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V/Line offers an important service to regional communities—it provides Victorians with access to services, education and employment across the state. Closer to Melbourne, V/Line also services many rapidly growing outer suburbs, and demand for these services is increasing.
V/Line operates and maintains a fleet of 372 passenger trains and carriages, and 3 520 kilometres of rail track used by passenger and freight services. More than 1 250 V/Line-branded coach services also operate every week, connecting the rail network with regional communities not serviced by trains.
From 2007, V/Line operated under franchise agreements with the Director of Public Transport. Since 2013, it has been operating under services agreements with Public Transport Victoria (PTV) to deliver safe, punctual and reliable rail and coach services for regional Victoria. As a state-owned enterprise, V/Line also reports to the Department of Treasury and Finance (DTF) and the Department of Economic Development, Jobs, Transport and Resources (DEDJTR).
In 2015–16, V/Line carried 17.7 million passengers—16.3 million on trains and 1.4 million on coaches—an increase of 88.3 per cent since 2006–07 and well beyond V/Line's expectations.
Several factors have contributed to the rapid growth in patronage, including the implementation of the Regional Fast Rail project in 2006, the completion of the Regional Rail Link (RRL) in 2015 and population growth in outer Melbourne and regional areas. These factors have put pressure on V/Line's services to incorporate features of an urban commuter network alongside its regional transport services.
A major challenge for V/Line is to cost-effectively manage the expected growth in patronage while improving performance.
We examined whether V/Line has delivered effective and efficient public transport services and whether it is adequately prepared to sustain and improve performance in the future.
ConclusionV/Line has not successfully dealt with the challenges it has faced over the past decade. However, it has recently started to turn this situation around and is now better informed about the risks and challenges facing its operations. It now has a strong evidence base to support its asset management, and a new management approach to monitoring and dealing with operational and performance issues.
V/Line was not prepared for the strong growth in patronage and the resulting increase in service demand following the opening of the RRL, which fundamentally changed the nature of its operations. V/Line did not foresee this growth or fully understand the causes of its poor performance because it lacked the necessary capability. It also lacked focus, until recently, on managing its assets.
Consequently, V/Line's performance over the past 10 years has mostly fallen short of its targets and community expectations, despite infrastructure improvements and timetable changes.
The most significant impacts on V/Line's performance have been:
V/Line's focus on achieving cost savings has improved its efficiency across a number of indicators, although it cannot demonstrate it is making the best use of its funding. It has not actively measured and benchmarked the efficiency of its passenger services since 2013.
Deficiencies in the basis of the thresholds and targets used to measure performance, and in institutional arrangements, have not supported effective planning, monitoring and governance of regional passenger services. The lack of clarity in the roles and responsibilities of public transport portfolio agencies has hampered V/Line's ability to address performance gaps and deal with emerging issues.
The establishment of Transport For Victoria (TFV), with its explicit focus on planning, is a key development with potential to strengthen governance in the transport portfolio.
FindingsV/LINE'S OPERATIONAL PERFORMANCEV/Line has failed to meet key service criteria for the operational performance of its passenger services, as specified in its services agreement and in State Budget papers, particularly during the period July 2015 to March 2017.
In early 2016, V/Line's train services were reduced, and in some cases replaced by, road coaches. This was due to the concurrent issues of excessive wheel wear on VLocity trains and restrictions on the metropolitan network caused by the failure of boom gates to activate on time at the level crossing in Dandenong on the Pakenham line.
During the current services agreement, V/Line has not been able to consistently meet punctuality targets for its train services.
V/Line measures and reports train punctuality and reliability against the timetable communicated to passengers in PTV's journey planner, rather than the master timetable. This approach means that V/Line's reported performance does not represent its actual performance, or necessarily reflect passengers' experience, especially when there are significant service changes. This was highlighted during early 2016 when, despite the wheel wear and boom gate problems—and the replacement of 350 trains with coaches every week—V/Line's publicly reported performance suggested that little had changed.
When trains do not run on time, some passengers may miss connections with other public transport services. PTV, which is responsible for coordinating public transport, does not monitor V/Line train connections with regional town buses and is not aware of the extent of this problem.
Congestion on the shared metropolitan and regional network is one of several challenges V/Line faces in meeting punctuality targets. V/Line operates more than 32 500 services a year across the metropolitan network, and its trains fail to consistently arrive at the metropolitan boundary in time to use their scheduled path. This highlights critical dependencies for V/Line, particularly at interface locations on the regional–metropolitan boundary.
