Delivering Outcome-Based Services To Improve India’s Roads

For this model to work effectively, it is important to take a long-term view. So the service provider needs to be encouraged to deliver good services from the outset, but there must also be rewards to promote continuous quality of service over many years. This is achieved firstly by awarding contracts which would last for many years – normal practice for highway concessions, but less common for local initiatives such as small-scale technology installations. The provider is then rewarded for the ongoing service, which in turn, requires good availability and maintenance of the supporting infrastructure.

This is not to say that the public sector can just award a long-term contract and then sit back and leave everything to the service provider. Priorities change over time and new ideas and expectations come along. This will inevitably lead to demands for changes in service levels or to provision of whole new services. This flexibility needs to be built into the prime contract. But to work effectively, all stakeholders must work together as in a partnership.

This model exposes a current problem, usually in the Indian public sector contracting system, where the contract is typically awarded to the L1 or lowest price bid with no consideration given to the relative quality of solutions. In Europe, it is commonplace for public sector tenders to be evaluated on the basis of 70% quality marks and 30% cost marks so that the “best value” tender is selected rather than simply the cheapest. Cost is also normally calculated as “through life” and will take into account consequential costs (and savings) beyond the tenderer’s bottom-line price. This scoring model can be used to ensure that a good service is provided not just at the outset but is also maintained for many years. Service-based payments serve to incentivise this focus on quality even more.

Everything described so far follows the principles of outsourced service delivery which apply worldwide. But it is essential for service providers in India to understand that they cannot drop an existing operational model or technical solution into a different environment and tweak it to fit in it. This is never more true than on India’s roads.

Techniques and technologies which have been successfully applied in countries across Europe and North America may prove to be less than effective for Indian road conditions. This is not just due to the Indian driving habits, but other fundamental differences as well such as the low cost of labour (relative to technology costs), the high proportion of two-wheelers and the absence of accurate national databases of drivers and vehicle owners.

This makes localisation the most important aspect of any service and solution design.

The use of Intelligent Transport Systems (ITS) technology poses particular problems in India. The premise underpinning most technology developments across the world is that technology is cheap and available, and labour is expensive and scarce. So business cases are founded on the idea that investment in technology will improve automation and so, reduce labour costs. In India, at present, the break-even point for such a business case is often at a very different level – so much so that just the ongoing maintenance costs of new technology may exceed the cost savings for the labour being replaced, that too without taking into account the initial implementation costs. So the business case for services in general and technology in particular need to consider other factors such as road safety, queues and congestion or toll revenue leakage.

Effective, localised service delivery can only be achieved by combining expertise from across the world with a deep understanding of local conditions and issues. Even then, solutions to specific problems are likely to take time to evolve. Introducing any new service provides a learning curve for all those involved.

Motorists quickly adapt to innovations – but not always in ways that are predicted. Indian motorists may react to new schemes in ways that are quite different to similar situations in, say, the USA or the UK. It is important to try to predict how local conditions will work out, and critical for the service provider to be able to adapt quickly to any unforeseen consequences – which, of course, an outcome-based service contract will enable.

 

Chris Bax

Director

Serco Transportation Systems Technology, UK

(As Director of Serco’s Transportation Systems Technology unit Chris, who has 18 years of experience in the traffic systems industry out of a total of 23 years with Serco, is currently responsible for maintaining UK and international relationships with key clients in the public and private transport sectors. He has the overall responsibility for setting the vision and strategy for Intelligent Transport Systems in this FTSE100 business).