7 public transport project bungles

In just a few days Jeroen Weimar will take over the running of the Department of Transport and Planning (DTP). Oversight of procurement and operating contracts worth billions of dollars per year is a major part of its work.

Some have worked out fine. Others had problems like going over time, over budget or not delivering goods to the functionality envisaged.   

Reading and thinking about the issues faced is important for DTP to become a learning organisation that does not repeat past mistakes. Here's 7 projects or contracts that didn't go quite as smoothly as hoped.  

1. Scratch tickets. Introduced in 1989, this was a pre-electronic ticketing system introduced to facilitate the removal of ticket selling staff from the rail and tram networks. Passengers had to pre-purchase a card ticket and scratch away the foil for the day/time of travel. However many only did that when they saw an approaching ticket inspector so fare evasion was rife. Scratch tickets were eventually replaced with Metcard. Background here and here. 

2. Metcard. The successor to 'scratchies', Metcard was our first foray into electronic ticketing, Commencing from the late 1990s, tickets were purchased from machines with data encoded on a magnetic strip. The project went over time and over budget. Vandalism, unreliability and the inability to buy a daily ticket on a tram were major problems in the system's first five years. Only a few years after Metcard had been got to a reasonably reliable state, the government decided it was time to shop for a new ticketing system - more on that later.

3. Rail franchising Mark 1. Like scratch tickets this was a product of the state's 1990s austerity and a political belief that private sector provision was always more efficient than through a state instrumentality. By the mid-1990s the Kennett government under minister Alan Brown had greatly reduced operating costs for the train and tram network while delivering some service frequency increases. 

However they went a step further, following the UK in splitting and then franchising out rail operations to international bidders. The franchise contracts were based on diminishing public subsidy and sharply rising patronage but operators bid anyway, eager to shut rivals out. And the state went along, naively thinking they'd get a bargain. Operations were relatively reliable but operators were struggling, asking the government for more money. Then it fell in a heap with National Express pulling out and the whole thing being renegotiated. The surviving operators continued on a revised, more favourable agreement including a requirement to re-integrate divided systems and address a driver training backlog. 

Later rail franchise models left the risk with the government and were more generous to the operator. This put rail franchising on a more stable footing (free of the post-pandemic turmoil in the UK) but meant that hoped for financial savings were not sustained. 

4. Southern Cross Station public private partnership. The Bracks Labor government wanted a flashy new station to complement its investment in regional fast rail. However they also wanted to be seen as financially prudent given still raw memories of the Cain-Kirner government. A solution to get things done without incurring extra public debt was to do a private-public partnership deal to rebuild and operate the station for 30 years. A cash-cow earner for an unaccountable superannuation fund, Southern Cross is now poorly regarded by users for its broken escalators, blank passenger information displays, diesel fumes, declining retail and more. And the operating contract limits what government can do until it expires in 2036. 

5.  Murray Basin Rail Project. This is a project to standardise and renew rail freight lines in the north-west of the state funded by the state and federal governments. After difficulties the project stalled but then resumed. The state Auditor-General wrote a critical report in 2020. A summary of the project is here. 

6. Myki smartcard ticketing. Successive Victorian state governments have struggled with procuring and operating successive public transport ticketing systems. Much more than in other states, Victorians have seen few years in the last 35 that ticketing hasn't made news headlines. 

Myki was the smart-card based system intended to replace Metcard. After time and cost blow-outs the project was descoped before eventually being delivered. 

Myki serves regular commuters well but the non-availability of short-term tickets (one of the items removed from the scope) and the more recent removal of cash top-ups from buses has made it poor for spontaneous travel. That's something that Myki's successor under Conduent should sort out, though recent news items indicate issues there too. 

Former premier John Brumby has blamed poor advice received from the  Department of Transport, especially its recommendation of a poorly qualified tenderer in Kamco, for Myki's problems.    

7. Melbourne bus franchising. The state government in 2012 wanted to save some money. Despite warnings from others in the industry (arguably sore losers who can't be considered impartial) the state awarded the rights to run nearly a third of Melbourne's bus network (Melbourne Metropolitan Bus Franchise) to France-based Transdev. 

The deal indeed saved money according to the state auditor-general. However Melbourne transport managers and auditors typically don't ride buses. Thus their views were not sullied by on-the-ground facts.  Including Transdev losing control of graffiti and skimping on cleaning, to the extent of leaning on staff to clean buses in their own time. And, as would later be discovered in 2017 when Transport Safety Victoria ordered buses off the road, they were cutting corners on maintenance too with DoT apparently too unaware or aloof to intervene earlier. 

