Refranchising Melbourne’s metropolitan train and tram networks
Deloitte Touche Tohmatsu ABN 74 490 121 060
180 Lonsdale Street Melbourne VIC 3000 GPO Box 78 Melbourne VIC 3001 Australia
DX 111 Tel: +61 (0) 3 9208 7000 Fax: +61 (0) 3 9208 7001 www.deloitte.com.au
Review of the Department of Infrastructure value for money assessment of private involvement in the Melbourne metropolitan train and tram networks
Deloitte Touche Tohmatsu were engaged to review the Department of Infrastructure’s (“DOI”) value for money assessment of the private involvement in the Melbourne metropolitan train and tram networks (the “DOI Assessment”), including the accuracy of information and the assumptions and data underlying the conclusions presented.
Scope and work performed
The work performed by Deloitte was a high-level, exceptions-based review conducted in accordance with Australian Auditing Standard AUS 110, comprising primarily of inquiries of relevant personnel, and inspection, on a sample basis, of evidence and supporting documentation and analysis. Deloitte did not provide comment or opinion on the DOI Assessment or its conclusions, but rather performed certain procedures to identify whether the interviews conducted and sample data that Deloitte reviewed revealed any inconsistencies with the DOI Assessment, its assumptions or conclusions.
Conclusion
In July 2007, Deloitte stated in our report that “based on the work which we have performed, nothing has come to our attention that would cause us to believe that, in all material respects, the key assumptions and statements underpinning the conclusions reached in the DOI Assessment report are inconsistent with the source data referred to in the report.”
Qualifications and limitations
Deloitte’s work was performed solely for the benefit of the DOI and may not be relied upon by any other person. The qualifications and limitations of the review performed by Deloitte are explained more fully in our report.
Deloitte Touche Tohmatsu
Liability limited by a scheme approved under Professional Standards Legislation.
Contents
Section 1: Introduction 5
Section 2: Cost to the State 7
Section 3: Risk Allocation 11
Section 4: Franchisees’ performance since contract commencement 12
Section 5: Overall Summary 23
This report has been produced by the Department of Infrastructure. 4 Melbourne Public Transport Overview Metropolitan Rail Franchising 2007 Section One: Introduction
The train and tram network has now Framework for assessing value Assessment of the success of the been operated by the private sector for money risk transfer in the arrangements for more than seven years. The within the current arrangements • Performance of incumbent Franchise Agreements with Connex The framework for this review will operators – (operating Melbourne’s train system use the same parameters used by Review of the performance of the under contract to the Government) the Auditor General in the 2005 incumbent operators since 2004 and with Yarra Trams (for the tram review of the re-franchising process against Business Plan KPIs. system) expire in November 2008. – cost to the State, risk allocation The Government therefore needs In summary: and performance. to decide whether and in what form • the Auditor-General confirmed to retain private sector involvement The Auditor General reviewed in 2005 that the costs, risk in the operation of train and tram the payments the government allocation and the performance services. In particular, it must decide negotiated with the train and levels negotiated in the franchise whether private sector involvement tram franchisees and assessed agreements in 2003/04 provided in service delivery provides a value the allocation of risks within the ‘reasonable value for money’ for for money outcome to the State. franchise agreements. This the State; review will also focus on the way This document: • the cost of operating the the franchisees have managed metropolitan train and tram • sets out a framework by which to risks through their performance in network remains relatively define value for money; operating the network since 2004. constant when costs are • lays out a definition by which to To determine value for money the normalised to reflect constant quantify value since contract following components have been investment in rolling stock; commencement in 2004; assessed: • the risks transferred to the • assesses performance of • Cost to the State – private sector have held since the incumbent since contract Outline of the approach taken by contract commencement; and commencement against that the State in the re-franchising • the performance of the incumbent framework and definition; and process to establish the operator operators has been sound when subsidy level • draws a conclusion about whether assessed against the 2004
value for money has been tender evaluation criteria and KPIs Review of the Auditor General’s achieved. in each franchise Business Plan. conclusions with regard to the 2003 process • the performance of the incumbent operators has been sound when Assessment of the actual assessed against the 2004 outcome of costs to operate the tender evaluation criteria and KPIs franchises in each franchise Business Plan; • Risk Allocation - and Review of the 2004 re-franchising process and the Auditor General’s conclusions about that process 5
Section Two: Cost to the State
