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THE ORGANIZING OF PUBLIC TRANSPORT SERVICEUNDER SERVICE CONTRACTS WITH PUBLIC PLANNING Emri Juli HARNIS 1 and Shoshi MIZOKAMI 2 1 Member of JSCE, Ph.D. Candidate, Dept. of Civil and Environmental Eng., Kumamoto University (2-39-1, Kurokami, Kumamoto, 860-8555, Japan) E-mail: [email protected] 2 Member of JSCE, Professor, Dept. of Civil and Environmental Eng., Kumamoto University (2-39-1, Kurokami, Kumamoto, 860-8555, Japan) E-mail: [email protected] Regulatory reform in public transport has become one of important issues in many countries, in order to improve efficiency and provide better services to users. Since regulatory reform will bring about institu- tional and structure changes of the organization, then it will imply the way of the public transport services regulated and managed. This paper highlights how public transport service is organized under service contracts system, as one of growing trends recently. That is to say a system of which the service delivery of public transport is con- ducted by business enterprise on specified target which is planned by authority, which works under contract agreement between them. The study focuses on the two cases namely both London’s and Seoul’s models. These will illustrate how they are put into practice in those cities. It could be significant as an alternative in undertaking local public transport reform efficiently. Key Words: regulatory reform, public transport, service contract 1. INTRODUCTION Recently, many local public transport agencies are trying to improve efficiency and provide better services of their public transport. Regulatory reform is one of growing options for these purposes. Indeed, there are various underlying reasons which are con- fronted by them each, such as the reducing of gov- ernment funding for public sector, the changes of regulations in the provision of public transport, or other reasons concerned with the improvement of services quantity and quality. The extensive evidence internationally showed that subsidized public transport services, provided on a monopoly basis by government’s operators in both developed and less developed countries tended to become inefficient 1) . They were partial to produce services for more than necessary (at above competi- tive rates), and service quality was often inferior 2) . The experiences when such services were opened to competition, usually through a competitive tendering and contracting process, were that substantial cost savings were achieved 3) . In the mean time, the using of deregulated system in the provision of public transport in some large cities, showed the drawbacks in several aspects, mainly related to the market fail- ure 4) . In many countries, governments are pushing for the introduction of competition in the organization of public services and more broadly in public pro- curement 5) . The development of public-private partnerships around the world is a good illustration of this trend 6) . Moreover, the emerging of new hy- brid model which is implemented in some countries around the world over the last three decades has been one of alternative choices in the provision of public transport service. In other word, a model of which the public and private sectors share responsibility in delivering the service 7) . The service contract system is one of the growing trends under hybrid model. The main feature of the system which is intended here is that the public transport services are planned by a public agency, and procured from business enterprises under service contracts, often with competitive tendering 8) . In ad- dition, although this system works under contract

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Page 1: THE ORGANIZING OF PUBLIC TRANSPORT SERVICEUNDER SERVICE CONTRACTS WITH PUBLIC PLANNING · 2017-12-28 · THE ORGANIZING OF PUBLIC TRANSPORT SERVICEUNDER SERVICE CONTRACTS WITH PUBLIC

THE ORGANIZING OF PUBLIC TRANSPORT

SERVICEUNDER SERVICE CONTRACTS WITH PUBLIC PLANNING

Emri Juli HARNIS1 and Shoshi MIZOKAMI2

1Member of JSCE, Ph.D. Candidate, Dept. of Civil and Environmental Eng., Kumamoto University (2-39-1, Kurokami, Kumamoto, 860-8555, Japan)

E-mail: [email protected] 2Member of JSCE, Professor, Dept. of Civil and Environmental Eng., Kumamoto University

(2-39-1, Kurokami, Kumamoto, 860-8555, Japan) E-mail: [email protected]

Regulatory reform in public transport has become one of important issues in many countries, in order to improve efficiency and provide better services to users. Since regulatory reform will bring about institu-tional and structure changes of the organization, then it will imply the way of the public transport services regulated and managed.

