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network and reducing service by 8%. BVG has now Overall, transit accounts for more than 50% of the completed a period of comprehensive restructuring modal choice in the region. More than 252 million and reforms. These reductions in personnel allow trips occurred in 2009, split as follows: BVG to cover labor costs (exclusive of benefits) Bus network: 42%, with fare revenues. Metro system: 30%, At the start of 2008, BVG and the state of Berlin Tram lines: 17%, signed a 12-year agreement, which secures the com- National Railway: 10%, and pany's existence until 2020. With this stability, BVG Ferry: 1%. can undertake long-term planning and development. Metro, tram, bus, and ferry services are commis- Funds for both operating and capital expenditures sioned by the state of Berlin. BVG is the only come from various sources, including ticket sales, provider of these services. BVG's quality of service congestion pricing, national government, and local is continuously checked against the benchmark set government. Farebox revenues cover 55% of the in 2007, before the signing of the long-term contract. funds required to operate and maintain the system; the BVG is subject to the terms of the contract with the difference is made up by grants. city and federal regulations. For instance, BVG has established preventive and corrective maintenance schedules for all its vehicles; in addition, there are DEFINING AND MEASURING strict rules that establish the need for overhaul or A STATE OF GOOD REPAIR heavy maintenance after a number of miles or for spe- Investments in infrastructure maintenance have cial purposes (e.g., improved accessibility). lagged in a large number of transit systems in the United States. Many American public transit systems have difficulty obtaining sufficient funding to main- Oslo tain their assets in a state of good repair. A major The organizational structure for implementing focus of this study mission was to look at how the and delivering public transport in Oslo is complex. various European transport systems maintain their Ruter AS is the administrative agency that manages transit assets, how they manage funding for such public transport for the city of Oslo and the surround- investments, and what best practices can be gleaned ing Akershus County. It is organized as a limited for potential application in the United States. company that oversees bus, metro, trams, and fer- A number of the host agencies shared how main- ries. The agency also holds special agreements with tenance standards are established for their transport Norges Statsbaner for fare regulation on commuter systems. In general, thresholds for these standards trains operating in the area. In addition, Ruter AS is are established by law, by the operating agencies, or responsible for administrating, funding, and market- a combination of both. Depending on the asset class ing public transport. Ruter AS, with 130 employees, (e.g., rolling stock, track, etc.), standards can be is owned by the City of Oslo (60%) and Akershus established by national and sometimes European County (40%). standards. These standards can also result from input Kollektivtransportproduksjon AS (KTP) is a pub- and benchmarks provided by the manufacturers and lic transport operator that is wholly owned by the city suppliers. of Oslo. KTP was established in 2006 and since 2008 The definition of "state of good repair" is fairly has operated under contract with the public transport consistent among the authorities visited: an asset is authority Ruter AS. KTP operates and maintains the considered in a state of good repair if it is safe, reli- Oslo Metro and Oslo Tramway. In addition, KTP is able, and keeps the customer satisfied. Maintaining a responsible for rail infrastructure in Oslo. The Oslo state of good repair, however, involves a constant Metro is operated by the subsidiary Oslo T-banedrift, process of assessing an asset's residual life and bal- while the Oslo Tramway is operated by the subsidiary ancing that against costs. An assessment can be based Oslo Oslotrikken AS. KTP also owns UniBuss, on a variety of factors: government regulations, laws, which was awarded several of the public service manufacturer's recommended maintenance plan, age, obligation bids for bus service in Oslo and Akershus. performance, distance traveled, inspections, and expe- At the end of 2009, KTP had approximately 3,300 rience. Experience is gained in collaboration with employees. the manufacturer, other asset owners, and daily prac- 7

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tices and observations. Implementation of needed entire asset. This includes labor and material costs for repairs versus replacement is dependent on cost and maintaining the component over the expected useful availability of funding or, as in the case of third-party life of the entire asset (e.g., 40 years for a passenger operators, profit. rail car). In the United Kingdom, governmental and statu- The final step is a risk analysis, which determines tory bodies establish and set requirements that need whether the component will be maintained, replaced to be met for certain asset areas (e.g., escalators). In in kind, or upgraded. The results of residual life and other areas (e.g., fleet maintenance), no benchmarks life costing are compared with performance risks-- are established by law. measures such as customer journey time, lost cus- Transport for London has a structured methodol- tomer hours, compliance, extraordinary maintenance, ogy for determining the state of good repair for all and safety factors. Figure 5 illustrates this final step. assets. Although different criteria may apply to the TfL's risk analysis for buses showed that it was various categories of assets, the methodology remains less expensive to retire buses at 3 years of age than the same. Three steps occur in the review: condition to maintain them for the general useful life of 9 to assessment, life costing, and risk analysis. 