Completion of the RRL project in June 2015 was expected to alleviate conflicts between metropolitan and V/Line services on the western and south-western lines, and improve punctuality across both networks. However, the full benefits of segregating the track from the metropolitan network were not achieved. Punctuality on the western corridor has been significantly lower than it was before the RRL was implemented, mainly due to the wheel wear issue and the significant growth in patronage on those services.
V/Line imposes speed restrictions on the rail network to ensure the safe running of trains, but the restrictions result in longer journey times for passengers and reduce the punctuality of trains.
CUSTOMER SATISFACTIONThe methods that V/Line, PTV and DEDJTR use to record and report customer satisfaction internally and publicly are inconsistent.
PTV conducts a quarterly customer satisfaction monitor (CSM) survey on both V/Line trains and coach services. PTV uses a subset of the results of the quarterly CSM to assess V/Line's performance under the services agreement. These results vary significantly from those publicly reported, due to the different assessment criteria used.
The scale that V/Line uses internally to track customer satisfaction differs from the scale that PTV and DEDJTR use to publicly report customer satisfaction, and the two approaches produce different results for the same periods.
The CSM survey has some limitations as a tool for measuring customer satisfaction, so V/Line introduced its own monthly measurement survey in 2016. This provides regular and detailed insights that allow V/Line to identify specific areas of dissatisfaction, resulting in a number of service improvements.
TRAIN LOADINGSGrowth in patronage increases train loadings and, if not well managed, results in passengers being unable to board a crowded train or experiencing an uncomfortable train journey.
The increase in passenger numbers following the opening of the RRL and new stations in metropolitan areas—Wyndham Vale and Tarneit—have resulted in almost a third of V/Line's peak services consistently exceeding the maximum capacity of seats available at the busiest point.
Although V/Line internally tracks train loadings, it is not required to meet any specific standards. The absence of a load standard in the current services agreement means we were unable to assess the extent of any load breaches or whether overcrowding is occurring.
To cater for increased service demand and to transition to more commuter-style services, V/Line is modifying new trains, including increasing seating, and is also preparing for more services with customers standing for part or all of the journey.
This will require a significant shift in V/Line passengers' expectations, especially for those who have historically experienced adequate seating availability. V/Line will need to develop a clear communication strategy to address its passengers' perspectives and needs.
PERFORMANCE MEASUREMENT FRAMEWORKSPTV has not adequately documented the basis for contractual thresholds and targets, or the State Budget output targets that it uses to assess V/Line's performance. As a result, it is difficult to determine whether the thresholds and targets represent a reasonable measure for assessing performance.
In our 2012 report Public Transport Performance, we noted that in 2008 V/Line requested a review of its punctuality threshold because it was not evidence based and was practically unachievable, given its resources and operational constraints. The former Department of Transport did not revisit this target when it revised the contracts in 2011, but indicated that it would review the target on completion of the RRL project. This did not occur.
Data used to measure performance varies in its reliability due to critical shortcomings in V/Line's and PTV's verification of reported performance.
For V/Line coach services, performance information relating to reliability and punctuality is self-reported by the operators contracted to provide the services. This approach has obvious and inherent risks—such as operator error and bias—which can affect the reliability of the data. To mitigate this risk, the coach contracts allow V/Line to conduct audits, which V/Line conducted for the first time in May 2017 for a limited number of services.
These issues raise concerns about the accuracy of the data submitted by operators and undermine the effectiveness and integrity of the performance regime.
V/LINE'S FINANCIAL PERFORMANCEPTV reviewed V/Line's financial performance in 2013 against international regional rail operators. It found that V/Line performed below average on most key efficiency indicators measured.
V/Line does not routinely monitor and report on the efficiency of its services. A significant amount of V/Line's managerial and board focus has been directed towards delivering the cost savings target set by PTV of $60 million over three years—$20 million per year from 2013–14 to 2015–16. Although some progress was made in delivering savings, this target has not been achieved.
The benchmarking comparisons in the 2013 review considered V/Line passenger services as a single operation. To better understand its efficiency, V/Line needs to collect data according to the four different types of services it delivers—commuter rail, frequent peri-urban all-day services, country long-distance trains and coach services. Each group's performance could then be compared with similar operations in other jurisdictions. V/Line currently does not have the systems in place to accurately produce separate data for the four types of V/Line passenger services.