This paper highlights how public transport service is organized under service contracts system, as one of growing trends recently. That is to say a system of which the service delivery of public transport is con-ducted by business enterprise on specified target which is planned by authority, which works under contract agreement between them.

The study focuses on the two cases namely both London’s and Seoul’s models. These will illustrate how they are put into practice in those cities. It could be significant as an alternative in undertaking local public transport reform efficiently.

Key Words: regulatory reform, public transport, service contract

1. INTRODUCTION

Recently, many local public transport agencies are trying to improve efficiency and provide better services of their public transport. Regulatory reform is one of growing options for these purposes. Indeed, there are various underlying reasons which are con-fronted by them each, such as the reducing of gov-ernment funding for public sector, the changes of regulations in the provision of public transport, or other reasons concerned with the improvement of services quantity and quality.

The extensive evidence internationally showed that subsidized public transport services, provided on a monopoly basis by government’s operators in both developed and less developed countries tended to become inefficient1). They were partial to produce services for more than necessary (at above competi-tive rates), and service quality was often inferior2). The experiences when such services were opened to competition, usually through a competitive tendering and contracting process, were that substantial cost savings were achieved3). In the mean time, the using

of deregulated system in the provision of public transport in some large cities, showed the drawbacks in several aspects, mainly related to the market fail-ure4).

In many countries, governments are pushing for the introduction of competition in the organization of public services and more broadly in public pro-curement5). The development of public-private partnerships around the world is a good illustration of this trend6). Moreover, the emerging of new hy-brid model which is implemented in some countries around the world over the last three decades has been one of alternative choices in the provision of public transport service. In other word, a model of which the public and private sectors share responsibility in delivering the service7).

The service contract system is one of the growing trends under hybrid model. The main feature of the system which is intended here is that the public transport services are planned by a public agency, and procured from business enterprises under service contracts, often with competitive tendering8). In ad-dition, although this system works under contract

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agreement between government as authority and business enterprises as operators but then authority takes active responsibility for planning of the service. This paper focuses on discussing of this kind of system. In a rather simpler way, the term of service contract system will then be used to represent such a system hereafter.

In view of the regulatory reform is a process of change, it will bring about the institutional changes or rule of the game, even in public transport sector. Consequently the functions of each stakeholder would also be changed. The new institutional setting including the applying of service contract system creates new roles for all actors to run the system. This will also change the structure of the public transport organization itself. Thus, in the context of public transport service, it will imply and influence the way of the services to be provided, so become important to organize it within an efficient manner.

This paper studies how the public bus transport service is organized in such an organizational form, as explained previously. The two cases, both Lon-don’s and Seoul’s model are used as illustration. It is preceded by explaining the shifts toward the service contracts system in those cities respective. This is then followed by highlighting the organizing of public bus transport services under such systems in the cities, which covers some aspects namely plan-ning, operating, and monitoring. In turn, it could be worthwhile as input for local public transport in conducting regulatory reform.

2. THE SHIFTS TOWARD SERVICE

CONTRACTS SYSTEM IN LONDON AND SEOUL Both London’s and Seoul’s cases are interesting

to study since they had difference backgrounds in introducing the service contracts system into their public transport service. Moreover, their previous systems in the provision of public transport service were different each other. In case of London, its regulatory framework in public transport has evolved over the last three decades. It has moved toward new system by introducing competitive ten-dering and undertaking the privatization of its pub-licly owned bus company gradually. It was very different from the Seoul’s experience in conducting its innovative public transport reform, which was prepared in a short time, only around two years, before going into operation in the year 2004.

In historical perspective on regulatory reform of the bus industry, the United Kingdom led the way in significantly deregulating the urban and rural public transport market when it introduced the 1985 Transport Act9). Under the Act there are two distinct systems in providing public bus transport services

through all The United Kingdom. The provision of public bus transport services for local and regional areas outside London is on the basis of unregulated system. This means that the initiative to run public bus transport services for passenger comes from private companies. They can apply and choose routes, arrange timetable and fare to be charged, based on a commercial basis.

