personnel and training

Revenue Assurance

VandalismOperations and

organisation

Customer service

Marketing & Brand

Supply of information

Rapports

Traffic production

Traffic management

Contract phasing

Larger total commitment and responsibility to the operator in our new business


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Two examples of the new reimbursement model

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Operator Keolis

Reimbursement model Quality Incentive

Agreement

Incentive share 27% (depending on

performance)

Responsibility Traffic operations Maintenance

Cost per year (MSEK) 1343 (prognosis)

Contract E19 – Bus for municipalies Nacka, Värmdö, Huddinge, Botkyrka och Söderort

Development E19 Facts

Case 2: Development of traffic contract E19

Costs Passengers Customer satisfaction

(CS)

Newcontract

CS


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Operator• Nobina

Reimbursement model

• Travel Incentive Agreement

Incentive share• 50% VPB

Responsibility• Traffic operations• Maintenance• Depot management• Passenger

environment• Customer service

Cost per year (MSEK)• 261 (prognosis)

Contract E19 B – Bus Norrtälje (municipality north of Stockholm)

Development of E19B Facts

Case 3: The development of traffic contract E19B

Passengers Customer satisfaction

(CS)

Newcontract

CS


Costs

Conclusions – so far The increased costs in the contracts we have

studied depend on:– Shift of responsibility- vehicles– Shift of responsibility- (ie. maintenance for depots)– Increased prices i.e index– Increased offers i.e more traffic, new lines etc.– Environment and accessibility measures

for passengers with disabilities – Incentives

Incentives influence both costs and results. As for the E19 contract (quality incentive)

passenger volumes have increased in accordance with historic numbers, strong continued increased customer satisfaction.

As for the E19b contract (passenger based incentive) passenger volumes have increased more than historically, customer satisfaction has increased to very high levels (85%)

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18

Thank You!

Business Development and Contracts

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