http://www.building.co.uk/story.asp?...de=3082525&c=0

Quote
A stand-up row :Ian Yule
Building 2007 Issue 10
'I can't think of any PFI project we have inherited that wasn't
dysfunctional in one way or another." So said Ken Livingstone, in
typically forthright fashion. On this occasion he was aiming his ire
at Tramtrack Croydon, the company that operates the Croydon Tramlink,
a light rail system procured under the PFI. The mayor went on to say
that Transport for London would provide extra bus services to
alleviate overcrowding on the busiest sections. The operator, he
alleged, had shown no willingness to increase capacity in the face of
rising demand.
Tramtrack rejected the criticism. The PFI contract, it said, made it
the responsibility of London Bus Services (the corporation) to fund
any enhancements to operations. In support of its case Tramtrack was
able to point to a decision of the Court of Appeal reported just
before Christmas. Although the decision is not straightforward it is
clear that the corporation failed to obtain a declaration that
Tramtrack was obliged to provide, and pay for, enhancements to
capacity.
The case contains important points for those drafting output
specifications - especially PFI ones.
A key clause in the specification stated that, for the purpose of
determining the number and size of tram cars, at least 30% of the
passengers had to be able to sit down. Also, the number of standing
passengers was not to exceed four for each square metre, or five in
the rush hours (the trial judge drily noted that nobody seemed willing
to guess what the corresponding figures were at the busiest times on
London Underground).
The corporation argued that, as these levels were being exceeded,
Tramtrack had to provide increased capacity at its own cost. The trial
judge disagreed. Merely showing that there had been instances of six
passengers standing in one square metre of space could not trigger an
obligation to add capacity. For example, there might be a sporting
event that would increase demand. What's more, the judge was not
prepared to imply into the contract some form of testing regime when
the parties had not drafted one. The criteria as to passenger space,
he said, were therefore design objectives, not performance
obligations.
When the case came to the Court of Appeal, the corporation adjusted
its position. It no longer argued that Tramtrack was in breach of
contract whenever more than five passengers were standing in one
square metre of space. However, it still maintained that the contract
required Tramtrack to put on extra trams if there was overcrowding.
The court asked itself: if the parties had intended that the
specification should contain an obligation on Tramtrack not to permit
excessive overcrowding, where would that obligation be? Not hidden
away in the part of the document dealing with design, it concluded. It
also agreed with the judge that one would have expected to have found
terms about how overcrowding was to be measured, and over what
period.
Counsel for Tramtrack argued bluntly that there was no breach of
service levels even if trams were repeatedly overcrowded. If either
party wanted to increase the capacity or frequency of trams, he said,
that party would have to pay for it. The court described this as a
"pretty unattractive scenario" but were not prepared to say that he
was wrong.
A point for those drafting specifications, particularly in PFI, is to
consider whether a criterion is to be merely a broad-brush design
objective or a performance standard. If the answer is a performance
standard, it is essential to set out a scheme for evaluating
performance together with the financial consequences of failure.
Unquote

On 9 Mar, 08:00, "Bob" wrote:
http://www.building.co.uk/story.asp?...de=3082525&c=0

Quote
A stand-up row :Ian Yule
Building 2007 Issue 10
'I can't think of any PFI project we have inherited that wasn't
dysfunctional in one way or another." So said Ken Livingstone, in
typically forthright fashion. On this occasion he was aiming his ire
at Tramtrack Croydon, the company that operates the Croydon Tramlink,
a light rail system procured under the PFI. The mayor went on to say
that Transport for London would provide extra bus services to
alleviate overcrowding on the busiest sections. The operator, he
alleged, had shown no willingness to increase capacity in the face of
rising demand.
Tramtrack rejected the criticism. The PFI contract, it said, made it
the responsibility of London Bus Services (the corporation) to fund
any enhancements to operations. In support of its case Tramtrack was
able to point to a decision of the Court of Appeal reported just
before Christmas. Although the decision is not straightforward it is
clear that the corporation failed to obtain a declaration that
Tramtrack was obliged to provide, and pay for, enhancements to
capacity.
The case contains important points for those drafting output
specifications - especially PFI ones.
A key clause in the specification stated that, for the purpose of
determining the number and size of tram cars, at least 30% of the
passengers had to be able to sit down. Also, the number of standing
passengers was not to exceed four for each square metre, or five in
the rush hours (the trial judge drily noted that nobody seemed willing
to guess what the corresponding figures were at the busiest times on
London Underground).
The corporation argued that, as these levels were being exceeded,
Tramtrack had to provide increased capacity at its own cost. The trial
judge disagreed. Merely showing that there had been instances of six
passengers standing in one square metre of space could not trigger an
obligation to add capacity. For example, there might be a sporting
event that would increase demand. What's more, the judge was not
prepared to imply into the contract some form of testing regime when
the parties had not drafted one. The criteria as to passenger space,
he said, were therefore design objectives, not performance
obligations.
When the case came to the Court of Appeal, the corporation adjusted
its position. It no longer argued that Tramtrack was in breach of
contract whenever more than five passengers were standing in one
square metre of space. However, it still maintained that the contract
required Tramtrack to put on extra trams if there was overcrowding.
The court asked itself: if the parties had intended that the
specification should contain an obligation on Tramtrack not to permit
excessive overcrowding, where would that obligation be? Not hidden
away in the part of the document dealing with design, it concluded. It
also agreed with the judge that one would have expected to have found
terms about how overcrowding was to be measured, and over what
period.
Counsel for Tramtrack argued bluntly that there was no breach of
service levels even if trams were repeatedly overcrowded. If either
party wanted to increase the capacity or frequency of trams, he said,
that party would have to pay for it. The court described this as a
"pretty unattractive scenario" but were not prepared to say that he
was wrong.
A point for those drafting specifications, particularly in PFI, is to
consider whether a criterion is to be merely a broad-brush design
objective or a performance standard. If the answer is a performance
standard, it is essential to set out a scheme for evaluating
performance together with the financial consequences of failure.
Unquote