At variance with outside London, bus service in London is operated by private bus companies as operators, which work under contract to London Buses (LB), a subsidiary of Transport for London (TfL). In addition, TfL is a functional body that re-sponsible for delivering the Mayor of London’s Transport Strategies. LB manages bus services, by planning routes, specifying service levels and en-suring the quality of services, and also responsible for providing other support services, such as bus stations, and bus stops. The contracts are awarded to private companies through a competitive tendering process, as a selection mechanism.

Previously, the provision of London's public bus service was a publicly owned and subsidized bus operation. Its service operation was an increasingly costly public monopoly at that time. Under the London Regional Transport Act 1984, London Transport (LT), which was then replaced by a new organization called TfL in 2000, was required to set up subsidiary companies to run both bus and under-ground. It was also demanded to introduce competi-tive tendering to ensure LT operated economically and required less financial assistance from public funds. In 1985 LT set up a subsidiary known as London Buses Limited (LBL), which was then split into 13 locally based subsidiaries companies. In the same year, LT also set up the Tendered Bus Division to begin the process of competitive tendering. In a consequence of the Act, LBL had to compete with private bus companies in order to get the right to run public bus transport service. Finally, LBL was sold to private sector in 1994, and all of public bus transport services are run by private companies after that. The introduction of competition for the market and the involvement of the private sector had there-fore been gradual in London6).

The average number of bus passenger in London, carried per day, had increased by 46.92% since 1985, up from 3,124,658 passengers to 5,886,800 passen-gers in 200810). Most of the increase occurred after the privatization. Moreover, based on his study on the deregulation in bus systems of the UK’s metropoli-tan areas, White found the indication that total op-erating costs declined by 10.5% in London11). The reduction in operating cost had been wholly swal-lowed up by subsidy cuts and mileage increase12). The average number of bus passengers per day in

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functions, tcused on thridership wimean time,service opeauthority.

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mpanies eachre establisheds in each zonoperating coal four werears14). Basically, thLondon and oss Cost ConC in London t model withrs linked to ains the revecost and groincentive to

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as between p urface transp

ute prior to tnto account oThis input wication, whicthe frequenc

f vehicles toance standarde a schedulee total cost

service to thtations to Teon pre-qual

ts are awardmost econ

n the resourcon is based oount of qualitQuality IncenLondon, comnk lines in Sorm, which istem works olitan area inus depots. Wcomprised oferators formeh. There werd from 38 comne. They werst, service aselected fo

e contract sySeoul nowa

ntract (GCC)currently is a

h direct finanthe quality nue. This is

oss cost contachieve qua

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private and

port within tender. In adof views froill be used t

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t plus profithe specificatiender (ITT) lification pro

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mpetitive tendSeoul, as a nis held by a

on the divnto four zoneWhen it was f 10 major aed consortiumre 8 consortmpanies, witre evaluated

and operationor a set of p

ystem which adays is on ). The impleman extensionncial incentivof services, in response

tracts which ality targets1

o reduce thety in turn. petitive ten-ppear in dif-

making usese, routes aren at the sameto facilitate

tire network.ich has been. In addition,ompany, thepublic com-

TfL, LB re-dition, to do

om the inter-to provide ahe route thevice, the typend the mini-rs are thenthe level ofmargin for

ion. Further,to approvedocess in ad-intention ofdvantageous

e. Nowadayse for money,y as essentialcts (QIC)17).dering is just

new concept,team of the

ision of thees, centeringfirstly intro-axes and 19ms of 4 or 5tiums whichth 2 tenderedon the basis

n plans. Theperiod of six

is used boththe basis of

mentation ofn of the grossves for oper-insofar TfLto the olderhad no such

17). In Seoul,

e

--e e e e .

n , e -

-o -a e e -n f r ,

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h f f s -

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under joint revenue management system, the SMG retains fare revenue, and operators are secured the reimbursement in compliance with total distance of service, according to bus operation each. In addition, in case of shortage, the SMG will subsidize bus op-erators. Table 2 shows some aspects of competitive tendering and contract system in London and Seoul.

