OECD, International Transport Forum (ITF)
Roundtable: Efficiency in Railway Operations and Infrastructure Management
Paris, 18-19 November 2014

Case study ProRail:
understanding the drivers ofRailway (in)efficiency
Jan Swier, ProRailWho is Jan Swier?
•Jan Swier, 63 years•

Married and five children•

Civil Engineer•

Expert in asset management•

Career:••••bridge engineering
maintenance contractor
staff manager
advisor2

Theme of the presentation
 Separation Transport-Track Costs & Earnings Transport

 Cost drivers Infra (In)efficiency drivers

3

Railways in the Netherlands

Together with Switzerland we have themost densely used network in Europe

Line;
Track:
Stations:

3063 km
7033 km
404

Punctuality:
94% (<5’)
Passengers:
1,1 mio/day
Freight: (net ton): 0,1 mio/day
Value rail infra:€ 32.000 mio
M&R costs infra:€ 1.200 mio/yrEarnings Transport: € 2.500 mio/yr

4

Rail Transport Costs & Revenues increased fast becauseof changing conditions and circumstances
Development of rail transport costs in the Netherlands (1938-2013)

Nominal costs

Mio Euro’s/year

Users Charge TOC’s
PSO-subsidy TOC’s

Nominal costs

Separation

Price level 2013NS declared
unprofitable-Rail Infra-costs

TOC-earnings

55

The institutional triangle was born as a consequenceof increasing government involvement
Government

Passengers& shippers- Competition Authority- Transport Safety Board

ProRail

Contractors,
Engineering
Agencies, etc.

- Network Statement- Access Agreement- Access Charges (€270)

Train
Operating
Vervoerders
Vervoerders
Companies
Vervoerders
Vervoerders

Institutional triangle

Contractors,
Engineering
Agencies, etc.
Euro’s (€) in millions

6Full vertical separation created a clear division ofroles, money flows and responsibilities
A subsidy is“Commercial Poison”“Who pays decides”.

Euro’s (€) in millions

One infra Manager
Means of production
Subsidy
Costs
Infra Performance & LCC(Very) Long Term focus

Multiple TOC’s (>15)
ProductRevenues
ProfitTransport profitability
Short/Medium Term focus
7

Quality & Utilization improved after separation

ProRail BV

Full vertical separation createdpositive optimization circumstances:• three views)* and contributions
on one common goal: improving
customer satisfaction,• an open debate about the bestsolution• “Who pays decides”
2013)*
2005

1998 Oursourcing Maintenance201419952013

Separation

Separation

1995

1946
Separation

Less technical infra failures

1994

2005; ProRai BV

Increase punctuality (<3’)

Increase utilization• TOC’s:transport costs, revenues and profit• Asset Manager: infra life cycle costs & performance• Government:
national transport policy & public interest

8Separation had a “purifying” effect on rail asset financing
and reporting; full transparency to the taxpayer
Depreciation ….based on construction value
Holding
ProRail BV

Full vertical separation
ProRailSeparation Trains-Track……based on renewal value

Depreciation costsStewardship costs
Nominal costs

Stations

Financial costs

Only AMAM,ProjectTraffic Control&Maintenance
Capacity Mngt.

Organization costs

Process Maintenance9(Only Infra)

Railway Business in Europe is complex because ofmultiple users and costs are higher as revenues and3.000.000

Costs & Income
TOC’s & IM
are in balance

Euro/km line/year

2.500.000

Railway Business Model:

Average modelledsituation NL

Infra

2.000.000

1.500.000

1.000.000

Costs &Earnings
TOC’s inbalance

Government subsidy•

Realization of 95 lines•

TOC-costs are modelled, basedon known quantities and yearlycosts•

Total infra-costs = Infra + Users
Charge. Both are based onrealization.

Profit TOC’s
Passengers
500.000

FreightTU/km line (Passenger km and Net ton km)

1010

Social benefits are a part of the rail transport business€1.650.000

Social benefits:€1.250.000€1.150.000

Average line use

Line average NL•

travel time savings by reducing
traffic jams;•

less accidents;•(possible) less air pollution;•(possible) less landscape damage;•(possible) lower production costs;•(possible) economic stimulus.

Rail Transport in the Netherlands
is abundantly profitable becauseof high utilization/earnings andconsiderable social benefits

19 November 201411Business (in)efficiency can be measured as the ratio
Earnings(= Performance) /Costs
Railways

Train Operation
Earnings + PSO SubsidyCosts)* + Access Charge)* Only Train Operation
not real estate and stations

PSO = Public Service Obligation€2400 + €200
€2100 + €300 = 1,08
Efficiency Train Operation

Efficient = effective= business like= competent= economical

Rail Infrastructure
Subsidy + Access ChargeCosts)** + Back log)***)** Traffic Control, M&R& Capacity Mngt)*** Back log = % main track withspeed restriction * M&R-costs Infra€1000 + €300
€1300 + €50 = 0,98
Efficiency Rail InfrastructureEuro’s (€) in millions

Euro’s (€) in millions

Train Operators

Government(€2400 + €300) + €1200(€3400 + €300) + €52= 0,72
Efficiency Railways= 0,32= 1,04
Efficiency Railways

Public Service Value
12

Drivers behind (in)efficiency are understood byanalyzing differences & analogous between companies

2-4 trains/day
1 track>5000 ton/train>2000 m/train>200 trains/day
2 tracks+70-1000 ton/train
40-600 m/train

