COMPETITION CONTRACTING Public Transport Competition Contracting Programme Introductions
COMPETITION & CONTRACTING Public Transport: Competition & Contracting Programme Introductions Brainstorm on identifying stakeholders Brainstorm on the ideal public transport system Presentation on competition, contracting and quality partnerships Break Small group exercise: preparing a contract specification Role play exercise: negotiating and agreeing a contract www. eu-portal. net
COMPETITION & CONTRACTING Competition, contracting and quality partnerships Transparency, efficiency and quality are the keys for a friendly and efficient Public Transport System. • The co-existence of authorities and operators, the necessary allocation of responsibilities sharing of risks as well as co-ordinated ”pull” and ”push” measures are other crucial issues www. eu-portal. net
COMPETITION & CONTRACTING SOURCES The following EU projects served as key sources: • ISOTOPE (improved structure and organisation for transport operations of passengers in Europe) • MARETOPE (managing and assessing regulatory evolution in local public transport operations in Europe) • QUATTRO (quality approach in tendering urban public transport operations) • CIVITAS - CIty-VITAlity-Sustainability • NPF-Urban Transport - The National Policy Frameworks for Urban Transport Project • SPUTNIC - Strategies for Public Transport in Cities www. eu-portal. net
COMPETITION & CONTRACTING EU Policy regarding Regulation of Passenger Transport Service Obligations with regard to public road and rail passenger transport Proposed Changes to Legislation COM(2005)319 Principles: • Contractual arrangements between the competent authority and the operator(s) responsible for providing services where financial compensation or exclusive rights are granted. • Need for periodic review of contract terms, so limits on its duration. • Competitive tendering for public service contracts, except in certain cases where direct award is possible, e. g. rail/underground systems or below a certain financial threshold. www. eu-portal. net
COMPETITION & CONTRACTING Agreed regulation of passenger transport services – “controlled competition” Local authorities may directly award a public service contract in 4 cases: • When the local authority provides the transport itself or through a distinct entity over which it exercises control (so called internal operator). • When the average value of a contract is small (less than € 1 m or less than 300, 000 km) and in the case of a SME (no more than 23 vehicles) thresholds may reach € 2 m or 600, 000 km. • In the event of immediate risk of disruption of services. • Where contracts concern transport by rail including suburban trains, regional trains, long distance trains with the exception of metro and trams. www. eu-portal. net
COMPETITION & CONTRACTING RIGHT OF INITIATIVE • competition on the road (UK) market initiative • competition off the road (very common throughout the EU) authority initiative Organisational forms Note! Tendering is possible in all models! Authority initiative Public system Source: MARETOPE Concession Market initiative Authorisation Open entry Delegated management Dominated by private companies) Public management Dominated by public companies) www. eu-portal. net
COMPETITION & CONTRACTING RIGHT OF INITIATIVE The market initiative regimes have as a common characteristic that commercially viable services are meant to appear from autonomous market processes. Authority initiative regimes have as common characteristic that services can only result from a conscious action by the authority. As such no services can appear as a result of simple market forces as no legal provision makes such autonomous entry possible. Organisational forms Note! Tendering of the realization is possible in all models! Authority initiative Public system Concession Market initiative Authorisation Open entry Delegated management Dominated by private companies) Public management Dominated by public companies) www. eu-portal. net
COMPETITION & CONTRACTING It is important to state that few real-world examples will fully correspond to any of these theoretical organisational forms. . Normally it is a blurry blend of several forms Organisational forms Authority initiative Open entry . . . Temporary non -exlusive authorisation . . . Temporary exclusive authorisation . . . Perpetual exclusive Perpetual authorisation Concession Source: MARETOPE . . . Delegated management Delegated . . . Central planning & out sourcing . . . Public management Source: MARETOPE Market initiative www. eu-portal. net
COMPETITION & CONTRACTING FORMS Organisational forms Open entry. . . Temporary non-exlusive authorisation. . . Temporary exclusive authorisation. . . Perpetual exclusive authorisation Concession. . . Delegated management. . . Central planning & outsourcing. . . Public management www. eu-portal. net Source: MARETOPE Market initiative Authority initiative