Due to the authority retains fare revenue of bus operation then it involves the central pooling of fare revenues, and payments to operators which con-cerned with the services and performance which is delivered. Consequently, there must be agency that

responsible for collecting and distributing it. In London and Seoul, such tasks are carried out by a traffic card company in behalf of authority, in this matter TfL and the SMG.

Under GCC, despite the risk of service produc-tions is transferred to private companies, but then they are still protected from full commercial risk, since revenue risk is born by authority. It is different from net cost contract where operator bears both production and revenue risk. The while under man-agement contract, both production and revenue risk are borne by authority18). The type of contracts on the

Table 2 Competitive tendering and contract system in London and Seoul.

ITEMS LONDON SEOUL

Competitive Ten-dering (CT) sys-

tem

• Route tendering system for entire network

• Route tendering system for trunk lines only

Executor of CT • LB as subsidiary of TfL • The team of SMG The number of

operator • Increase, since enables potential op-

erators to take part in the process of CT

• Reduce, since some operators had to form consortium to take part for CT

Process of CT • Competition was between private and public companies before privatization

• Apply pre-qualification system, be-fore issuing Invitations to Tender (ITT) to approved operators

• Work on division of the greater metropolitan area into four zones, centering on the public bus depots

• Comprised of 19 routes, with 2 ten-dered bid in each zone when it was introduced

Evaluation crite-ria of CT

• The best value for money, taking into account of quality and safety by Quality Incentive Contract

• Operating cost, service and operation plans

Contract system • The Quality Incentive Contract which is the extension of Gross Cost Con-tract

• TfL retains fare revenue, contract payments related to mileage operated and overall reliability of the service

• Under joint management of revenue, SMG retains fare revenue, and reim-burse bus operators based on total distance of service per vehicle

• Shortage will be subsidized by SMG

Contract period • A 5 year contract with possibility to a 2year extent based on performance

• A 6 year contract for trunk lines which are put for tendering system

Table 3 The type of contracts based on the division of risks between authority and operator.

Type of Contracts Production risk: Revenue risk:

Authority Operator Authority Operator

Gross Cost Contract √ √

Net Cost Contract √ √

Management Contract √ √

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basis of the division of risks between contracting parties, both authority and operator, in the provision of public bus transport service can be seen in Table 3.

However, in London, there was an attempt to transfer the both risks to operators under net cost contract, which was applied in preparation for the privatization of its publicly owned company, London Bus Limited (LBL), until routes were tendered. It was not only to shift the revenue risk to the operators but also gave them the incentive to generate more revenue by increasing the quality of the services. Initially this contract system was not subject to competition as the routes were allocated to the in-cumbent operators by negotiating. However, this trial seemed not successful, and only gross cost contracts have been offered since 199919).

Concerned with the contractual form, the time period of contract should be considered as well. Under Quality Incentive Contract, LB signs up the contract with operator for a 5 year contract with the possibility to a 2 year contract extension on the basis of operator’s performance. In Seoul, under competi-

tive tendering, all contracts are signed for finite time period of 6 years. The longer contract term will allow for the bidder to offer the low price related to scale economies, but reduce the opportunity for competi-tion amongst potential operators.

(3) Monitoring of bus services

The monitoring is an important part in manage-ment cycle, including public transport sector. This is being more significant as the right of operating pub-lic transport service is left to some operators. Under a gross cost regime, operators always have an incen-tive to supply less than the contracted amount of service, so the agreement needs to be enforced19). Thus, the establishment of an efficient monitoring system is required to ensure bus services are pro-vided as defined target. Further, it could also be used as feedback for policy formulation and development to provide better public transport services to citizen as users.

