twinning project, activity 4, maintenance assessment tuesday 4 th october 2005, session 2b the...
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Twinning project, activity 4, Maintenance assessmentTuesday 4th October 2005, session 2b
The concession model; the instruments in the relationship
By Jan Swier, ProRail, The Netherlands
Tel. +31 30 235 5315. e-mail: [email protected]
© ProRail. All rights reserved File: g:\Js05\0406.Slovenia.Oct.3.Concession model.ppt
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Presentation contents
*Business relationships in the concession model*The instruments in the relationship between Government and ProRail:
*Management plan*Financial model*Dashboard*Track Access Charge
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enGovernment
Train Operators
Transport concession (Passengers only ) Performance contract
ForwarderPassengers
Forwarders
Payment Repayment scheme
Network statement Access agreement Track Access Charge Performance regime
Contractors Engineers
Process contractsProject specifications
RIBVLProRail
•Management concession•Management plan•Budget: financial model •Performance: KPIs •Track Access Charge
Business relationships in the institutional triangle
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Dashboard
Legal context
Instruments
Essential instruments in the relationship between Government and ProRail
*(New) Railways Act*Management concession: the contract
*Management plan*Budget: financial model*Budget: Track Access Charge
*Dashboard: KPIs
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Contents Management Plan*
1. Mission and strategy of ProRail2. Assessment by stakeholders: duty of
care and key performance3. Ensuring sufficient, reliable and safe
infrastructure4. Supplying sufficient, reliable and safe
capacity5. Safety and the Environment6. Continuous improvement: migration
to output-based management7. Financial parameters8. Operators view of management plan
* Management plan = strategic policy plan ProRail with objectives for costs, performance and organisation for the next five years.
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Financial model Government - ProRail
PerformancePerformance ActivitiesActivities CostsCosts
Departure points
Departure points
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In the management concession (art. 20), the Minister imposes four conditions on ProRail
for heading towards output:
Transparency in the relationship between
activities, costs, performance and departure points.
A
Awareness of the interaction
between performance by
manager and operators.
B
Awareness of the long-term
effects of maintenance
(LCM).
C
Structures and systems for
effectively using the insights
referred to in A, B and C.
D
Audit 2008
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The financial model should establish a relationship between costs, performance and departure points in a
transparent manner
Focus: ‘Trade off’ within the sectorFocus: ‘Trade off’ within the sectorFocus: ‘Trade off’ within the sectorFocus: ‘Trade off’ within the sector
Given the departure points… - the operational model:
e.g. existing or corridor- the accompanying infrastructure:
quantity, quality- intensity of use- Environmental and Safety legislation
…for the required performance…- availability- TAOs and FHT
…the cost level is fixed- at given efficiency
Given the departure points… - the operational model:
e.g. existing or corridor- the accompanying infrastructure:
quantity, quality- intensity of use- Environmental and Safety legislation
…for the required performance…- availability- TAOs and FHT
…the cost level is fixed- at given efficiency
‘Trade off’
‘Trade off’
Financial modelFinancial modelPerfor-mancePerfor-mance
•Setting level
CostsCosts
•Efforts• Indexing
Departure points
Departure points
• Infrastructure• Intensity•Legislation•Operational model
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- Production plan- OPC 2004
- IHC- RVL- CM- …
- Production plan- OPC 2004
- IHC- RVL- CM- …
ActivityActivity
ProRail activitiesProRail activities
The financial model is directly related to the ProRail activities and the efficiency with which they are implemented
Feedback loop keeps model
up to date
‘Trade off’‘Trade off’
CostsCosts
Financial modelFinancial model
Departure points
Departure points
• Setting level• Efforts• Indexing
Task setting organisation
Perfor-mancePerfor-mance
Focus: ‘Trade off’ within the sectorFocus: ‘Trade off’ within the sectorFocus: ‘Trade off’ within the sectorFocus: ‘Trade off’ within the sector
• Departure points are jointly determined by agreements within the institutional triangle (Government-Operators-ProRail)
• Insight into mutual influence of alterations to budget, performance and departure points
• Departure points are jointly determined by agreements within the institutional triangle (Government-Operators-ProRail)
• Insight into mutual influence of alterations to budget, performance and departure points
Focus: Efficient operation of Focus: Efficient operation of ProRailProRail
Focus: Efficient operation of Focus: Efficient operation of ProRailProRail
• How is the required performance translated into activities within ProRail
• How do efficiency moves influence the ‘trade off’ within the financial model
• How is the required performance translated into activities within ProRail
• How do efficiency moves influence the ‘trade off’ within the financial model
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Example relationships between maintenance costs, intensity of use and disruptions
Relationship between intensity and Relationship between intensity and maintenance costsmaintenance costs
Relationship between intensity and Relationship between intensity and maintenance costsmaintenance costs
€ 0€ 1.000€ 2.000€ 3.000€ 4.000€ 5.000€ 6.000€ 7.000€ 8.000€ 9.000
€ 10.000
0
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# Treinen per wissel per jaar
KG
O /
wis
sel
/
Engels Normaal Hoge snelheid
€ 0€ 1.000€ 2.000€ 3.000€ 4.000€ 5.000€ 6.000€ 7.000€ 8.000€ 9.000
€ 10.000
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# Treinen per wissel per jaar
KG
O /
wis
sel
/
Engels Normaal Hoge snelheid
Trains/year
Eu
ro/p
oin
t
Relationship between intensity and Relationship between intensity and performanceperformance
Relationship between intensity and Relationship between intensity and performanceperformance
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Aantal treinen#
On
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atig
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en
Engels Normaal Hoge snelheid Gemiddeld
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Aantal treinen#
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atig
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Engels Normaal Hoge snelheid Gemiddeld
Trains/year F
ailu
res/
yea
r
EXAMPLE for
points
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The model must provide an insight into the effect of changes in expenditure, performance and/or departure points.
