Performance Regimes: the Italian experience

& the European Performance Regime project

Brussels, April 4th 2008

2

Agenda

q Italian Performance Regimeq Why a Performance Regimeq A short historyq Basic principles & main featuresq Supporting IT Tool & procedures

q European Performance Regimeq Organization of the Projectq Outcomes of 2005-2006q Activities in 2007q Commercial Modelq Next steps

q RFI experience: some inputs

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THE ITALIAN PERFORMANCE REGIMETHE ITALIAN PERFORMANCE REGIMETHE ITALIAN PERFORMANCE REGIME

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Why a Performance Regimeq Need to define internationally accepted and measurable qualitative standards at

the aim of stimulating the industry and improve the provided service

q Need to fulfil the requirements of both national (Concession Act – 2000 and dlgs. 188/2003) and international legislation (EU Dir.2001/14)

q focuses on the most important market value punctuality

q provides regulation for the “lack of quality” (bad performance) rather than for the “lack of service” (cancellations)

q is applied on the whole network and all RUs are involved

q foresees monetary flows but the penalties are kept low by applying ceilings and thresholds to avoid financial risk for the partners

RFI created a system whichRFI created a system which

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A short history00

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Test

ing

Test

ing

è 2000 - RFI starts working on a Performance scheme both at national and at international level on the basis of the outcomes of the EPR I and II UIC Projects.

è End 2001 - RFI presents its proposal to the Ministry of Transport

è 2002-2004 – Test of the and fine tuning of the model

è July 2004 – Presentation to RUs

è Until December 2004 - Shadow running in cooperation with RUs

January 2005 official startJanuary 2005 official start

2005

-to

day

2005

-to

day è MONITORING

è FINE TUNING (thresholds, ceilings, delay attribution …)

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Basic principles

Differentiated by type of traffic(• thresholds: 15’ for passenger, 30’ for freight and

5’ for regional)

Incentivatingand not

compensative

Produces financial flows

Controllable by IT Tools

Oriented towards the most valuable market value: punctuality

Measurable & Quantitative(based on delays)

Symmetricalthe delays caused by IMs and RUs

“costs” the same amount

Main features and basic principles of the chosen model

Main features and basic principles of the chosen model

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Main features1

Mon

itorin

g 1

Mon

itorin

g è Monitoring made per trainè Delay measurement in terms of minutesè Cause attribution for each single minute

ü Secondary delays are attributed to the related primary cause ü Undocumented delays are attributed to RFI

2 ca

lcul

atio

n2

calc

ulat

ion è Late trains above threshold are taken into account

è Minutes of delay at destination are shared according to attributed responsibilities (excl. external causes)

è Penalties are calculated according the above mentioned share of delay

3 fin

anci

al fl

ows

3 fin

anci

al fl

ows è Unitary value : 2€/minute

è Ceilings: 20% of the TAC of the delayed train (for single trains) and 15% of the total charge (for each RU at the end of the invoicing period)

è Penalties are calculated and attributed per train/RUè Compensations between parties are applied

AUTOMATICAUTOMATICAUTOMATIC

MANUALMANUALMANUAL

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Supporting IT tools & procedures

On-line connection of RUs (Suite WEB RUs)RUs can agree/disagree within 24h; in case of disagreement there are three levels of discussion: by24h, 48h, 8 days. If no agreement special inquires are settled and those trains excluded from calculation

OnOn--line connection of line connection of RUsRUs (Suite WEB (Suite WEB RUsRUs))RUs can agree/disagree within 24h; in case of disagreement there are three levels of discussion: by24h, 48h, 8 days. If no agreement special inquires are settled and those trains excluded from calculation

PICü Monitoring of traffic;ü Delay registering;ü Causes attribution

üü Monitoring of traffic;Monitoring of traffic;üü Delay registering;Delay registering;üü Causes attribution Causes attribution

ü Penalties calculationü Statisticsü TACs calculation

üü Penalties calculationPenalties calculationüü StatisticsStatisticsüü TACsTACs calculationcalculationREAL TIMEREAL TIME

CONSOLIDATED DATACONSOLIDATED DATA

In order to guarantee privacy, integrity and reliability of data RFI obtained the TÜV Certification for:

q IT Security Management System (BS 7799) applied to SISCT-RIACE

qQuality Management System (UNI EN ISO 9001:2000) applied to the Security Data Base (BDS)

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Some results ….q Better knowledge of the performance: the share of undocumented causes has sensibly

decreased, from a quarterly average of 26% (with peaks of 75%-80%) in 2002 to 10%-12%q The financial flows account for about 1% of the total TACs

q The The total PR delays have been decreasing since the year 2002

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… some results ….q The punctuality has improved since 2005

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… some resultsq The system is managed without overwhelming administrative costs

Data processing Data analysis and

evaluationAttribution of financial

penalties/bonuses

Data processing Data analysis and

evaluationAttribution of financial

penalties/bonuses

Data input/collection about delaysAttribution of

causes/responsibilities

Data input/collection about delaysAttribution of

causes/responsibilities

Managing offinancial

flows

Managing offinancial

flows

Managing of claims by interested subjects

Managing of claims by interested subjects

The system is the same

The system is the same

The shadow running phase did not show

an increase in “disagreements”

