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model of performance measurement that includes articulated in relatively broad terms, and most sys- the following: tems focus on customer satisfaction, safety, and orga- nizational learning. From the broader strategies, the Strategy development--the agency's articula- organizations identified individual goals and objec- tion of a clear strategic vision and direction and tives by department or disciplines. Specific, more the connection of performance measures to that refined targets and the performance measures used to strategy; gauge progress were then identified and monitored. Measures--the specific items the agency has Base-level performance targets in all cases were chosen to observe, quantify, and document; established by governmental oversight agencies or Reporting--the mechanisms and media the regulators, and additional targets and performance agency uses to inform appropriate parties within measures were developed internally, as well as and outside the agency about what they have through industry standards, such as those of the Inter- measured, and why; national Organization for Standardization (ISO), and Quality control--a process the agency has put international benchmarking groups. Similarly, inter- in place to verify and ensure the accuracy of nal systems for gathering, storing, and reviewing data performance measurement data; are used. In most cases, system concepts were bor- Course correction--how the agency uses the rowed from other organizations or toolkits adapted knowledge gained from the performance mea- for use in a particular system, such as the balanced sures to improve its operations; and scorecard, which is a tool to help organizations align Strategy refinement--how the agency uses per- strategies with positive outcomes.1 formance information to make adjustments in Figure 2 illustrates the basic model for perfor- the strategic direction of the agency. mance improvement processes used by the transit systems visited during the study mission. The following common themes were noted in con- The transit operators in the four cities receive versations with the host agencies: some capital subsidies, such as land grants to build It is important to provide a choice for the trav- facilities, initial capitalization for system infrastruc- eling public. ture, and fuel and/or tax relief subsidies to promote Providing public transportation is a social profitability. But each system's ability to expand responsibility. and to sustain profitability relies heavily on internal Global warming/climate change is real, and the strategies. government wants to do something about it. Roadways can no longer continue to be ex- Hong Kong panded for additional capacity. Cities cannot build themselves out of their capacity and Hong Kong has a population of 7 million in an congestion problems. area of 1,108 sq km. The transit system is privatized, but is overseen by the Hong Kong Transport Depart- These themes provide a context for the various ment, a governmental regulatory agency. There are no strategies and approaches taken by each of the host direct government subsidies in the way of cash out- agencies. lays, but initial system capitalization is funded by the government. In addition, licensing fees are waived, rent on government-owned facilities is below market STRATEGY DEVELOPMENT value, and licensed transit operators are exempt from gasoline taxes. The public transit systems in the four cities visited are seemingly motivated by fundamentally different factors than the public transit providers in the United 1The balanced scorecard is a performance measurement system, States, primarily because they are largely privatized developed by Robert Kaplan and David Norton, that provides and focus on business strategies that improve prof- managers with several key measures of agency performance itability. This focus on profitability is, together with (customer satisfaction, internal processes, and ability to learn the requirements set by the government regulator, the and improve) that augment the traditional financial perfor- foundation for the business strategies developed by mance measures; the balanced scorecard gives a more complete each of the transit operators. Strategies are generally picture of where a business is, as well as where it is heading. 4

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Internal Goals and Regulatory Requirements Objectives Strategies Inputs (ISO Standards, Performance Targets Benchmarking, Other) Performance Measures Data Assessment, Storage, and Reporting Assess and Adjust Tools (balanced scorecard, other) Figure 2 Basic model of performance improvement processes used by the transit systems visited during the study mission. Hong Kong's public transportation system they consume a significantly larger per capita use of includes heavy rail, light rail, trams, buses, ferries, the road. Pedestrian walkways are typically located minibus systems, and taxis, as well as nonfranchised above or below street level to minimize interruptions bus operators that supplement the franchised bus to traffic. The number of vehicles in the city, includ- services during periods of peak or high demand. ing commercial vehicles, totals 565,000, of which Recently, Hong Kong has experienced a modal only 372,000 are privately owned automobiles, demand shift from bus to rail. The Transport Depart- resulting in a phenomenally low rate of car ownership ment encourages