Relationship between costs and performance if Relationship between costs and performance if departure points remain the samedeparture points remain the same
Relationship between costs and performance if Relationship between costs and performance if departure points remain the samedeparture points remain the same
prestatie
€
Kosten
P1
Fall in additional yield
P2
Costs
Performance
Relationship between costs and performance with Relationship between costs and performance with changed departure pointschanged departure points
Relationship between costs and performance with Relationship between costs and performance with changed departure pointschanged departure points
Prestatie
€
Kosten
P2
Fall in additional yield
P1
Costs
Performance
Illustra
tion
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ProRail Dashboard: internal management instrument for measuring the results achieved within the concession agreement
KPIs
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5 Safety &Environment
5. … within statutory frameworks for safety and the
environment...
6Finance
6. … as efficiently as possible...
1Availability
1. ProRail will guarantee optimum availability…
3Adjustment
3. … complies with agreements with operators...
4Use
4. …will optimise supply/demand for the available track …
2Transfer
2. … lives up to agreements on transfer facilities...
Indicators
7Personnel
8Innovation
The Board of Directors’ dashboard with 6 top KPIs & 2 organisation KPIs
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5 Safety &Environment
5. … within statutory frameworks for safety and the
environment...
6Finance
6. … as efficiently as possible...
1Availability
1. ProRail will guarantee optimum availability…
3Adjustment
3. … complies with agreements with operators...
4Use
4. …will optimise supply/demand for the available track …
2Transfer
2. … lives up to agreements on transfer facilities...
Indicators
7Personnel
8Innovation
The Board of Directors’ dashboard with 6 top KPIs & 2 organisation KPIs
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The dashboard covers all parameters in the financial model
‘Trade off’
‘Trade off’
Financial modelFinancial modelPerfor-mancePerfor-mance
CostsCosts
Departure points
Departure points
1Availability
2Transfer
3Adjustment
4Use
5 Safety &Environment
6Finance
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The top KPIs from the dashboard have been translated into more specific KPIs at underlying management levels
5 Safety &Environment
6Finance
1Availability
3Adjustment
4Use
2Transfer
7Personnel
8Innovation
Board of Directors
Director Infra Management5 Safety &
Environment
6Finance
1Availability
3Adjustment
4Use
2Transfer
7Personnel
8Innovation
Contract manager
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A target value represents the target aimed at by ProRail.
A threshold value is the target according to which ProRail will be held accountable. A target value is therefore less absolute than a threshold value. A threshold value can only be determined once ProRail has sufficient experience with a KPI. The eventual intention (at the latest by 1 January 2008) is that all KPIs will have threshold values.
Internal regulation limits have been agreed to focus ProRail on the agreed targets. They indicate, according to a colour code, whether the KPIs are ‘on track’. The colours have the character of traffic lights. The colour green means that the KPI is developing according to the target, and is on track. The colour orange indicates that there is a temporary deviation for which no (more) separate actions need be taken. The colour red indicates that additional action and therefore attention are necessary to tackle the deviation from the target.