As part of efforts to maintain the quantity and quality of public transport service which is provided, there are various monitoring systems which have

Table 4 Bus monitoring systems in London.

Monitoring System

Objects Methods Executor Attributed to bonus & deduc-tion of payment

Mileage operated

Lost mileage within operator control

• Compare to contract agreement London Bus (LB)

Yes

Reliability Operator’s ability to schedule

• Roadside survey about regularity and punctuality of service (3-5% of the whole services)

LB Yes

Driver and vehicle delivery

Service quality in compliance with contract

• Mystery traveler survey, covers: Static audit, survey at bus stands Mystery shopping survey

Research agency in

behalf of LB

Yes

Driver quality Driving skill of driver

• Covertly assessment • Driver receives a graded score

Specialist Contractor

of LB

No

Engineering quality

Maintenance pro-cedure and vehi-cles mechanical condition

• Regular check of 25 % of each operator’s fleet the whole year

• The average number of point per vehicle, by scoring any defects

Independent contractor

of LB

No

Costumer satisfaction

survey

Satisfaction of users

• Interview, includes: safety and security, information, reliability, cleanliness, staff behavior

LB No

Public corre-spondence data

Public information • Made by phone, email and letter • Data is analyzed at route level

LB No

Contract compliance

audits

Operator’s com-pliance with the specifications in the contract

• Regular visits to operating garag-es, focus on administration sys-tem, handling and accounting for bus revenue and LB’s owned equipment

Team of LB No

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been appliemileage opelivery, drivesurvey saticontract comremedies cotors17). The are shown in

The thrementioned bility, driveused to deteon the basiwhich is imto Minimumagreed betwthe contract

The dedujust executetrol, such asbeing mechMoreover, tthe basis oschedule, coresult from services. Mdriver and vity and in cby carrying service. Bebonus and dis also shareto address afied. Furthebeing concethese are nounder QIC.

The whibles LB ansatisfaction vices whichimprovemensystem, safand drive bcollates puband addresstaking fieldsive to userinformationation of tendnew contraformance isment, but thcontract as anearly all mually, howe

ed in Londerated, reliaber quality, enisfaction, pumpliance audoncerned wit

monitoring n Table 4. ee earlier ofabove, nameer and vehicermine finanis of operato

mplemented inm Performanween LB andt signed. uction of payed for some rs non availabhanically fitthe reliabilitof assessmeontrol and aroadside su

Moreover, thvehicle delivompliance wout mysterysides it is a

deduction payed with operany area of wer, driver quaern of moni

ot attributed d le, the custo

nd bus operaof customer

h is provident needed. fety and secubehavior. Mblic informas specific co

d investigatior’s need and n will be takeders and recocts. Basicallssues throughen it retainan ultimate s

monitoring mever, TfL has

on recently.bility, driverngineering qublic corresdits, and otheth the perforsystems in L

f the monitoely mileagecle delivery ncial bonusesor’s performn London nonce Standard d operator at

yment for threasons with

bility of staff t to be usey of service

ent of operaadjust serviceurvey of 3-5e monitorin

very, focuses with contracty traveler survassociated wyment, the darator, so theyweaknesses wality and engitoring objecdirectly to in

omer satisfacators to monrs in term thd, and identIt is includurity, cleanl

Moreover, LBation to revoncerns, incluon, so as to bsatisfaction.en into accouommendationly LB will rgh normal cons the right tsanction. In amethods are us started using

