Managing the Performance of Rail Franchisees

Tabled: 7 December 2016

Appendix C. Monitoring franchisee performance

Operational performance

Public Transport Victoria (PTV) measures operational performance in two main ways, summarised in Figure C1.

Figure C1
Train and tram operational performance measures

Publicly reported service reliability and punctuality—percentage-based measures

Operational performance regime used for incentive payments and penalties


Reliability—percentage of timetable delivered.

Punctuality—percentage of services that arrive no more than one minute early or four minutes 59 seconds late.

The impact on passengers of an individual service delay or cancellation, taking into account:

  • the type of service disruption (such as cancellation, late arrival, early departure)
  • the extent of the disruption (in minutes)
  • the number of people affected.

Measurement method

Trains—franchisee records on paper the arrival times of trains at the destination, which is periodically audited by PTV. This continued until March 2015 when an automated system was introduced, which increased monitoring points.

Trams—measured using Automatic Vehicle Monitoring system, which records information at several points along each tram journey.

Relies on same service delivery and punctuality measurements.

Franchisee self-reports the causes of delays.

Publicly reported

Publicly reported in PTV's Track Record.

Not publicly reported.


No financial incentive or reward.

Failure to meet thresholds can lead to:

  • call in (please explain)
  • contract breach
  • contract termination.

Linked to financial incentive and penalty scheme (capped at $1.1 million per month for trains, $0.55 million per month for trams).

External events

Does not exclude events that are outside the franchisee's control.

Excludes unusual, material events outside the franchisee's control (such as extreme storms, customer incidents).

Assessment, thresholds and targets

Results are assessed quarterly against established minimum thresholds equal to the 'call in' threshold. These were set at the commencement of MR3 based on past performance. These are not subject to any periodic reviews or resets.

Reliability—98 per cent (train and tram).

Punctuality—train 87 per cent and tram 77 per cent.

Assessed monthly against thresholds and benchmarks that were set at the commencement of MR3 based on past performance. The agreement stipulates that benchmarks can be reviewed and varied in certain circumstances, such as timetable changes.

Source: VAGO.

Operational Performance Regime

The Operational Performance Regime (OPR) bonus and penalty payments are determined based on passenger weighted minutes (PWM) of delay. PWM measures the impact of an individual service delay or cancellation, is weighted for peak times and makes allowances for events outside the control of franchisees, such as public trespassing or illness.

Figure C2 provides a summary of how PWM is calculated.

Figure C2
Summary of payment calculation for OPR

Summary of payment calculation for OPR

Source: VAGO, based on information provided by PTV.

At the beginning of MR3 an annual target was developed based on the franchisee performance for the 12 months ending 31 June 2009.

The franchise agreements specify the procedures for periodic adjustments of the annual targets, typically aligned with service changes such as route alterations or journey time changes.

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