On Fri, 8 Dec 2006 15:46:19 +0000, Tom Anderson
wrote:

On Thu, 7 Dec 2006, Paul Corfield wrote:

On Thu, 7 Dec 2006 01:13:41 +0000, Tom Anderson
wrote:

On Wed, 6 Dec 2006, Paul Corfield wrote:

I think the Mayor has been convinced that an operating concession can
work (witness DLR and the fact there has been no change to the
operating concept there or the willingness of TfL to procure
extensions via design, build, maintain contracts). Therefore he is
happy to see a new operation be established without the baggage of
decades worth of LU culture - some of which is good, some of which is
dreadful.

Intriguing; i'd sort of assumed the NLR would be run directly by London
Rail, or some other division of TfL. Cheers for the interesting
insight, Paul!

The contract will be administered by London Rail in much the same way as
the core DLR management administer the contracts with Serco (main DLR
service provision), the Lewisham concessionaire (infrastructure south of
Crossharbour) and the LCA concessionaire (infrastructure east of Canning
Town).

What does 'administer the contracts' mean? Specify the service and sign on
the dotted line, or is there any day-to-day operational input?

I would imagine that the concessionaire will have to make the trains
available for service, provide drivers for them, open the stations, sell
tickets during specified times, have staff on platforms, make sure the
stations are clean, publicity is up to date etc etc etc. There are loads
and loads of aspects of the service that will be specified.

The contract team will collect data, check it, do audits and
inspections, record delays and incidents and determine responsibility
(i.e. did the train breakdown or did Network Rail's signals fail). This
will all be part of a set of defined contract measures which will be
linked to how much the concessionaire is paid for delivering the
service. Every 4 weeks I would guess there will be a payment process
which will determine how much the concessionaire will be paid for the
service. I would also imagine that the contract will offer the
opportunity to earn bonus payments if the service quality is very high
and above a pre-determined level.

LU does this with the Infracos (it's my job for part of the LU network),
the DfT do it in respect of the TOC franchises and there is an
allocation process between all the TOCs and Network Rail to determine
responsibility for delays on the network.

These sorts of contracts are very common in all sorts of industries
where a private company provides a service back to the customer.

Apparently the NLR arrangement is a concession rather than a franchise
because TfL takes the revenue risk for the NLR network it takes over
next year.

Does 'concession' basically mean 'subcontract' then?

Not really. There will be a contract between TfL and the company running
the trains and stations on the NLR network. Under a normal TOC franchise
the TOC takes on the responsibility for the level of income (revenue)
that will be earnt. They are also able to control some of their costs.
While they forecast how much they think they will earn and how much
stuff will cost when they bid they then have to deliver it. Therefore
they are incentivised directly to make sure revenue is as high as
possible and costs as low as possible. However as we have seen with GNER
it only takes something like the bombs in London to stop people
travelling and all of a sudden they have less money coming in. Under a
franchise the TOC can specify some of the fares levels and can do clever
things with special offers, discounted fares to fill up their trains.
They are also (theoretically) incentivised to give a high quality of
service to tempt people to use the train rather than say a car. They
should also be interested in controlling fraud levels to a very low
level so they maximise their income.

Under a concession TfL control all the fares and thus the operator has
no room to do clever things with special offers etc. Also if there are
external events that reduce income unexpectedly then TfL take the risk
about income levels. The payment to the operator is pre-defined and is
not varied as a result of revenue levels - it only varies according to
how well or badly the service operates. As I said it is likely that
there will be incentives to tempt the operator to earn bigger contract
payments for delivering a high quality service. This is how the bus
contracts work - there is a base fee for running the service. If buses
are late, cancelled, break down, have wrong blinds and defective
wheelchair ramps the operator loses money. If the buses run to time,
are clean, reliable and all the "small" bits of the service are spot on
then the operators can earn bonuses. This is called the Quality
Incentive Contract regime. TfL have teams of surveyors who monitor
every bus service in London to see how well it runs.

The performance data for each route is available here

http://www.tfl.gov.uk/buses/about/pe...ugh-report.asp

I think it is going to be a very interesting operation because it will
create another comparator to the DLR form of operation, LU and TOCs. If
performance and ridership really do improve I think there will be some
interesting messages emanating from TfL towers.

Indeed. This is the first test of whether the DLR model is really better
than the LU or NR models, or whether the DLR's success is just down to
being rather new - since the NLR is not at all new.

I think it is already evident that the DLR arrangement works very well.
Performance levels are very high and there are few obvious issues with
bits of the railway that are provided under separate contract. Parts of
the DLR are now getting oldish so challenges will start to emerge but
overall it has the benefit of modern technology, good maintenance and
asset management practices and a relatively fresh culture without
decades of poor practice and dire industrial relations to deal with.

If infrastructure performance is poor or costs too high then expect the
hallowed words of "vertical integration" to start being bandied about
(as with Merseyrail).

Is this a codename for 'nationalisation'? Or 'Londonisation' in our case!

Possibly. Network Rail have refused to transfer infrastructure control
for Merseyrail. However the PTE are trying again and they have the
benefit of a localised network and a long franchise with Serco Nedrail.
This brings forward lots of opportunities for sensible planning and
investment. It will be much harder in London as the Overground network
is not that self contained - especially in South London and as Dave A
has mentioned there is a lot of freight traffic. This will pose issues
about regulation as freight operation is all private but there are
certain rights of access to the network that are preserved. I'm sure
that part of TfL would dearly love to kick freight off the NLR network
but it can't do so.
--
Paul C


Admits to working for London Underground!