this trend as it will optimize road (53 cars per 1,000 population). capacity by reducing the number of vehicles traveling The study team met with the Hong Kong Trans- on its highly congested road system (Figure 3). Even port Department, the Kowloon Motor Bus Company the use of bicycles is discouraged in Hong Kong, as (KMB), and the MTR Corporation (MTR). Transport Department Transportation infrastructure is a challenge in Hong Kong due to the mountainous terrain that covers approximately two-thirds of the land. The 2009-km roadway system has limited capacity, and there is just not enough land to expand the roadways. The Hong Kong Transport Department recognizes the importance of increasing the freight capacity of its roadways and thus encourages residents to shift to mass transit, and in particular to rail transit. The Transport Department estimates that its public trans- portation system, including taxis and nonfranchised transit operators, accommodates 12 million passen- ger trips per day. Figure 3 Hong Kong's roadway system is extremely Approximately 90% of trips are taken on public congested, and there is no land for expansion; the Hong transport, with about 35% on rail transit. The Trans- Kong government encourages travelers to shift from port Department has defined the modes by capacity, bus to rail as a means of reducing the number of buses with heavy and light rail at the top of the list. Trams on the roads. are also considered part of the high-capacity rail 5

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network. Franchised buses fall into the medium vide sufficient service at reasonable fares. The capacity category; they serve as feeder service to the Transport Department wants to promote healthy rail lines and provide service in areas not accessible competition among the various transport modes in by rail. order to elevate service, reduce waste, and enhance The Transport Department grants licenses, or sustainability. franchises, to private companies, allowing them to The Transport Department plans to expand its rail operate a variety of public transportation services, transit system with an investment of approximately including rail and bus service. Although the fran- HK$90 billion on five additional lines. As the rail ser- chisee's performance is not necessarily related to the vice is expanded, bus routes will be reconfigured to renewal of the license, a license can be revoked for ensure integration and avoid competition between the "bad behavior." As part of the license agreement, two modes. franchisees are required to provide an annual progress The Transport Department gives priority to devel- report to the Transport Department, as well as main- opment of rail transit, but it considers the franchised tain a "forward planning program" to address future bus operations to be an essential component of the needs and operations. overall system. Part of the Transport Department's vision is pro- The Transport Department has granted six viding a transportation system that is "satisfying to licenses to five competing franchises to operate the both users and operators." While there is no guarantee 600 bus routes in the city. Routes are negotiated by of profit for the franchisees, the government encour- the Transport Department. Bus companies must pro- ages the use of prudent business practices in deliver- vide the Transport Department with data to justify ing service to the customers in order to expand any requests to modify, change, or eliminate routes. ridership and turn a profit. The government does not In addition to the rail and bus franchises, the Trans- typically directly subsidize the operations of transit port Department grants 18,000 taxi licenses to service providers, but does provide indirect financial 15,000 owners/operators within the city. support through waivers of license fees and depot As part of the license agreement with the Trans- rental fees. Operators are also eligible to apply for fare port Department, transit operators must meet increases if they are operating at a loss. In some cases, government-specified performance measures. Using the government may contribute up to 80% of costs as surveys and site visits, the Transport Department a subsidy. The government always encourages the audits the data that has been submitted. To evaluate franchisees to continually improve productivity so that actual performance, the Transport Department com- they can eventually lower fares. pares the data to the targets that had been established The franchisees are allowed to keep 100% of their and works with the operators to identify problems that profit, up to a 9.7% return. If profits exceed 9.7%, the are keeping the operators from meeting their targets. franchisees are required to share 50% of the excessive They also work together to identify any necessary profit with their customers, through a rider fund that course correction. must be used for the benefit of passengers. The Transport Department recently commemo- Kowloon Motor Bus Company rated its 40th anniversary. Comprehensive transport studies (CTS) are completed about every 10 years. In Hong Kong, where 90% of trips take place on The third CTS (CTS-3) was completed in 1999 for public transit, the Kowloon Motor Bus Company the horizon year 2016. It established the long-term carries 2.7 million passengers daily on roughly strategy for Hong Kong's transport system. 