COMPETITION & CONTRACTING LEVELS OF PLANNING AND CONTROL IN PT Level Decision General description Strategic What do we want to achieve? Software Hardware General goals: transport policy market share profitability General description of the services: Long term (5 year) Tactical Which services can help to achieve these aims? Medium term (1 -2 year) Operational How to produce these services? Short term (1 -6 months) Source: MARETOPE area target groups intermodality Detailed service characteristics fares image additional services Sales selling activities information to the public… vehicles routes timetable Production infrastructure management vehicle rostering and maint. personnel rostering and mngt. www. eu-portal. net
COMPETITION & CONTRACTING EXAMPLE: TENDERING OF THE DESIGN AND REALISATION (COMMISSIONING) The freedom of operators is limited by the minimum standards defined by the commissioning agency which organises the tendering of all services, area-wise, according to the instructions of the transport authority. In many cases decisions pertaining to one topic, such as fares or routes, will not be attributed totally to solely one actor. Source: MARETOPE www. eu-portal. net
COMPETITION & CONTRACTING Actor “The People” Transport Authority Political council Relation Strategic Source: MARETOPE Instructio ns Transport Providers Independent Organisation Private companies Contract with tendering organisation Transp. Pol. Social pol. (discussio (ndiscussion) ) Mobil. Std. Accessib. Std. (Min. std. ) (Mid. std. ) Competitive tendering Operational Hierarchi cal control Translation Tactical Democrat ic control Transport Department Tendering organisation Fares Routes Timetable Vehicle type Sale Information Person. Mngt. Vehicle Mngt. www. eu-portal. net
COMPETITION & CONTRACTING CONTRACTUAL RELATIONSHIP BETWEEN ACTORS Contracts in the public transport world usually divide between production cost risks and revenue risks. Risks can be shared in various ways implying many intermediate forms of contracts are possible as can be seen in the shaded boxes. Production risk borne by Authority Management M with Revenue risk borne by Revenue Contract incentives (M) Operator Source: MARETOPE Operator M with productivity Productivity and incentives revenue incentives GC with Shared production risk GC with rev. incentives and shared prod. risk NC with shared revenue and production risk Gross Cost Contract (GC) NC with Shared production risk Net Cost Contract (NC) GC with Revenue incentives NC with Shared revenue risk www. eu-portal. net
COMPETITION & CONTRACTING Production risk borne by Authority Revenue risk borne by Authority Operator Source: MARETOPE Operator Management Contract (M) M with Productivity incentives M with Revenue incentives M with productivity and revenue incentives GC with Shared production risk GC with rev. incentives and shared prod. risk Gross Cost Contract (GC) GC with Revenue incentives NC with shared revenue and production risk NC with Shared revenue risk NC with Shared production risk Net Cost Contract (NC) www. eu-portal. net
COMPETITION & CONTRACTING CONFLICT TYPES There are internal (industrial relations) and external (between an authority and an operator) and will vary in their magnitude of importance. Contracts should include provision for remedy covering all the risks that may be foreseen at the outset. Flexibility is one important part to guarantee a sustainable service which can cope with future challenges. CONFLICT TYPES Responsibilities Source: ISOTOPE Finance Objectives to Reach Fare Policy Performance Other www. eu-portal. net
COMPETITION & CONTRACTING OWNERSHIP VERSUS USAGE Management The figure presents possible combinations of public or private ownership with public or private management indicating different types of contracts between government and state-owned enterprises, private managers of Ownership state assets and Public Private private monopoly, Private respectively. Delegated management Private concession (wb: Management contract) (wb: Regulatory contract) Public management (wb: Performance contract) Public Source: MARETOPE www. eu-portal. net
COMPETITION & CONTRACTING Ownership Public Private Management Private Delegated management Private concession (wb: Management contract) (wb: Regulatory contract) Public management (wb: Performance contract) Public Source: MARETOPE www. eu-portal. net
COMPETITION & CONTRACTING FIXED VERSUS FLEXIBLE PLANNING In the context of tendering, decision making at the tactical level can be organised. • prior to the contracting out and operators have no tactical powers (London, Copenhagen) • (prior to the contracting out and operators have some tactical powers (Helsingborg, Sundsvall) • during the contracting out (Netherlands, France) simultaneously with the contracting out of the operational level • during the contracting out not simultaneously with the contracting out of the operational level www. eu-portal. net
COMPETITION & CONTRACTING FIXED VERSUS FLEXIBLE PLANNING These various forms are ordered into four main options for the place of the tactical (T) decisions. T Determined During contracting/tendering T Changes During contract T Fixed During contract Source: MARETOPE T Determined prior to contracting/tendering Contracting/tendering of: · The Development and · the implementation · with redevelopment incentives. Contracting/tendering of: · The Development and · the implementation www. eu-portal. net
