# Presentation: 657831

## Central Puget Sound Regional Fare Coordination  “Smart Card” Project:Experience and Lessons

**T3 Session ****October 19, 2006**

*Presenters*

- Candace Carlson
- King County Metro
- Chris Cluett
- Battelle Seattle Research Center

## T3 Session Objectives

**Present lessons as experienced by the project partners**
**Discuss the external, federally funded evaluation of the early evolution of the Regional Fare Coordination project**
**Identify selected institutional challenges faced and present lessons from the external evaluation**

**T3 Session Objectives**

## RFC Project:Purpose, Partners, and Status

**Partners:**
**- Community Transit, Everett Transit, King County Metro Transit, Kitsap Transit, Pierce Transit, Sound Transit, and Washington State Ferries**
**- New Partners may join in the future**
**Status:**  **Currently engaged in revenue service beta test**

**RFC Project:****Purpose, Partners, and Status**

## Schedule Overview

**Schedule Overview**

## What Distinguishes the Seattle Project

**“****Business Account” subsidy fare products and program management development****—****for example, employers, schools, universities, and human service organizations**
**Smart card replacement of all current prepaid fare instruments; future fare payment is via physical cash or smart card**
**New development of a “Driver Display Unit” to support on-board bus 3****rd****-party system integration, i.e., “smart bus” strategies**
**Complex revenue reconciliation to support current regionalized fare products and transfer agreements**
**Vanpool fare collection demonstration**
**Consensus-based project management with seven fully engaged and diverse transportation providers**

## Customer System Benefits

***Individual Customers***
- One card for all participating agencies
- Convenient “reload” options to add new fare value
- No need to carry cash
- Transit value restored on a lost card
- Reduced “fear factor” of what, when, and how to pay fares

## Customer System Benefits, cont’d.

***Business Account Customers***
- Accurate trip data for employer budget planning
- Reduced financial risk via card cancellation controls
- Reduced administrative support required
- Web-based program management and reporting
- Accurate and daily regional revenue reconciliation
- Accurate ridership data for all prepaid fares

## Customer System Benefits, cont’d.

***Agency Customers***
- Reduced card handling in production, sales, and accounting practices
- Daily system activity and productivity reports
- New riders, primarily from new Business Accounts

## Non-Quantifiable System Benefits

**One Card/One System**
**Flexible Fare Policy**

- Delivers on promise of a “seamless” system
- Provides a system that supports current and future fare policy innovations, incentives, special customer needs, and fare structure changes (e.g., distance-based fares)

## Non-Quantifiable System Benefits, cont’d.

**Expanded**** ****Transportation**** ****Payments**

- Provide a system that may link a variety of transportation services (e.g., parking at Winslow, Tacoma Dome, or Park & Ride lots; road tolls; van pool; taxi)

## Non-Quantifiable System Benefits, cont’d.

**Revenue Generation**
**New Riders**

- Provides a “portable” transit application that can be licensed for use on other cards, badges, or objects (e.g., Swatch watch)
- Removes risk and cost barriers to encourage more employers to subsidize transit and reach new riders

## Card Facts

**Technology: **Contactless microprocessor smart cards
***Standard card:  ***Durable, with a 3–5 year life, and     “reloadable” by the customer
***Disposable card:  ***Preloaded, for limited applications (e.g., short-term benefits for human services clients; juror tickets)
**Configuration:**
- Cards issued as ***Adult, Youth*** or ***Reduced Fare***
- Passes and stored value (“electronic purse”) supported

## More Card Facts

**Data:**
- For example: date, time, card type, fare paid, transfer, incentives applied, agency, route, employer (if applicable)
- Collected at each card use
- _No personal information on the card_
**Purchase and Revalue:**** ****	**
- Cards may be **purchased AND revalued** at agency CSO’s project web site, phone, or mail.
- Cards may be **revalued only** at retail outlets, at Sound Transit TVMs, or through autoload.
**Distribution:****	**
***Start-up: ***Cards will be distributed free for a fixed system “conversion” period.
***On-going: ***Cards will be sold for a minimal one-time fee.