400 routes. KMB is the largest private bus company Critical pieces of CTS-3 included integrating in Hong Kong, and it is a wholly owned subsidiary of land use and transport planning, optimizing rail Transport International Holdings Limited, a publicly usage, improving public transport services and traded corporation. KMB began operations in 1933, facilities, improving the use of new technologies, and it has expanded significantly since then. Today it and increasing environmental responsibility. The operates and maintains a fleet of 4,300 buses in eight government's policy is to establish rail trunk lines depots, and it employs 13,000 persons. and to use buses to feed the trunk lines and serve There are two primary motivations for KMB's sections of the city that cannot or will not be served performance measurement strategies--to achieve the by rail. It is also the government's policy to pro- regulatory requirements set by Hong Kong Transport 6

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Department, which allow KMB to maintain its public can be extended to 1 month, provided an interim transport franchise, and to improve its public image reply is sent within 10 days), and hence improve profitability. The objectives and Passenger liaison meeting--held six times strategies for meeting these goals are set by the regu- each year, latory agency and by KMB's board of directors and Passenger information at bus terminals-- are articulated in its Corporate Social Responsibility current route and fare information should be Charter, which focuses on employee engagement, readily available, and caring for customers, effective communication, and Passenger information at stops--current route environmental performance.2 information should be readily available. Bus operators in Hong Kong must compile and submit performance data to the Transport Department To identify and measure its performance in various at least annually. The Transport Department estab- areas, KMB uses frameworks provided by organi- lishes performance targets based on the prior 3 years zational standards, ISO standards, and regulatory of data. Performance is indexed to targets, and the measures. regulatory agency can recommend improvement mea- The publicly listed company is governed by a sures if an operator does not meet its targets. The board of directors, and two of the board members are Transport Department establishes performance appointed by the Hong Kong Transport Department. measures and targets that are not dissimilar from the KMB considered participating in an international business objectives expressed in KMB's internal benchmarking group, but elected not to, in the belief strategies. The targets include the following: that the group's measurements were not relevant to Reliability, the company. Bus availability--the ratio of actual bus allo- cation to scheduled allocation, MTR Corporation Lost trips--a maximum allowable percentage MTR operates nine rail lines serving Hong Kong of total trips scheduled, Island, Kowloon, and the New Territories, as well Efficiency, as a light-rail network, a bus fleet, and the Airport Bus utilization--the percentage of the licensed Express high-speed rail line. The Hong Kong gov- fleet that is actually on the road, ernment, once the sole shareholder, now owns Safety, 75% of MTR. In 2007, the operations of the other Training program for new bus captains government-owned rail operator, Kowloon-Canton (drivers)--percentage of newly recruited bus Railway Corporation, were merged into MTR's oper- captains who receive training before provid- ations, making MTR the only rail operator in Hong ing service to passengers, Kong today. Training for in-service bus captains-- MTR's business interests are quite diverse and percentage of bus captains who participate in include private consultancy services in planning, at least one training session every 3 years, engineering, and design, as well as business devel- Cleanliness of system, Bus body--washed once daily, opment. The company also has a flourishing real Bus floors--swept at least twice per day, estate management division. Five new lines, includ- Environmental friendliness--percentage of ing one to mainland China, are currently in the fleet meeting Euro 2 (or higher) emission planning phase and are expected to be in operation standards, within the next 6 or 7 years. MTR carries 4.2 million User friendliness, passengers daily in its 1,200 vehicles; 3.8 million of Complaints--each person filing a complaint these passengers are on heavy rail. should receive a full response within 10 days There are two discrete streams for establishing (for more complicated cases, the reply period performance: regulatory requirements and business strategies. MTR uses strategy planning as a basis for its budget development, and it requires that sys- tem performance standards correspond to its cus- 2The Corporate Social Responsibility Charter is available at tomer service pledge. Service standards that do not www.kmb.hk/eng/pdf/csr.pdf. drive performance outcomes are identified and used 7

