The Worlds Oldest Subsurface Transport System in London - Essay Example

? Managing in a Mixed Economy TABLE OF CONTENTS Introduction 3 Background 4 Discussion 5 Public Private Partnership 5 Contractual performance 7 Asset management 7 Metronet Case and PFI 7 Strategy 8 Future strategy 9 Upgrade Benefits 9 Performance Measurement 12 The Approach 12 The Outcome 13 Upgrade Plan Achievements 14 Conclusion 15 Bibliography 17 Introduction Popularly known as the LU or Tube, the London Underground was conceived about 140 years ago, making it the world’s oldest subsurface transport system. This innovation transport network started with a six kilometre line connecting Paddington to Baker Street and, further, to mainline stations above the ground in the city of London. Currently, LU comprises or more than 400 kilometres of railway track, serving 275 main stations, while traversing across 12 lines. The LU provides transportation to over a billion individuals annually, a number almost equivalent to that, transported by the National Rail Network (NRN). LU’s land portfolio of more than 4,000 ha, a labour force of more than 19,000 individuals, and its coverage of most parts of London, Essex, Buckinghamshire and Hertfordshire, all serve to show the immense significance of this transport system. The Transport for London (TfL) is a public institution currently tasked with the responsibility of managing LU and other modes of transport throughout London. The principal strategy of the TfL is to ensure excellent performance of London’s transportation network, making it distinctive and more efficient in comparison to other cities around the world, while providing London dwellers with ample access to transportation. The TfL also strives to raise the performance standards of the LU in regard to environmental protection, hence making the system a global leader not only in addressing the challenges of urban transportation, but also in environment conservation. Significant changes towards the better have already been attained in the mentioned efforts, but there are still prevalent challenges, especially in upgrading the Tube to modern standards. Background Based on historical analysis of the London Underground, major development inhibitors have been present, and particularly under investment. Poor financial backing, prior to alteration of managerial structure, had rendered the LU outdated and unreliable. The principal challenge of the body responsible for managing the LU is, therefore, attempting to continually develop a safe and reliable transport service (Great Britain Parliament House of Commons 2010, p. 42). It is, however, imperative to note that while safety and reliability are crucial attributes of an effective transport service, they should not be the sole focus of management. Other features should be accorded equal attention, and these include, time taken during travelling, as well as, quality of services offered in the course of the journey. This is because; most passengers require a fast mode of transportation, especially in the contemporary economic environment where time is a crucial resource. Quality should not be overlooked, since; if customers are granted comfort and proper service during the travel, there is a high likelihood of using the LU other than alternative means of transport. Quality of transportation and proper care of passengers are, clearly, features that London Underground’s members of staff hold with utmost regard. This is evident from the staff’s ease of accessibility and constant willingness to help passengers whenever need arises. The extensive consideration of quality is also apparent from the installation of high-tech security and information systems, which increase customers’ convenience when using the LU. Additionally, there are numerous and regular investments to increase the Tube’s accessibility for passengers (Dunwoody 2008, p. 102). Nevertheless, the management and effective running of the LU is not devoid of challenges. The primary challenge is to sustain constant transportation of passengers, while still trying to transform the Tube to fit the standards of a modern railway transport network. This challenge is characterized by customers’ regular complaints of delays and under-funding of the project, although this was mainly in the past. The problem of underfunding is currently being dealt with, through extensive investments by the government, aimed at improving the entire transportation network. The additional funding is particularly aimed at increasing the carrying capacity of the London Underground, necessary to cater for increasing demand for urban transportation (White and Ball, 2002, pp. 76-77). In effect, the swiftness and extent of refurbishment currently occurring in the London Underground has not taken place in more than six decades. This implies that major changes are being executed, slowing down the LU’s services, especially considering the fact that this transport network was the original underground system thus warranting extensive alterations. Discussion Public Private Partnership The Transport for London (TfL), a public organization, took over the LU’s management responsibilities from the department of transport in the year 2003, following increased concerns in regard to the structure characterizing Public Private Partnership (PPP). The British Government initially settled for the PPP structure, with the main aim of solving the problem of serious intense under funding that had seen the LU deteriorate in terms of track quality, as well as, trains and other equipment becoming obsolete. The PPP model gradually oversaw the yearly investment increments in renovation of London underground (Marko, 2012, pp. 105-106). The contractual agreement between the British government and TfL was stipulated to last for a period of 30 years. Based on provisions of this PPP contractual accord, duties were to be apportioned among the companies involved. For instance, the three companies responsible for infrastructure development were supposed to upgrade LU’s stations, tunnels, signals and tracks, as well as, the rolling stock or wheeled vehicles owned by the London Underground. Additionally, the LU’s network was apportioned among the three infrastructure development organizations to ease the work load. For instance, LU’s