Re-franchising process • establishment of a Franchise The risk-adjusted PSBs were 2003/04 Agreement with PTD, to monitor developed in accordance with service delivery and customer Partnerships Victoria Guidelines, Public Sector Benchmarks (PSBs) service to standards specified; with significant risks identified, were developed as part of the and valued and allocated. Risk re-franchising process to predict parameters and values were then • outsourcing of maintenance to the future revenues and costs determined and validated in a specialist providers who have of operating the two franchises, series of risk workshops, involving a greater level of competency thereby: Departmental staff and external to undertake works and bear advisors. • informing the Government about operational risk. what it would cost an efficient Offers submitted by Connex and Within these parameters the project public sector organisation to Yarra Trams during the course of the team developed “raw “ (ie, non-risk- operate the franchises, in the negotiations were assessed against adjusted) PSBs based on forecast event that negotiations with a range of pre-defined evaluation revenues and cash costs for the incumbents was unsuccessful; criteria. Financial aspects of these businesses over a seven year and bids were assessed in the light period to 2010. • allowing the evaluation of the of the PSBs. Comprehensive bid reasonableness of the offers The PSBs comprised: evaluation reports were presented to Cabinet and decisions taken submitted by Connex and • base estimates of the most by Ministers, in the light of these Yarra Trams. important revenue and cost reports, on the value-for-money inputs - including driver costs, The PSBs reflected the provided in the offers submitted infrastructure renewals and Department’s assessment of the by Connex and Yarra Trams. The maintenance costs, rolling stock most efficient possible means of analysis in the bid evaluation reports costs, and fare revenue; public sector operation, based on a confirmed that, on the basis of the publicly owned enterprise providing • competitive neutrality PSBs, a return to public operation the same scope of services as that adjustments - to adjust for would not offer value-for-money to demanded of Connex and Yarra advantages or disadvantages the State when compared to the Trams. accruing to a public operator arrangements negotiated with the The model provided for: because of their state ownership two incumbent franchisees. (such as the absence of any • a Government Business obligation to pay taxes); and Enterprise (GBE) governance structure to oversee the • transferable risks – which were development, monitoring and identified and valued through achievement of objectives a standard “Monte Carlo” risk and provide an accountability analysis. framework;
7 Auditor-General’s Report – To assess this, the Auditor-General The other component of the Franchising Melbourne’s train developed a “good practice” model Auditor-General’s value for money and tram system 2005 based on a review of Partnerships assessment was whether DOI Victoria guidelines and practices effectively used other negotiation The objective of the – Franchising in the UK and other overseas strategies to achieve a desirable Melbourne’s train and tram system jurisdictions. The Auditor-General’s outcome. The Auditor-General audit was to determine if the good practice model required that: identified eight other strategies in renegotiated franchise agreements addition to the PSBs. The review for the metropolitan train and • the PSBs were clear, determined that all were either tram system represented value comprehensive and transparent; effective or partially so, in delivering for money. In particular, the audit • the PSBs main inputs were the overall objective: sought to determine whether: robust, accurately applied, On the whole, DOI had adequate • the responsible agencies validated and endorsed; and strategies (other than the PSBs) effectively managed the process • changes made to the PSBs, once to influence the environment of developing the current the offer and evaluation and within which negotiations were franchise agreements, so as to negotiation process commenced, taking place, and to assess ensure value for money, and were made in a robust manner. franchisees offers… Throughout • the 2004 franchise agreements [Page 68] the renegotiation process, DOI adequately took account of the simulated, as best it could, the Specifically, the Auditor-General’s lessons learnt from the 1999 competitive pressures of an open review found: franchise agreements. [Page 4] book tender process. DOI also The PSBs were an effective tool in used the renegotiation process to The review’s overall conclusion was: helping the government become establish arrangements whereby Our overall conclusion is that the an informed purchaser during the the government shares excessive current train and tram franchise renegotiation of the rail franchises. profits made by the franchisees. agreements represent reasonable The PSBs were developed in a By focusing in detail on the value for money (assuming that robust manner, according to good Department’s public sector franchisee performance meets practice, and were effectively used benchmarking process, the Auditor- contracted levels). [Page 4] to negotiate the franchisee’s offer. General took the option of public The franchisees’ forecasts were In coming to this conclusion, the sector operation fully into account reasonable and consistent with past Auditor-General assessed value in reaching his conclusion that “the trends, and their overall offers were for money by examining the risk franchise renegotiations resulted financially sustainable. [Page 87]. transfer in the agreements, the in a good outcome for the state”. PSBs developed by DOI and the The report concluded: negotiating strategy adopted by Using the benchmarks, DOI the Department to complement effectively negotiated Connex and the PSBs. Yarra Trams offers to within about 3 The review examined whether DOI’s percent of the relevant public sector PSBs were effective by determining benchmark (for trains $1 548 million whether DOI: and for trams - $598 million). [Page 7] • developed robust PSBs; and • used the PSBs effectively during the offer evaluation and negotiation process. [Page 67]
Page number references relate to the Auditor General’s Report
8 Melbourne Public Transport Overview Metropolitan Rail Franchising 2007 Costs of operating the The increase in recurrent funding The following is DOI’s analysis metropolitan train to franchisees of $1.1 billion over comparing the costs from 1998/99 and tram system 5 years as part of the re-franchising with the forecast franchisee process was a result of the subsidy for 2005/06 and the The forecast subsidy lines unsustainable nature of the initial actual payments for that year. developed as part of the re- 1999 Agreements, where patronage franchising process were deemed growth and cost reductions were to be value for money by the Auditor expected to reap savings of $1.8 General despite the increase in billion over the franchise term (12 recurrent funding that occurred years of tram, 15 years for train). as part of the process.