The shadow running phase did not show

an increase in “disagreements”

Costs for the PR for RFI:

q Setting up of the system €200.000 (una tantum)

q Managing of the system €450.000 per year

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THE UIC EPR PROJECTTHE UIC EPR PROJECTTHE UIC EPR PROJECT

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Organization

Project ManagementLeads the Project

Leader: B.Morgante (RFI)

Project ManagementLeads the Project

Leader: B.Morgante (RFI)

WG ContractualLegal support

WG ContractualLegal support

WG ImplementationImplementation of the

system

WG Data ManagersImplementation of the

system

WG Data ManagersImplementation of the

system

Advisory Group (IM+RU)Takes decisions

Leader: D. Haase (DBNetz)

Advisory Group (IM+RU)Takes decisions

Leader: D. Haase (DBNetz)

WG CommercialCommercial Model

WG CommercialCommercial Model

WG IT-Tools/RNEIT support

WG IT-Tools/RNEIT support

Leader: H.Reisinger, RNE Leader: R.Achermann, SBB Leader:J.F. Ducoing, RFF Leader: to benominated

UIC SubgroupLeaflet 450.2 (UIC)UIC Subgroup

Leaflet 450.2 (UIC)TEST-TEAM 1TEST-TEAM 1 TEST-TEAM 2TEST-TEAM 2 TEST-TEAM nTEST-TEAM n

The Project has been organized in three Working Groups dealing with Commercial, Technical and Legal aspects of the project. Each WG is led by a Coordinator. Also a specific Advisory Group has been set up to evaluate the output of Working Groups. A new Data Managers Group has been created with representatives of RUs/IMs in order to organize and carry out the test run in 2008.

Representatives from both IMs and RUs (UIC Forum)

Supported by CIT and CER

Representatives from both IMs and RUs (UIC Forum)

Supported by CIT and CER

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Outcomes of 2007 - overviewLast year has been very important for the developments of the EPR Project

q Coordination with RUs (passenger and freight) Presentation of the work done by EPR teams and remarks by RUs; remarks by RUs and presentation by SNCF of an improvement of the model. The general approach of the model has been agreed; some points remain open and it has been agreed to deeply examine the different options

q UPDATING OF THE UIC LEAFLET 450.2The requirements for a better implementation of the EPR have mainly been met

q TEST RUNThe EPR model proposals have been tested on three Corridors by test teams (RUs+IMs):

ü Brennerü Rotterdam-Milanoü Antwerpen Basel

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EPR Commercial ModelThe common features of the proposed models can be described as follows:

q Based on delays

q Foresees financial penalties

q Corridor – based approach (first step)

q Includes secondary delays (RU/RU) and provides an incentive to recover delays

q Limits penalties to a warning function

q Applied on the whole train path

q Monitoring made per trainThe different options concern

ü Secondary delays treatmentü Recovered time treatmentü Technique of penalty calculation

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Test run 2007The main objectives of the test runs 2007 were:

q Data quality evaluation

q Detection of technical and operational

problems – propositions for solutions

Technical/operationalTechnical/operational

q Analysis of the commercial model options using real data

Com

mercial

Com

mercial

Very good results:qData quality and EOPT

functionality improved, qRemaining problems

identifiedqDefinition of next

improvementsqCooperation and data flow

among partners improved

An analysis on different aspects but without a deep commercial evaluation: new tests are foreseen in 2008

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Next stepsSince the project has come to a crucial point, participant railways have signed a Memorandum of Understanding stating their commitment in the Project. This years activities would be:

q Commercial issuesü Deeper analysis of the outcomes of the test run 2007ü Analysis of outcomes of the test run 2008ü Drafting of a final Commercial Model

q Test run ü Carried out by the “Data Managers Group”ü Corridors to test: same of 2007 (with an improved

automatic procedure) and/or new corridorsq Fine tuning of

ü Contractual aspectsü Acceptance procedures and disputes resolutionü Update version of the Handbook

DEADLINE : end 20082009: dry-runs foreseen

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RFI’s experience: some inputsRFI’ s experience highlighted that the following items are important in setting up a Performance Regime

A MARKET ORIENTED SYSTEM

A MARKET ORIENTED A MARKET ORIENTED SYSTEMSYSTEM

Choice of an indicator that best suits the involved network; in principle it should be

ü Measurableü Recognized by all stakeholders (nationally and

internationally)

COOPERATIONCOOPERATIONCOOPERATION The performance of the railway system depends on both IM and RUs: it is important to involve the RUs at least in a shadow-running

EFFECTIVENESSEFFECTIVENESSEFFECTIVENESSFinancial flows should be foreseen as they stimulate the commitment of partners, in addition the system should also allow a better knowledge of the causes of bad performance and distinguish different type of traffic

PR IS A MEANS NOT A GOAL

PR IS A MEANS NOT A PR IS A MEANS NOT A GOALGOAL

If existing, penalties should be kept low, what is important is to allow the identification of corrective actions