Client Situation

Our client, a state owned Metro design and construction company, intended to collaborate with the private sector for the operations and maintenance of a new state-of-the art Metro system.

The system comprises two lines of a total length of about 15 km, 18 stations and is fully automated (ATO), carrying at peak over 15,000 pax/hour/direction.

M-Prime was asked to develop the business plan for the system’s operations and maintenance over 15 years, encompassing all revenues, OPEX and renewal costs. The business case was used as an input to the full financial model developed by the financial advisor and the legal model developed by the legal advisor of the PPP project.

The way to problem solving

In this project, we collaborated very closely with senior technical staff of our client, as well as with the financial and legal PPP advisors.

Our approach in delivering the technical advice comprised the following steps:

Revenue estimation. Fare box revenue was based on ridership estimates and the proposed pricing policy. For ancillary revenue we used detailed benchmarks from similar systems appropriately normalized and adjusted.

Organizational structure and staffing plan considered our proposed client service strategy, the technical system and service requirements. This encompassed all aspects of client service excellence, operations, maintenance and sustainability.

OPEX. Based on the staffing plan and the related salary rates, we estimated personnel costs. Energy costs were based on a detailed operations plan. Other OPEX were estimated based on ops/maintenance requirements or benchmarks.

Renewal costs were estimated based on system technical requirements.

Impact

• Validated daily demand profiles and estimated yearly ridership for the 15 year period
• Proposed pricing policy and estimated fare box revenues
• Estimated yearly ancillary income, optimizing service offering
• Calculated yearly personnel costs based on detailed staffing requirements
• Estimated energy cost based on operational plan and benchmarks
• Estimated cleaning and security costs, spare part, insurance costs, outsourcing of E/M system maintenance and other costs based on benchmarks appropriately adjusted
• Quantified system renewal costs
• Developed the full income statement for the 15 year period and performed sensitivity analysis addressing major risks and opportunities
• Proposed Key Performance Indicators for system customer service, operations, maintenance, financial efficiency, and sustainability.

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