New Bus Service Framework for
Budapest high quality for passengers, opportunity for market players
László Sándor KERÉNYI
Head of Transport Strategy Department
BKK Centre for Budapest Transport
László Sándor Kerényi: New Bus Service Framework for Budapest 2
Contents
• Budapest facts and figures
• Current status of the bus sector
• Challenges for better services
• The new model
• Lessons learnt
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Budapest facts and figures
Budapest / the Capital (since 1873):
• 1.700.000 inhabitants
• 600.000 car trips/day
• Modal Split: 60% personal / 40% public
• 3,56 million passengers/day on BKV
Agglomeration (Pest County, 80 settlements):
• 800.000 inhabitants
• 400.000 car trips/day (66% of all trips!)
László Sándor Kerényi: New Bus Service Framework for Budapest
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Budapest facts and figures
Two level municipal system (since 1990):
• Municipality of the City of Budapest (the Mayor of Budapest)
• 23 municipalities (23 mayors) of 23 districts
Transportation tasks of the Municipality of the City of
Budapest: [National Law LXV.1990. 63.A§ g]
• Public transportation
• Traffic management on the whole road network of Budapest
(4500 km)
• Road and bridge maintenance tasks on roads and bridges
owned by the City of Budapest, or used by public transport
(1000 km)
• Transportation development projects
• Permitting and legal control
László Sándor Kerényi: New Bus Service Framework for Budapest
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Budapest facts and figures
Road network:
• Full length of the road network: 4500 km
• Length of the main road network: 1200 km
• 9 Danube road bridges (including M0 bridges)
• Over 1000 traffic signaled intersections
Public transport network:
• Length of the public transport network: 1100 km
• Number of stops and stations: 4700
• Rolling stock: app. 3000 vehicles (176 million km run)
• Average occupancy of vehicles: 23,8%
• Average circulating speed of vehicles: 16,7 km/h
• 1,37 billion passengers/year, 5,1 billion passenger km/year
László Sándor Kerényi: New Bus Service Framework for Budapest
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Budapest facts and figures
László Sándor Kerényi: New Bus Service Framework for Budapest
New transport management model (since 2010):
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Budapest facts and figures
General tasks of BKK:
• Ordering services of public transport (network planning,
commission, control, issuing and controlling tickets, regional
coordination)
• Operation of roads, bridges and the traffic management
system (development and coordination of reconstruction and
construction works)
• Integrated administration and development of urban
transportation (elaboration and updating of transport strategy,
development and management of projects, professional
coordination)
• Elaboration and operation of general transportation
regulatory systems (parking, congestion charging, heavy
weight traffic charging)
László Sándor Kerényi: New Bus Service Framework for Budapest
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Current status of the bus sector
László Sándor Kerényi: New Bus Service Framework for Budapest
Bus service facts and figures:
• Share: 40%
• 556 million passengers p.a.
