Bus Contracting Model – The Rationale Behind the Reform in Singapore

Unlock the Secrets to Efficient Public Bus Services

At the Singapore International Transport Congress & Exhibition 2024 (SITCE 2024) conference in Singapore, Jeremy Yap, Deputy CEO of the Land Transport Authority (LTA) Singapore, shared valuable insights into the city-state’s innovative approach to urban mobility, particularly focusing on the transition to a new bus contracting model.  

This reform, initiated to enhance service delivery and operational efficiency, marked a significant shift from Singapore’s historical dual monopoly system, where two operators held territorial monopolies with limited contestability. 

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The Rationale Behind the Reform 

Historically, Singapore’s bus operations lacked the competitive edge necessary for fostering innovation. The existing operators, driven by bottom-line considerations, often provided just enough capacity to meet demand without significant investment in service quality or innovation. Recognising these limitations, the LTA decided to implement a Bus Contracting Model (BCM) that would introduce contestability into the market. This shift aimed to align service provisions with evolving commuter expectations and changing travel demands.  

Yap emphasised that the transition required new legislation and a revised financial framework, however this process was a smooth one. A key aspect of this model is the ownership of assets, including buses and depots, by the government. This decision lowered entry barriers for new operators and also encouraged competition and innovation in the sector. 

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Benefits of the Bus Contracting Model

The results of this transition have been promising. One of the most notable benefits has been the improvement in commuter satisfaction. Since the implementation of the bus contracting model in 2013, satisfaction levels have risen from 88.5% to an impressive 93% in 2023. This increase reflects the model’s effectiveness in enhancing service quality. 

Additionally, the gross cost model inherent in the bus contracting framework has allowed operators to better manage costs, reducing the likelihood of overruns in operational and maintenance expenses. With the revenue risk borne by the authority, operators can focus on cost containment, leading to more efficient service delivery. 

Yap also highlighted the model’s capacity to foster innovation. The competitive nature of the contracting process encourages operators to propose new technologies and service improvements, resulting in enhanced service levels and operational efficiencies. 

Addressing Budget Concerns 

For cities with tight budgets, the initial perception of the bus contracting model as potentially expensive can be daunting. However, Yap reassured that with careful monitoring of key performance indicators (KPIs) and a gradual approach to raising service standards, costs can be effectively managed. By setting realistic KPIs and maintaining a collaborative relationship with operators, the authorities can ensure that service quality improves without incurring excessive expenses. 

Roles and Responsibilities

In this collaborative model, clear delineation of roles between authorities and operators is crucial. The LTA takes on the responsibility of asset ownership and timely replacements, while operators are tasked with maintaining these assets to specified standards. This partnership ensures that both parties are aligned in their goals, with operators incentivised to uphold service quality to avoid penalties that could impact their margins. 

Yap emphasised the significance of a comprehensive framework for monitoring service quality. With it, the LTA utilises a bus service reliability framework that measures excess waiting times and on-time arrivals, thereby offering a transparent assessment of performance. This data-driven methodology not only ensures operator accountability but also guarantees that commuters benefit from timely and dependable service, underscoring its critical importance. 

Embracing Technology 

Technology plays a pivotal role in the success of Singapore’s BCM initiative. The implementation of a common fleet management system allows for real-time tracking of buses, enhancing operational efficiency, and providing commuters with accurate arrival information. This technological investment not only improves service reliability but also strengthens the relationship between authorities and operators by facilitating better communication and coordination. 

Looking Ahead 

As Singapore continues to innovate in public transport, the focus is shifting towards sustainability. Yap noted the ongoing energy transition, with plans to replace a significant portion of the diesel bus fleet with electric buses by 2030. This initiative is part of a broader commitment to achieving net-zero emissions by 2050, demonstrating Singapore’s dedication to sustainable urban mobility.

Conclusion 

Notably, Yap’s insights into Singapore’s BCM program reveal a thoughtful approach to urban mobility that prioritises service quality, cost management, and innovation.

The LTA’s success, as shown in our case study, demonstrates the power of strategic planning, innovative contracting, and a commitment to passenger-centric solutions. Trapeze Group, with its expertise in intelligent transport systems empowers public transport authorities to implement and manage such complex systems effectively. 

As cities around the world look to enhance their public transport systems, Singapore’s experience offers valuable lessons in fostering collaboration between authorities and operators while embracing technological advancements for a sustainable future. 

Contact us today to learn how we can help you transform your public transport network. 

Notice:
This article is based on the transcript of this interview. The content has been adapted and condensed for readability, but the key insights and information remain consistent with the original video. For a full viewing experience, we encourage you to watch the entire interview.