lines including the Northern, Piccadilly and Jubilee were covered under the PPP accord. The remaining infrastructure organizations are responsible for the Central, Bakerloo, Waterloo, and Victoria lines, as well as, the District, Circle, City & Metropolitan and Hammersmith lines. Further, the contract provided that, the TfL was supposed to attain a specific level of asset performance on a daily basis. In addition, the TfL is expected to constantly upgrade these assets, so as to allow future improvement of the LU and sustain its long term performance. To uphold checks and balances for the TfL’s performance, this organization is liable to financial penalties in case of failure, as well as, monetary incentives to bolster effectual fulfilment of parameters stipulated in the contractual agreement. In the middle of year 2010, the LU lines became a formal subsidiary of the Transport for London (Marko, 2012, p.107). Contractual performance The 30-year contractual agreement between the British government and TfL undergoes extensive review after a period of 7.5 years. For instance, the contract with Tube Lines', one of the infrastructure companies, underwent review at the end of the year 2002. Additionally, the LU’s management have to publish a report showing the performance of all its subsurface lines. Asset management Following the signing of the PPP contract and consequent development of the Tube, the TfL’s management has received recognition for proper management of the LU’s assets. This performance recognition came in form of momentous engineering accreditations. The LU was the first railway operator from the UK to attain the prestigious PAS55 certification, which is British asset management standard acknowledged globally. Achieving this certification in the year 2011, confirmed that the LU is currently engaging efficiently in the Upgrade Program efforts. It is imperative to note that, this certification covers all assets of operation like tracks and rolling stock; civil structures like embankments, as well as, systems in diverse stations like fire protection. Metronet Case and PFI In the middle of the year 2008, the Metronet Rail SSL Limited and Metronet Rail BCV Limited, two of the infrastructure development companies in the PPP contract, were effectively absorbed under two TfL subsidiaries. At this time, Metronet was a significant participant in the scheme referred to as, Private Finance Initiative (PFI), which sought to guarantee that the private sector actively got involved in development of public services. However, conflicts emerged in regard to profitability of the upgrade program, and it became apparent that public and private profit projections bore no similarity. The British taxpayers were also forced to deal with the immense impact of the huge risk associated with PFI. In this case, legislative money transfer strategies were utilized to effectively execute the monetary carry-overs. The transfers brought to an end, the PPP contractual arrangement that existed for two thirds of LU’s network (White and Ball, 2002, p. 78). This is because; shortly after striking the deal, issues negating the contract began to come up. For instance, constant objectives’ conflicts between participating parties started to rise, and involved companies largely disagreed with the stipulated contractual terms, even though they had agreed earlier. Further, the government acted as though it had purchased a contract based on fixed price and expected outcome, thus failing to account for changing concerns. In contrast, the partisans from the private sector appeared to have signed an agreement with a wide array of unclear terms. Additionally, risks were not transferred to private parties, making the public bear the larger financial burden. The extremely high costs of transactions were not apportioned among involved parties, thus raising the ratio of debt to equity. As a result of the numerous conflicts between parties involved, Metronet sunk into bankruptcy (Pynes, 2009, p. 325). Strategy The primary strategy of LU’s management is to combine service reliability, with the exemplary customer care standards, in order to foster popularity of the LU among passengers. Thus far, the LU is popular for its swiftness and expediency. For this reason, the LU promoters’ main aim is to increase the service’s reliability, through hiring highly trained staff members, installing flawless systems and ensuring that LU’s transport system is running smoothly, thus facilitating speedy improvement to counter delays (Brunsdon, 2006, pp. 2-5). Research conducted by LU promoters sought to evaluate passengers’ perceptions of the service’s quality. The outcome of the survey revealed that, customers value travel quality, as much as they appreciate safety and reliability of the transportation system. This serves to show that, the LU’s stations’ distinctive design is meant to improve customer service quality. To foster quality, LU’s members of staff are easily available, and always willing to help, an aspect the management intends to uphold. Another significant quality upholding strategy is installation of appropriate information systems to promote the LU’s convenience for passengers (Brunsdon, 2006, pp. 10-13). Future strategy In the future, the London Underground’s management should replace signals, tracks, as well as trains, to keep up with changing times and increase working efficacy. Another imperative strategy would be to constantly update and upgrading activity on LU’s website, thus enabling customers to plan their schedules effectively in case of any disruption (Doherty and Horne, 2002, p. 18). The website should also have a customer interaction interface to build passengers’ confidence in the railway transportation system, while providing constructive suggestions for improvement. Upgrade Benefits According to Nash, Coulthard, and Matthews (2004, p. 317), there would be an increment in the number of trains working in the stations. Additionally, an increase in the frequency of the trains’ travel times would be experienced. Consequently, there would be an increase in the movement capacity, meaning that more individuals would move across the train network. Therefore, having latest trains in the network would make the system more efficient and reliable. This will result