August 2, 2010
Employment opportunities in this week's classifieds include two CEO positions and several high-level technical posts!
Transit Systems Work Smarter
BY SUSAN BERLIN, Senior Editor, AND JOHN R. BELL, APTA Program Manager-Communications
In these very challenging economic times, public transportation agencies are compelled to make difficult choices—primarily, whether to raise fares or cut operations to cover their expense—despite an increased need for their service. In fact, a recent APTA survey found that 84 percent of U.S. transit agencies have either done or considered these actions since Jan. 1, 2009.
Transit agencies, however, are reframing the issue, finding ways to work smarter through innovative technologies and more efficient use of their employees. Here are a few examples of how these systems are doing more with less.
Boosting Existing Ad Revenues
Sometimes a public transit agency can gain additional benefits and revenues from an underused existing asset. Allvision, a company based in New York City, is working with New Jersey Transit Corporation (NJ Transit) to increase billboard revenues while simultaneously decreasing overall signage.
NJ Transit had two specific goals when it signed on with Allvision in 2004: reduce the number of billboard faces throughout the system—more than 300 at the time—and increase revenue. The company’s plan has led to a $100 million increase in future projected revenues to the transit agency, including $30 million in upfront lump sum payments, along with a 65 percent reduction in overall outdoor advertising inventory.
Allvision began by reviewing and auditing NJ Transit’s existing contracts and identifying revenue opportunities, then worked closely with agency staff to create a strategic plan designed to meet specific objectives. The process also included Allvision standardizing NJ Transit’s outdoor advertising license agreements, restructuring all outdoor advertising location permits, and working through the environmental regulatory process regarding new and existing signs on system property.
Allvision Chief Executive Officer Greg Smith explained that his firm does not own or operate any form of outdoor advertising: “We guide clients in making the best decisions based on a number of customer-specific criteria.”
Another way of working smarter is to operate more efficiently. Miami-Dade Transit (MDT) has implemented its Service Efficiency and Restructuring Initiative (SERI), one of the largest bus system restructuring efforts in its history.
Introduced in December 2009, SERI eliminated route duplication and improved overall efficiency of the bus network by reconfiguring the operation into a modified grid pattern, feeding routes into major trunks or corridors. According to MDT Director Harpal S. Kapoor, this change saved millions of dollars in operational costs for the agency.
“The success of SERI is attributed to the rider data the department used from its new automated fare collection system, which came online in October 2009—a first for Florida,” he said. MDT recognized that the restructuring initiative forced more passengers to transfer, so it eliminated the transfer fee to mitigate some passenger inconvenience. Said Kapoor: “The restructuring of the bus system is estimated to save $12 million by the end of the fiscal year without any major impact to the riders.”
That isn’t the only form of working smarter underway at MDT, however. The agency uses proven business practices—Six Sigma processes and balanced Scorecard Reporting of Key Performance Indicators—to identify and correct gaps in its operations with a systematic approach for root cause analysis.
These techniques also have internal applications, he said, such as improving the percentage of on-time payment (within 30 days) to MDT’s vendors and improving the cycle time to recover claims and parts availability, thus reducing the number of buses down for parts.
“While major transit systems across the country have faced steep cutbacks as a result of the national economic downturn, we have been able to avoid major service reductions by using performance-based management, working more efficiently, and utilizing the latest technology to better allocate our resources,” Kapoor added.
Putting Data to Work
The term data management refers to finding new methods of using available information for the benefit of an organization—which can also lead to more efficiency and lower costs.
Since January 2008, the Greater Cleveland Regional Transit Authority (GCRTA) has been using TransitStat, a data management process. TransitStat uses information to define, measure, analyze, improve, and control critical operations—and, according to Jerome Masek, media relations and public manager, it “has cut millions out of our overtime budget.”
The program refers to a structured continuous management process that requires the frequent gathering, reviewing, and analysis of day-to-day government performance. The predecessors to TransitStat are the New York Police Department’s CompStat, which uses computer mapping and statistical data to capture crime trends, and CitiStat, designed by the city of Baltimore to track components of municipal government such as waste collection, road repairs, and housing enforcement.