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occasionally. MTR tries to optimize performance evaluating outcomes. There are four primary areas improvements by evaluating demand for the improve- that are key in developing performance strategies ments with the associated costs. and objectives; safety, financial performance, regu- The company wishes to create a "lifestyle of latory requirements, and customer satisfaction. health and sustainability," and the company motto is MTR has developed a set of indices for each oper- "the ride to great living." ational area, including environmental control sys- MTR's business strategies are the key drivers for tems, fixed plant fare systems, communications, and improving financial performance, and they are aimed lifts and escalators. Data collection and monitoring at two broad objectives--growth and productivity. is conducted through MTR's station management MTR concentrates on the following four interrelated system and incident reporting. MTR also monitors areas: customer satisfaction areas, such as train cleanliness Financial performance, which focuses on and temperature, which are verified through schedul- increasing MTR's market share, revenue ing reviews and customer surveys. diversity, optimization of assets, and cost effi- MTR publishes its data quarterly. The data are ciencies; reviewed and validated by a public auditor. Directors Customer satisfaction, which focuses on cus- and managers partake in monthly meetings to respond tomer service, fostering/improving community to specific performance indicators. MTR's commit- relations, and improving safety; ment to constant improvement through performance Process and efficiency, which involves sys- targets is evident by its employment priorities, which tem reliability, ensuring service and service include a full-time staff member who focuses on per- expansion are meeting market demand, and formance measures. Other members of MTR commit good safety practices; and 10% of their time to performance measure assess- Organizational learning. ment, and managers spend 20% of their time review- ing data and reporting performance measures. The MTR's operating agreement also requires that it resulting performance measurement data is a product meet certain performance criteria in various areas. of these efforts. MTR's commitment to customers is embodied in MTR uses the balanced scorecard system to align its customer service pledge. The pledge, combined its strategies with performance; the scorecard is inte- with customer satisfaction survey data, informs the grated into its business plan, where it is used to under- company's customer service target. The target is then stand the data that is being collected and to measure used, in conjunction with other performance require- progress. The balanced scorecard allows MTR to ments, to develop the system performance standards. review a specific performance area and its relation- MTR also provides historical data and performance ship to the factors that influence performance, which trends as input to the system performance standards. helps management understand and determine how to MTR considers multiple factors when establish- allocate resources to specific areas. The three key ing performance measures, including the following: indicators factored into the balanced scorecard are operational statistics, budget variance, and safety and The requirements set by the regulator (Trans- security (accident and injury rates). The data are port Department); Local regulations or standards (e.g., noise reviewed to gain an understanding of how system out- comes measure up to system targets. levels); Customer needs; Market competition; Singapore Benchmarking with agencies in other cities; Cost efficiencies; and Land Transport Authority Targets established by best practices and and Public Transport Council achievable and acceptable by equipment The city-state of Singapore covers an area of suppliers. 710 sq km, and it has a population of 4.8 million. There are 3,300 km of roads on this small island. Sin- MTR has a highly structured approach for establish- gapore has an extensive rail rapid transit system of ing targets, developing performance measures, and 167 km with 143 stations, combining both heavy rail 8

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and light rail technologies. Along with the rail sys- structure that is affordable while still allowing the tem, 3,700 buses serve 4,600 bus stops on 260 routes operators to turn a profit. Operation and maintenance to provide 4.5 million transit trips per day. The pub- costs are expected to be covered by fare and nonfare lic transportation mode share is currently 63%. revenues, including advertisement placements and Singapore's Land Transport Authority (LTA) leases of station space. and Public Transport Council (PTC) operate within There is no cap placed on operators' revenues, the auspices of the Ministry of Transport. The gov- but PTC can cut fares to limit revenues. Although ernment provides the transit infrastructure and oper- fares are capped each year, they can change based on ating assets. The operators are beholden to LTA as a number of factors, including inflation and unem- the regulator of public transport service and safety ployment. Opportunities to earn greater revenues standards, and their operating licenses are dependent are encouraged in order to maximize profits. Every on compliance. 