1998/99 Subsidy vs Forecast Subsidy 2005/06 (AG's Report) & 2005/06 Actual $600.00 $17.8m difference }
$500.00
$400.00
$M $300.00$m
$200.00
$100.00
$0
1998/99 Forecast 05/06 AG Report Actual
The 1998/99 base total of $317.8 million includes:
Base subsidy $280.0 m Concession fare top-up $30.6 m Revised farebox arrangements $7.1 m State funding 1998/99 $317.8 m
To compare this to the 2005/06 costs the following items have been included:
Inflation adjustment $74.9 m New rolling stock lease costs – Connex $92.3 m New rolling stock lease costs – Yarra $39.6 m 350 additional staff funded since 1998/99 $26.3 m Revised 1998/99 State Funding $550.9 m
The colours used in these tables relate to the colours used in the bar chart.
9 The revised total of $550.9 million works and additional initiatives Conclusion is approximately $18 million lower purchased by the State under the than the forecast amount from New Franchising Arrangements. While the cost of operating the the Auditor General’s Report for metropolitan train and tram network The constant nature of costs to 2005/06 and the actual costs for did not reduce in the manner operate the train and tram network the same year. This difference can that was originally anticipated by was borne out in the Auditor be attributed to additional train and privatisation, both Yarra Trams and General’s review. The chart below tram service kilometres (which have Connex have managed costs well shows the cost of operating the increased from approximately 37.21 under the agreements. networks has remained (and is million per annum to 39.79 million expected to remain) relatively per annum since 19991) , expanded constant over time, with the role of Metlink, an improved exception of the costs of introducing infrastructure maintenance regime, the new rolling stock. greater expenditure on capital
Total cost of operating Melbourne’s trains and trams ($million per year) 900
800
700
600
500
400
300
200
100
1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09
Total metro rail costs - before normalisation adjustment Normalisation total metro rail costs
The normalisation adjustments are mainly to include constant investment in rolling stock which is consistent with DOI’s analysis.
1 1998/99 figure for tram was based on an estimate using previous years data.
10 Melbourne Public Transport Overview Metropolitan Rail Franchising 2007 Section Three: Risk Allocation
Re-franchising process 2003/04 a franchisee’s financial performance Auditor-General’s Report – turned out to be much better than Franchising Melbourne’s train The original 1999 franchising expected. and tram system 2005 arrangements were characterised by an unsustainable transfer of risk The risks on the cost side of The review noted that risk transfer is to the franchisees. In the new the franchise businesses were central to achieving value for money contracts the Government aimed to more readily manageable by in public private partnerships, with provide a more balanced sharing of franchisees than those on the the aim to transfer significant risks risk and reward. revenue side. The key costs in the to the private sector, provided it franchise businesses were labour, is better placed to manage those In the case of public transport, maintenance (which itself included risks. The Auditor-General assessed neither the State nor the franchisees a strong element of labour), rolling the risk allocation in the context were uniquely able to manage stock lease payments, capital of the experience with the original revenue risk and a sharing of risk investment delivery, traction power franchise agreements and national was deemed to present the most and corporate overheads. There and international experience. cost-effective solution for both was no obvious reason why the parties. The review noted that risks returned State would be better placed to to the State as part of the process With this in mind, the Government control these risks than franchisees, due to the unsustainable nature of designed a farebox revenue or why it would wish to take them the original agreements and that this risk-sharing mechanism, where on. It was therefore decided that had increased the financial exposure it would make up some of the franchisees should continue to to the State. The Auditor-General shortfall in the event that farebox manage most cost-side risks. concluded: revenue fell below a threshold Other risks that were transferred level, thereby providing a level of We consider the allocation of risks in to the franchisees included: “downside” revenue protection to the current franchise agreements to the franchisees. Conversely, the • Performance risk – franchisee be appropriate. However, DOI should Government believed that it would exposure to performance review