Login
or
Register
Home
»
Trains Magazine
»
Forums
»
Passenger
»
Happy 80th Birthday, Empire Builder!
Edit post
Edit your reply below.
Post Body
Enter your post below.
<P mce_keep="true">[quote user="oltmannd"] <P>[quote user="Sam1"] <P>Once we understood the contractor's costs, we agreed on prices (revenues) that were designed to recover the costs and provide a modest return to the contractor. We agreed on a variety of performance standards, including customer satisfaction metrics, which would enable the contractor to increase his returns if he exceeded them. The contractor could also increase his returns through additional costs savings that he initiated. But the contractor had to share the cost savings with us to help prevent him from cutting corners and allowing quality to suffer.</P> <P>[/quote]</P> <P>You can greatly simplify the process and not need all those messy customer satisfaction metrics, et. al..</P> <P>It's this simple.</P> <P><STRONG>You specify:</STRONG></P> <P>-train schedule</P> <P>-car and locomotive supply agreement (X$ per loco per day and or mile, Y$ per coach per day....)</P> <P><STRONG>You ask bidders</STRONG>:</P> <P>-how much to I have to pay you for you to run the scheduled train on this route? </P> <P>The only caveat is that the winning bid has to be less that current level of subsidy AND be less than cost to operate "bare bones" sevice, so the bidder does not have incentive to take the money and run away.</P> <P>Winner gets paid a periodic lump sum. Winner sets fares, collects AND KEEPS all the revenue.</P> <P>Any cost savings, HE KEEPS.</P> <P>Any revenue gains thru better service, amenities, advertising, tour packages, etc. HE KEEPS.</P> <P>If he cuts corners on cost, it kills his revenue and he loses, so he won't do that.</P> <P>It's just like a regular old, for profit business. Efforts to improve service (and therefore revenue) are rewarded. Efforts to cut costs are rewarded. No messy performance standards and rating systems and schedule of incentives and endless bargaining and hauranging </P> <P>You win because the bid costs you less than current subsidy level.</P> <P>Operator wins because he has incentive to improve the margin by working the cost and revenue side of the equation.</P> <P>You win when the again when it comes time to rebid the service because better practices will have been found and exposed and following rounds of bids should come in lower. Good'ol competition.</P> <P>[/quote]</P> <P>We restructured our procurement and contracting processes on advice from Booze, Allen, and Hamilton, McKinsey & Company, and Planmetrics. It produced the results that we wanted. I am sticking with their advice, backed by 15 years of successful contract administration. </P> <P>Our experience taught us severable valuable lessons. One, the process is not as simple as you imply, especially for complex projects. Two, you can outsource everything (contracting is outsourcing) except management. Three, if the other guy can do it cheaper than you can, you need to ask why you cannot do it as cheaply. There are many good answers to this point, but since this is not a forum on contract administration, I think it is time to end it.</P>
Tags (Optional)
Tags are keywords that get attached to your post. They are used to categorize your submission and make it easier to search for. To add tags to your post type a tag into the box below and click the "Add Tag" button.
Add Tag
Update Reply
Join our Community!
Our community is
FREE
to join. To participate you must either login or register for an account.
Login »
Register »
Search the Community
Newsletter Sign-Up
By signing up you may also receive occasional reader surveys and special offers from Trains magazine.Please view our
privacy policy
More great sites from Kalmbach Media
Terms Of Use
|
Privacy Policy
|
Copyright Policy