Green Orange Red
Internal regulation limit 1
Internal regulation limit 2
Target values and/or threshold values have been agreed for all KPIs
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Target values and threshold values 2005
KPI/NPI Dashboard Items
Targ
et v
alu
e (i
nte
rnal
re
gu
lati
on
lim
it 1
)
Inte
rnal
reg
ula
tio
n
limit
2
Th
resh
old
val
ue
2005
(A
gre
emen
t M
inis
try
of
Tran
spo
rt)
1 KPI Availability1.1 NPI-Unplanned non-available (TAO (#) *(FHT (hours)) 14.200 * 14.605 N/A 20051.2 NPI Planned non-available (TVP (#)) 344 380 N/A 20051.3 NPI Weighted unplanned non-available (TAO (#) *(FHT (hours)*BVW) In development N/A 2005
2 KPI Transfer2.1 NPI Appreciation social safety (daytime) 84% 76% 76%2.2 NPI Appreciation social safety (night-time) 45% 37% 37%2.3 NIP Appreciation cleanliness 48% 42% 42%
3 KPI Adjustment3.1 NPI Information provision according to agreements 98% 95% 95%3.2 NPI Adjustment according to agreements 92% 92% 90%3.3 NPI number of irregularities in route setting 1.075 1.100 N/A 2005
4 KPI Use4.1 NPI Successful appeals Netherlands Competion Authority (NMa) 40% 60% N/A 2005
5 KPI Safety & Environment5.1 NPI System safety In development N/A 20055.2 NPI Work safety In development N/A 2005
6 KPI Finance6.1 NPI Overhead costs 15,0% 16,5% N/A 20056.2 NPI Costs per train km (costs including capital costs) € 8,23 8,64€ N/A 2005
7 KPI Personnel (internal KPI)7.1 NPI Absenteeism due to sickness 5% 5,40% N/A 20057.2 NPI RGB discussions held (planning and evaluation meetings) 90% 75% N/A 20057.3 NPI Employee satisfaction 73% NTB N/A 2005
8 KPI Innovation (internal KPI)8.1 NPI Innovation In development N/A 2005
The following NPIs are information items for the Board of Directors**
1.1.1 NPI Availability due to unplanned withdrawal (TAOs (#)) Information item N/A 20051.1.2 NPI Average functional repair time for a TAO (FHT (hours)) Information item N/A 20052.3.1 NPI Cleanliness (objective measurement) Information item N/A 2005
* Target value + Package of measures agreed with Ministry of Transport, Public Works and Water Management
** Information items are not on the Board of Management Dashboard, but are reported to the BoM once a quarter or monthly
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Track Access Charge
TOCs have to pay for the use of the Rail Infrastructure, but…….. this is only possible when the TOCs earn sufficient money to make a profit. This is a delicate balance between business possibilities and limitations.
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Development of Track Access Charge in the Netherlands
Income Rail Infrastructure from user fee
1938
5986
119
163179
195
0
20
40
60
80
100
120
140
160
180
200
2000 2001 2002 2003 2004 2005 2006 2007
Mio
Eu
ro
Maintenance & Renewal costs 2004, (excl Traffic Control & Capacitymanagement)
420
162
78
66
188
893
119
98
0
100
200
300
400
500
600
700
800
900
1000
1100
Costs 2004 Income 2004
Mio
Eu
ro
User fee
Government
Organisation and overhead
Intrest
Management
Depreciation
Track renewals
Maintenance
In 2007, the track access charge will provide ProRail with about 20% of its total income
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Attribution of Track Access Charge to systems and cost drivers
Train km
Train km
Ton km
Stops kWh
61
65
9
41
20
Superstructure , tonkm
Signals & Traffic Control , trainkm
Yards & Sidings , trainkm
Electrical energie , kWh
Stations , stops
million Euro
million Euro
million Euro
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Situation from 2006 onwards
*New Railways Act and EU Directive 2001/14–Track access charge must be agreed with TOCs –ProRail sets the system and the tariffs–Competition Authority monitors developments–Payment based on realisation figures
Conclusion: New revised system necessary
*EU Directive is strictly followed–% variable cost is set on basis of 2000 to 2003: Approx. 19% of our costs are variable–Standard costs instead of estimated costs: stable tariff –Attribution of costs to cost drivers carried out by experts
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Cost drivers and tariffs (beyond 2005)
*Signalling & Control: € 0.5046 per train km*Yards: 14% surcharge on train km fare*Catenary: € 0.02989 per kWh*Superstructure: € 0.001711 per tonne km*2006: € 0.0005 per ton km for freight trains
Stations:*Very large (4 stations): € 5.0672 per stop*Large (approx. 35 stations): € 2.4848 per stop*Small (approx. 350 stations): € 0.8615 per stop
INFORMATIVE
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Cost drivers are measured
*Train kilometres and stops: by traffic control within the VPT system.*Axle loads, speed and round wheels: new measuring system “Quo Vadis”*kWh from cost model, used for the allocation of electricity costs (no measuring system yet)
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Conclusions1. The concession model has laid down the conditions for further
professionalisation of the railway transport sector in the Netherlands.
2. The requirements imposed by government on ProRail to head towards output are encouraging and effective.
3. Establishing a transparent relationship between costs – performance - activities - departure points is a challenge which appears fulfillable, but which will demand maximum effort from the organisation.
4. By introducing the “track access charge”, train operators impose explicit demands on the rail infrastructure: “he who pays the piper calls the tune”. This will have a stimulating effect.
5. Instruments for measuring use have been introduced for the track access charge, which will increase the efficiency and effectiveness of train operators and ProRail.
6. Focusing on KPIs has increased management involvement and effectiveness.
enGovernment
Train Operators
Transport concession(Passengers only )
Performancecontract
Train Operators
Transport concession(Passengers only )
Performancecontract
Network statementAccess agreement
Track Acces ChargePerformance regime
Network statementAccess agreement
Track Acces ChargePerformance regime
RIBVLProRail
•Management concession•Managementplan•Budget: financialmodel •Performance: kpi’s •Track Access Charge
RIBVLProRail
•Management concession•Managementplan•Budget: financialmodel •Performance: kpi’s •Track Access Charge
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Thank you for your attention
Any questions?