this allocation to ensure it is be unacceptable for franchisees incentive regime and appropriate for future metropolitan to earn excessive returns from the compensation mechanism for train and tram arrangements. operation of publicly owned public particularly poor performance; [Page 62] transport assets, particularly in • Safety – accreditation and Conclusion the circumstances of single-source compliance with regulations; negotiations where the State was The Auditor General concluded sharing a significant part of revenue • External parties – industrial that the risk transfer to the downside risk. relations risk, supplier and private sector was appropriate sub-contractor risk; given the circumstances of the It was therefore decided to include time. Given that no risk has been • Maintenance condition – a profit-sharing mechanism in the transferred back to the State since infrastructure and rolling stock Partnership Agreements to enable commencement of the existing operability and safety. the State to share in the benefits if agreements, both franchisees have met expectations. 11 Section Four: Franchisees’ performance since contract commencement April 2005
As noted, the Auditor-General’s review Yarra Trams - Overview The safety of passengers whilst determined that the processes and boarding and alighting is being mechanisms put in place by DOI Yarra Trams has maintained targeted through several initiatives, during the re-franchising process accreditation under the Rail Safety Act the effectiveness of which is still were sufficiently robust to provide for and demonstrated the competence under review. These initiatives have a value for money outcome. Three and capacity to manage the safety included road markings to increase years since contract commencement, risks associated with tram operations. the visibility of stops, additional the State is now in a position to lighting on trams (and illuminated Yarra Trams have improved the safety review the franchisees’ performance signage) and amendment to road of passengers onboard trams by to gain a practical insight of the rules when driving with trams. implementing several programs that actual outcomes of the franchising Yarra Trams has been working in have reduced collisions and falls on arrangements to determine if they partnership with VicRoads and the trams, including: have in fact delivered value for money. Department of Infrastructure to DOI has assessed the performance • all drivers undergo an annual implement these initiatives. The of the incumbents against the key refresher course involving safety safety brochure ‘Your Safety is 2004 tender requirements and against theory and practical application, Our Priority’ has been developed specific Key Performance Indicators to advise passengers and the • all new drivers undertake (KPIs) that were included in the elderly of best practices to ensure defensive driver training; franchisees’ business plans. personal safety. • the implementation of a facility Personal safety of passengers to record drivers in operation is being addressed by the ‘Love has also provided for visual and Your Trams’ campaign launched objective feedback. in January 2007. This partnership with the Victorian police provides for plain clothed police to ride on trams, and encouraged passengers to report instances of graffiti and vandalism.
Safety - Yarra Trams
Evaluation KPI Planned KPI Movement Actual KPI Movement Criteria at end 2006/07 for 2006/07 (compared to 2004/05^ target) (YTD to end of March) Safety Collisions Reduce 18% Reduced 24% Falls on Trams Reduce 12% Reduced 26% Lost Time Injuries Reduce 45% Reduced 45%
Yarra Trams’ target for 2004/05 in all cases was improved from the existing network conditions.
12 Melbourne Public Transport Overview Metropolitan Rail Franchising 2007 Service Delivery - Yarra Trams
Evaluation KPI Planned KPI Movement Actual KPI Movement Criteria at end 2006/07 for 2006/07 (compared to 2004/05^ target) (YTD to end of March) Operations Percentage Reduce 37.5% Reduced 60% of services cancelled On-Time Performance At Destination (%) No Target Set Increased 4.1% points Over Length of Route (%) Steady (81%) Increased 1.2% points Annual Kilometres of No Target Set Increased 3.75% Service – Driver Productivity No Target Set Increased 5% Tram Availability No Target Set Increased 0.8% points ^ Yarra Trams’ target for 2004/05 in all cases was improved from the existing network conditions.
– Annual Kilometres of service 2006/07 is based on standard week scheduled kilometres for timetable effective at beginning March 2007.
In the case of service cancellations, the 60 percent reduction over the last 3 years comes on top of a reduction of over 70 percent already achieved by the private tram operators between 1999 and 2004.
