Appendix A | 161
TABLE A.16 Lessons
learned from the business collaboration agreements in Singapore
BEST PRACTICES
AREAS FOR IMPROVEMENT
• The reform incorporated valuable existing assets from incumbent operators (depots and fleet). [planning risk] [incumbent risk] [operational risk] • The reform included transition mechanisms, remunerating incumbents for their fleet while it was replaced by new vehicles owned by the authority. [planning risk] [incumbent risk] [operational risk] • Given the shortage of land, making the incumbent depots available to bidders removed a huge barrier to entry. [planning risk] [incumbent risk] [operational risk] • The model allowed for flexibility in changing the level of service and adapting to changing demand. [operational risk] • The model allowed for flexibility in incorporating new electronic buses. [technology risk] • The reform increased the number of buses and improved the level of service. [planning risk] [design risk] [operational risk] • The short-term duration of the operation contract allows for more competition for the market. [planning risk] [operational risk] [technology risk] • The automatic fee adjustment mechanism reduces the perceived risk by the operator. [planning risk]
• Operators receive a fixed payment and are compensated by operational costs, which produces no incentives to reduce costs or limit supply. [planning risk] [operation risk] • The Land Transit Authority (LTA) requires a large capacity to monitor operational costs and compliance with service standards, and the demand level is consistent with fare collection. [planning risk] [operation risk] [institutional risk] [evasion and cash management risk] • There is no clarity on how overhaul maintenance will be done or on the capacity of the LTA to undertake it. [planning risk] [operation risk] [institutional risk]
Source: World Bank.
by the government. LTA retains all fare revenue that the operators collect. LTA determines the level of services to operate the routes, and the number of vehicles allocated to a given route. LTA acquires the fleet and owns the buses, leasing them to the operators. Operators are responsible for routine maintenance of the buses and on-board equipment as part of their contracts. They are also responsible for maintaining the bus depots assigned to them. Operators also provide user information as well as customer service (lost and found, grievance redressal). Operating contract terms range from 2 to 10 years. To provide the right incentives for operators, which are entitled to fixed payments, the remuneration includes performance payments of up to 10 percent. If the operator does not meet standards, up to 10 percent of its fee will be deducted. Performance indicators are linked to reliability and waiting times, the punctuality of first and last dispatches, and the maintenance of buses, depots, and equipment. The model has led to improved service quality. It has allowed the LTA to adapt the fleet to changes in demand, making urban bus services responsive to changes in ridership and commuter needs. It has increased competition in the industry and raised service levels for commuters. Table A.16 presents the lessons learned from Singapore’s business collaboration agreements.
NOTES 1. This improvement surpassed the municipality’s goal of a 25 percent reduction. 2. For the 10-year exchange rate, see https://www.xe.com/currencycharts/?from =USD&to=PEN&view=10Y. 3. US$1 = Mex$18.99. 4. Bono de chatarrización, a grant that allowed operators to cover the down payment for the new fleet. 5. Syndicat Mixte des Transports pour le Rhône et l’Agglomération Lyonnaise. 6. T Sh 364,602,325,731 converted to US dollars (US$1 = T Sh 2,179.98).