• 177 million vehicle kms
• full geographical coverage
• 7/24 service
• 206 bus lines (daytime)
• 38 night bus lines
• Peak hours passenger load above 90% on 80% of the
lines, average passenger load 24.0%
• OPEX HUF 40 billion (EUR 135 mn) per annum
• Total number of passengers 1.39 million per annum
Rate of passenger numbers by vehicle
types
40%
28%
22%
5%5%
Bus Tram Subway Trolleybus Suburban Railway
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Current status of the bus sector
• First-door alighting to
be extended gradually
• Operational and planned
replacement of BKV’s
fixed-rail services
• Mid-term general goals:
• more fixed-rail services
• less bus services
• Automated fare collection to be rolled out
(fully managed by BKK)
• GPS-based AVL system to be mounted on all surface vehicles
(even private operators)
• Gradual shift to the competitive tendering model
László Sándor Kerényi: New Bus Service Framework for Budapest
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Current status of the bus sector
László Sándor Kerényi: New Bus Service Framework for Budapest
Bus fleet facts and figures:
• 1,353 buses
• 624 pcs „articulated” (18m-long)
• 698 pcs „solo” (12m-long)
• 31 pcs „midi” (8m-long)
• Average age of fleet:
18.13 years
• BKV’s subcontractors:
2 operators (1 private,
1 government controlled)
• own depots 0
50
100
150
200
250
300
350
400
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Current status of the bus sector
László Sándor Kerényi: New Bus Service Framework for Budapest
IK 260
377 pcs
IK 280
270 pcs
IK 435
171 pcs
IK 415
160 pcs
Volvo 7700 A
150 pcs
IK 412
114 pcs
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Current status of the bus sector
Bus fleet vs. services:
• Many break-downs and cancellations
• 75% high-floor
• 83% no A/C
• Mostly EURO-0, up to EURO-III
• Deteriorated outlook, passenger area
László Sándor Kerényi: New Bus Service Framework for Budapest
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Current status of the bus sector
László Sándor Kerényi: New Bus Service Framework for Budapest
Bus depots of BKV:
• 4 bus depots
• 1 trolley bus + bus depot
• 300-350 buses per depot
• all owned by BKV
• on-site petrol stations
• on-site car wash
• Full Wi-Fi coverage (as part of the AVL system „FUTÁR”)
• Not to be sold – can be utilized by future private operators
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Challenges for better services
László Sándor Kerényi: New Bus Service Framework for Budapest
Main questions related to the new model:
• How to deal with current technical conditions of the fleet?
• How to involve private funding?
• How to improve services for passengers?
• How to generate competitive pressure for BKV?
Main aims of the new bus model:
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The new model
László Sándor Kerényi: New Bus Service Framework for Budapest
• Hundreds of low-floor, air-conditioned,
EURO-5 or EEV buses to be put into
operation until 2014
• No CAPEX
• Competitive tendering
• Cheaper, more efficient, better
• Risk-sharing between BKK and the
operators
• BKV’s bus operations: competitor and
benchmark
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The new model
László Sándor Kerényi: New Bus Service Framework for Budapest
Competitive framework:
• EU public procurement directives, HU public procurement law
• Two phases:
• Prequalification: open for application for years – since
21/10/2011
• Competitive tendering: actual call for tender for those
operators who have successfully passed the pre-
qualification
• First tender due: December 2011
• „Larger” and „smaller” fleet contracts
• Contract term depending on age of fleet; with new buses
planned term: 8 years
• Planned contract sizes between 50 and 300 buses
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The new model
László Sándor Kerényi: New Bus Service Framework for Budapest
Service level agreements:
• Punctuality
• Cleanliness
• Passenger comfort (heating, A/C)
Strict control regime:
• Incentives and penalties – „bonus-malus” (stick / carrot)
• Ever increasing service level control
• BKK-managed AVL system to track each vehicle
Target: high quality services
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The new model
László Sándor Kerényi: New Bus Service Framework for Budapest
Gross cost contracts:
• Km-based service fee
• Service fee to be reviewed per annum
• Fare revenue to be collected by BKK
Contract term:
• Based on turnover of CAPEX and 1370/2007/EC
• Average planned contract term 7-8 years
• Option to extension
Risk-sharing, spreading of costs:
• Minimal standards to be set
• Application of greatest possible freedom for operators
Target: acceptable service fee
Costs:
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The new model
László Sándor Kerényi: New Bus Service Framework for Budapest
Factors on possible price increase Potentials to decrease costs