To assess the efficiency of V/Line passenger train services, we established a set of agreed measures in consultation with V/Line and PTV. These showed that during the period 2012–13 to 2016–17, V/Line's efficiency improved for most indicators.
V/Line is also required to meet community needs in the way it operates its business, which affects its ability to be commercially viable. The community requirements that affect V/Line's business performance should be identified and measured to enable a comprehensive assessment of the efficiency of V/Line services.
ASSET MANAGEMENTIn the past, major periodic maintenance funding has not kept pace with the levels of funding required to maintain a fully operational and reliable passenger network. This has resulted in a deterioration of the network.
Until recently V/Line did not have a comprehensive understanding of the condition of its assets. It was therefore unable to develop sound long-term asset management strategies or to make evidence-based decisions on how it funded and prioritised maintenance and renewal work.
In 2015, V/Line changed its asset management approach from 'fix on fail' to 'predict and prevent', based on known asset condition. V/Line has now identified its maintenance backlog and has prioritised investments according to criticality and risk. The scale of funding required to address the maintenance backlog is significant—approximately $534.8 million across the entire V/Line network.
Asset failures limit V/Line's ability to deliver agreed service levels, resulting in customer delays and service cancellations. Many of the vehicles in V/Line's rolling stock fleet have been in service beyond their expected life, which is typically 30 years. Consequently they have a high failure rate and require significant investment in replacement and refurbishment.
To begin addressing the backlog, V/Line received a significant boost in maintenance funding for infrastructure assets in 2016–17.
GOVERNANCEDEDJTR, PTV, V/Line and VicTrack—which all have specific responsibilities for Victoria's transport-related land, assets and infrastructure—are jointly responsible for planning and operating regional passenger services in Victoria. There is a lack of clarity in the roles and responsibilities and overlapping functions between these agencies.
Recent reviews by V/Line and DEDJTR have found that inadequate governance procedures directly contributed to V/Line's funding shortfall of $50.5 million for the 2015–16 financial year. The complexity of governance arrangements—with overlapping functions between the agencies and multiple communication, reporting and oversight channels—has contributed to uncertainty in funding and budget planning.
Poor timetable development processes and inadequate collaboration between agencies on a new train timetable introduced in 2015 resulted in significant crowding on some lines and an initial drop in punctuality. The timetable was not tested and did not reflect operational constraints such as the availability and capabilities of V/Line's rolling stock.
Following greater collaboration between V/Line and PTV using a more robust timetable development process, the January 2017 timetable changes were successfully implemented.
Due to recent operational and asset management reviews, V/Line is now better informed about the likely risks and future challenges, although the current transport portfolio governance arrangements limit its ability to address performance gaps and deal with emerging issues.
In April 2017, TFV became operational. Its role is to plan and coordinate Victoria's transport system and associated agencies. TFV could have a significant positive impact on the governance arrangements in the transport portfolio, although how it will address these issues is uncertain at this early stage.
RecommendationsWe recommend that V/Line:
1. strengthen its monitoring processes for measuring on-time running of trains and coaches (see Section 2.5)
2. improve its systems to collect and separately analyse and report operational and financial performance information between service groups—commuter rail, peri‑urban, country long-distance, and coach—and businesses, passengers and freight, to better understand performance in separate parts of the business (see Section 3.3)
3. undertake peer operational and financial performance benchmarking by service group with similar railways in other jurisdictions and devise a long‑term plan to improve efficiency (see Section 3.3)
4. use community service obligations to model and understand how they influence performance (see Section 3.3).
We recommend that Public Transport Victoria:
5. improve how it monitors and manages V/Line performance by:
6. work collaboratively with V/Line to:
We recommend that the Department of Economic Development, Jobs, Transport and Resources :
7. work collaboratively with Public Transport Victoria and V/Line to:
8. review the transport portfolio governance framework with a particular focus on clarifying the roles of key agencies and reporting and information flow (see Section 5.2).
Responses to recommendationsWe have consulted with DEDJTR, DTF, PTV and V/Line, and we considered their views when reaching our audit conclusions. As required by section 16(3) of the Audit Act 1994, we gave a draft copy of this report to those agencies and asked for their submissions or comments. We also sent a copy to the Department of Premier and Cabinet.
The following is a summary of those responses. The full responses are included in Appendix A.
DEDJTR, PTV and V/Line responded, accepting the recommendations, and providing a detailed action plan on how they will address them. DTF did not respond.
This article first appeared on www.audit.vic.gov.au
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