The importance of institutional arrangements for a ...constraints and obstacles to project implementation, thus reducing the effectiveness of the envisaged solutions to integrate urban

The importance of institutional

arrangements for a successful

transport and urban planning

CODATU XV Addis Ababa, Ethiopia

Jose Enrique Pérez Fiaño

October 2012

2 The role of public transport prioritization in (re)shaping cities

Table of Contents Introduction: initial thoughts on BRT

implementation needs

The public agencies framework: discussion

of alternative models

Public Private partnership opportunities in

BRTs

Conclusions


Lower

service

quality

The growing success of BRT systems is due to its proven ability to break

the vicious circle that leads to degradation of the urban transport

The progressive weakening of transportation systems is caused by the weakness of the operators and

public agencies responsible for guiding and regulating the operation. Users end up paying the inefficiency of

the system with higher fares

Declining Quality Spiral Lower

service

quality

Car

ownership

increasing

Increase in

traffic

congestion

Buses stuck

in traffic

Decrease

in bus

investment

Poor

financial

viability

Higher in

business

risk


Key elements for a successful BRT implementation

Operational

performance

Fleet quality

Engineering

design

TICs, control

tools

Institutional

arrangements

The availability of a fleet of new high-capacity buses, comfortable, and

equipped with safety features, is the main distinguishing element of a

BRT System

An efficient operation of the bus fleet is the main reason for the

implementation of a mass transit system with fixed stops, regular

frequencies and sufficient service capacity

The provision of adequate technological systems for fare collection,

ticketing, fleet positioning control, incident response and security issues,

are key to guarantee the BRT efficiency and public image

A substantial part of inefficiencies, unnecessary costs and functional

problems in mass transit systems, can be avoided with a proper design

of the corridor facilities

Efficiency and profitability of the BRT system depends, ultimately,

in a stable framework of institutional arrangements, that should be

accepted by all the public and private stakeholders


Elements of the institutional arrangements framework

INSTITUTIONAL IMPLICATIONS

Several projects can coincide and progress at the same time for the implementation of BRT corridors, MRT, or metro lines . Each system is usually operated or managed by a different agency

The proposal of new transport modes has technological, operational and business model implications that require responsive and specialised management that can avoid bureaucratic delays

The desire to incorporate the private sector into the operation and financing of new transport systems implies the need for clear rules on access to and presence in the market and transparent management of the fare revenue

• It is essential that there will be a

Transport Authority provided with the

powers for planning, control and

coordination of the different transport

systems. The Transport Authority shoud

act as a single coordinating agency

• The planning, control and management

of different systems implies the

creation of public agencies with the

capacity for flexible management and

specific knowledge of each business.

• The public sector (authority and public

management companies) must maintain

the functions of control, regulation,

planning and award of contracts and

operating licenses, and the construction

of the overall system infrastructure and

that for each specific mode.

EVOLVING ACTIONS

Definition of

ownership and

maintenance of buses

and infrastructure

Definition of the

coordination

mechanisms

Definition of roles and

responsibilities of the

agents

INSTITUTIONAL ACTIONS

The initiatives to modernise public transport system require concurrent action on a new institutional framework


BRT projects involve a large number of stakeholders

Typical structure of stakeholders in BRT projects

Private

Sector

Current

operator

Informal

vendors

Civil

Organiza

tion

Real

State

agencies

National Level

Ministry of

Transportation

(Communications)

Ministry of

Home Affairs

Ministry of

Planning

Ministry of

Finance Ministry of

Economy

Ministry of

Environment

Presidency

Current

operator

Municipal Level

Informal

vendors

Civil

organizations

Real State

Agencies

Railroads

authorities

Road

Authorities

Policy

department

Universities

Cooperation

agencies

International

entities

Banks


The path to succeed is a clear definition of the three institutional levels:

policy-making, regulation and operation, within the institutional framework

Leaving the institutional issues unaddressed most likely might result in unresolved constraints and

obstacles to project implementation, thus reducing the effectiveness of the envisaged solutions to

integrate urban and transport planning

Level of

Government

Participation of private sector

POLICY

REGULATORY

OPERATION

National

Local

Decision drivers







BRTs

Conclusions


In the case of the Public Sector the institutional arrangements may include

a variety of formats

Level of

Government

National

Local

Type of institution Description

A transport

department

A transport authority

A public company

A specialised transport

agency

A non - governmental

organisation

• Large entity with a wide range of regulatory and management

responsibilities; typically reports directly to city political officials

• Organisation with wide oversight on all public transport activities;

frequently given autonomous status through a board of directors

• A specially created company that is owned and managed by

local government

• Smaller organisation with a focused mandate; typically reports

directly to city political officials

• Independent outside organisation that is given the responsibility

of managing the public transport system


Managing relations with public transport operators, through contracts and service level agreements,

including the definition of performance criteria, preparation of service contracts and monitoring of

performance

Coordination of the funding of the system, via funding agreements with the GoB and public and

private operators

Fare policy, involving the definition of the range of tickets and annual revision of prices

Development of projects commissioned by other Administrations to ensure compliance with the

functions of the GDMTA

Definition and promotion of the corporate image of the Metropolitan Public Transport System and

public transport in general

The main decision driver is where to place the regulatory functions of a

metropolitan transport agency

Planning of infrastructure and services, including the definition of operational aspects (routes,

frequencies, etc), programming investments and supervising the corresponding projects 1

