How can customer focus be strengthened in competitive tendering?

Document Type

Journal Article

Publication Date

2014

Subject Area

organisation - contracting, organisation - competition, organisation - performance

Keywords

Competitive tendering, Contracting, Public transport, Incentive, Performance based contract, Customer focus

Abstract

Award procedures, contract designs and the scope of contracts vary widely in public transport (PT). Notwithstanding obvious improvements of the technical quality, many authorities are not fully satisfied with the outcome of their tendered contracts. Dissatisfaction with patronage development and with the customer focus is widespread. Many contracts are not seen as sufficiently effective in creating a growing PT market share. Enhancing the focus on passenger needs seems essential.

There is no evidence that specific contract types or specific financial incentives can guarantee success in the passenger market. However, although tendered contracts obviously provide strong incentives to reduce costs, they seem to be weak in motivating the operator to care for passengers and create opportunities for expanding the market share of PT.

The paper examines the reasons for these weaknesses, drawing on professional experiences gained in a 15-years period. In particular, it analyses the functioning of the interaction between the authority and the operator and the role of individuals in contract regimes.

The paper develops conclusions for the next generation of contracts and suggestions for further research. The conclusions envisage the development of contractual relationships which strengthen the motivation to care for customers.

Rights

Permission to publish the abstract has been given by Elsevier, copyright remains with them.

Comments

Research in Transportation Economics Home Page:

http://www.sciencedirect.com/science/journal/07398859

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