Costing Public Transport Tenders

Assisting public transport operators to tender for government (passenger transport) or private sector (staff transport) is a service we offer for this niche market. The tender documents are voluminous and can be overwhelming
for smaller public transport operators. We have the skills, expertise and resources to compile and submit a tender on time that is compliant to the administrative and technical requirements, is competitively priced, and still provides the shareholders with a fair profit.

Providing a market related, tender price for a seven year contract requires insight into the public transport market, the economy of the area where the services are required, and an understanding of transport industry-related inflation, to name a few prominent risk drivers. The transport industry inflation is often higher than the general inflation rate as the industry is sensitive to fuel pricing and the Rand exchange rate against major currencies where the chassis and major components of the Original Equipment Manufacturers (OEMs) are sourced. In addition, all of the seven year contracts are net based, which means the operator takes the fare revenue risk.

The realisation that the formal public transport market requires more competitors to level the playing field and ultimately provide competitive prices that are underscored by supply and demand principles is growing, especially in the public sector. We therefore see this service offering expanding in the future. Green Square Consulting has assisted Litsamaiso (Pty) Ltd with tendering for the following contracts:

• Public Transport Operating Grant contracts for three areas in the Gauteng Province;
• Rea Vaya Phase 1A;
• Crew and ground staff transport services for the Airports Company of South Africa (ACSA);
• Routes where vehicle shortages occur from time to time for the Passenger Rail Agency of South Africa (PRASA); and 
• Staff transport services for Glencore Lion Smelter in Mpumalanga.

Integrated Public Transport Network Planning

Public transport planning is crucial for the functioning of our metropolitan areas and larger cities. Historically, the focus on public transport planning was cities throughout South Africa. In addition, the rapid-rail system, Gautrain, was introduced in the Gauteng Province in 2010.

Public transport serves mostly the captive user, i.e., the people that are dependent on public transport for the daily commute.  This market is familiar with public transport and understands the operations, routes, stops and frequencies without the information being publicly readily available. By contrast, for choice users, i.e. people that own a car, it is difficult  to access information on current service schedules, operating times, routes, fares and fare media. 

The sustainability of any public transport system envisaged in South Africa has to deal with the history of segregated planning as well as low population density. Segregated planning led to poor people living far from economic opportunities, and urban sprawl combined with low density human settlement developments makes public transport inefficient and expensive to operate. 

Integrated Public Transport Networks (IPTNs) have been planned and partially implemented at Local Authority level since 2007. The aim is to integrate the different modes into a single public transport network that provides for seamless inter-modal travel using one ticketing system. The intention is for the network to be under the control of the Planning Authority who will manage it by putting  the services to be operated on the network out to tender for the  private sector to operate. The Planning Authority will monitor the operations in terms of operator adherence to the timetable, routes and quality of the fleet. 

We have been involved with the planning and implementation of IPTNs at Project Management Unit (PMU) levels since 2009, and has specifically worked for the City of Tshwane, City of Ekurhuleni, City of Polokwane and Rustenburg Local Municipality.

Cost Benefit Analysis

Formalised Public Transport will always require financial support to sustain its operations. Often the benefit of a subsidised public transport system far outweighs the cost of the direct subsidy. Benefits to society include fewer private cars on the road, time savings due to reduced congestion, fewer  accidents, and less pollution (vehicle emissions) due to fewer cars.

Determining the net cost or benefit to society in general requires that all cost and benefits of the public transport intervention be calculated over the life cycle of the project.  Should the benefits outweigh the costs, the project has a net positive impact on society in general. This technique is used to determine the net impact of a project is referred to as Cost Benefit Analysis (CBA).

Green Square Consulting has been involved in the Cost Benefit Analysis for determining the best route alignment for the extensions of Gautrain for the Gautrain Management Agency.

Business Case Development

The development of a business case for any component of a public transport system is a necessity that is often overlooked. However, executed timeously and in sufficient detail with the necessary consultative process, it proves that the recommended solution is based on sound principles and that a thorough process was followed to arrive at the recommended solution. A business case is required when a problem presents itself and there are a number of potential solutions available to solve the problem. 

The typical steps to be followed include a high-level assessment of the options to be considered to solve the problem (optioneering approach), and the determination of the operational and functional requirements. 

Once these steps are completed to the satisfaction of the role-players, the process continues with the development of all possible options. Following this, the options are narrowed down and then scored based on a Multi Criteria Analysis which considers technical and feasibility criteria. This is usually followed by an Options Assessment workshop whereby the shortlisted options are scored on the Investment Objectives (usually informed by Government policy) and the technical and feasibility criteria. A preferred option should emerge from this workshop, which is then taken further in detailed design. 

Green Square Consulting has been working with Aurecon on the detailed business case development of the Whangaparāoa bus station in Auckland, New Zealand.

Public Transport Services Design

The design of public transport services on behalf of a Planning Authority is a crucial step in the process of contracting road-based public transport operators to provide service for a seven year period, as legislated in terms of the National Land Transport Act of 2009.  

The broad steps in designing the seven year contracts require that surveys be conducted in the area to determine the passenger demand, vehicle utilisation, operating times and routes to service the main Origin-Destination pairs. From the surveys, the vehicle utilisation, routes, operating times and the headways during peak and off-peak periods can be determined. A high-level scheduling exercise is required to determine the peak fleet requirement of the intended operations. The operational information is then costed, based on industry norms, to provide the Planning Authority with an indicative cost of the contract over the contracting period.  This exercise assists the Planning Authority to budget for the services over the contract period.

Green Square Consulting has designed bus contracts in the Secunda, and the Witbank/ Middelburg area for the Mpumalanga Department of Roads and Transport.