Not surprisingly Transdev lost the contract when it came up for refranchising, with Kinetic taking over. However the fleet management crisis didn't do them long term damage; Transdev is now back in Melbourne operating trams due to success in the most recent tram refranchising.   

Common themes

1. A desire to save money. Getting good value for money should be top of mind for every bureaucrat. So should saving money if there are better uses to which it should be put. But sometimes attempts to do this can backfire. For example the government had a choice to pick different contractors for trains, buses and ticketing who may well have performed better than who we got. Failing operators might have been 'called in' earlier but there might have been a temptation to hold off because proper resolution might involve spending money not budgeted or avoiding making necessary but industrially-unpalatable offsetting savings. Maybe more due diligence on real costs might have prevented the state falling for 'too good to be true' offers? Less naivety over who ultimately bears and pays for risk might also have helped. 

2. Information Technology. There seems to be something about governments and IT procurement that make it very high risk. Both Metcard and Myki were IT-intensive projects that ran over time and over budget with eventual delivery being less than envisaged. And there is a significant chance of history repeating with issues with Conduent's successor to Myki reported in just the last week. While Melbourne is the Australian capital with the most ticketing dramas it's not just us; both Brisbane and Canberra have problems right now. 

3. Internal expertise.  Our heavily outsourced model builds a wall between purchasers and providers. That can lead to those leading purchasing agencies not having much operational experience and giving poor advice to government. My look at the background of DTP executives indicated this could be a risk since few have long-term operational experience in the industry. Private operators are big international companies with many internal opportunities for an ambitious executive. Or they might jump over to another private operator or shift to consulting. Hopefully this is something that incoming Secretary Jeroen Weimar is alive to, if for no other reason that he himself has a much stronger background in public transport than the current secretary.  

4. Remoteness from the 'coal face' leading to not seeing or denying of problems. This was clearly a problem for the Transdev bus contract; I regard it as a contract management failure that problems were not fixed before Transport Safety Victoria had to intervene. Even the auditor-general was not immune, focusing too heavily on what it cost (a good story with savings obtained) to the exclusion of value delivered (a bad story with uncleaned and, as would later be revealed, unsafe buses) that might invalidate opinions formed from a desktop. Remoteness can also directly cost money, such as DTP losing control of and being deluded over the real extent of bus fare evasion.

5. Sensitivity over what to tell political masters. This is the frank and fearless advice thing. At their best departments use their hierarchy as a means to channel information up to senior management who are thus well equipped to make decisions, give sound advice to the minister and drive improved performance from operators. When performing less well the hierarchy might be a means for good ideas and knowledge from experts in the department's middle levels to be killed off in favour of what they think the minister wants to hear. The latter might seem to work for a short time but problems (and bad news coverage!) just fester and multiply as we have seen with various ticketing systems. It's worth mentioning that the 'killing off' mentioned above need not be a conscious act; leaders may just be poor communicators, ineffective internal advocates or even just be too eager to please. 

6. A management culture too accepting of mediocre performance. One path of least resistance might be to accept mediocre performance and avoid tough conversations with ministers, treasury officials, unions or franchise operators. The latter can spot weakness in DoT/DTP contract management a mile away. They will gravitate to only minimally satisfying contract requirements while maximising profits. As they are private entities with responsibilities to shareholders, I don't blame them for doing what privateers do. But it is also fair for taxpayers and riders to expect strong leadership from the department to encourage a high performance service delivery culture. Rail trouble-shooter Simon Lane argues that there have been times when Melbourne has had this leadership culture and other times it hasn't.    

Conclusion

I've outlined seven significant project bungles whose history is worth studying further for anyone who wants more useful, higher performing and more cost-effective public transport. 

Are there any I've missed? I'm conscious that I haven't covered the consequences of bad hiring choices that lead to mediocre day to day management or priorities. That can include poor judgement and being taken in by fashion. 

The recurring but fortunately now receding fad of flexible route buses or techbro grifter 'mobility as a service' stuff are examples. Both have wasted a lot of peoples' time by diverting attention from delivering the basics of good value good service every day. 

Management attention is limited and to manage means to make choices. Doing the right things and doing things right are both essential.    

Your comments on these are appreciated and can be left below.