On Time Performance of Tram Network
100.0 x x x x x x x x 95.0
90.0
85.0
80.0
75.0
70.0
65.0
60.0 FY 1999/99 FY 1999/00 FY 2000/01 FY 2001/02 FY 2002/03 FY 2003/04 FY 2004/05 FY 2005/06
% On-Time at Destination % On-Time Average Over Trip x % Operated
13 It should also be noted that comparisons of service performance with data prior to 1999 are problematic due to changed reporting mechanisms. The specific performance since re-franchising is illustrated below.
Service Delivery on Tram Network (% of services cancelled) 1.8
1.6
1998/99 1.4
1.2
1.0
0.8
% Scheduled Services Cancelled 0.6
2004/05 0.4
2005/06 0.2
2006/07
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
1st Year Franchise (2004) 2nd Year Franchise (2005) 3rd Year Franchise (2006) Average % Services Cancelled 1998/99 Service Delivery was adversely affected on 2, 3, and 4 February 2005 by a severe storm. Excluding these dates the overall cancellation rate was 0.9% for February 2005.
On-time Performance of Tram Network 95.0
93.0
91.0
89.0
87.0
85.0 % On-time
83.0
81.0
79.0
77.0
75.0 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
1st Year (2004/05) 2nd Year (2005/06) 3rd Year (2006/07)
Tram punctuality in March 2007 was affected by the flow-on impacts of the Burnley Tunnel accident in the period 23-27 March 2007. Some extra tram services were operated in this period to ease commuter pressure.
14 Melbourne Public Transport Overview Metropolitan Rail Franchising 2007 There has been a small Yarra Trams has presided Tram availability while improving improvement in the punctuality of over a substantial reduction in slightly has remained below the tram network since contract infrastructure related delays with Yarra’s target over the past commencement. This improvement these incidents reducing 53% in 12 months. A number of tram has been largely constrained due 2005/06 compared with 2004/05. upgrade/refurbishment programs to shared road conditions of the have been completed including Facilities upgrades have included: network with approximately 80% refurbishment of A, B and Z3 of the network operating in mixed • the development of the South Class trams (316 trams), and traffic environment. Melbourne operations centre mini-refurbishment of Z1/Z2 Class which provides live picture (31 trams). Collision repairs are Key inputs for reliable and punctual feeds from the network enabling being undertaken in-house by services are driver productivity and management to respond more Yarra Trams to reduce the down- availability and fleet availability. readily to incidents, diverting time of vehicles out of service Improvements in driver outcomes trams where necessary to avoid from these incidents. have included: tram bunching; The need for greater control over • improved efficiency of driver • Yarra Trams’ control centre has fleet deployment is becoming rostering of 3% since Yarra took also been connected to VicRoads more critical as the tram fleet over the M>Tram network. traffic control centre and size is a fixed resource until new • the introduction of ‘Absenteeism cameras to help Yarra manage trams are introduced in 2010/11. Committees’ for sick leave and traffic incidents, with tram priority This is being addressed at depot work cover incidents at all eight protocols agreed level by ensuring larger capacity tram depots have resulted in vehicles are specifically targeted • the introduction of CAMS – a improvements of 32% on pre- to individual trips during peak computerised asset management privatisation levels. periods to cater for loading system for rolling stock and patterns. • a substantial decline in the Lost infrastructure; Time Injury Frequency Rate from • together with the Department of 39.4 per month at privatisation infrastructure, build a strategy to an average of 5.6 per month in for the redevelopment of Preston 2006/07 (to end March 2007). Depot (as part of a greater depot strategy in conjunction with the tram procurement program) to enable enhanced maintenance capabilities and efficiencies.