to better access to the trains for passengers, without experiencing any difficulties. All the same, appropriate measures should be adopted in reducing congestion within the stations during the busy periods. For example, adding the number of alighting and boarding platforms along the line would reduce overcrowding in the stations. Moreover; it will be necessary to introduce extra safety elements, so as to increase passenger’s security. Every component of the upgrade is designed to improve transportation of passengers in the train network. There has been slow development and upgrade in the train systems because of underfunding of the London Underground for several years. The underinvestment has led to minor updates technologically, an aspect which is extremely imperative in ensuring that the system is per the global standards and also has competitive advantage over the other modes of transport. The initiatives which are being taken as per provisions of the PPP are also slow in implementation thus causing a lot of unnecessary discomfort to the passengers, due to the work in progress. Despite the fact that London Underground authorities argue that working on a single line at a time, this is not effective for testing as well as signalling, their mode of working is disrupting the smooth running of the train network. Therefore, it is better to have extended closures with less transportation issues (Hughes, 2012, pp. 80-83). In addition, there is no provision of night shifts which would be better because they would be able to work all through the night and this would speed up the work and also reduce passengers’ discomfort the during the day. The night stretch would also provide ample uninterrupted time constructing, signalling, as well as, testing the efficiency of the upgrade. Another issue is that construction is designed to takes place during the weekend. This is a big issue for numerous individuals travelling on the weekend. The construction also causes a lot of closure on the train network which is a principal disruption of people’s travelling plans (Bovaird and Loffler, 2009, pp.43-47) As mentioned, the London Underground experiences extremely recurrent closures. This is a phenomenon that is not common in other train services all over the world. This is attributable to the fact that there have been fewer investments in the London Underground since the time it was implemented in 1863. Additionally, there has been a constant increment of demand for the train services. In comparison to the New York and other metropolitan railway networks in the world, the London Underground does not hold four track systems, thus its inability to provide 24 hours services. In addition to the improvements being done, the failure to provide services throughout the day and night has led to the further inefficiency of the network. The complexity and size of the London Underground is another issue that is accentuating its inefficiency. This is because, the system is bigger than even the one covering Paris or Singapore. The length of the London Underground track is approximately 249 miles in comparison to the Paris and Singapore tracks which are 133 and 56 miles respectively. Therefore, there is a lot of time and manpower that is needed to maintain the London Underground infrastructure (Hughes, 2012, p. 519). Performance Measurement As indicated previously in the discussion, the London Underground train system contract is 30 years with a measurement review of performance being conducted after every seven and a half years. The London Underground management is responsible for the PPP contracts; so as to make sure that there is delivery of maximum value (Nash et al., 2004, p. 318). A report concerning the issues of the train system is published every year. The report usually revolves around the PPP contractual agreement, as well as, the London Underground performance. Additionally, the report includes the subsequent steps to be taken in ensuring that appropriate improvements are made as per the promises made. Therefore, four weekly reports are published by the London Underground providing information about maintenance, in addition to the ongoing work in the train system. To achieve this, the London Underground is in partnership with one of the largest, most highly ranked profiling company, thus ensuring that, the management and development of the infrastructure in the London Underground is completed in time. The Approach The London Underground Limited (LUL) is a public body that is responsible operating and maintaining London’s metro system. Price Waterhouse Coopers, an auditing company, reviewed options available for the development, management and financing, of the London Underground. Following the review, the company came up with a proposal for the system to adopt a Public Private Partnership. This was embraced by stakeholders, and the London Underground consequently got apportioned into a single operating organization and three infrastructure organizations. The companies created would be responsible for three lines. This partnership entailed a ?37.7bn cost which, according to the proposed PPP accord, would be distributed over 30 years. Additionally, there was a commitment of ?4.6bn private funding. Further, the remaining funds got allocated to the infrastructure companies as annual payments (Richards and Smith, 2002, pp. 32-36). Completion of the first phase of the contract was on December 31st, 2002. This was basically a stage of the project dealing with assets transfer. The rest of the Public Private Partnership included transfer of the other two groups which came to a close in April in 2003 (Flynn, 2012, pp.54-55). The Outcome There is an underlying innovative commercial structure in the PPP deal. These specifications are mentioned in the contracts that the particular infrastructure organizations are supposed to maintain, as well as, increase performance of the London Underground Network. Therefore, a wide range of parameters has been set, in order to avail the required systems’ character and capability. It is also important to note that, there are arrangements preset, to ensure that the public sector’s interests are protected. For that reason, quality services should provided to members of the public. So as to measure performance of the Public