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ERTMS Benchmarking: driving costs and their actual evolution Istanbul, 01-03 April 2014 Piero Petruccioli – UIC Rail System Department.

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Presentation on theme: "ERTMS Benchmarking: driving costs and their actual evolution Istanbul, 01-03 April 2014 Piero Petruccioli – UIC Rail System Department."— Presentation transcript:

1 ERTMS Benchmarking: driving costs and their actual evolution Istanbul, April 2014 Piero Petruccioli – UIC Rail System Department

2 ERTMS Benchmarking : purpose Costs Structure of purchasing company Key performance indicators Procurement strategies Maintenance strategies Project description Cost drivers Cost evaluation (CAPEX, OPEX) as a function of all relevant factors. The later, the more precise (but less useful…) Late prediction Ex post analysis Early prediction Feasibility studies Regulatory benchmarking Istanbul, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli 2

3 ERTMS Benchmark, UIC > UIC project, ; late or ex post flavour > Geographic scope : EU, 19 companies, 32 projects (board, lines) > Technical scope: ETCS + GSM-R extensions for L2 No comparison with other subsystems No global signaling system comparison, just Train Control > Project view, not network(s) view Including share of R&D costs, but… …not considering migration strategies and their induced financial costs > Costs : LCC (R&D, investment, op. & maintenance, disposal) > 2014 complements Maintenance strategies and main cost drivers Putting costs in relation with performance (explanatory factors), in addition to technical complexity and purchasing strategies Istanbul, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli 3

4 4 ERTMS in operation today in Europe Source : UIC ERTMS Database (status Oct 2013) Difficulties (1/2): A narrow scope In Operation: L11870 L1 and L21920 L22165 Regional134 TOTAL6089 Contracted:5267 Istanbul, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli

5 Difficulties (2/2): An evolving market Istanbul, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli 5

6 ERTMS Commercial Operation Istanbul, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli 6

7 ERTMS Commercial Operation – plan 2020 Istanbul, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli 7

8 ERTMS Commercial Operation – plan 2025 Istanbul, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli 8

9 ERTMS Commercial Operation – plan 2030 Istanbul, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli 9

10 > IM and RU involved in ERTMS are primarily focused on time and costs for implementation and commercial exploitation > O&M aspects tended to be passed over > In many cases only a couple of years of O&M are contracted > O&M phase has strong impact on the total LCC of ERTMS > Railways can get into strong dependency of their industrial suppliers > Highly recommended: manage the long term O&M early in the first / main tender ERTMS Operation and Maintenance Istanbul, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli10

11 > OUTSOURCING - Main decision drivers: Price Control over maintenance costs Managing complexity, mostly for IM Mandated for SW updating/upgrading Timely with the tendering phase (to limit the vendor lock-in) > IN-HOUSE - Main decision drivers Cost of the maintenance staff Technical Maturity of the staff Small or preventive maintenance of big series Flexibility to manage the Business Risk transfer, mostly for RU ERTMS maintenance - main strategies Istanbul, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli11

12 > Personnel costs (for in–house) > Costs of man-hours (for outsource, higher than standard) > Safety Software Updating / Upgrading > Special equipment, > Spare parts > Storage costs for the components > Training documentation ERTMS maintenance - main cost drivers Istanbul, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli 12

13 PhaseLevel 1 / dtkm Level 2 / dtkm On board / OBU R&D20 k100 k110 k Investment90 k400 k340 k Total initial costs 110 k500 k450 k Range (observed) 35 – 140 k140 – 940 k120 – 800 k * Operation & Maintenance 15 k130 k110 k LCC, total125 k630 k560 k Result: ETCS Average Life cycle cost Source: UIC Benchmark project Istanbul, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli13

14 > Uncertain Economics due to: Deep Influence of pre-existing systems; Wide range of applications and expected performance; Transition costs; Comprehensive planning is difficult in a shared system > Market expansion and version management still have unfathomed effects > RU- Business case vs. IM- Public Company Onboard: low flexibility, high costs, low direct benefits put RUs in a difficult situation (direct subsidies are problematic); therefore: Importance of setting access charges right Importance of low cost developments, so IMs can pass substantial benefits to RUs. Conclusions (1/2) Istanbul, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli14

15 > Remaining works under UIC Benchmarking project: Integrate maintenance ROI Attempt to link costs with high level performance criteria Conclusion (2/2) Istanbul, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli15

16 16Istanbul, Apr 2014, ERTMS World Conference, ERTMS Benchmarking – Piero Petruccioli Thank you for your kind attention Piero Petruccioli, project manager


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