12 years. The current policy is thus to sell 3-year-old A condition assessment is performed to determine buses, which usually are purchased by systems in the residual life of the asset. Condition assessment other European countries or in South American standards are developed by TfL's engineers and countries. The average cost of a new bus is h100,000 are based on discussions, surveys, experience, and (about $160,000). This replacement program is sup- benchmark information obtained from consultants, ported by funding generated from congestion pricing. original equipment manufacturers, and engineering TfL estimates it has a h1.5 billion backlog of universities. At a minimum, TfL must comply with repair and replacement work necessary to regain a the requirements established by the British Standards state of good repair. It anticipates the work will be Institution (BSI). The specific category of asset will completed in approximately 22.5 years. Currently, also be broken down into a hierarchy of components. 89% of the assets have at least 1 year of life remain- Each subcomponent has its own expected and resid- ing. A satisfactory state of good repair is achieved ual useful life, which impacts the whole. Additional when a percentage of assets have greater than 5 years factors that impact the condition assessment are avail- of residual useful life. ability of parts (obsolescence); risk code (crucial to Nottinghamshire provides tram and bus service the asset's performance); and ambience. (Ambience for a total of approximately 1.8 million trips per year. became a factor as a result of customer feedback and The tram system opened in 2004, so the infrastructure expectations.) The results are rolled up into a final assets are fairly new and in a state of good repair. The residual life expectancy. buses are operated and maintained by a third party. In The next step is life costing. TfL determines the general, authorities that have entered into operating cost for the remaining life of the component and the and/or maintenance agreements with third parties are Source: Richard Moore, presentation on "Asset Management Development," June 14, 2010. Figure 5 Comparing residual life of an asset to performance risks. 8

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cautious in sharing performance and cost data due to All assets are tracked and monitored and are to be the competitive nature of the contracts. Such operat- turned over to the authority at the end of the contract. ing agreements are prevalent throughout Europe, At that time, the equipment will be inspected, as it especially with bus services. must meet certain useful life and reliability conditions Transit authorities segregate social, branding prior to the turnover. Currently, the operator spends (marketing), and profit responsibilities. Financial approximately h4 to h5 million per year to maintain responsibilities for operating and maintaining the a 17-year-old fleet of 26 trams (94 cars), 54 km of assets are passed to the third-party operators, while track, and 59 stations. The initial expectation was that the authority focuses on social needs and require- the track was "built to last forever"; however, that ments and monitoring the operator. Performance soon changed to a realization that the track required standards and requirements are stated in the contract. maintenance, particularly in the areas where four or These are usually tied to reward and penalty fees. In five rails cross. general, standards are developed based on regulatory The operator began developing a formal mainte- requirements, such as those set by the BSI, and the nance plan in 2010. Work is under way to develop European Union's expected useful life and safety maintenance cycles with other companies. The intent standards. is to compile information on their experiences and to Independent traffic controllers, as well as the share which processes work and which do not work. authority's engineers, perform periodic inspections. Due to the competitive nature of the market, however, The purpose of these inspections is to monitor actual the shared information tends to gravitate toward the performance against standards, compliance with con- latter (i.e., what does not work). Repair cycles fluctu- tractual performance requirements, and condition ate among the group. The information is updated assessment of the asset. The authority's engineers annually, accelerated and deferred scenarios are ana- perform random inspections every 4 weeks, as well lyzed, and each scenario is compared with the origi- as oil analysis, inspection of spot failures, and annual nal cost. There is no final answer yet. vehicle tests that include a review of the maintenance In some cases, responsibility for maintaining a records. Independent traffic controllers also define, state of good repair is passed to the supplier via war- manage, and investigate performance measurements ranties or insurance--for example, the supplier of the in accordance with European standards. propulsion system inspects the component(s) at the In general, buses have an expected life span of end of its useful life and determines whether mainte- 12 years or about 600,000 km. Once they reach this nance was performed as required. threshold, the buses are passed down to the school The bus facility handles all levels of work in- system, where they are operated for short periods in cluding repair, rehabilitation, cleaning, and painting. the morning and the afternoon, allowing for daytime Subcontractors are available when needed, but maintenance work. The buses are used in this capac- only the seats are subcontracted out on a regular ity for another 12 to 13 years. Although these are the basis. Buses are considered beyond their useful life general asset life parameters, the age of the fleet is at 12 years or 600,000 km. At 480,000 km, the buses determined solely by the commercial operator. Also, undergo major repair: all