5 years, however, PTC asks the operators to extract The Rapid Transit Systems Act gives LTA the some of their profits to give back to the communities. authority to grant operating licenses, regulate terms Adherence to the bus quality of service standards and conditions of concessionaire contracts, and issue is a requirement in each operator's license agreement. standards for practice, as well as directives, as needed, Public transport operators submit monthly compli- to individual operators. LTA can impose penalties, ance reports that explain any noncompliant perfor- including loss of license, on operators for noncompli- mance and include requests for waivers from the ance. Rail transit operating licenses are granted for performance standards. LTA evaluates the requests 30-year terms and require the operator to follow the by considering the data and justification. Results are operating performance standards and document and presented to PTC two times per year, including rec- implement a safety management system and describe ommendations for penalties. The transit operators its plans for managing operations. have an opportunity to appeal to PTC, and if the tran- LTA integrates its planning efforts with Singa- sit operator does not agree with the PTC's ruling, it pore's Urban Redevelopment Authority. The govern- may appeal to the Minister of Transport to overturn ment owns 80% of the land in Singapore, and all new the ruling. development must seek approval from the Urban Public transport operators submit annual reports Redevelopment Authority. and financial statements to LTA and PTC for review. LTA is poised to take over central bus network LTA has authority to conduct audits to ensure that planning. In the future, the department will license operators are in compliance. Random audits are con- bus routes in packages in order to encourage better ducted on a monthly basis. Process audits of the oper- connectivity throughout the system. ators are performed annually, and a system audit takes Historically, Singapore's urban transport policy place every 3 years. considered the regulation of transport providers as For the rapid transit system, the operating perfor- public utilities. The operators were not meant to mance standards require compliance with compre- compete with each other. LTA currently is taking hensive key performance indicators in service quality, steps to encourage more competition between tran- safety, and equipment performance and reliability. To sit providers. LTA believes that the system should LTA, the customer's entire journey experience is be profitable and that individual lines should be important enough to require performance standards in regarded as contributing to the entire system. How- these areas. ever, unprofitable routes or lines are not necessarily The Land Transport Masterplan for Singapore less important or less useful. was finalized in March 2008.3 In preparing to rework PTC is a 16-member organization made up of its transportation master plan, the Singapore govern- union representatives, academics, and community ment looked at the trends of increasing travel demand leaders. Members are nominated or recommended to and of increasing use of private automobiles on the the Minister of Transport for appointment. island. The government's study of the demograph- PTC regulates bus service standards and fares. Its ics of the changing population highlighted the fact responsibility is to balance service standards with the that these trends were not in alignment with the need for financial sustainability of the operating com- panies. This is accomplished through government 3 The Land Transport Masterplan is available at http://app.lta. oversight of service quality and by maintaining a fare gov.sg/ltmp/index.asp. 9

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expectations of the traveling public. LTA seriously SMRT Corporation considered the impact of increasing private automo- In 1987, the Singapore Mass Transit Rail Corpo- bile use on overall system capacity and environmen- ration (SMRT) became Singapore's first transit oper- tal sustainability and concluded that drastic measures ator. A publicly traded company, today's SMRT were needed to change travel behavior. It decided to Corporation provides engineering, project manage- focus the Land Transport Masterplan on the needs of ment, and property management services, in addition the community. The plan's basic premise is to work to managing a suite of transportation alternatives, toward "a people-centered land transport system." including heavy and light rail, bus, and taxi. A divi- The master plan contains three main strategies, sion sells and produces advertising media. or thrusts, as follows: The corporation operates two driverless light Making public transport a choice mode, rail transit (LRT) lines: the Circle Line, or CCL, with Managing road usage, and 33 km of track and 23 stations, and the Bukit Panjang Meeting the diverse needs of the people. Line, with 8 km of track and 14 stations. The LRT sys- tem, which is completely elevated, carries 14.3 million Within these three strategies are several objectives. passengers annually. SMRT also operates the Mass The first thrust, "Making public transport a choice Rapid Transit system, or MRT, a 93-km electrified mode," contains objectives for improving overall heavy rail line with 53 stations serving 1.5 million pas- performance of the public transportation system, senger trips per day. Its bus system includes 860 vehi- including making improvements to the system by cles, which carry more than 270 million passengers expanding the rail network through new lines and each year. SMRT is also the second largest taxi oper- extensions, improving travel times, creating more ator in the region. competition, providing bus priority, and changing The company's goals are adopted by its board of the fare structure to a distance-based system. More directors and made public. SMRT's overall goal is to specifically, the transport