Asset management - Yarra Trams Evaluation KPI Planned KPI Movement Actual KPI Movement Criteria at end 2006/07 for 2006/07 (compared to 2004/05^ target) (YTD to end of March) Asset Management Autopoint Faults No Target Set Reduced 62% Derailments No Target Set Reduced 56% (Mainline+Depot) AVM System Faults No Target Set Reduced 27%**
Actual KPI movement calculation is different to period specified in table heading for derailments and AVM System faults. **AVM System faults – July –March 2005/06 to July-March 2006/07
15 Marketing & Revenue - Yarra Trams
Evaluation KPI Planned KPI Movement Actual KPI Movement Criteria at end 2006/07 for 2006/07 (compared to 2004/05^ target) Marketing Annual Tram Patronage No target Increased 2.0% (04/05) & Revenue as measured by Metlink No target Increased 3.3% (05/06) * (through VRS) Fare Evasion Rate (%) Reduce by 9.23% Reduced 42.78%** Valid Concession Percentage (%) Increased 1% percentage point Increased 7%
Marketing & Revenue Data/Comparisons commence September 2004, upon commencement of the standardised quarterly VRS Survey by Metlink. Fare Evasion (FE/VCP survey) commenced in January 2005 and is conducted twice a year. **Fare evasion reduction is from December 2004 to June 2006
Patronage on Melbourne’s tram Performance of Yarra One measure of the extent to which network has increased from Trams against 2004 Yarra Trams’ service performance 134.7 million in 2002/03 to 149.6 tender requirements is likely to have attracted patronage million for 2005/062 , (excluding growth is the quarterly monitor of Commonwealth Games Patronage). customer satisfaction carried out by Broader economic factors such as Promotion of public transport PTD. Levels of customer satisfaction employment growth have played a patronage growth for the tram network are consistently substantial role in this outcome, Key initiatives of Yarra Trams to high. but Yarra Trams’ strong performance promote patronage growth have Support for public transport has also contributed. included: ticketing The strong patronage growth has • improved service delivery and Yarra Trams has participated contributed to enhanced revenue punctuality as well as additional actively and constructively in joint streams, and this has been services; work on the new “myki” smartcard- consolidated by improved outcomes • introduction of real time based ticketing system and has in relation to fare evasion and passenger information at key committed considerable internal concession ticket fraud. stops and real-time phone-in resources (as required under its tram schedule information; Franchise Agreement) to this end. It has also worked successfully with • significant contribution to the Metlink and the other operators to tram priority program which tackle fare evasion. appears to have arrested the decline in tram speeds due to The reduction in fare evasion and traffic congestion; invalid use of concessions over the past two years has resulted • continued strong support in approximately $13 million in during Melbourne special events additional fare revenue in the (approximately 60,000 kilometres first Half of 2006/07 alone, when per year), including all night tram compared to an equivalent six-month services on new year’s eve period of the first Half of 2004/05.
2 Patronage estimates for the metropolitan modes are based on a new and improved measurement methodology from 2004/05. This change in methodology means a step-change in patronage estimates. This needs to be considered when comparing estimates before and after the change in methodology.
16 Melbourne Public Transport Overview Metropolitan Rail Franchising 2007 Quality of asset management Supporting the State’s vision In addition to these the State also for public transport requires partnership in relation to Yarra Trams obligations to maintain the impending implementation of the infrastructure are set out in the Commencing in 2004, Government the Meeting Our Transport Infrastructure Lease. Under this funding under the Think Tram Challenges (MOTC) program. Lease Yarra Trams has committed program was provided for works The first of the MOTC programs was to undertake a minimum amount over two years to deliver improved implemented in September 2006 of maintenance renewal as well as travel times, punctuality and safety with the commencement of late night to carry out day-to-day maintenance along some of the busiest corridors tram services. Yarra Trams has also in line with a rolling three year asset on the tram network. Whilst seconded a specialist resource from maintenance plan and annual managed by VicRoads it is overseen Transdev to assist with the tram works plan. by a TaskForce comprising the procurement program (MOTC) and Director of Public Transport and the Yarra Trams has undertaken more associated depot strategy, which is CEOs of VicRoads and Yarra Trams. renewals than required under the scheduled to bring new vehicles The fundamentals of the Think Lease although not every item is into service from 2010/11. Tram program is to provide greater ahead of schedule. In particular, priority to trams on roads through it has renewed considerably more physical separation, traffic signal track than was anticipated in 2004 priority, changes in road rules, or with some 3.64 more kilometres a combination of these. of track and 12 more crossings and turnouts completed than Yarra Trams have also been contractually required. instrumental in the development of a St Kilda Road strategy, including As noted earlier, Yarra Trams have the possibility of a 3rd track to also implemented a number of improve operations along the busiest facility upgrades to better manage tram corridor (over 1500 scheduled assets. services per day) and improving tram punctuality and travel times. A specialist from Transdev has been seconded to assist in a review of St Kilda Road tram routes (2nd/3rd quarter 2007/08) to improve operational efficiencies and levels of service.