At the core of the Stat process are ongoing biweekly performance monitoring forums, with results measured weekly. Transit department directors and their support staffs present graphs and charts to the general manager and deputies. The process can target areas that have had problems with underperformance, such as the various components of multi-year projects; inventory; maintenance productivity; and bus incidents, collisions, and crime.
Listening to Employees
Of course, public transit agencies must remember that their employees observe how things work (or don’t work) and are likely to have suggestions for management improvements. Community Transit in Snohomish County, WA, invited its employees to submit cost-cutting ideas as part of a “contest” called “Dollars & Sense.”
“We got some great ideas, most saving hundreds or thousands of dollars, but they added up,” said spokesperson Martin Munguia. These included:
* Publishing schedule books on newsprint rather than sturdier paper and limiting the press run, telling customers to hold onto their copy throughout the service change period. These actions saved about $30,000;
* Printing only the bus stop signs on routes that have changes instead of all signs; and
* Buying a milling machine to repair some bus parts in house rather than buying replacements.
In addition, since Community Transit had already cut its regular advertising budget, it turned to non-traditional media: explanatory videos uploaded to YouTube and linked from its web site and Facebook page, as well as a blog to discuss the changes. The agency also hopes to save money by referring passengers to its web site rather than publishing a service change booklet and incorporating local and commuter schedules into a single publication.
A more immediate problem for the system’s riders, Munguia said, was the suspension of Sunday and holiday service. “To help mitigate that for our customers, our board allocated $50,000 that will be used to set up a transportation assistance program operated through community service agencies,” he continued. “The point is to allow those people who have a trip they must take on Sundays and have no other options to call for assistance and get that trip filled. So, for a fraction of the cost of bus service in Sunday, we’ll be helping those most in need continue to get around.”
Sampling More than a Ride
Sometimes, working smarter means seeking out unexpected sources of revenue. Boston’s Massachusetts Bay Transportation Authority (MBTA), among other transit systems, is bringing in a steady stream of revenue--$80,000-$90,000 a year—by leasing its facilities to marketers who want to distribute product samples to the public.
MBTA has discovered the monetary benefits available through the distribution of product samples—or “sampling,” according to Peter Swan, manager of special projects. Sampling requires no extra services or staff, he added: “All we do is lease out the area they’re in—no police and no vehicles used. Station police keep an eye on the sampling crew to ensure the safety of both them and our passengers.”
MBTA began its sampling program about 10 years ago, and its clients since then have included Stonyfield Yogurt, Microsoft, Dunkin Donuts, and Starbucks. Dr. Oetker’s, a frozen pizza company from Germany, distributed 35,000 free frozen pizzas to MBTA riders.
The process of sampling is not restricted to product giveaways, Swan noted. To promote its flights to England, Virgin Atlantic installed red telephone booths in an MBTA subway station, attended by company staff dressed in certain clothes, from a Beefeater [Queen’s] guard to a Bobbie [police officer]. In a similar vein, Axe Body Spray conducted an in-station mini-drama in which a man sprays himself with the product and is immediately chased through the station by a throng of women!
Such activities require good communication at all levels, Swan emphasized. Sampling staff must ensure they do not impede traffic; MBTA customer service personnel and supervisors are present; and advisories sent throughout the system alert police and everyone from top to bottom.
“Once someone sees the value of what their clients are going to get, they keep bringing clients year in, year out,” he said. The latest effort? MBTA has begun advertising in an event-marketing magazine, which should, he said, easily double the number of clients.
The Name of the Game
More recently, naming rights have become a source of income for public transportation agencies. Just as sports and entertainment venues sell their naming rights to third parties, transit systems are finding revenue opportunities in branding stations and individual lines.
For example, in Philadelphia, the Southeastern Pennsylvania Transportation Authority (SEPTA) has entered into a five-year contract with AT&T, valued at more than $5 million, under which SEPTA’s Pattison Station will change its name to AT&T Station. The agreement also provides for station beautification efforts and improved communications tools such as new digital displays and signage.