2

3

4

5

6


The best case is a hierarchized institutional model, with a clear division of

capabilities among the public agencies involved

PM

BRT

REG

Other operators

Sometimes this model have to deal with some confusion

created by the national/regional decision makers

PM PM National Local

REG

BRT

Other operators

Rail/Metro

PM

BRT

REG

Other operators


The opposite option is an inverse hierarchized model …

Ej. León, México

National

PM

BRT

PM PM PM PM Local

Normally combined with a parallel structure of conventional

public transport

BRT Op Op Op Op

National

PM PM PM PM PM Local

Typically the BRT operator is “naturally” placed as a “virtual

regulator” of the whole system

PM

BRT

Op

PM PM PM PM Local

Op Op Op Op

Ej. Transmetro Bogotá, Metro Caracas, Transmetro Guatemala

Ej. León, México

National

PM

BRT

PM PM PM PM Local

Normally combined with a parallel

structure of conventional public transport

BRT Op Op Op Op

National

PM PM PM PM PM Local


A third usual model is the creation of “competitive” regulatory agencies

PM

REG

BRT Op

REG

(other mass transit

systems)

Op Op Op Op


Finally, a more political option is progressing towards a consensus among

the policy agencies, through SPV (Foundations, Consortiums, etc.)

Sometimes, these consortium are created on the PM level…

PM

BRT Op

PM PM PM PM

Op Op Op Op

Ej. Madrid

… or placed in the regulatory level, but sharing the competences

PM

REG

Op

PM PM PM PM

Op Op Op Op

Ej. Transantiago

The main risk of this option is the obligated concurrence of the SPV with

complementary regulatory agencies

PM

Op

PM PM PM PM

Op Op Op Op

REG

REG REG

Sometimes, these consortium are

created on the PM level…

PM

BRT Op

PM PM PM PM

Op Op Op Op

Ej. Madrid

… or placed in the regulatory level,

but sharing the competences

PM

REG

Op

PM PM PM PM

Op Op Op Op

Ej. Transantiago







BRTs

Conclusions


Once the institutional framework is decided, the operational structure

should be addressed: some important opportunities for PPPs could be

identified

• Under the business model framework for the BRT system there exist five principal actors: the BRT Regulator, Trunk Route Operators,

Feeder Route Operators, Fare Collection Company and Trust.

• Private concessions will be used to develop the system, including the operation of buses and the collection of fares.

• It is also possible to use concessions during the construction of the infrastructure. In this way, the policy makers can secure the investment required

through private companies and therefore share the financial risk while at the same time maintaining control.

Business Model

BRT System

BRT Regulator

Trunk Route

Operators

Feeder Route

Operators Trust

Fare Collection Company

• System planning

• Day to day programing of the integrated operations

• Quality control

• Resource management

• Purchase of feeder vehicles

• Maintenance of vehicle fleet

• Operation of feeder services

• Management of personnel within concession

• Manage revenues from fare collection

• Act as clearing house to divide revenues between system entities

• Acquire fare collection and ticketing equipment

• Maintenance of equipment

• Collection of fares from service users

• Purchase of trunk vehicles

• Maintenance of vehicle fleet

• Operation of trunk services

• Management of personnel within concession


A joint participation between public and private companies can be

expected in a number of BRT main and complementary business

Economic compensation for

rationalization

BRT Corridor construction

Fleet scrapping program

BRT Corridor maintenance

Terminals construction &

maintenance Stations construction &

maintenance

Bus fleet purchasing

Security and cleaning

services

Bus operation

Fare collection and

clearing house

+ for PPP

+ for Public + for Private


18

Many other complementary activities can be sorted out from the core

business of the BRT operation, and assigned to private companies

Real estate

Security services

BRT Operation

Shopping

Fare Collection

and Trust

Maintenance

Services

- Road

- Stations

- Terminals

- Fleet

Facilities

operation

Rickshaws integration

Main

BR

T o

pe

rati

on

al

bu

sin

es

s

+

+


19

The relationship between public and private companies in BRT

operations can be addressed through 5 main actions

Incorporation of a number of current bus

operators through negotiation or tender

processes

Fleet Scrapping

Program and

incentives to operators

Tenders for Fare

Collector and Trust

Fund operators

An economic compensation

mechanism for route rationalization

Fare policy

1

2

3 4

5







BRTs

Conclusions


Conclusions

• The institutional framework is a key element for a BRT implementation

• The most successful models have been generally based on the separation of

Policy, Regulatory and Operational functions. A hierachized model is the best

preferred option

• Leaving the institutional issues unaddressed most likely might result in unresolved

constraints and obstacles to project implementation, thus reducing the

effectiveness of the envisaged solutions to integrate urban and transport planning

• There are a number of opportunities to private partnership in the core and

complementary business of the BRT operations

• Existing operators should be the preferred system operating unit for the BRT

• It is recommended to contract an external fare collection agency and/or clearing

house to improve transparency in the distribution of revenues

Contact person

[email protected]

www.alg-global.com

BARCELONA

Tanger 98, 3ª planta

08018 Barcelona (Spain)

Tel: (+34) 93 430 4016

Fax: (+34) 93 363 0623

[email protected] BEIJING BILBAO BUENOS AIRES CARACAS DUBAI LIMA LISBON LONDON MADRID MEXICO CITY MILAN PARIS RABAT SAO PAULO

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The importance of institutional arrangements for a ...constraints and obstacles to project implementation, thus reducing the effectiveness of the envisaged solutions to integrate urban