13TOC-costs per line differ substantial because ofdifferences in train length, -type and -intensity
100-200 seats/train

Intensity
TrainsDemandDistance
Personnel
Speed400-1100 seats/train

RegionalIntercity

Freight

1 or 2 trains/hr/direction
Short, simple
Low / Medium
Short / Medium
Train driver
100 km/hr

4 trains/hr/direction
Long, comfortable
Medium / High
Medium / Long
Train driver + conductor(s)140 km/hr

Depending needLong, simple
High load per train
LongTrain driver
100 km/hr

Intensity
TrainsDemandDistance
Personnel
Speed

19 November 201414Infra costs per line differ substantial because ofdifferences in utilization and complexity+/- € 200.000 /km line+/- € 500.000 /km line

> € 1.000.000 /km line

Regional line

Intercity main line

Yards••••••••••••••••••

Single track
Simple layout
Simple signaling
No catenary
100 km/hr
17-20 ton axle load

Double (or more) track
More complex layout
Double/single track signaling
Catenary140-200 km/hr
22,5 ton axle load

Complex layout: many switches
Complex signaling
Complex catenary
Complex traffic control
Complex surrounding
Low(er) speed

19 November 201415

Modelling maintenance cost drivers revealed theimpact of the conditions
Averagesituation NL(2013)

Maintenance cost model:••••

Complexity

Prediction of M-costs for
projects, tenders,….
Applicable for networks,
lines, contract area’s
High reliability (R²=0,9)
Also applicable tounderstand costdifferences between
countries/continents

Utilization16

e LCC(co r
M mp ai lor le i nfredi x) m ast
es a ru
el rs ct
re ha urefu l lin Neli n g ya Ls
60 N t all rds% o atiLle ca on
Le essss co 80 ss ten s(c m % sw aryom pl le i tc
Mpl ex ss heorex tra si seda Lo ) le ff ic gna
M yw w ve c lsor o er l on
ceef rk ( ma ros trolfe 90 te si
cr n
Pu Hig tive % v ial gsherc e w rs cosr
Sc has uti ork us tsi
C ale ng li za ing 65%aO rgo ad Pow tion hrs )pe(7vra rel ant er in t /5)
tio ate ag (es hena d es tim Ul e sp (e a S
LC xce ecs sti m ted
C l le (e a )ra nc sti t edil e m )i n (e atfra s est t im d)ru act tedur )eUS

M
orLCC Cost Index

LCC index

100

20
480

60
100
0
11
7445517 1940
101112Quality

USA

120

NL

The big infra-cost gap between US-Netherlands arebecause of difference in usage & complexity
LCC comparison rail infrastructure;
the Netherlands - US (INDICATIVE)
9Usage & Complexity
9Difference in conditions:•No catenary•< switches (-60%)•< signals (-80%)•> day work (90%)•> effective working time•> tonkm, < trainkm

019

Differences

17

Maximizing asset efficiency depends of the skills andquality of the organization to manage all risks• Amount of assets• Utilization• Technical condition• Effective working Time• Day/Night/Weekend work
• Worksite conditions• Legislation• Social Agreements

Conditions

Circumstances
‘

Costs

Risks

Performance• History / Culture• Society / Economy• Political focus• Stakeholder focus• Way of Separation• Capacity• Functionality• Quality (RAMSHE)*)• Image• Risk Mngt.
• LCC Mngt.
• Contract Mngt.
• Quality Mngt.
• Information Mngt.
• Knowledge Mngt

Activities“The mechanism behind Asset Management”• Maintenance• Renewal• Inspections• Measurements• Stewardship1818

Performance improved after separation because of focus
on clients, continuous improvement and co-operation
Example: Performance Analysis Bureau:(at ProRail Traffic Control):• independent knowledge center for thewhole branch• provides all kind of train process info
• feedback loop plan-realization train process• practical train process knowledge
Kind of improvements in the branch:
1. minute/seconds in timetable per train series
2. track use per station
3. optimized maintenance schedules
4. decrease of red signal approaches
5. de-complex infrastructure, less switches/signals, less failures, increased speed
6. maintenance change: less train failures
7. Improved stop-&-go linking per station
8. Improve start-punctuality per station
9. Improved depart procedure trains
10. ………………….

• development and improvement info systems

TC = traffic Control

19

The cost-performance ratio improves when
the whole system is de-complicatedUtrecht(today)TokyoUtrecht(2016)

90 60 180 trains/h
16 14 19 platforms
60 200 28 switches
23 2 min headwayPerformance)* increases and costs go down when the system is de-complicated)* Capacity, Functionality and RAMSHE-quality

20Conclusions
1.

Railways in Europe can’t exist without government financing.

2.

Full vertical separation created beneficial circumstances as a resultof well separated roles, money flows and responsibilities

3.

Full separation created positive optimization circumstances:• TOC’s:• Asset Manager:• Government:

transport costs, revenues and profit
infra life cycle costs & performance)*
national transport policy & public interest

4.

Role fulfillment of the government ánd co-operation are decisive

5.

Earning/cost-ratios are high level indicators for efficiency

6.

Usage and complexity are the main rail infrastructure cost drivers

7.

Risk management is key to optimize infra costs & performance)*

8.

Skills, conditions, circumstances and price determine (in)efficiency.
)* Infra performance = Capacity, Functionality and RAMSHE-quality

21Our ambition:
the best infra manager in Europeand leading in the World