Business Development and Contracts

1. Transport Administration Stockholm County Council Business Development and Contracts Jens Plambeck Director Strategic Development Stockholm County Council Transport Administration April 2013

2. Agenda • Facts and figures • Earlier contracts • New approach • Conclusions – so far

3. The public transport system in short Contracts traffic op. and maintenance:13,5 bn SEK/year About 80% of the system runs on renewable fuel Bus line 4has as many passengers/day as SJ Boardings: 2,5 million/day 80% market share in the morning peak in Stockholm

4. About our passengers sl.se has130 000 visitorsevery day 10 000 ”färdtjänst” travelsevery day 739 000passengersevery day 74% satisfied customers

5. The infrastructure in short 244stations 1 000rolling stock 900 000 m2property 167 bridges 32depots 233 kmtrack Infrastructure value100 bn SEK

6. Transport Administration Stockholm County Council The history of our traffic contracts • 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 • 2002-2012 • More of economic incentives • Heavy focus on customer • satisfaction • Increased degree of co-operation

7. Transport Administration Stockholm County Council Strategic analysis Total cost SL employees Customer satisfaction Traffic supply Population Passengers • 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…

8. Transport Administration Stockholm County Council Case 1: The metro contract development- E17 Contract E17 - Metro Development – dotted line shows the start of the new contract Facts Newcontract • 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 CS Customer satisfaction (CS) Costs Passengers

9. Transport Administration Stockholm County Council thinking new…

10. Transport Administration Stockholm County Council 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

11. Transport Administration Stockholm County Council The remuneration of the newer traffic contracts is based to a large extent on the incentives to achieve targets Share of incentives in 11 traffic management contracts Completed Existing New contracts

12. Transport Administration Stockholm County Council The degree of responsibilities passed to the operator has increased along with the incentive share Share of incentives vs increased responsibility in 11 traffic management contracts Incitamentsandel vs ansvarsförskjutning till trafikoperatörer i 11 stycken trafikdriftsavtal High Verified Paid Boardings (VPB) contracts Incentive share Low Low Responsibility to the operator High

13. Transport Administration Stockholm County Council Larger total commitment and responsibility to the operator in our new business Traffic production Traffic management Consultation and coordination Security and safety Traffic planning Customer service Rapports Revenue Assurance Follow-up Areas of responsibility Traffic information Technical systems Contract phasing Supply of information Personnel and training Real estate (depots) Handicap avvailability Passengerenvironment Stops Operations and organisation Marketing & Brand Vandalism Vehicles (Buses) Environment & Energy

14. Two examples of the new reimbursement model

15. Transport Administration Stockholm County Council Case 2: Development of traffic contract E19 Contract E19 – Bus for municipalies Nacka, Värmdö, Huddinge, Botkyrka och Söderort Development E19 Facts Newcontract • Operator • Keolis • Reimbursement model • Quality Incentive Agreement • Incentive share • 27% (depending on performance) • Responsibility • Traffic operations • Maintenance • Cost per year (MSEK) • 1343 (prognosis) CS Customer satisfaction (CS) Costs Passengers

16. Transport Administration Stockholm County Council Case 3: The development of traffic contract E19B Contract E19 B – Bus Norrtälje (municipality north of Stockholm) Development of E19B Facts • 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) Newcontract CS Customer satisfaction (CS) Costs Passengers

17. Transport Administration Stockholm County Council 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%)

18. Thank You!