plan has set targets that become the transit customer's choice provider through would enable 85% of commuters to complete their its outstanding performance. SMRT's license and door-to-door journeys within 60 minutes during the operating agreement commits SMRT to meeting per- morning peak through improved transfers, accessibil- formance standards in areas such as operations, main- ity, and frequency. The plan also seeks to double the tenance, and safety, as set forth by LTA and PTC. rail transit network to 278 km by 2020 and increase SMRT's performance strategies fall into two bus speeds to 2025 km/h, up from 1619 km/h. LTA broad areas: those that are set internally to improve has set a goal of increasing the public transport mode profitability, and those set by the regulatory agency share to 70% in 2020, from today's share of 63%. The (LTA). The internal strategies focus on customer sat- operational key performance indicators that are isfaction, profitability of existing services, and busi- required in the operator licenses address safety, relia- ness diversity (nonfare areas) and growth (operating bility, accessibility, and customer service--all key transit systems in other markets). Specific objectives factors in encouraging or deterring ridership. articulated in SMRT's 2007 annual report4 include The second thrust, "managing road usage," is the following: designed to limit the number of cars that use the road- way system by engaging in electronic road pricing, Maximize long-term shareholder value by allowing market forces to set parking policies, and Improving group profitability, strictly limiting the number of vehicle registrations Providing good dividend payouts to share- issued. holders, and The third thrust, "meeting the diverse needs of Managing risks to mitigate impact on earn- the people," will be accomplished through engaging ing and prospects; the community, enhancing accessibility by providing Provide safe, reliable, and friendly travel expe- barrier-free facilities and keeping fares as low as pos- rience at affordable prices; sible, making transfer stations into "lifestyle hubs," and promoting the use of bicycles and other clean vehicles. 4With SMRT, I Can: 2007 Annual Report. Available at http:// These initiatives set the standards for quality of www.smrt.com.sg/investors/documents/annual_reports/2007/ service by Singapore's public transport operators. external_pdfs/SMRT_AR_2007.pdf. 10

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Leverage core expertise in operations and main- The surrounding Klang Valley, which includes Kuala tenance for trains and related infrastructure; Lumpur and its suburbs, is home to 7.2 million peo- Maximize nonfare revenue through rental, ple. Compared with the other three cities visited, advertising, and engineering businesses; and Kuala Lumpur's public transportation usage is rela- Enhance and sustain high standards in corpo- tively low, with a mode share of 14%. Car usage in rate governance, corporate transparency, and the city is thus disproportionately higher than in other corporate social responsibility. Asian cities. SMRT also relies on customer feedback to help The Malaysian government privatized public determine its priorities for improvement. As part of transportation in the 1990s and issues concessions this effort, customer feedback is logged and submit- and licenses that allow private-sector companies to ted to each relevant department head for a response. run the mass transit systems. The customer service center is committed to a max- The Malaysian government invests in the initial imum 14-day turnaround period to respond to cus- infrastructure for public transport, but the operator of tomer comments. the system is responsible for maintaining the system. SMRT produces monthly performance reports The operator has little input on the equipment pur- to the regulators. Incident reports are also provided to chased, which can confound profitability and other the regulators on an ad hoc basis. Shareholder reports operational objectives when system equipment fails. are submitted quarterly. As with many other corpora- tions, SMRT also produces an annual report to docu- RapidKL ment its performance and progress in the past year. An example of SMRT's use of performance mea- RapidKL (Rangkaian Pengangkutan Integrasi sures to change course occurred when ridership grew Deras Sdn Bhd) is the only multimodal public trans- by 9% in 2008, requiring the company to expand port company in Malaysia. Incorporated in 2004, capacity. SMRT's trainload estimation system helped RapidKL is a subsidiary of Syarikat Prasarana Negara the company determine when additional vehicles were Berhad (Prasarana), a government-owned company. required. For example, crush capacity per six-car train Prasarana owns the assets of the two LRT lines is about 1,600 riders. For comfort, however, SMRT (Ampang Line, formerly known as Star, and Kelana uses 1,200 riders per train as the trigger for additional Jaya Line, formerly known as Putra). The city's capacity. The daily load was averaged over a period monorail system is managed by KL StarRail, which of one month to determine if the loads had reached the is another subsidiary of Prasarana. tipping point. Service was then adjusted as needed by RapidKL operates both the LRT system and the putting additional trains in operation. The company bus system. Its bus service includes 165 routes in six has established a number of systems for managing areas of the Klang Valley, serving approximately and reporting data, including the trainload estimation 400,000 passengers/day. RapidKL has a fleet of program, a train deviation system, and a safety infor- 978 buses maintained at 11 depots, and it employs mation system. 