Business Development and Contracts Jens Plambeck Director Strategic Development Stockholm County Council Transport Administration April /10/ Transport Administration Stockholm County Council

Agenda  Facts and figures  Earlier contracts  New approach  Conclusions – so far

The public transport system in short Contracts traffic op. and maintenance: 13,5 bn SEK/year Boardings: 2,5 million/day Bus line 4 has 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 passengers every day ”färdtjänst” travels every day sl.se has visitors every day

The infrastructure in short m 2 property rolling stock 244 stations 167 bridges 233 km track Infrastructure value 100 bn SEK 32 depots

 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   More of economic incentives  Heavy focus on customer satisfaction  Increased degree of co- operation Transport Administration Stockholm 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  The number of passengers has not increased enough in relation to costs, satisfied customers of even the population growth… Transport Administration Stockholm County Council

Case 1: The metro contract development- E17 26/10/ Development – dotted line shows the start of the new contractFacts 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 CostsPassengers Customer satisfaction (CS) New contract CS Transport Administration Stockholm County Council

9 thinking new… 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 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 CompletedExistingNew contracts Transport Administration Stockholm County Council

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

26/10/ 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 Vandalism Operations 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 Transport Administration Stockholm County Council

26/10/ Two examples of the new reimbursement model

26/10/ 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 E19Facts Case 2: Development of traffic contract E19 CostsPassengers Customer satisfaction (CS) New contract CS Transport Administration Stockholm County Council

26/10/ 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 E19BFacts Case 3: The development of traffic contract E19B Passengers Customer satisfaction (CS) New contract CS Transport Administration Stockholm County Council 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%) 26/10/ Transport Administration Stockholm County Council

Thank You!