• Higher amortization
BKV’s buses are amortized to
zero now
• Higher maintenance costs
Higher qualified maintenance
staff and more expensive
• More diesel used by new
buses
New technology, A/C increases
fuel consumption
• Risks
Diesel price increase, use of
BKV depot, trade unions
• Experience of operators
Experience with cheaper
buses, existing processes,
workflows
• More efficient processes
Maintenance, roistering, ever
increasing cost optimization
• Risk coverage
Overhead costs spread
across other activities
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The new model
László Sándor Kerényi: New Bus Service Framework for Budapest
Phase 0
Tenders
150 pcs 450 pcs 750 pcs 900 pcs
• Phase 0: replacement of BKV’s subcontractor contracts (until 1/5/2012)
• Tenders: gradual and continuous increase of number of contracts and operators
• Target: more than half of the fleet size are new buses on the new tender regime
„urgent”
Public
procurement
preparation
Service
provision
Roll-out of the new service framework:
The first tender: under time pressure…
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The new model
László Sándor Kerényi: New Bus Service Framework for Budapest
Phase 0 (under time pressure) Later phases service framework
• BKK-BKV consortium to procure
• Short-term contract(s) (1-2 years)
• Small fleet size (25-50)
• Acceptance of high-floor/low-entry
buses
• „Compromises” on technical
expectations
• Subcontracted to BKV
• Direct contract award
• Service to start on 1/5/2012
• Buses to be distributed across the
Budapest bus network (mixed with
BKV buses)
• Tenders from 1/5/2012
• BKK to procure
• Long-term contracts
• Smaller and larger fleet sizes
(100-300)
• Only new buses
• High quality expectations
• Service contract with operators
• Competitive tendering
• Redistribution of buses on the
network
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The new model
László Sándor Kerényi: New Bus Service Framework for Budapest
The first tender: urgent need to act quickly
• BKV’s Public Service Contract and BKV subcontracts
expire on 30/4/2012
• Before 1/5/2012 BKK had no authority to conclude
procurement and award contracts
• BKV has no extra 110 buses for replacement
• New contract needed to provide capacity
• Time pressure leads to phase 0 „contradictions” with the
new service framework
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The new model
László Sándor Kerényi: New Bus Service Framework for Budapest
Activities
BKK internal decisions
Prequalification
BKK to draft tender documents
Submission of applications
Evaluation of applications
Negotiations with applicants
RFP
Decision by BKK/BKV
Room for appeal
Contract Award
Preparation for Service Provision
Week
November December
44 45 46 47 48 49 50 51 52 1 2 3 4 5 6 7 8 9 10 11 12
January February March April
13 14 15 16 17
2011 2012
Service contracts Part 1 to 6
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The new model
László Sándor Kerényi: New Bus Service Framework for Budapest
Parts Winner Number of
buses
Contracted
performance Pricing method Details of the buses
1. - - - - -
2. VT-Transman
Kft. 25
2 000 useful bus
km/year
+ 20 % optional
Useful bus km with
penalties
Used
Low floor
With airconditioning
3. VT-Transman
Kft. 25
2 000 useful bus
km/year
+ 20 % optional
Useful bus km with
penalties
Used
Low floor
With airconditioning
4. - - - - -
5. VT-Transman
Kft. 25
825 useful bus km/year
+ 100 % optional
Useful bus km with
penalties
Used
Partially low floor
With airconditioning
6. VT-Transman
Kft. 25
825 useful bus km/year
+ 100 % optional
Useful bus km with
penalties
High floor
Without air-conditioning
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The new model
László Sándor Kerényi: New Bus Service Framework for Budapest
Service contracts Part 7 and 8:
• Part 7: 25 new solo buses + 200% optional
• Part 8: 25 new articulated buses + 200% optional
Specifications:
• Low floor, with ramp
• Minimum EEV engine
• Additional points for the alternative propulsion
(CNG, hybrid, electric etc.)
• Air-conditioning
• Built-in CCTV security system
• Built-in passenger counter system
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Lessons learnt
László Sándor Kerényi: New Bus Service Framework for Budapest
Main lessons after the first tenders:
• No real bonus/malus: only penalties can apply due to the
Hungarian procurement procedures → new regulation?
• BKV is not allowed to bid on these procurements → New
prequalification tender without BKV
• Only Hungarian bidders → minimum fleet size to bid for
new market is around 200
• No Hungarian buses → ???
No change:
• Integrated bus fleet control remains in the responsibility of
BKK (FUTÁR system will be integrated on all vehicles)
• Continuous quality control to be performed
Thank you for your kind attention!
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László Sándor Kerényi
Head of Transport Strategy Department