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ERTMS Benchmarking : driving costs and their actual evolution

ERTMS Benchmarking : driving costs and their actual evolution. Istanbul, 01-03 April 2014 Piero Petruccioli – UIC Rail System Department . ERTMS Benchmarking : purpose. Cost evaluation (CAPEX, OPEX) as a function of all relevant factors. The later, the more precise (but less useful…).

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ERTMS Benchmarking : driving costs and their actual evolution

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  1. ERTMS Benchmarking: driving costs and their actual evolution Istanbul, 01-03 April 2014 Piero Petruccioli – UIC Rail System Department

  2. ERTMS Benchmarking : purpose Cost evaluation (CAPEX, OPEX) as a function of all relevant factors. The later, the more precise (but less useful…) Early prediction Feasibility studies Regulatory benchmarking Late prediction Ex post analysis Istanbul, 01-03 Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli 2

  3. ERTMS Benchmark, UIC • UIC project, 2008-2014 ; “late” or “ex post” flavour • Geographic scope : EU, 19 companies, 32 projects (board, lines) • Technical scope: ETCS + GSM-R extensions for L2 • No comparison with other subsystems • No global signaling system comparison, just Train Control • Project view, not network(s) view • Including share of R&D costs, but… • …not considering migration strategies and their induced financial costs • Costs : LCC (R&D, investment, op. & maintenance, disposal) • 2014 complements • Maintenance strategies and main cost drivers • Putting costs in relation with performance (explanatory factors), in addition to technical complexity and purchasing strategies Istanbul, 01-03 Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli 3

  4. Difficulties (1/2): A narrow scope ERTMS in operation today in Europe Source : UIC ERTMS Database (status Oct 2013) Istanbul, 01-03 Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli 4

  5. Difficulties (2/2): An evolving market Istanbul, 01-03 Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli 5

  6. ERTMS Commercial Operation - 2014 Istanbul, 01-03 Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli 6

  7. ERTMS Commercial Operation – plan 2020 Istanbul, 01-03 Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli 7

  8. ERTMS Commercial Operation – plan 2025 Istanbul, 01-03 Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli 8

  9. ERTMS Commercial Operation – plan 2030 Istanbul, 01-03 Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli 9

  10. ERTMS Operation and Maintenance • IM and RU involved in ERTMS are primarily focused on time and costs for implementation and commercial exploitation • O&M aspects tended to be passed over • In many cases only a couple of years of O&M are contracted • O&M phase has strong impact on the total LCC of ERTMS • Railways can get into strong dependency of their industrial suppliers • Highly recommended: manage the long term O&M early in the first / main tender 10 Istanbul, 01-03 Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli

  11. ERTMS maintenance - main strategies • OUTSOURCING - Main decision drivers: • Price • Control over maintenance costs • Managing complexity, mostly for IM • Mandated for SW updating/upgrading • Timely with the tendering phase (to limit the vendor lock-in) • IN-HOUSE - Main decision drivers • Cost of the maintenance staff • Technical Maturity of the staff • Small or preventive maintenance of big series • Flexibility to manage the Business Risktransfer, mostly for RU 11 Istanbul, 01-03 Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli

  12. ERTMS maintenance - main cost drivers • Personnel costs (for in–house) • Costs of man-hours (for outsource, higherthanstandard) • Safety Software Updating / Upgrading • Specialequipment, • Spare parts • Storage costs for the components • Training documentation 12 Istanbul, 01-03 Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli

  13. Result: ETCS Average Life cycle cost Source: UIC Benchmark project 13 Istanbul, 01-03 Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli

  14. Conclusions (1/2) • Uncertain Economics due to: • Deep Influence of pre-existing systems; • Wide range of applications and expected performance; • Transition costs; • Comprehensive planning is difficult in a ‘shared’ system • Market expansion and version management still have unfathomed effects • RU- Business case vs. IM- Public Company • Onboard: low flexibility, high costs, low direct benefits put RUs in a difficult situation(direct subsidies are problematic); therefore: • Importance of setting access charges right • Importance of low cost developments, so IMs can pass substantial benefits to RUs. 14 Istanbul, 01-03 Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli

  15. Conclusion (2/2) • Remaining works under UIC Benchmarking project: • Integrate maintenance ROI • Attempt to link costs with high level performance criteria 15 Istanbul, 01-03 Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli

  16. Thank you for your kind attention Piero Petruccioli, project manager Istanbul, 01-03 Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli

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