Private Partnership, the contract provides that a review should be done every 7.5 years. Settling of any disputes is done by the “legislative arbiter” who is usually called in to assess the situation after every review. These positions were created in the new legislation. This means that the deal is inclusive of issues covered under the privatised utilities regulations. The financial tools, as well as, the commercial instruments being utilized in the London Underground have not been used in another Public Private Partnership (Nash et al., 2004, pp. 319-320). Upgrade Plan Achievements According to Hughes (2012, pp.33-37), various parameters can be utilized to assess the performance of the Public Private Partnerships. In the London Underground, indicators reveal that the partnership has made numerous improvements. This is evident from the fact that by the year 2010, the Victoria line of the LU had established a new control centre coupled with a new track, in addition to a new signalling framework. This means that the innovations would also be introduced in the newly acquired trains. A new line currently running across the Metropolitan line has new air conditioned trains, which are the first of their kind in the London Underground. Upgrades in the Jubilee line are underway and the line is also nearing its completion. It is significant to note that; in 2006 the new Wembley Park station was re-opened, thus ensuring that the London Underground has the capability to accommodate the constant increment in passenger demands. An upgrade in the Waterloo & City lines, has also led to 25% increment in the functioning capacity of the system. The Heathrow Terminal was the first extension which was done in addition to the Jubilee line and this has also increased passengers’ travelling capacity greatly. Further, the Wood Lane and Tube station got opened in 2008. Wood lane is made in an impeccable design and it is also accessible from different stations thus making it better and more accessible for passengers. Consequently, there has been a noted congestion level in the most imperative stations. Additionally, there have been principal redevelopment at the King's Cross which has led to an increase in capacity of the extremely significant station by four times. There is a new communications system that has been set up and it is also functional. This helps passengers to have access to vital and comprehensive information about the trains they want to board, thus slightly reducing the noted congestion in stations (Nash et al., 2004, p. 321-324). Conclusion The London Underground line is not only one of the oldest transportation systems in the world, but is also one of the largest and complex systems in the transportation industry. Therefore, in order to cater for the needs of the passengers, governance of the system should be distributed fairly among the stakeholders, so as to foster their capability to deal with any budgetary restrictions. The Public Private Partnership with TfL is one of the recent developments in the governance of the London Underground, as well as, in the shift of management regarding the underground trains. The Public Private Partnership which is currently managing the London Underground has been under scrutiny for quite some time. This is because the PPP is supposed to adhere to extremely aggressive performance standards. Therefore, there are strict standards and proper measurement standards formulated particularly for managing the different parts of LU’s system. For instance, maintenance schedules, train availability and satisfactory customer services should be maintained. For the partnership to be strong and successful, some private companies like Metronet and Tube were included in the system (Nash et al., 2004, p. 325). This strategy was implemented in a way that there will be a notable increase in the performance of the London Underground. There are outstanding improvements in the performance, but there is more work to be done in order to make the train system more reliable and efficient for passengers. Nevertheless, there have been several complaints regarding the PPP for improvement of the London Underground. This can be largely attributed to the fact that there were increased delays in the stations, which is a major loss prompting other stakeholders to question this private-public partnership (Ferlie, Lynn, and Pollitt, 2005 p. 110). Additionally the TfL is solely responsible for the running of the system’s system despite the fact that the 30 year service contracts awarded were part of the PPP. It is also evident that there are shortages in funds, which is a challenge that must be effectively addressed in order to guarantee the success of the system. Bibliography Bovaird, T and Loffler, E .2009. Public Management and Governance, London: Routledge Brunsdon, C. 2006. A fine and private place: the cinematic spaces of the London Underground. Screen, 47(1), pp. 1-17 Doherty, T., and Horne, T., 2002. Managing Public Services- implementing change, 2nd ed., London: Routledge, pp. 16-21 Dunwoody, G., 2008. The London Underground and the Public-Private Partnership Agreements, 2nd ed., London: The Stationery Office, pp. 101-107 Ferlie E, Lynn L, and Pollitt, C. 2005.The Oxford Handbook of Public Management, Oxford: Oxford University Press Flynn, N. 2012. Public Sector Management, London: Sage Great Britain Parliament House of Commons, Transport Committee, 2010. The performance of the London Underground, 6th ed., London: The Stationery Office, pp. 34-46. Hughes O. 2012. Public Management and Administration: An Introduction, Basingstoke: Palgrave Macmillan Marko J. 2012. The problematic object of the London Underground. Architectural Research Quarterly, 16, pp 105-107. Nash, C., Coulthard, S. and Matthews, B. 2004. Rail track charges in Great Britain – the issue of charging for capacity, Transport Policy, October, pp 315-327. Pynes, J., E., 2009. Human Resources Management for Public and Nonprofit Organizations: A Strategic Approach, 6th ed., USA: John Wiley and Sons, pp. 323-345. Richards, D and Smith, M. 2002. Governance and Public Policy in the UK. London: Sage White, P. and Ball, J. 2002. Experience of National Railways Privatisation and of Vertical Separation in Metro Systems, Trasporti Europei, 20(21), pp 76-88. Read More