1,300 drivers. In addition, SMRT's participation in the Nova RapidKL's two LRT lines have a total of 56 km international benchmarking group means its key per- of track, with 49 stations. Ridership on the LRT sys- formance indicators can be compared with those at tem is approximately 350,000 passengers per day. other transit properties.5 Nova's member forums The Kelana Jaya line is a driverless system that runs allow SMRT to follow best practices within the on 3-min headways during the peak periods. The industry to realize continued improvement. Ampang line uses drivers and operates on frequencies similar to that of the Kelana Jaya line. The LRT fleet Kuala Lumpur consists of 35 sets of two-car trains with a capacity of 400 passengers per train. RapidKL has recently pur- Kuala Lumpur, with a population of 1.7 million, chased its first fleet of four-car trains. is the largest and fastest growing region in Malaysia. The government grants a license to RapidKL to operate transit services. Expansion of the system is 5Nova is a consortium of 15 medium sized metro systems undertaken by Prasarana, with input from RapidKL. throughout the world that are engaged in benchmarking. Infor- In 2008, in response to media coverage and cus- mation is available at www.nova-metros.org. tomer comments on its website, RapidKL's chief 11

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operating officer undertook an effort to redefine Using this target, RapidKL would be able to define the organization's business strategies with the staff training needs within a given timeframe so that intent of changing the image of the organization additional steps could be taken to realize the actual and achieving RapidKL's mission of being finan- training. cially sustainable. In the long term, as part of their effort to enhance The vision of the organization is reflected in four quality management, RapidKL is building a central- business strategies or "pillars," which are based on the ized bus control center to ensure the accurate collec- balanced scorecard approach to quality management: tion of data. The company has also hired more staff Internal processes, and allocated more funds to support this effort. Financial performance, RapidKL's performance measurement systems Customer satisfaction, and are less mature than those of the other agencies Learning and growth. visited. The company has, however, taken lessons learned from other systems in order to establish Within the four pillars, there are nine objectives and its own processes, and it is realizing some significant 21 key performance indicators. successes with each step forward. RapidKL uses the Vancouver (British Columbia) SkyTrain as its model for operations. RapidKL's man- Taipei agement team traveled to Vancouver for 3 months of training, during which time they also discussed the The Taipei Rapid Transit Corporation (TRTC) performance indicators that are used to evaluate and operates 75 km of rubber-tired, fixed guideway, and improve service in Vancouver. RapidKL then hired electrified heavy rail (electric multiple unit, or EMU, a consultant to assist in the development of its own technology) on eight lines with a total of 70 stations. performance measures. Over a period of 6 months, Daily ridership is in excess of 1.2 million. The Taipei RapidKL's consultant developed and assigned government owns the guideway infrastructure and weights to each of the key performance indicators. grants TRTC a license to operate the system. The ser- Some performance indicators are based on customer vices provided by TRTC are known by the brand needs, shareholder expectations, and government name of Taipei Metro. requirements. Taipei Metro's mission is "Providing a Safe, Reli- The pillars and their respective performance indi- able, Cordial, and High-Quality Transportation Ser- cators are integrated into RapidKL's operating agree- vice" to travelers, and its management philosophy is ment. The operating license requires the company's "Customers Come First and Quality Above All." performance to meet certain targets. Data on the per- Eighty-five percent of the company's revenues formance of the company is collected through event come from fares. The company provides a 20% dis- logs, schedules, and automated data collection sys- count to passengers who use the IC Easy Card, a tems. On a monthly basis, RapidKL reviews the smartcard system implemented in June 2002. Passen- results of its performance as reported in the balanced gers are charged for transfers at a discounted rate. scorecard. Rapid KL reports to the regulators on a These discounts are absorbed in the operating budget quarterly basis. for the organization. Currently, about 90% of the pas- RapidKL relies heavily on peer group input to sengers use the smartcard. validate its definition of performance indicators. As In addition to operating rail passenger service for a reality check, RapidKL benchmarks its perfor- the city of Taipei, Taipei Metro collects revenues mance against similar systems, including those serv- from leasing space at shops, underground shopping ing Vancouver (SkyTrain) and the John F. Kennedy malls, and parking lots. The company also sells International Airport in New York (AirTrain JFK). advertising space in trains and at stations. These rev- RapidKL uses performance data to indicate where enues account for approximately 11% of the corpo- course correction might be warranted. For example, ration's total revenues, about US$36 million. The within the learning and growth pillar, the company company has also assumed management of the Taipei has an objective to develop skilled employees. The Arena, a 15,000-seat multipurpose facility for sports performance indicator for this objective is the defini- events, exhibitions, and performances, and operates a tion of staff training requirements. The target was to mountain gondola. In total, TRTC earns approxi- complete training-needs analysis within 2 months. mately US$20 million in profit each year. 12

