As part of its commitment to improve metro passenger rail services in Auckland, Auckland Transport recently awarded a new passenger Rail Franchise Agreement to Auckland One Rail after a lengthy procurement process. The previous passenger rail contract was outdated, and improvements were needed to deliver better outcomes for customers. To better configure their passenger rail operations, Auckland Transport reached out to Deloitte, seeking help to facilitate the consolidation of their various operating contracts into a succinct rail franchise.
The existing franchise was burdened by significant fragmentation. Several public and private sector organisations comprised the overall rail system in Auckland, with one company operating trains, different companies providing train and station maintenance, and yet another maintaining the railway tracks – not a very efficient or cost-effective position. These arrangements left Auckland Transport acting as a manager and coordinator of these different supplier relationships to deliver the best outcomes for customers – a challenging task at times.
Given the length of time that existing contracts had been in place, any change away from the status quo would represent a significant shift for staff and stakeholders. To be successful, Deloitte needed to challenge and help change culture and mindsets, so that a new rail franchise agreement would be readily accepted.
To realise this change, the Deloitte team worked in close collaboration with Auckland Transport personnel. Deloitte adopted a highly collaborative approach using weekly workshops to explore and mutually agree on key commercial terms for the new agreement. By bringing people from across all parts of Auckland Transport directly into the conversation, and engaging throughout with other advisors, Deloitte helped to enable a significant change in approach.
The team recognised from the onset that the size and geographical separation of the New Zealand market makes it harder to attract overseas tenderers given that there are more lucrative opportunities elsewhere. However, accessing international experience and expertise would be critical to high-quality passenger rail services in Auckland. Tim Arbuckle, the Deloitte Engagement Partner, travelled with staff from Auckland Transport to various locations in Europe, Australia and Singapore to look more closely at passenger rail operations in other cities. It became apparent that to make the contract attractive and lucrative enough for overseas contractors, scale had to be offered.
A range of commercial terms were developed, outlining the consolidation of metro rail operations within the new franchise agreement. This included a detailed design of the payment mechanisms, performance regime, risk allocation frameworks and key commercial terms.
Notwithstanding the impact of COVID-19, the resulting rail franchise agreement successfully encouraged several international candidates to tender for the Rail Franchise Agreement with Auckland Transport, and Auckland One Rail was ultimately successful. The new contract represents a significant investment in service improvements and growth, providing cost efficiencies for stakeholders and improved customer outcomes for the citizens of Auckland.
"This has been a wonderful opportunity for Deloitte to partner with Auckland Transport to help transition Auckland's passenger rail operation to a modern world class metropolitan service that will be ready to capitalise on the completion of a large-scale rail network investment programme including the opening of the City Rail Link next year,” says Tim Arbuckle, Deloitte Engagement Partner.
Additionally, a more efficient and customer-centric rail service with improved public value incentivises the population to use rail more regularly, which helps to decongest and decarbonise the transport network. It’s safe to say the Deloitte team have certainly helped put things back on track.
"This has been a wonderful opportunity for Deloitte to partner with Auckland Transport to help transition Auckland's passenger rail operation to a modern world class metropolitan service." - Tim Arbuckle, Deloitte Engagement Partner.