17 Connex - Overview
Safety - Connex
KPI Planned KPI Movement at end 2006/07 Actual KPI Movement (YTD) (compared to 2004/05 target) • Number of Signal Decrease 6.7% Decrease 32% Incidents (SPADs)* • Overall customer Increase 2% points Decrease 1.4% satisfaction with personal safety • Lost time injuries No target set Decrease by 33%
*SPADs is Signals Passed at Danger – July 2006 – February 2007
Connex has maintained accreditation Connex initiatives to improve • refresher courses for drivers under the Rail Safety Act and safety have included: which include issues of signal demonstrated the competence and sighting and response. • a review of signal sighting and capacity to manage the safety risks reliability and commenced associated with rail operations. a program of signalling and infrastructure improvements
Patronage & Revenue - Connex
KPI Planned KPI Movement Actual KPI Movement (YTD) at end 2006/07 (compared to 2004/05 target) • Annual patronage growth (%) – Increase 5.3% Increase 24.6 % retaining current customers and gaining recruits • Farebox growth (%) Increase 16.4% Increase 30.4% • Fare evasion No target set Decreased by 29%
The percentage growth between Significant rises in petrol prices 2003/04 and 2005/06 was up to in mid-2005 fuelled some of 20%, rising from around 134 million this growth, although continued to 162 million passengers per annum. growth more recently when petrol In 2006 alone, patronage growth prices have fallen, suggests that was estimated at 11%, which is about other factors, including good three times the annual growth of operational performance during the the past decade. Commonwealth Games may have had an impact.
18 Melbourne Public Transport Overview Metropolitan Rail Franchising 2007 Service Delivery - Connex
KPI Planned KPI Movement Actual KPI Movement (YTD) end 2006/07 (compared to 2004/05 target) • Punctuality (% of scheduled Increase 0.5% points Decrease 1.46% points* services on-time) • Cancellations (% of scheduled Decrease 0.35% points Increase 0.34% points** services that did not run) • Train availability No target set Increased by 7.06%
*July – Feb 2006/07 compared to July – Feb 2004/05
The chart below illustrates the Department has reviewed data punctuality and reliability of the and consulted senior PTC and metropolitan train system since MTA executives from this period 1991/92 and is included to highlight to confirm that the parameters the broad trends in service delivery. for punctuality have remained It is also important to note that unchanged over this period.
Punctuality & reliability of the metropolitan train system - 1991/92 to Feb 2007 100.0%
98.0%
96.0% 20% increase in patronage
94.0%
92.0% PTC Corporatisatio
90.0%
88.0%
86.0% 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 Feb-07 Year
Punctuality Reliability
A train considered on time when arriving between 59 seconds early and 5 minutes 59 seconds late.
19 Reliability of train services has Since the Re-franchising process remained relatively stable between in 2004, reliability has remained 98% and 100%. Improvements to stable, with the exception of some train punctuality that began in the incidents such as the difficulties with mid 1990’s continued in the initial the Siemens rolling stock. While period of privatisation with on-time reliability has fluctuated between performance improving from around 98% and 100%, there has been 94% to 97%. a declining trend in punctuality performance over the period.
Train Cancellations (%)
3.5%
3.0%
2.5%
2.0%
Percent 1.5%
1.0%
0.5%
0.0% Apr-04 Jun-04 Aug-04 Oct-04 Dec-04 Feb-05 Apr-05 Jun-05 Aug-05 Oct-05 Dec-05 Feb-06 Apr-06 Jun-06 Aug-06 Oct-06 Dec-06 Feb-07 Month Cancellations (%) Cancellations (Business Plan) Cancellations (passenger compensation)
Train Punctuality (%)
100.0%
99.0%
98.0%
97.0%
96.0%
95.0% Percent 94.0%
93.0%
92.0%
91.0%
90.0% Apr-04 Jun-04 Aug-04 Oct-04 Dec-04 Feb-05 Apr-05 Jun-05 Aug-05 Oct-05 Dec-05 Feb-06 Apr-06 Jun-06 Aug-06 Oct-06 Dec-06 Feb-07 Month Punctuality (%) Punctuality (Business Plan) Punctuality (passenger compensation)
20 Melbourne Public Transport Overview Metropolitan Rail Franchising 2007 On Time running vs patronage growth 1991/92 - Feb-07
100 %
200.0 99 % 98 % 180.0 Patronage spike 97 % 160.0 96 % 140.0 95 % 120.0 Patronage 94 % 100.0 93 % % Punctuality 80.0 92 % patronage (millions) patronage 60.0 91 % 40.0 90 %
20.0 89 %
0.0 88 % 91/92 92/93 93/94 94/95 95/96 96/97 97/98 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 Feb-07
Patronage Punctuality
The punctuality and reliability of • Driver shortage - was a • Fleet Availability - The the metropolitan train network is key determinant on service management of rolling stock impacted by a number of factors, performance at franchise continues to challenge Connex, including: commencement. The shortage although availability has improved reflected chronic failures within since the commencement of • Patronage Growth - The the industry, including ineffective the franchise as indicated by a chart above shows the trend in workforce planning and high 7.06% improvement between punctuality since 1991/92 to levels of transfer of metropolitan 2004/05 and 2006 in the number February 2007 and underscores drivers to the regional network of week days where insufficient the impact of patronage growth and was compounded by National rolling stock was available at on train punctuality. The Express’ decision not to recruit the commencement of the peak patronage spike that commenced additional drivers in its last year periods. in 2005 precipitated declining of operation. punctuality to levels that are • Major Projects - The impact of a
