1. ERTMS Benchmarking: driving costs and their actual evolution
Istanbul, 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
Costs
Structure of purchasing company
Key performance indicators
Procurement strategies
Maintenance strategies
Project description
Cost drivers
Maintenance costs and upgrade costs were seldom provided on the basis of experience, and unavoidably have “educated guess” character.
Late prediction and Ex post analysis is what ERTMS Benchmark currently does 2
Istanbul, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli

3. ERTMS Benchmark, UIC
UIC project, ; “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
(sig = train detection, route protection, train control, central control) 3
Istanbul, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli

4. ERTMS in operation today in Europe
Difficulties (1/2): A narrow scope
ERTMS in operation today in Europe
In Operation: L1
1870
L1 and L2
1920 L2
2165
Regional
134
TOTAL
6089
Contracted:
5267
Source : UIC ERTMS Database (status Oct 2013) 4
Istanbul, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli 4 4

5. Difficulties (2/2): An evolving market
Top : ERTMS trackside contracts
In percentage, by region
Bottom left: ERTMS onboard units contracted
Comparison September September 2013
Bottom right: ERTMS trackside contracts
In tracks km (excluding frame contracts), comparison September September 2013 5
Istanbul, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli

6. ERTMS Commercial Operation - 2014
Top : ERTMS trackside contracts
In percentage, by region
Bottom left: ERTMS onboard units contracted
Comparison September September 2013
Bottom right: ERTMS trackside contracts
In tracks km (excluding frame contracts), comparison September September 2013 6
Istanbul, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli

7. ERTMS Commercial Operation – plan 2020
Top : ERTMS trackside contracts
In percentage, by region
Bottom left: ERTMS onboard units contracted
Comparison September September 2013
Bottom right: ERTMS trackside contracts
In tracks km (excluding frame contracts), comparison September September 2013 7
Istanbul, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli

8. ERTMS Commercial Operation – plan 2025
Top : ERTMS trackside contracts
In percentage, by region
Bottom left: ERTMS onboard units contracted
Comparison September September 2013
Bottom right: ERTMS trackside contracts
In tracks km (excluding frame contracts), comparison September September 2013 8
Istanbul, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli

9. ERTMS Commercial Operation – plan 2030
Top : ERTMS trackside contracts
In percentage, by region
Bottom left: ERTMS onboard units contracted
Comparison September September 2013
Bottom right: ERTMS trackside contracts
In tracks km (excluding frame contracts), comparison September September 2013 9
Istanbul, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli

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, 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 Risk transfer, mostly for RU 11
Istanbul, 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, higher than standard)
Safety Software Updating / Upgrading
Special equipment,
Spare parts
Storage costs for the components
Training documentation 12
Istanbul, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli

13. Result: ETCS Average Life cycle cost
Phase
Level 1 € / dtkm
Level 2 € / dtkm
On board € / OBU
R&D
20 k€
100 k€
110 k€
Investment
90 k€
400 k€
340 k€
Total initial costs
500 k€
450 k€
Range (observed)
35 – 140 k€
140 – 940 k€
120 – 800 k€ *
Operation & Maintenance
15 k€
130 k€
LCC, total
125 k€
630 k€
560 k€
LCC costs (2008 value) for 20 years lifetime and net present value (6% discount rate).
Only includes GSM-R upgrade costs made necessary by ETCS
dtkm: km of double track;
OBU: on board unit
Best data quality for R&D and Investments (CAPEX);
operation and maintenance data analysis still to be refined
* = normalized, assuming 50 OBUs. Batch size and retrofit are main cost drivers According to other sources (ATOC, 2011), marginal cost is about 100k€ per unit,
assuming large order size and new deliveries
Source: UIC Benchmark project 13
Istanbul, 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.
Version management is however under strict control of the European Railway Agency, with UIC participation, and subject to impact assessment.
Key problem, specific to the European Union, is balance of costs and benefits between infrastructure managers and railway undertakings via track access charging. Indeed, the most recent baseline evolution (Baseline 3) is beneficial to infrastructure managers, while entailing costs on railway undertakings and rolling stock owners due to software upgrades. Track access charges, if properly regulated, should create a win-win situation. 14
Istanbul, 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, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli

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