Where did the idea come from? Rich Dilullo, SEPTA director of marketing and advertising, credited its outdoor display advertising firm. Pattison Station, he said, was a good fit for the naming program because its location—surrounded by sports facilities in South Philadelphia—is both heavily traveled and not part of an established residential neighborhood with its own name recognition.
“AT&T has a facility in one of the stadiums already and a sponsorship with the Phillies, so it already has a brand presence in that area,” Dilullo noted. In addition, AT&T is currently the only wireless carrier providing coverage underground along SEPTA’s Broad Street and Market-Frankford lines. The station is located at the south end of the Broad Street Line.
General Manager Joseph M. Casey called the naming “an exciting new step in SEPTA’s ongoing effort to help defray costs to customers and taxpayers by creating new advertising and sponsorship opportunities throughout the transit system.”
In Brooklyn, NY, station naming rights are just one component of a larger development package. Through a 20-year, $4 million deal with the New York Metropolitan Transportation Authority (MTA), Barclays, an international financial firm, will add its name to MTA New York City Transit’s Atlantic Avenue-Pacific Street subway station.
MTA spokesperson Kevin Ortiz explained that Barclays is purchasing the station naming rights along with a more major commitment to the Atlantic Yards site: naming rights for a new sports arena that ultimately will house the New Jersey Nets pro basketball team. Forest City Ratner has begun construction at the site, which will include construction of a new rail yard for MTA Long Island Rail Road as well as 336,000 square feet of office space, 6.36 million square feet of residential space, 247,000 square feet of retail space, and a 180-room hotel.
Individual stations are not the only targets for sponsorship. In Cleveland, two hospitals located on the bus rapid transit (BRT) route in the Euclid Corridor, originally designated the Silver Line, decided to partner and sponsor the new service, which opened in late 2008 as the HealthLine.
At the time that University Hospitals and the Cleveland Clinic agreed to the joint partnership with the Greater Cleveland Regional Transit Authority (GCRTA), Chief Executive Officer and General Manager Joseph A. Calabrese cited the importance of naming rights. “In Cleveland we have Quicken Loans Arena and the newly renamed Progressive Field, both world-class infrastructures and important to the city,” he said. “Without a doubt, the Euclid Corridor project falls in those categories, so I think that allowed us to get something like this done.”
The two medical facilities—both of which have major hospitals located on the BRT line—entered into a 25-year deal to pay $6.25 million. Additional funds may come from GCRTA’s plans to sell sponsorships for individual stations along the seven-mile line.
“Many people have associated this project with the health of the city, the health of the economy, and the health of the environment,” Calabrese said in 2008. “So the name is fitting.”
In addition, three sponsors have entered into 10-year contracts, at $30,000 each per year, for the right to put their names on specific HealthLine stations.
Challenge Drives Innovation
Necessity is the mother of invention, and public transportation systems are showing the nation how ingenuity can help the industry succeed, even with a difficult economy. Are there other innovative revenue-enhancing strategies currently in use? Based on this sample, the answer is likely a very strong “yes.”
Sidebar: Benefits of TransitStat
Leaders of GCRTA described the benefits of TransitStat—including shorter waits for phone callers, more miles between bus breakdowns, and less overtime—during the Host Forum at the 2010 APTA Bus & Paratransit Conference in Cleveland.
Gale Fisk, executive director of GCRTA’s Office of Management and Budget, described how the TransitStat process has saved the agency $15 million over a two-year period while also improving service. “People used to give the same tried and true urban legends for reasons,” Fisk said. “That doesn’t work anymore. Now you’ve got to back up what you say with real data.”
For example, the TransitStat team developed a way to save $2.3 million from the current year’s overtime budget by analyzing each situation by the workers, work type, and cause, then moving schedules and making other changes.
Also, by shifting employees to late evening and early morning hours and making other changes, GCRTA reduced its backlog of work orders by 65 percent, cut towing costs by $150,000 a year, and increased average miles between service interruptions to more than 8,000.