crucial control compo- the operator may determine that a route or service is nents are changed out, upgraded and modernized no longer profitable and request release from the con- parts are installed, and the bus's interior is painted. tract. The main indicator for determining whether The bus shop facility maintains a 1-year supply of service is viable is cost per head. parts, with the exception of parts for the newer buses In France, the trams and related track in Stras- manufactured in Poland; parts for those buses are bourg are maintained by a third party. The decision ordered as needed directly from the manufacturer whether to repair or replace an asset is profit driven and are received within 3 days. Buses are cycled into and must first be presented to CUS for approval. the shop weekly, and on average 12 buses are repaired CUS makes the decision as to whether the operator each day. Maintenance practices are scheduled at should continue maintaining the asset or whether the 1,000 km, 5,000 km, and 10,000 km. An automated owner should replace the asset. Because the operator system monitors maintenance-level requirements is working in a competitive market, not all data are and distance traveled. Buses are rotated among the shared with the owner; much of the data are protected routes as needed to maintain an even level of use and confidential. (mileage). 9

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Germany also establishes standards and bench- of all elements and pipes and wires under the marks for certain asset classes similar to those used in car body. the United Kingdom. For example, for rolling stock, Levels B and C: Execution of maintenance the standards for reconstruction are governed by Ger- works (clearing, lubrication, adjustments) and man law, which requires a renewal every 8 years. work on particular components and measure- Other standards are set by suppliers and by industry ments on the cars. standards. Level D: Maintenance and inspection work, In Karlsruhe, equipment replacement cycles are work on the bogies, and a check of the gear- generally 30 years for trams and 15 years for buses. boxes on a test stand. All requests for replacement must be accompanied by Level E: Major modernization and renewal cost-benefit analyses. Three basic criteria must be based on German law (BOStrab) after 8 years met: an increase in ridership, a reduction in building of operation or 500,000 km. Renewal of ele- and maintenance costs, and an increase in production. ments of bogies, drive propulsion, controllers, Asset conditions are monitored using SAP soft- parts of the car body, and the interior. ware. Condition assessment criteria are lengthy and In Oslo, KTP has a comprehensive maintenance are prioritized. In general, the many maintenance plan for regular maintenance and long-term replace- items are grouped into intervals of 5 and 10 years. ment strategies. It is managed through a software Major repairs are performed at a separate facility. program (IFS) that tracks all assets by components. Drivers perform tram and track condition assess- Work orders are created for the planned maintenance ments while in service and provide immediate feed- and inspections that include condition assessment. back to the control center. Track and mobile teams Every time a new project is implemented, the last perform repairs for failures in the field. Minor repairs phase of the project requires that the team create and are performed at the shop: trams are repaired, cleaned, key in a plan for maintenance, including rehabilita- and sent back out in 40 minutes. Maintenance costs tion and replacement. are also supported via vendor warranty, time and KTP manages an infrastructure planning group to material contracts, and insurance. review the different priorities of work generated. The BVG in Berlin faces a major challenge to bring its group looks at all requests for projects and considers assets up to a state of good repair. On the tram side, safety, functionality, and politics. This group is influ- deferred maintenance needs total almost h26 million; enced by operations, maintenance, and, of course, the on the metro side, the amount ranges from h60 million owner--the city. It can recommend penalties if the to h90 million. All stations also require improve- service is unsatisfactory. ments to meet standards; upgrades will require more Assets owned and operated by KTP are inspected than h500 million over a 10-year period. daily. More detailed inspections are performed every BVG has a formalized maintenance plan with third year. Rail is inspected twice each year. Similar various categories and level of repair. There are three basic categories and five levels of work. The cate- to other European transit authorities, KTP has noted gories are as follows: that the transit industry lacks standards such as those found in the aviation industry. KTP is dependent on Preventive maintenance (periods depend on its multidisciplinary teams to review operating main- mileage); tenance issues and to recommend corrective action Corrective maintenance (repairs, accident re- plans. A technical rules division develops guidelines conditioning, cleaning/repairing acts of van- for condition assessment. These rules guide daily dalism); and maintenance requirements and short-term projects. Reconstruction (as established by legislative Larger infrastructure needs are scoped, planned, and body and to meet passenger needs). presented to the county for review, approval, and The levels of repair are as follows: funding support. KTP is currently focused on a 20-year, h9 bil- Level A: Visual inspection (under the vehicle lion expansion project and a h500 million backlog and laterally) for damage by external factors of maintenance and state-of-good-repair work. This (ground contact or foreign matter), as well as includes transitioning the fleet to comprise heavier on fixed bearings, safety devices, and tightness equipment and converting catenary-provided power 10