. They inclr and vehiclequality, costuspondence ders sanctionsrmance of opLondon rece

oring systeme operated, re

monitoring,s and deductance under wadays. It re(MPS) whicthe beginnin

he lost mileaghin operator cf and vehiclesed on the r

is expressedator’s abilitye, by using % of the wg system unon service q

tual requiremvey whilst buith the finanata of this sury can take acwhich are idegineering quacts also, des

ncentive paym

tion survey nitor the levehe quality of tify areas w

ding informaliness, reliabB also uses view, undersuding by unbe more respAll of avail

unt in the evn for awardinresolve any ontract manto terminate addition, receundertaken mg a combina

lude: e de-umer data, s and pera-ently

ms as elia-, are tions QIC efers ch is ng of

ge is con-s not road. d on y to data

whole nder

qual-ment, us in ncial rvey ction enti-ality spite ment

ena-el of f ser-

where ation bility

and stand nder-pon-lable valu-ng of per-

nage-any

ently, man-ation

of pacandsystregu

Iwhiby ttiongenfor tionsigndrivsengaddcouopeopeandsafecernto b

MSeotionas iitoratioinfoBMsystpoli

Omea

technologieket radio ser

d assure of ttem allows ulate serviceIn Seoul, theich is deliverthe Bus Man

nal body, a pnt transport s

a central buns and speedned to any gvers, and progers waiting

dition, by mauld more ensueration. Furtherator’s perfod informatioety of bus sens for the SMbus companyMoreover, thoul is under cn and Informintegrated trar and coordinons. It collecormation deri

MS, T-Moneytem, automaice agency, aOther thanasures to mo

Fig.5 Mon

es, satellite rvice (GPRStimely bus obus controlls to make the managing red by somenagement Sypart of the SMsystem (ITS)s control cends, adjust thgiven route, ovide real-ti

g at bus stopanaging and ture the puncher, as part oormance whn concernin

ervice operatMG in givingy accordinglyhe monitorincontrol of thation Serviceansport mananate all of tracts and procived from rely card whichatic violatioand transport

BMS andonitor buses

nitoring system

tracking aS) data transoperation. Tlers, so call

hem more relof public bu

e operators isystem (BMSMG. By util) technologyntre to monithe number o communicaime informaps or via thetracking bus

ctuality and sof the monitholly, the reng both reltion will lateg incentives ay 14). ng of bus o

he Transportae (TOPIS) thagement sysaffic conditiocesses all trlevant sourceh is automa

on enforcemt broadcastind TOPIS, s operation a

of bus service

and generalsfer, to trackThis tracking

ed iBUs, toiable. us operations undertaken), as a func-izing intelli-, this allowstor bus loca-of buses as-ate with busation to pas-e internet. Ins operation itsafety of busoring of bus

ecorded dataliability andr on be con-

and penalties

operation ination Opera-hat functionstem to mon-ons and situ-ransportationes, including

atic paymentment system,ng. some otherare also un-

in Seoul.

l k g o

n n --s --s -n t s s a d -s

n -s --n g t ,

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dertaken inpassengers services whvestigation faction surveconomic freliability, scovers the circumstancIn the earlysurvey was the new systwell. The retake quick and to be fareas whermonitoring can be seen

The invorequired to isfactory ofLondon, thTransport UBus Reformsignificant rpublic transagreement areform propcitizens. Evcontinued toSeoul publia variety isindependentsentative of and citizen Bus Reform

(4) Consens

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Fig.6 The e

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hich is provias well. Somvey focus ofeasibility cosafety, driveradequate of

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some undewhich was into reality, sole it to laLondon is ru

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Based onsome consid

Fig.7 Some service

erlying acts followed by either throu

arger bus oprun by privateely, the policng public traed existing reappropriate le in applyinncompassingystem, and cof involvedf financial suwhich possib

by it could sewill also facild responsibilision of publiween them ithat lack of e obstacles vailability omes crucial

contract systenot be possi

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have some imoperating sy

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consideration ie under service

or regulatiotechnical pr

ugh managemperators17). Ae companiescy support isansport reformegulation is ilegal institut

ng the new sg the regulacompetition sd parties, upport, likes ble needed fecure an effecitate to elaboity of each paic transport sin detail late

f any of thesefor the refo

of sufficient issues in theem. In the abible7). e of the bus o

me issues wittters of resouulatory reformer status, shoentation. In

mplications anystem. It reqem to both a

e and operatening should mprove the of staff, driv

ned, in advanexplanations hich could be

n organizing pucontract system

ons accordinrocess to brinment buyout

All bus servic thereupon.