COMPETITION & CONTRACTING CONTRACT DESIGN The contract should specify: • objectives of continuous improvement • tools and responsibilities, including measurement and/or monitoring programmes • consequences of the measures, including financial incentives and/or penalties • control of these results • recourse procedure in the case of non application of the contract www. eu-portal. net
COMPETITION & CONTRACTING CONTRACT DESIGN This specification of services should stimulate operators and authorities to cover all operational/tactical fields of interest by the continuous improvement system: • Transport (including access/exit by users) • Connections (inside UPT/with other modes) • Information to customers (static/real time) • Fares and sales system • Environmental impact (in a broad sense) www. eu-portal. net
COMPETITION & CONTRACTING INTEGRATION The contract should specify: • Logical integration • Physical integration • Traffic integration Continuous improvement By ”continuous improvement” of urban public transport, we consider the need for continuous adjustment of the service design and of the organisation in charge of providing the service, in order to maintain or increase its value. Innovation in service and management is generated by continuous improvement systems. www. eu-portal. net
COMPETITION & CONTRACTING QUALITY SERVICE FRAMEWORK 8 main indicators: 1. Availability 2. Accessibility 3. Information 4. Time 5. Customer care 6. Comfort 7. Security 8. Environment www. eu-portal. net
COMPETITION & CONTRACTING AVAILABILITY www. eu-portal. net
COMPETITION & CONTRACTING ACCESSIBILITY www. eu-portal. net
COMPETITION & CONTRACTING INFORMATION On street underground real time display in Stuttgart www. eu-portal. net
COMPETITION & CONTRACTING TIME www. eu-portal. net
COMPETITION & CONTRACTING CUSTOMER CARE www. eu-portal. net
COMPETITION & CONTRACTING COMFORT www. eu-portal. net
COMPETITION & CONTRACTING Quality partnerships Three sorts of voluntary partnerships: • Route or corridor based partnerships • Area-wide partnerships • Social partnerships Statutory partnerships: Aim: to give partners confidence to invest • • • Local authority provides particular facilities Bus Operators who wish to use them adhere to agreed standards Traffic Commissioners act as regulator Standards can only encompass quality measures Fares, Frequency, Timings are not covered, except in Scotland where minimum frequencies can be defined www. eu-portal. net
COMPETITION & CONTRACTING Partnership Framework Fair and open access – no exclusion Quality standards Exclusion from facilities only for non partners Consultation Ensure that it is not anti-competitive Quality contracts – stick or carrot? www. eu-portal. net
COMPETITION & CONTRACTING Components Service dimensions: • Journey time reliability • Labour/equipment availability • Congestion levels, infrastructure priorities • Information • Stability/knowledge/printed/interactive • Comfort • Vehicle quality, driver quality, traffic environment • Access to the system • Low floor buses, stops, interchanges www. eu-portal. net
COMPETITION & CONTRACTING Measures & responsibilities Local authority: • • Bus priority measures, e. g. bus lanes, traffic light priority Bus shelters; well maintained with good lighting and timetable information (RT) Bus stops; well maintained, with good lighting and timetable information Dropped kerbs and Kassel kerbs with raised platforms Parking restrictions enforced to enable buses to access stops Improved interchanges between routes and modes Quality walking routes to bus stops Operators: • • • Provision of modern, comfortable, low floor, low pollution vehicles Provision of timetable information at all stops Provision of drivers trained in customer care able to provide appropriate information Provision of easy to understand timetable information and fare structures Joint travelcard amongst operators and modes Employers: • Preparation of travel plans to promote use of PT for commuter and work trips • Provision of data on staff travel patterns to help with service design www. eu-portal. net
COMPETITION & CONTRACTING QUALITY CONTRACTS AND TENDERS • Influence of the legal framework • Influence of the share of risks • Use the tender to promote quality • Quality in the contract itself www. eu-portal. net
COMPETITION & CONTRACTING QUALITY CONTRACTS AND TENDERS Influence of the legal framework Market regulation Procedures regulated limited competition free access open tendering restricted tendering direct negotiation www. eu-portal. net
COMPETITION & CONTRACTING QUALITY CONTRACTS AND TENDERS Influence of the share of risks Types of contracts net cost Risks auth both gross cost ope auth both management ope Auth both ope political production revenue financial planning environmental contractual Source: Quattro www. eu-portal. net
COMPETITION & CONTRACTING Role play groups Local Authority/Municipality Task: To secure an operator for new route(s)/service(s) PT Operator Task: To win and agree the contract for new service(s)/route(s) Developer Task: To ensure viability of your development (selling/renting dwellings and commercial units) Local people – prospective residents and businesses Task: To be able to live, work and play using PT in their area www. eu-portal. net
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