## Slide 14

## Travel Transfer Example

## RFC Centralized Operating Concept

## Cost Estimates: Capital Phase 2003–2006

**         ****Costs shared regionally per “equipment purchase” formula**
**	****	****KCM****	****CT****	****ST****	****PT****	****KT****	****WSF****	****ET**
**	**	55.15%	11.56%	10.65%	8.61%	5.88%	5.27%	2.88%

## Cost Estimates: Operating Phase 2006–2015

**	****	****    ****Costs shared regionally per “ridership” formula**
**	****	****KCM****	****PT****	****ST****	****CT****	****WSF****	****KT****	****ET**
**	**	70.7%	9.1%	7.6%	5.9%	2.8%	2.6%	1.4%

**King County provided central services****—****reimbursement-per- ridership formula**

**Card Procurement **
**Local Card Warehousing and Distribution**
**New Card Order Fulfillment**

## Slide 19

## Lessons Learned by Project Team

_**Methodical Project Development**__**—**__**Provides a Record           of Decisions**_
**   ****Technology Capability Analysis**
**   ****Agency business needs/process analysis**
**   ****Preferred operating concept**
**   ****Requirements development for RFP**
_**Vendor Contract**__**—**__**Terms and Conditions for Risk Management and Schedule Adherence**_
**   ****Conservative payment schedule and fixed-price contract**
**   ****Dispute Review Board****—****briefed quarterly**
**   ****Intellectual Property Escrow Management**
**   ****Key personnel removal**
**   ****Overall level of functional requirement detail proven effective**

## Project Team Lessons Learned, cont’d.

_**Agency Project Governance**__**—**__**Basic Decisions Affect**__**Schedule and Budget**_
**  ****Decision 1****—*****organizational structure:***** JPO or individual **
**   ****agencies**
**  ****Decision 2****—*****decision-making model: *****lead agency or **
**   ****consensus**
**  ****Impacted Area Examples: legal support and procurement**
**  ****Staffing Model**
**  ****Schedule Management Model**
_**Legislative Considerations**_
**   ****Customer “Use Data” protection from public disclosure**
**   ****Escheatment/Unclaimed Property for unused electronic  **
**    ****purse funds**

## Project Team Lessons Learned, cont’d.

_**Biggest Design Challenges Out of 100+ Design Documents**_
**   ****Back-office networks**
**   ****Customer Service Terminal Point of Sale functionality**
**   ****Reporting**
**   ****Web Site Design (Call Center, Cardholder, Agency & Business Accounts)**
_**Most Challenging Technical Issues**__**—**__**Measured in Time to Solve**_
_**3rd Party Vendor Integration**_
**   ****Radio Control Unit integration with the Driver Display Unit**
**   ****Farebox interface with the Driver Display Unit**
**   ****Terminal Gate adaptation of the Fare Transaction Processor**
**   ****Ticket Vending Machine adaptation of the Fare Transaction Processor**
_**Most Challenging Development Tasks Overall**__**—**__**Adoption of Regionally Consistent Business Rules**_
**   ****Underestimated the “rule” requirement****—****currently at 244**
**   ****Underestimated the staffing requirement to get to concurrence**

## Project Team Lessons Learned, cont’d.

_**Challenges on the horizon ...**_
**  ****Defining the scope of work for post-beta design changes**
**  ****Managing the introduction of new agency partners**
**  ****Managing the customer card conversion process**
**  ****Adopting an agency management structure for the operating**
**   ****phase**

## Objectives of the External Evaluationof the RFC Project

- Document a timeline of RFC Project milestones.
- Analyze project planning and implementation issues.
- Identify how the project integrates partner agencies.
- Identify findings that are applicable to other settings.
- Obtain project cost data and post on-line.
- Prepare a set of Lessons Learned for on-line posting.

