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Doing business on several tracks

Doing business on several tracks. Presentation for SMI conference 25 April 2001 by Bert Klerk. Introduction. 1. RIB; what is its situation at present? 2. What are RIB’s ambitions? 3. What are the ambitions for PPPs? 4. Examples and proposals 5. Conditions for successful PPPs.

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Doing business on several tracks

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  1. Doing business on several tracks Presentation for SMI conference 25 April 2001 by Bert Klerk

  2. Introduction 1. RIB; what is its situation at present? 2. What are RIB’s ambitions? 3. What are the ambitions for PPPs? 4. Examples and proposals 5. Conditions for successful PPPs

  3. RIB; what is its situation at present? • ‘State Owned Enterprise’ • Independent of NS (Nederlandse Spoorwegen) • NS is largest customer

  4. The mission has wider scope than before “Maximum utilisation of rail infrastructure through passenger and freight traffic”. So Not only the bright, shiny lines

  5. RIB has three types of customer... MARKET PLAYERS Transport companies and others: developers, constructors etc. Customers ànd partners of RIB GOVERNMENT Principal Shareholder ‘Lower’ tiers of government: principals ànd partners RIB CITIZENS / CONSUMERS Taxpayers ànd passengers Indirect customers

  6. …and consequently three tasks 1. Executing government policy 2. Delivering users’ infrastructure 3. Acting as an independent expert RIB operates in both a public and a private environment This calls for a flexible and transparent organisation

  7. Department of Public Works: Task-oriented Management of infrastructure Perform to the best of its ability Public Executive Input-driven Government manages directly Principal for market players Revenue from the government Schiphol: Output-oriented Utilisation of infrastructure Guarantee a certain result Hybrid Enterprising Output-driven Government manages at arm’s length Principal and partner for market players Revenue also from commercial activities Transport companies pay RIB Interest in competition on the railway RIB’s ambition: The Schiphol of the railways!

  8. Ambitions: Quality in the chain and at connection points RIB’s ASSIGNMENT Better use of rail infrastructure Better use of property Better quality/price for transport GOVERNMENT POLICY Growth in traffic and mobility Quality rail product Better quality/price RIB’s AMBITIONS With regard to quality in the entire public transport chain With regard to the station as a transfer point

  9. When will PPPs be used? When they help RIB to realise its ambitions In other words: 1. When the maintenance, management, new construction and innovation of the rail infrastructure could be better or cheaper 2. When the property or the network are better utilised 3. When better integration is achieved in the public transport chain 4. When stations become a better transfer point

  10. 1. Improving maintenance, management, new construction • With alliance contracts in which market players and RIB work together to innovate in building, construction or production methods: • A better price-performance ratio as a result of innovation or upgrading of the product • Risks and cost advantages are shared • New products are developed • Better quality is achieved

  11. Alliance for laying a complex route • Risks and revenues are shared • Both parties have an interest in doing as much as possible for as little money as possible • Optimisation by using best available people and resources • Alliance acts as a single party towards subcontractors and the environment • Once the contract is concluded, the co-ordination costs are much lower • Arisen out of practical experience 1a. Example: Waardse Alliance RIB Partner Alliance Board Alliance Organisation Alliance Fund Traditional Executive Bodies

  12. 2. Better utilisation of property; multiple use of 3000 km of railway • Additional utilisation: • Tunnel tubing under the rails for wiring and pipes • Windmills above the rails • Or better utilisation: • Co-operation with parties at the connection points; Shared business premises at stations on the Randstad line • Optimisation of route selection in consultation with government authorities or market players (Sloelijn)

  13. 2.a. Better utilisation by usingRIB’s property...

