A.15 Lessons learned from the business collaboration agreements in Medellín, Colombia

TABLE A.15 Lessons learned from the business collaboration agreements in Medellín, Colombia

BEST PRACTICES

• Cuencas 3 and 6 created competition in the bidding process. [planning risk] • Cuencas 3 and 6 and business collaboration agreements integrated incumbent operators. [political and social risk] [planning risk] [incumbent risk] • Business collaboration agreements incorporated incumbent assets and planning capacity into the system. [planning risk] [design risk] [incumbent risk] • Business collaboration agreements allowed for hybrid payments with cash and fare cards in the buses. [technology risk] • Business collaboration agreements created incentives for efficient operations. [planning risk] [design risk] • Area Metropolitana del Valle de Aburra developed a system to allow for monitoring of compliance with the level of service and other requirements using operators’ automatic vehicle location systems. [operational risk] [technology risk]

Source: World Bank. AREAS FOR IMPROVEMENT

• Cuencas 3 and 6 had no identified depots and workshops. [planning risk] • In cuencas 3 and 6, compressed natural gas buses were not fit for operating in certain areas. [operation risk] [technology risk] • In cuencas 3 and 6, fare collection distribution was not sufficient in low-demand areas. [planning risk] [technology risk]

The results were excellent. Fleet rationalization was lower (17 percent on average in cuencas 1, 2, 4, 5, 7, and 8), fare collection on buses was integrated with the system (through a hybrid operation that allowed for cash payments), assets from existing operators were incorporated into the system, more than 90 percent of buses were clean and included the corporate image, and all vehicle operations were controlled by the authority. The operations were integrated with the rest of the system, and there was no associated subsidy on any of the routes. Table A.15 presents the lessons learned from the business collaboration agreements.

CITYWIDE UNBUNDLED FLEET PROVISION AND OPERATION IN SINGAPORE

Singapore is a successful example of an innovative citywide intervention characterized by the unbundling of the fleet and operations.8 The incorporation of incumbent assets (especially depots in a context of land constraints) removed barriers to entry and reduced costs. The reform focused on improving the level and coverage of service, which led to successful results.

Singapore initiated reform in 2012 with the creation of the Bus Service enhancement Programme. The program supported the purchase of 1,000 new buses and the introduction of new services to expand the program. Little by little, the city improved bus services in the existing system. In 2016 the Land Transport Authority (LTA) bid 14 packages with about 300–500 buses each, for a duration of five years with the possibility of a two-year extension. To ensure a gradual transition, an additional 11 packages were extended in periods from 2 to 10 years. In addition, LTA made sure that the affected employees of incumbent operators were offered jobs by the new operators.

In the model implemented in Singapore, operators receive a fixed fee to operate bus services. The fees are automatically adjusted to reflect changes in inflation, wages, and fuel costs. Operational costs are considered separately and paid