## Lessons Learned fromExternal Evaluation

- Consider a “consensus” organizational model to help assure support and participation of partners in a regional fare card project.
- Compared to the “lead agency” model, this approach helps to build trust and ensures that no one agency will dominate the process.
- However, the “consensus” model is likely to be more time-consuming to execute.

## Lessons Learned fromExternal Evaluation, cont’d.

- Examine the context that characterizes the region and the participating agencies, and manage the issues that will determine the success or failure of a regional fare card project.
- Each agency is different with regard to factors that affect their operational approach: customer base, geography, size and services, governance structure, technology needs, and existing fare structure.

## Lessons Learned fromExternal Evaluation, cont’d.

- Understand the issues, strategies, and trade-offs that motivate agencies to join in a regional partnership,  and provide appropriate support.
- The WA State Legislature encouraged regionalism from the start.
- The larger partner agencies have helped out the smaller agencies.
- Sound Transit has helped underwrite costs for some of the agencies.

## Lessons Learned fromExternal Evaluation, cont’d.

- Consider the value of implementing a limited fare pass program initially to serve as an interim experience base for a comprehensive region-wide electronic fare card system.
- The Puget Sound region implemented several precursor fare pass programs that demonstrated the viability of regional fare systems.
- Leaders of these early programs helped guide the RFC Project.
- Also look to other current fare card programs around the country.

## Lessons Learned from External Evaluation, cont’d.

- Provide legal support services to address the many significant legal issues faced in implementing a regional fare card project.
- The RFC project established a useful legal advisory team.
- Legal issues include RFP preparation, contract with vendor, change amendments, intellectual property, indemnification, and performance security.

## Lessons Learned from External Evaluation, cont’d.

- The technical, procedural, and organizational complexity of a regional fare card program implementation suggests the need to plan for greater time, cost, and management challenges than might be expected.
- Assign a full-time Site Manager in each agency to manage the project.
- Allow adequate time for document reviews, legal reviews, meetings, technical integration, interaction with the vendor, and  management oversight.
- Organizational flexibility is a critical success factor.

## Lessons Learned from External Evaluation, cont’d.

- Provide for a regional team, sufficiently staffed, to support and lead the project.
- Need balanced attention to both vendor contract management and traditional project management
- A strong locus of regional coordination and support is essential.
- RFC project leadership and decisionmaking: Agency Governing Boards and a Joint Board composed of GMs from each partner agency.

## Lessons Learned from External Evaluation, cont’d.

- Anticipate, understand, and manage the risks associated with fare card technologies and the vendor relationship. This project:
- selected and modified parts of an off-the-shelf system.
- established a performance security requirement for the vendor.
- established an escrow account for the vendor’s source code and created documentation to help protect against default.
- required vendor insurance coverage.

## Lessons Learned from External Evaluation, cont’d.

- Understand the fare policy objectives and fare structure of each partner agency, and establish a regional framework that can accommodate these different structures and is viable for all the partners.
- Agencies selected a coordinated fare arrangement.
- Regional fare structure allows agency autonomy in setting fare policy.

## Lessons Learned from External Evaluation, cont’d.

- Complex regional fare card projects likely will involve finance plans that include a diverse array of funding sources, thereby requiring flexibility and creativity among the partner agencies.
- RFC Project finance plan includes federal, local, and private sources.
- Sound Transit subsidizes the first few years of capital and operating costs for some of the partner agencies.

## For Questions, Contact:

- Candace Carlson
- RFC Contract Administrator
- (206) 684-1562
*candace.carlson@metrokc.gov*
- Website: *http:/transit.metrokc.gov/*
*prog/smartcard/smartcard.html*
- Chris Cluett
- Battelle Evaluation Manager
- (206) 528-3333
*cluett@battelle.org*