Thanks for posting that article - I think it's actually a very clear
summary of the real root of the problems with Tramlink. Whilst TfL and
Tramtrack Croydon Ltd (the operators of Tramlink) are in a war of
words - both claiming that the other party is the obstacle to
expanding capacity (amongst other things) - it would seem that the
fundamental problem is that the contract for the 99 year concession to
run Tramlink is itself a pretty duff bit of paperwork, as it is
woefully inadequate in specifying who is obliged to do what with
regards to providing extra capacity on the system.

It would seem that the authors of the 1996 Tramlink Concession
Agreement failed to foresee the current "pretty unattractive
scenario", in the words of the judge. The article suggests to me a
number of possible ways forward...
(1) TfL pays for the increased capacity themselves;
(2) The contract is re-negotiated somehow, though I'm sure this
wouldn't be at all easy;
(3) TfL and TCL agree some kind of Memorandum of Understanding that
goes above and beyond what is set out in the inadequate contract, so
that progress can be made - the problem of course is that any such
agreement wouldn't be backed up by the force of law.

Of course I am not a lawyer so there's probably umpteen various other
options that I haven't considered. Regardless, some way forward from
this impasse must be found as Tramlink is immensely successful and
needs to add capacity - at peak times parts of the system are bursting
at the seams.

On Fri, 9 Mar 2007, Bob wrote:

'I can't think of any PFI project we have inherited that wasn't
dysfunctional in one way or another." So said Ken Livingstone, in
typically forthright fashion.

So who negotiated the contract in the first place?

Any chance this is going to put Ken off commissionairing the London
Overground?

tom

--
The Gospel is enlightened in interesting ways by reading Beowulf and The
Hobbit while listening to Radiohead's Hail to the Thief. To kill a dragon
(i.e. Serpent, Smaug, Wolf at the Door) you need 12 (disciples/dwarves)
plus one thief (burglar, Hail to the Thief/King/thief in the night),
making Christ/Bilbo the 13th Thief. -- Remy Wilkins

On 9 Mar, 11:58, Tom Anderson wrote:
On Fri, 9 Mar 2007, Bob wrote:
'I can't think of any PFI project we have inherited that wasn't
dysfunctional in one way or another." So said Ken Livingstone, in
typically forthright fashion.

So who negotiated the contract in the first place?

Presumably it was London Regional Transport (LRT), which was then an
organisation controlled more or less directly by central government,
specifically by the Department of Transport. The contract was signed
between Tramtrack Croydon Ltd and London Bus Services Ltd - which was,
and still is, the legal entity that organises bus services in London
(at the time it was part of LRT, but when the GLA was set up it became
a subsidiary of Transport for London).

I don't know exactly what role all the different bodies played in
this, but as the money was coming from central government they
certainly dictated the broad terms of this PFI contract. Who exactly
is to blame for the detail, i.e. the inadequacies of the Tramlink
contract, I'm not so sure. In a way it doesn't much matter now, at
least with regards to the specific issues that Tramlink has, in a way


Any chance this is going to put Ken off commissionairing the London
Overground?


No. The deal is done. AIUI the DfT agreed to let TfL control the
London Overground (LO) on the condition that it was operated as a
concession by a private sector company, so TfL would not have been
able to directly run it themselves and directly employ all the workers
(though I could be wrong on that).

The LO concession will however be handled by TfL themselves through
the TfL Rail division. TfL Rail are also responsible for the DLR,
which is run by a private company, Serco Docklands Ltd, and TfL find
this a very satisfactory arrangement. So I'd suggest that TfL will
very carefully specify the contract for the LO concession, and will
have a good relationship with the operator.

On Mar 9, 1:35 pm, "Mizter T" wrote:
On 9 Mar, 11:58, Tom Anderson wrote:

On Fri, 9 Mar 2007, Bob wrote:
'I can't think of any PFI project we have inherited that wasn't
dysfunctional in one way or another." So said Ken Livingstone, in
typically forthright fashion.

