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Can Tar Ella, Financing Local Public Trasnort - Cost and Benefits Evaluation

Can Tar Ella, Financing Local Public Trasnort - Cost and Benefits Evaluation

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Published by: ihering on Sep 26, 2010
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01/05/2013

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 1
FINANCING LOCAL PUBLIC TRANSPORT:COSTS AND BENEFITS EVALUATION
*
 
Giulio Erberto Cantarella
1
, Stefano de Luca
1
, Massimo Di Gangi
21
Dept. of Civil Engineering – University of Salerno. Italy
2
Dept. of Architecture Planning and Transport – University of Basilicata, Italyemail:
g.cantarella@unisa.it, sdeluca@unisa.it, digangi@unibas.it 
 
ABSTRACT
Currently, an increasing consensus is endorsing the introduction of competition in public transport (PT), through public service contracts. At thesame time, whilst in some countries subsidies (or financial compensation) area well-established practice, in others they are considered unmotivated.In this paper a framework is proposed to estimates and evaluate transit costs,benefits, and impacts to support transport planning and policy making as wellas operator management. The proposed methodology aims at computing the(total operating) cost and the revenue resulting from the option features andfares, and allows public transport service plan appraisal. In particular, thesubsidies, or financial compensation, are given a clear socio-economicmeaning.
1 INTRODUCTION
Currently, an increasing consensus is endorsing the introduction of competition in public transport (PT), through public service contracts. At thesame time, whilst in some countries subsidies (or financial compensation) area well-established practice, in others they are considered unmotivated. Theapproach followed in this paper allows better to understand the economicmotivations of having competition still maintaining subsidies.In the following emphasis will be on local and regional public transport(L&RPT); many considerations may be extended to inter-city public transportwhich on the other has a national relevance.According to EU Commission documentations, evidence supports thatcontrolled competition is more effective than both non competition at all aswell as deregulation; moreover controlled competition makes easier to checkquality requirements as well as to implement fare and service integration.Further, according current proposal for EU regulations when any (public)payment is to be considered to a L&RPT operator, a public service contract iscompulsory, and it should usually be awarded through competitive tendering.In Italy as well as in other countries further regulations have been introduced.
*
Due to unforeseeable and unavoidable commitments what follows is only a first version of this paper, the final one will be available at the conference and included in the final version of the electronic proceedings.
 
 2Basic services, which are the object of this paper, are distinguished by specialones, such school bus, bus for people with reduced mobility, and so on. Publicservice contracts are to be awarded through a competitive tendering referringto a service plan (SP) designed by the competent (planning and controlling)authority. In Italy competent authorities are the Regions, but it is commonpractice that decisions about road services are delegated to Provinces;moreover, a SP is legally feasible only if revenue is at least 35% of (totaloperative) cost, difference between cost and revenue being the financialcompensation and the relative contract is awarded for three years..In this paper a framework is proposed to estimates and evaluate transit costs,benefits, and impacts to support transport planning and policy making as wellas operator management. Each SP option may be described by severalfeatures such as: line structure, stop locations, frequencies, travel timesbetween adjacent stops, timetable, vehicle capacity, and so on. Its completedescription also include fares relevant to compute revenue. The proposedmethodology aims at computing the (total operating) cost and the revenueresulting from the option features and fares, as such it includes severalmodels described in the following sections.
2 SUPPLY AND COST MODELS
This section describes the main elements of:the supply model for computing performance indicators, such as vehicle
×
kmvehicle
×
hour, pax
×
km, pax
×
hour (= total travel time) and the like, andPT attributes (such as travel time, waiting time, …) from option features,the cost model for computing the total operating cost from performanceindicators and unitary costs,
Supply and cost models
optionfeaturesperformanceindicatorsPT time attributesoperatingcostmodeloperatingCostunitarycostssupplymodel
 
optionfeaturesperformanceindicatorsPT time attributesoperatingcostmodeloperatingCostunitarycostssupplymodel
 
 3 The supply model is based on the kind of network models adopted for transitsystem analysis; if performance indicators only depend on frequency andhourly capacity often a line-based approach leading to synchronic networksmay be enough, but for a detailed analysis referring to the timetable a run-based approach should be preferred. The PT time attributes will be a relevantinput of the mod choice model described in the next section 3 as a part of thedemand model.Regarding the cost model, several methods concerning cost structures of public transit systems have been proposed in literature, but most of them havebeen introduced to compare operators each other. On the other hand in theproposed approach the cost model aims at carrying out a quantitative analysismeant to estimate the (total operative) cost of an option. During the designstage this indicator will support the authority to compare financial effects of desired features with available budget as well as operators decision-making. Itwill also play relevant role during the evaluation stage described in section 4.Operative costs can be divided in two classes:
costs whose total value, in the short term, depend from the volume of activity, that is the quantity of supplied service, these costs are generatedonly if the service is produced;
costs to produce resources used to be shared among the lines; at this aimappropriate parameters can be used which represent the size of theservice produced by the lines (n° of runs, n° of vehicles, etc.).The adopted methodology can be summarized in the following phases:
identification of the activities done for the production of the service;
definition of the kind of resources used for the development of the singleactivities;
definition of the acquisition cost of these resources;
definition of the quantity of resources used by the line;
prevision of the operative costs of line for activity;The total operative cost has been considered composed by the followingitems: traction cost [
TC 
], maintenance cost [
MC 
], cost for plant and vehicles[
PVC 
], personnel cost [
PC 
] and general expenses [
GE 
], as detailed describedbelow. The parameter chosen as indicator of the amount of produced serviceis the amount of vehicle-kilometre [
VKM 
], which can easily be disaggregatedper line.
Traction cost
is here referred to the unitary cost [
UTC 
] and the suppliedservice, in terms of veh-km, produced in the entire year. The unitary cost isobtained on the basis of the fuel consumption, unitary cost of fuel, type of vehicle, type of the line mileage (congested, urban, extra-urban):
TC = UTC 
⋅ 
VKM 
where the off duty consumption has been considered negligible.

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