consistent with those achieved number of simultaneous major rail The problem has largely when the network was first and non-rail government projects been rectified through State privatised. The implications on which affected the inner core of intervention through negotiations performance of the patronage the network was a contributor to with Connex and the RTBU which growth are evident in the Connex’s declining performance resulted in a number of short heavy loadings currently seen over the franchise period. Works term work-practice changes to on metropolitan trains. PTD’s at Flinders Street Station and free up driver resources and 2006 Load Survey indicated 30 Southern Cross Station for an amendment to the Connex load breaches on the network, instance, where construction franchise agreement. a doubling from the previous has proceeded over much of the year. High loadings lead to franchise period has resulted longer dwell times at stations in significant performance and eliminate any ‘catch-up’ time implications. in the timetable and therefore contribute to late running.
21 Performance of Connex Quality of asset management Supporting the State’s vision for public transport against 2004 tender Connex’s obligations to maintain requirements the infrastructure are set out in When Connex took over the the Infrastructure Lease. Under operation of the whole train system Promotion of public this Lease, Connex is required to in 2004 the State’s key strategic transport growth undertake a specified level of asset needs were: renewals as well as to carry out day • a smooth transition of the former While external factors have clearly to day maintenance in line with a National Express operations; been a key component of the rolling three year asset maintenance patronage growth that has occurred plan and annual works plan. • the successful operation of train on the train network, the company services during the Commonwealth Connex has had a mixed has implemented initiatives to assist Games; with this goal. performance in relation to their maintenance and renewal obligations • the need to develop a revised One of the most successful and proscribed in the Infrastructure Action Plan to meet the requirements innovative of these has been the Lease, although in several areas they of disability access legislation, and SMS update which is a phone based have undertaken more renewals than • the successful implementation service which advises subscribers required under the Lease. Examples of myki. when train services have been of enhanced performance include disrupted cancelled or delayed by renewal of eight more train stations, more than 15 minutes. re-asphalting of five more station In addition to these the State also platforms and the installation of Support for public requires partnership in relation to the 931 more overhead structure anti- transport ticketing impending implementation of MOTC. climbing devices than were originally Connex has co-operated fully with planned in the Lease. The integration of Connex and the Government in the development the former M>Train business was of myki. It has been actively engaged managed well by Connex in difficult in planning for the civil works at circumstances. Challenges were stations, in the development of faced in integrating the Comeng train myki training and in determining the fleet as well as driver shortages, a changes which may be required to problem due, at least in part, to a revenue protection policy under the failure by National Express to recruit new system. drivers in its final year of operation. At the same time Connex has Connex also delivered excellent worked successfully with Metlink performance during the and the other operators to tackle Commonwealth Games delivering fare evasion. The reduction in an additional 3,800 services with fare evasion and invalid use of 99.8% reliability. concessions over the past two years has resulted in approximately $3.2 million in additional fare revenue.
22 Melbourne Public Transport Overview Metropolitan Rail Franchising 2007 Section Five: Overall Summary
In summary: • the Auditor-General confirmed in 2005 that the costs, risk allocation and the performance levels negotiated in the franchise agreements in 2003/04 provided ‘reasonable value for money’ for the State; • the cost of operating the metropolitan train and tram network remains relatively constant when costs are normalised to reflect constant investment in rolling stock; • the risks transferred to the private sector have held since contract commencement; and • the performance of the incumbent operators has been sound when assessed against the 2004 tender evaluation criteria and KPIs in each franchise Business Plan.
23 DOI3129/07 For further information please contact the Department of Infrastructure on 9655 6000 or visit www.doi.vic.gov.au Published and authorised by the Department of Infrastructure, 80 Collins Street, Melbourne, Victoria. July 2007 © State of Victoria. Printed by Impact Digital, 32 Syme Street, Brunswick, Victoria, 3056 If you would like to receive this publication in an accessible format, please telephone Public Affairs Branch on 9655 6000.