So who negotiated the contract in the first place?

From the TfL website:
Tramtrack Croydon Ltd won a 99-year Private Finance Initiative (PFI)
concession to design, build and maintain the Croydon Tramlink System
in 1996
Croydon Tramlink was opened in May 2000
Croydon Tramlink carries around 24 million passengers a year
TfL inherited responsibility for the PFI contract with Tramtrack
Croydon Ltd following TfL's creation in 2000.

Remember that Ken was in the outer darkness at the time and had the
Tube PPP foisted upon by the Treasury - presumably the same thing
happened in Croydon.

On 9 Mar, 13:59, "Bob" wrote:
On Mar 9, 1:35 pm, "Mizter T" wrote: On 9 Mar, 11:58, Tom Anderson wrote:

On Fri, 9 Mar 2007, Bob wrote:
'I can't think of any PFI project we have inherited that wasn't
dysfunctional in one way or another." So said Ken Livingstone, in
typically forthright fashion.

So who negotiated the contract in the first place?

From the TfL website:

Tramtrack Croydon Ltd won a 99-year Private Finance Initiative (PFI)
concession to design, build and maintain the Croydon Tramlink System
in 1996
Croydon Tramlink was opened in May 2000
Croydon Tramlink carries around 24 million passengers a year
TfL inherited responsibility for the PFI contract with Tramtrack
Croydon Ltd following TfL's creation in 2000.

Remember that Ken was in the outer darkness at the time and had the
Tube PPP foisted upon by the Treasury - presumably the same thing
happened in Croydon.

Sort of the same thing - though the Underground PPP was an
'innovation' of the new Labour government elected in 1997, whilst the
Tramlink PFI deal was done under the previous Tory government.

On 9 Mar 2007 06:16:51 -0800, "Mizter T" wrote:

On 9 Mar, 13:59, "Bob" wrote:
On Mar 9, 1:35 pm, "Mizter T" wrote: On 9 Mar, 11:58, Tom Anderson wrote:

On Fri, 9 Mar 2007, Bob wrote:
'I can't think of any PFI project we have inherited that wasn't
dysfunctional in one way or another." So said Ken Livingstone, in
typically forthright fashion.

So who negotiated the contract in the first place?

From the TfL website:

Tramtrack Croydon Ltd won a 99-year Private Finance Initiative (PFI)
concession to design, build and maintain the Croydon Tramlink System
in 1996
Croydon Tramlink was opened in May 2000
Croydon Tramlink carries around 24 million passengers a year
TfL inherited responsibility for the PFI contract with Tramtrack
Croydon Ltd following TfL's creation in 2000.

Remember that Ken was in the outer darkness at the time and had the
Tube PPP foisted upon by the Treasury - presumably the same thing
happened in Croydon.

Sort of the same thing - though the Underground PPP was an
'innovation' of the new Labour government elected in 1997, whilst the
Tramlink PFI deal was done under the previous Tory government.

Not really the same thing at all. The PPP is a long maintenance and
upgrade contract - the operation remains in the public sector as do the
assets. The PPP Contractors take no revenue related risk as they do not
have access to the farebox revenue and no incentive to directly increase
such revenue. Indirectly they have an influence in that a better
performing railway should attract custom and delivery of the line
upgrades will grow revenue as a result of better train services and more
capacity. They, for example, do not have an immediate obligation to make
stations much bigger if ridership increases. This is almost an
impossible risk to pass to the private sector as growth trends are
hugely variable and the associated expenditure to make stations much
bigger is in the tens or hundreds of millions of pounds.

Under Tramlink design, build, maintain and operate is all in the private
sector and I believe the assets belong to Tramtrack Croydon too. These
would revert to the public sector upon termination or expiry of the
contract. I suspect the row about Tramlink centres on several things -
revenue assumptions given that TfL have radically changed the fares
structure assumed for Tramlink, maintenance and upgrade responsibilities
- the system will very soon need some major work doing to it to keep it
fit and the upgrade risk resulting from passenger growth.

Given the Tramlink deal is for 99 years it is pretty important to get
these "fault lines" in the contract sorted out. If it is not resolved
quickly then you will end up with a system that is simply falling to
bits because the respective parties will walk away from their real /
imagined obligations to maintain and grow the system. Given the
argument that was in the article I think TfL are on pretty weak ground
and will end up coughing up the money. I suspect their quid pro quo
will be much greater direct control over the operation as per the DLR
set up. There will almost certainly be a renegotiation or else a large
scale variation to the contract - I doubt the parties are genuinely at
the "tear it up and walk away" stage.

The other very interesting factor that is not yet obvious is how will
the system be extended. If we look at the Metrolink precedent each time
the concession has been relet and each time the operating consortium has
changed. Quite what compensation has flowed between the parties in the
background I do not know but if Tramlink does extend to Crystal Palace
(or wherever) it will be interesting to see how TfL decide to play the
procurement game.


--
Paul C


Admits to working for London Underground!