s highly requm. The overvimportant forional framewsystem. It coation about system, the and regula a large amo

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er on. Since,e areas could

orm to run winstitutional

e implementabsence of it,

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4. SOST

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port

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SOME MOPERATIOSEOUL The implemblic bus opeoul seems to hir public bustion carried hority or its anning and leaerators under In London ca

mpany had bebeen run by

rity still mablic transportwork. Meantem in Seoulponsibility iblic bus servere authorityBy managinhority to oumance targetrity to plan ats public busauthority to

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MERITS OON SYTEM

entation of tration systemhave the sam transport seout by priva

agency takesaves the bus gross cost c

ase, notwithseen privatizedy private comaintains coort services bywhile the ch is actually inn controllinvices whichretains all ro

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very helpful insport and e

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ation previouompetition btransport beiIt also enab

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t can be seen

OF PUBLM IN LON

the new arraem both in Lme purposes. Tervices underate managems active resposervice deliv

contract systestanding pubd and public mpany, howrdinated struy managing echange of buntended to re

ng the provh was weak outes as wellutes networke specificatiit is much ethe goals of tervices. It alse quantity and to passengf service prostem of pubegrated systen Seoul. By o their publin creating a

enhancing efrt service. f integrated snd feeder linunorganized

usly, but alsbetween buseing a mutualbles to securency of the rvices withinintegration

h has also b

ontact systemul require theake some funonly to condu

ervice undertracting sys-in Fig.7.

LIC BUSDON AND

angement ofLondon andThey controlr service op-ment. Publiconsibility forvery to someem. blicly ownedbus services

wever the au-ucture of itsentire routesus operationestore public

vision of itspreviously,

l thereafter.k, it permitson and per-asier for au-the provisionso allows fornd quality ofger demand,ovision, andlic transportem seems tografting in-

lic transporta more relia-fficiency and

A concretesystem is thenes system. Itd public busso has con-es and otherslly beneficialre others ad-

services byn the wholeof fare and

been imple-

ms which aree empowerednctions underuct planning

r -

S D

f d l -c r e

d s -s s n c s ,

s --n r f , d t o -t -d e e t s -s l -y e d -

e d r g

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tasks, but also to procure the service from operators, manage bus operation, and monitor the service pro-vided by operators.

Despite both London and Seoul apply service contract systems under control of local level author-ity directly, however, the structure of organization which is responsible for planning, procuring, and monitoring the service in those cities emerge in dif-ferent forms practically. Indeed, it is concerned with the underlying acts and process of the reform itself. All of such functions are held and coordinated by London bus in London. The while, in Seoul, to do so, the SMG is assisted by some specific organizations and competence authority. Moreover, the Seoul Bus Association, who represents the interest of bus companies in Seoul, plays a part in bridging the co-ordination between bus operators and the SMG.

With the total number of routes which is great, round about 700 routes, LB holds competitive ten-dering every 2-4 weeks. Therefore, it seems to be reasonably the present of LB as particular organiza-tion in handling such functions of public bus transport services in London. This is not only re-sponsible for enforcing continued tendering but also executing other tasks concerning planning, operating, and monitoring of bus service in London.

Under a quasi public system, not all bus routes are put on competitive tendering system in Seoul. As a new concept, part of the reform, competitive ten-dering was just applied for 19 routes (5.2% of total number of routes), when it was first introduced. It was just applied for trunk lines, while for the feeder lines, public bus service operation is still run by a large number of private companies that work based on agreement with the SMG under joint revenue management. This system is adopted as a new rule in Seoul, results from consensus of the interested par-ties who involved in the reform process, particularly the SMG and the Seoul Bus Association who played leading roles in the reform process.