  14. 2.b. … or by getting transport moving Soon the Betuwe route will be ready…but there are (still) no customers. 10 billion guilders are invested and then it becomes clear: the border is not a final destination and transport companies will have to invest more • In PPP-construction RIB can initiate: • Investments in necessary new technology for equipment (lowering of thresholds for transport companies) • Organisation of points beyond the border where other companies take over • Regular running of services with space for containers

  15. 3. Chain integration = co-ordination between numerous parties Cycle Bus Car Taxi Tram Cycle Bus Car Taxi Tram Door Park Station Station Park Door Train journey RIB’s responsibility municipality operators traffic controllers construction firms transport companies owners services

  16. 3.a. The parties in the chain are both public and private • RIB seeks PPPs with market players in the chain who have parallel objectives. • For us the main issues are: • A quick, stress-free journey • High frequency, few cancellations, seats for everyone • Good links with modes of transport used before and after the train journey • Good information provision

  17. 3.b. Example: Innovation of cycle sheds Train-cycle transfer is high; capacity of sheds is not enough One formula for rent-a-bike in the country will not be profitable Public transport - cycle collaboration: • Innovation in shed systems and enhancing capacity • Cycle manufacturing for more practical cycles • Rental chains for logistical expertise • Fiets BV for expertise in the area of operation and formula management

  18. 4. Stations as a transfer point • A station is rarely a final destination, but rather a transfer point in the public transport chain: • A terminal can be given basic quality, but also optimum quality: • Better environment in the terminal • Social and physical safety • A high quality urban environment • A smooth mobility connection point • PPPs add quality; opportunities are wasted if public and private resources are not combined

  19. 4.a. Example: Arnhem • Nicer hall, better passageways, more pleasant atmosphere • Through investments from private parties - above the basic level • In exchange for m2 for commercial use at the connection point • Agreement at an early stage between all parties concerned (municipality, NS, project developers) • RIB is a broker and partner and provides: Expertise in the Logistics of building over the railway, External safety and Improving quality of links between platforms and stations

  20. 4.b. Furthermore, barriers in the city are being removed Not like this: But like this: NS NS

  21. A wide range of ways to carry out ‘public’ tasksPPPs are only one form Innovative tendering Privatisation Outsourcing: contracting out, concessions, franchise Government public/private limited companies/foundation Public-private partnerships Private Introduce competition; allow private parties in Public- private Stimulate government authority co-operation Create internal market Formation of a fund Vouchers Public Subsidising Fiscal policy

  22. PPPs are more than innovative tendering • PPPs are collaborations with a clear, jointly endorsed goal • In these projects more is achieved than when private and public parties operate independently, because: • The specific expertise of the parties is combined • The scope is wider than just creating an infrastructure • Risks and revenues are shared

  23. The first Dutch PPP in railinfra-structure was initiated by RIB! • In itself innovative tendering can be a good thing: efficiency & spreading of risks • However, the principal - contractor relationship remains in place • It all depends on what the best way is of achieving a (public) goal For HSL-Zuid innovative tendering was used, but not a PPP

  24. Conditions for successful PPPsfor RIB vis-à-vis the market • Reliability; no instability due to changing policy • More responsive and market-oriented competences • Willingness to bear risks • Only in projects in which RIB’s core competences add value • Willingness to contribute expertise

  25. Conditions for successful PPPsfor RIB vis-à-vis the State • Freedom of action within output definitions • Being able to generate and invest revenues • Transparent responsibility and supervision that fits in with ambitions • Internal divison of key tasks and ‘market activities’

  26. Conditions for successful PPPsfor private partners • Objectives in line with RIB’s ambitions • The same openness as between private parties • Long-term commitment to the joint project • Willingness to bear risks • Willingness to be innovative • Willingness to make expertise available • Willingness to trust

  27. In conclusion... How does RIB maintain its independent role as advisor and executive body of the ministry? Through transparency, separating the market activities and giving account for all activities. Improper competition in relation to the market players? RIB is the manager of unique property. Does ‘The Schiphol of the railways’ involve a stock market launch in 2003? RIB operates from within the public domain and does not manage a profitable product.

  28. A production of: Bert Klerk, René Buvelot, Gert Dijkstra (RIB) and Babs van den Bergh (Public SPACE)

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