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Taipei Metro pays rental fees of approximately city officials recognized the direct link between ser- US$80 million per year to the government to fund the vice quality and ridership. In the context of this ini- replacement of rolling stock, communications and tiative, the Taipei City Public Transportation Office signalization infrastructure, and mechanical equip- (TCPTO), the city department that regulates the ment. Approximately US$18 million (before profit) is quality of service for buses, asked Professor William paid to the government and held in escrow to fund Jen of National Chiao Tung University to conduct a future capital maintenance. study to evaluate the performance of bus companies. In cooperation with the Taipei city government, The research undertaken represents a very early stage Taipei Metro plans to expand its network to 132 km in the use of performance measures to enhance qual- on five lines by 2013, at which time it expects to be ity of service. It is reasonable to assume that this is serving about 2.7 million passengers per day. The the first cut at developing performance measures Taipei government contributes about 50% of the cap- that may eventually become an enforceable standard ital cost of new construction, with the Taiwan gov- when the city grants licenses to operate bus service ernment paying the remaining 50%. in the region. Taipei Metro staff spent 2 full days with the study Dr. Jen worked with the director of public trans- team to share its extensive experience using perfor- port and the bus operators to define the performance mance measures at all levels to improve quality and indicators and create a weighting system to score the delivery of service to its transit customers. Led by quality of service of the bus companies. The 21 mea- Dr. Huai Sheng Tsay, president of Taipei Metro, the sures were divided into the following four categories: discussions focused on several systems and processes Terminal, the organization has in place to continually improve Vehicle, operations companywide. Interaction quality (between passengers and Taipei Metro representatives stated that the suc- drivers), and cessful implementation and use of performance mea- Management. sures to improve operations was due to a combination of commitment and conviction of the organiza- Within each category, four to six specific items were tion's leaders, setting achievable goals, and recog- identified for assessment. Quantitative data for some nizing employees when goals are met. performance indicators could be collected from the Taipei Metro historically looked at financial indi- operators. Qualitative data, such as passenger per- cators to advise its business strategies. But in 1999 the ception, was collected through rider surveys. Data company began refining its organizational manage- indicating compliance with government policy was ment processes using four areas of quality manage- subject to assessments and reviews performed by ment based on the balanced scorecard approach: TCPTO. finance, customer satisfaction, internal processes, and The study outlines several steps to fully evaluate organizational learning and development. the bus companies. The process begins with the aca- demic exercise of establishing the performance indi- Performance Evaluation of Private cators and is followed by input from the TCPTO and Bus Companies in Taipei a workshop with the bus companies. From that work- shop, an action plan will be created to begin data col- In contrast to Taipei Metro's well-developed use lection and analysis. The results are intended to be of key performance indicators, the city of Taipei is reviewed twice per year. only in the early stages of establishing performance By using performance measures to evaluate the measures for its bus franchises. The City of Taipei bus companies, the City of Taipei hopes to encourage understands the importance of the city bus network as bus companies to improve quality of service and thus a critical component of the overall public transporta- increase ridership. This may become a way for the tion system, providing both feeder service to trunk city to enforce high standards of service. The poten- lines and transportation in areas not served by rail. tial loss of an operating license is an incentive for a More than 300 bus lines serve 1.7 million bus company to comply. In addition, bus companies passengers/day in Taipei. There are 14 bus compa- may be eligible for subsidies from the government, nies that have licenses to operate in the region. To depending on their ability to meet the performance encourage higher bus ridership during peak hours, standards. 13