Indeed, the establishing of organization to plan, manage and coordinate the whole services should consider the efficiency and effectiveness of its func-tion. Since, it requires additional budget allocation from authority to support the operation of the or-ganization. The choosing of organization form could be associated with task’s function and responsibility, including the size of area to be served, the complex-ity of service, and the usage of kind of technology just like the scientific bus operation system which has been applied in Seoul.

In term of the competitive tendering system as a selection mechanism to designate operators to run public bus services, it has been successful in London. Direct savings from competitive tendering have av-eraged 15 to 20 percent21). In the meantime, London

Transport found that competitively tendered service had generally higher quality, and that when the public operator provided service in a competitive environment (faced with the threat of contract can-cellation, like private carriers), service quality im-proved on the same services2). The while, competi-tive pressure from tendering process leads to situa-tions in which operators must innovate in order to be competitive in the market22). This indicates that competitive tendering is not only could increase production cost efficiency through direct saving as a result of its process but also enhance service quality. Further, for the authority it could reduce asymmetry information as some operators offer the best com-petitive price and quality of service, in order to get the right to run the services on the certain routes.

In the context of monitoring system, in London, under quality incentive contract, the reliability of service, concerning both regularity and punctuality of service provided by operators, is measured by carrying out roadside survey. It is very different as compared to Seoul, which has applied the using of appropriate technology for such functions. By uti-lizing an intelligent transport system (ITS), global positioning system (GPS), and using a sophisticated fare collection system, it could be conducted effec-tively. Under this system, authority can also monitor the safety of bus service operations, and analyze the statistic performance of bus companies by utilizing smart card’s recorded data and others related infor-mation. All of available information will be analyzed by TOPIS, and then used by the SMG as considera-tion in decision making policy for better service to community as users. This system is not only to help in creating flexible and efficient control over inte-grated public transport, but also in ensuring demand responsive routing and scheduling, based concrete demand data.

5. CONCLUSION

This paper focuses on the study of organizing of local public transport service, based on London’s and Seoul’s experiences. This describes the two previous different systems of public bus operation, which move toward the service contract system, under various rational behind their reform respective. It shows that the previous systems of public bus operation both under public monopoly and unregu-lated system run by a large number of private com-panies are allowed for shifting toward such a system.

The changes toward the new arrangement of public bus operation system in those cities were highly concerned with the underlying acts or regu-lations and the processes which took effect in con-ducting the reforms themselves. These determined

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the way of the competence authorities to take initia-tive to start, perform, and encourage the reform process to come up with their expected goals, and influenced the result itself as well. It became more relevant due to the reform process involved many interested parties.

The separation of planning from operation under gross cost model which are applied in those cities shows the role of involved parties both authority and private operators clearly. Moreover, since authority more focuses on maximizing the service and dele-gates operational right to provide public bus services to operators, so the availability of an effective or-ganization and appropriate technology become sig-nificant in supporting to run and control public bus services. Indeed in applying such a system, the so-lution adopted by one city cannot be directly trans-ferred to another city. However, it is important to recognize that local circumstance of an area is dif-ferent individually. Therefore it should be seen and put in particular situation of an area in question, including by linking it with policy objectives of the service provision, as is the case in London and Seoul. The information on service contracts system of their best practices, should be developed and fitted with real situation by making the best use of the ad-vantages, things like competitive tendering system, the utilizing of appropriate technology for planning, managing, and monitoring of service, and consider-ing obstacles to effective service contract system of a certain area, like institutional capacity, the availa-bility of reasonably operators, and the choosing of procurement and contractual type as well.

This study doesn’t come to the conclusion of which one is the better of those experiences. It is beyond of the scope of the study, in view of the backgrounds, the former systems, and the processes of change both in London and Seoul were different at all. The stressing is more given to the way of or-ganizing public bus transport service in those cities each. Finally, it could be useful inputs and alterna-tives in conducting local public transport reform under service contract with public planning.

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(Received February 25, 2011)