At the beginning of mr3, an annual target was developed on the basis of the 12-month franchised benefit that ended on June 31, 2009. It is encouraging to see that PTV`s plans for negotiations with franchisees have been deepened. PTV has developed a deep understanding of the strengths and weaknesses of current agreements and has identified significant and achievable opportunities for improvement. Railway customer satisfaction is measured by a quarterly telephone survey. As shown in Chart 1E, customer satisfaction has improved under the current agreement and has met the performance targets set when negotiating the contract. VicTrack owns the public telecommunications network. VicTrack provides franchisees with telecommunications services managed by this infrastructure under these agreements. The ability of the PTV to improve rail and tram traffic will depend on the success of its contract negotiations and the implementation of the new agreements. The new PTV contract management framework, described in Part 2, provides for regular revisions of MR4 agreements over their duration to determine whether the agreements are meeting their objectives and have the expected benefits. This will allow PTV to identify the necessary changes to the MR4 agreements and prepare for future agreements.
PTV`s decision to make incentive payments and penalties through subjective telephone surveys meant that the achievement of this benchmark required much less effort for each franchisee. Public Transport Victoria (PTV) assessed the current franchisees – Metro Trains Melbourne (MTM) and Yarra Trams – as the required performance criteria. PTV and the Department of Economic Development, Jobs, Transport and Resources (DEDJTR) are responsible for negotiating new agreements with franchisees. Its priority is to “create sustainable franchise agreements and appropriately allocate risks in order to maximise the value for money for the State and optimize the operation of train and tram systems.” In our 2007 Managing Victoria`s Rail Infrastructure Assets report, we recommended that the former Department of Infrastructure develop a long-term asset management strategy for urban rail infrastructure to identify and prioritize the maintenance and renovation of these facilities. The department did not make this recommendation. As a result, there was no long-term asset management strategy for the train and tram network at the beginning of the current franchise agreements, known as MR3, in 2009. The first fixed performance benchmark was a reliability target – 98.5% of the daily services listed in an agreed schedule are provided. This objective was based on the minimum service thresholds described in Section 2.3 of this report. The thresholds included a provision that PTV should request a meeting and obtain a statement from the franchisee when their performance falls below the 98% call-in threshold.
Current agreements do not allow for regular review and rejection of benchmarks. As a result, the PTV had only limited capacity to use these benchmarks to continue to improve. During the MR3 agreements, PTV franchisees submitted reports on maintenance and renewal work, which they reviewed in monthly meetings. However, until recently, these reports and meetings focused on operational issues and progress in maintenance and renewal. The current tram and tram franchise agreements – known as MR3 – expire in November 2017. The agreements give franchisees the exclusive right to negotiate with the state an extension of the agreement for up to seven years if they meet certain performance criteria. It is positive that the PTV has gained a good understanding of the strengths and weaknesses of the current agreements and that it is well prepared to negotiate better outcomes in future agreements. The challenge for PTV is to properly negotiate and implement new agreements and improve contract management.