Guidebook for Planning and Implementing Automated People Mover Systems at Airports (2010)

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107 In planning for the implementation of an airport APM, there are alternative O&M approaches that should be con- sidered. The purpose of this chapter is to present the possi- ble O&M approaches for airport APMs and to identify their advantages and disadvantages. It is important to note that the optimal O&M approach for an airport when opening an APM may be different than it would be after the APM has been operating for a number of years. Some of the unique issues for ongoing O&M services are also presented in the chapter. The research produced from ACRP Project 03-07, “A Guidebook for Measuring Performance of Automated People Mover Sys- tems at Airports,” should be a useful reference on this topic. 11.1 Initial O&M Approaches APMs have been operated and maintained at major airports for almost 40 years and at over 40 different airports. Based on this experience, four candidate approaches to initial O&M are identified, along with their advantages and disadvantages. 11.1.1 APM Supplier O&M O&M responsibilities are assigned to the APM equipment supplier. This is the most common approach to APM system O&M at airports. The supplier typically hires the vast major- ity of its staff locally. The selection of the winning supplier is based, at least in part, on the combined implementation cost and O&M costs for some period of time, typically for 5 years. This contract structure encourages the supplier to perform life-cycle cost analysis since both capital and O&M costs are considered in the selection. Furthermore, the supplier’s O&M payments are based on achieving performance levels defined in the contract. In this approach, the airport awards a single contract for the implementation and O&M of the APM system. Linking the O&M services with the initial capital construc- tion provides a powerful incentive for the supplier to provide its best efforts on both fronts. Typically, the cost of the O&M services is included in the supplier’s proposal, with the com- bined capital and O&M costs constituting the basis of award. After contract award, most airports have executed two sepa- rate contracts for capital construction and O&M services, respectively. Advantages: • APM supplier is intimately familiar with the APM operat- ing system technical features and has direct access to the technology’s replacement parts and materials. • APM supplier has access to lessons learned from other sim- ilar APM installations. • No O&M staff administrative responsibilities for airport. • Payment to APM supplier is based on system performance, with incentives for surpassing the system availability goal and penalties for not achieving the goal. This incentive is typically passed on to all of the supplier’s employees, cre- ating a highly motivated workforce. Disadvantages: • Profit is the APM supplier’s primary concern. • May be more expensive hiring APM supplier personnel than hiring airport personnel. • APM supplier may need to be monitored. 11.1.2 APM Supplier Initial O&M O&M responsibilities are assigned to the APM supplier for a short initial period. This initial period may be one to 2 years, compared to a 5-year period of typical DBOM contracts. Prior to transitioning out, the supplier trains the airport staff, and they become responsible for O&M activities. A support person from the APM supplier is typically retained as a sub- contractor to the airport. This approach offers the ability to defer training of airport staff prior to APM operations. C H A P T E R 1 1 Operations and Maintenance

Advantages: • Passenger service is the airport’s primary objective. • Airport may retrain and use employees who are displaced by the APM system as O&M personnel (if APM is replac- ing bus operation). • Airport has in-depth, first-hand knowledge of the APM system performance problems and can act in the best inter- est of the airport operation. Disadvantages: • Airport must hire and train O&M staff. • Airport must provide the administrative services (payroll, benefits, etc.) for the O&M work crew. • Airport will not have continued access to the lessons learned. • Airport’s work crew may not be as knowledgeable about the APM system’s technical features as the APM supplier’s personnel. • Financial incentives and penalties may be more difficult to implement. 11.1.3 Airport O&M O&M responsibilities are assigned to airport staff at the beginning of passenger service. The supplier provides training to the airport staff prior to system opening. This approach is similar to the approach in section 11.1.2 (APM Supplier Initial O&M), except that airport staff begins O&M activities imme- diately with the opening of the system. Advantages: • Passenger service is the airport’s primary objective. • Over time, the airport may retrain and use employees who are displaced by the APM system as O&M personnel (if APM is replacing bus operation). • Airport will achieve in-depth, first-hand knowledge about the APM system’s performance problems and can act in the best interest of the airport operation. Disadvantages: • Airport must hire and train O&M staff. • Airport must provide the administrative services (payroll, benefits, etc.) for the O&M work crew. • Airport will not have any access to the lessons learned. • Financial incentives and penalties may be more difficult to implement. 11.1.4 Third-Party O&M O&M responsibilities are assigned to a third-party contrac- tor. This is similar to the approach in section 11.1.1 (APM Sup- plier O&M), except that the O&M contract is completely separate from the procurement and is open to all qualified firms. This approach is not significantly different from the APM supplier O&M approach in terms of phasing or impact on the airport APM’s existing staff, but costs may be slightly higher. Two examples of third-party O&M are Hous- ton Airside and Chicago Landside. Advantages: • No O&M staff administrative responsibilities. • Payment to third-party contractor is based on system per- formance, with incentives for surpassing the system avail- ability goal and penalties for not achieving the goal. Disadvantages: • Profit is the third-party contractor’s primary concern. • Third-party contractor will not have any access to the les- sons learned, nor will technical support be available from APM supplier organization or from the APM supplier’s other O&M applications. 11.2 Initial O&M Period Versus Future O&M Periods The potential O&M options and their advantages/ disadvantages for a new APM system are typically different than the options for an existing APM system that is coming to the end of an existing O&M contract. The competitive environment is typically strong for the initial O&M contract because multiple APM suppliers compete to both construct (design and build) and operate/maintain the APM system. Suppliers are judged in an open competition in terms of price and qualifications. For the four O&M approaches listed above, the first two approaches (with the APM supplier pro- viding initial O&M services) have clear advantages, while the third (airport O&M) and fourth (third-party O&M) have more clear challenges. The environment for the renewal of O&M services for an existing APM system is much less competitive than for an ini- tial system. The established APM supplier has its equipment in place and has a unique understanding of its technology in general, as well as its specific application at that airport. The current supplier also has access to the technology-specific parts and materials. This combined knowledge and materials advantage of the existing supplier makes it difficult for airport staff or a third-party provider to compete against an existing APM supplier for providing O&M services. 11.3 Competitive Procurement of Ongoing O&M Services Competitive procurement of the ongoing O&M services of an operating APM system is a recent phenomenon. Although the airport APM industry is approximately 40 years old, most examples of competitive procurement of O&M services have 108

occurred since 2005. One example is so recent that its out- come in terms of pros and cons cannot yet be fully ascertained. To date, the sole reason for competitive procurement of O&M services for APM systems appears to be the airport’s desire to ensure the lowest cost for the services. In no exam- ple of competitive procurement was there a problem with the technical performance of the original O&M provider. Nor have there been examples of the existing cost of the O&M services being considered (by the airport) to be exorbitantly high. Despite corporate philosophies of retaining the O&M services for their original product, in only one case of compe- tition has the original APM supplier been successful in retain- ing the O&M services. In this example, the original supplier was again selected through a best-value evaluation but not primarily by price. Historically, ongoing O&M services have not been com- petitively procured. One reason is probably that the APM industry is highly specialized, with each supplier’s system being proprietary in nature. Thus, there has historically been no established competitive market for APM O&M services, and the universe of responsible third parties capable of pro- viding such services remains very limited despite the recent solicitations. It is generally thought that the acceptable per- formance of the original O&M providers and their long-term relationship with the airports simply served the best interests of the airport and the airport’s customers—airline passen- gers. The strong and consistent APM system performance outweighed the potential lower cost. Five examples of competing APM O&M services are pro- vided below. The first example is unique because it is not recent in terms of the previously noted 4-year time frame. Due to the sensitive nature of these examples, neither the air- port nor the O&M provider are mentioned by name. 1. Small Landside APM at Large Airport • APM supplier ceased supporting this system approxi- mately 25 years ago. • A third-party O&M provider (non-supplier) has been the sole O&M provider through multiple solicitations. • There have been no other known proposers. 2. Large Airside APM at Large Airport • Initially four proposers; two elevator proposers were found non-responsive. • The original APM supplier was selected (retained) based on a best-value evaluation, not lowest price. 3. Large Airside APM at Large Airport • Three proposers: original APM supplier, a third-party O&M provider, and a jetbridge maintainer. • The third-party O&M provider was selected based pri- marily on price, replacing the original APM supplier. 4. Small Airside APM at Large Airport • Two proposers; original APM supplier and a third-party O&M provider. • The third-party O&M provider was selected based pri- marily on price. 5. Landside and Airside Systems at Large Airport • Solicitation was a continuation of the previous con- tractual arrangement: a single O&M contract for both systems. • Three proposers: existing APM supplier, an outside APM supplier/operator, and an elevator company. • The outside APM supplier was selected based primarily on price. • The outside APM supplier hired most of the existing employees. 11.4 Summary of O&M Approaches In terms of procuring O&M services for a new APM system, there is a clear advantage in contracting with the APM supplier for an initial O&M period. The linking of construction and operations helps ensure that the system performs as it is speci- fied. The historically high level of competition among APM suppliers to construct new APM systems at airports has resulted in good O&M prices for the airport in the initial O&M phase. The competitive environment for the ongoing provision of O&M services is quite different. With an operating APM sys- tem, the original APM supplier has a unique advantage over other potential O&M providers (airport, third party, other APM suppliers, etc.) in terms of technical knowledge, access to parts/materials, and access to skilled local labor. Despite the inherent advantages of the incumbent APM supplier, introducing the element of competition for ongoing O&M services can provide the airport with some much-needed negotiating leverage. This will help ensure that the airport receives good value for its ongoing APM operations and main- tenance. However, caution should be exercised if this approach is taken because, depending on the procurement method that is used, the airport may ultimately be forced to engage an O&M provider that is not its preferred choice. 109