The TTC Board met on Monday, February 24. In an earlier article, I gave a preview of issues from the agenda. This post reports on some of the debate and follow-up information from the meeting.
This was the first meeting under new Chair Maria Augimeri, and it was noteworth for the amount of actual discussion that took place. The four citizen members, who at one point were a majority of Commissioners actually present, participated at some length with pointed questions. One can only guess the degree to with former Chair, now mayoral hopeful Karen Stintz, ran tightly scripted meetings that were all about good news with little or no dissent or disruption.
In his presentation of the survey for the 4th quarter of 2013, TTC’s Chief Customer Officer (and Acting Chief Service Officer) Chris Upfold explained that the polling is done over the entire period with about 80 interviews conducted each week. Therefore, most of the responses predate the severe weather of December. Although there is a marked drop in satisfaction by streetcar users, there is a general concern with service quality and crowding.
The TTC wants to better understand whether other components contribute to this such as the possibility that bad news about “old streetcars” colours the responses. This is an attractive theory if one ignores the decline in service reliability that began in the third quarter. Blaming problems on external causes, in this case the media, has a long tradition at the TTC. Old streetcars will be with us for many years, and both the quality and quantity of service must be addressed.
Commissioner Alan Heisey asked about the status of the review of transit priority on King Street and of the existing Bay Street “clearway”. Upfold replied that a report on King Street would come to the Commission in July, and that it will deal with all day issues, not just the AM peak as originally proposed.
Commissioner Josh Colle asked whether being a peak period rider had the greatest effect on the satisfaction of riders. Upfold replied that this was true both because peak riders tend to value their time more highly, and because they see the system at its most crowded. Colle asked whether there should be “two TTCs”, one designed for the peak and one for off-peak. Upfold responded that satisfaction (or lack of it) feeds into a business case for improvements. Colle, presuming that those who think very highly of the TTC and are considered champions of the system live downtown, asked whether the TTC should be reaching out to the suburbs. Upfold replied that, in fact, these “champions” are all over the city as shown by the postal codes collected as part of the survey.
Commissioner Nick Di Donato asked whether there is a breakdown of reliability by line. Upfold noted that performance is best on the routes with reserved lanes (St. Clair, Spadina and Harbourfront) and that these routes buoy up the average for the streetcar network in general. [This information is published quarterly on the TTC’s website and summarized in my article. For the 4th quarter, the St. Clair and Spadina lines came in at over 80% on the TTC’s reliability metric.]
Commissioner Raymond Cho asked about the low rating for the availability of help from staff in stations. Upfold replied that despite some increases, the TTC remains a lightly-staffed organization in stations compared with some other systems. This is an amusing observation in the context of the hoped-for “savings” from elimination of station collectors. CEO Andy Byford noted that through both the complaints database and from feedback at “Meet the Manager” sessions in subway stations, senior management knows about issues riders have. This is not the same, however, as having someone who can assist riders on a day-to-day basis.
Commissioner Anju Virmani asked how often services are tweaked to improve them. Upfold’s answer was not entirely on the money here when he said that this happens quarterly based on the survey. In fact, service is adjusted every 5-6 weeks with each new “board period” based on riding counts and evolving needs of routes, all of course subject to budgetary constraints. Upfold noted that if the perceived value of transit service goes up, then the elasticity of riding versus fares goes down because a fare increase is not perceived as making a bad service worse.
In some of these responses, we may see hints of how a future budget advocating service improvements might be pitched to the Commission and to Council.
The CEO’s report provoked little debate.
On the subject of ongoing delays in restoring streetcar service to Queens Quay, CEO Andy Byford stated that the TTC is very focussed on installing the new rail as quickly as possible and is working with Waterfront Toronto to get this work underway. (Waterfront Toronto hopes to begin construction of the new roadbed for the streetcar right-of-way and the north roadway in late March with all trackwork completed by the end of June.)
Byford talked about the importance of tapping into the latent pride and capability of front line staff to improve the organization. This is a fine goal, and I hope we can see some specific examples of this cited in future reports.
Changes to station signage at Bloor-Yonge will be installed on the weekend of March 1-2, 2014. This is a trial, and to the degree possible, the new signs will simply use stickers over top of existing ones to minimize cost and to simplify any future changes.
The matter of route management came up because of comments in a public deputation that some route supervisors can’t do their jobs. Byford replied that good supervision is a vital part of customer service. Twenty new supervisors will be deployed, but these have to be “the right people”.
Commissioner Heisey asked about the possibility that the Spadina subway extension might not hit its late 2016 opening target because of serious problems with Steeles West Station’s construction. Because this involves a dispute with the contractor, the matter was left for discussion in a private briefing.
The Cost of Hybrid Buses
As I mentioned in the preview, the biggest issue to surface from an audit of bus maintenance was the looming crisis in bus maintenance costs. Media reports and all of the debate focussed on whether the TTC was getting the full possible return from warranty claims, and whether other maintenance practices either (a) were performed more often than required for safety or (b) were not performed well to the point that vehicles broke down in service. The big issue lies in hybrid bus costs that dwarf, by an order of magnitude, the other issues raised by the audit.
The cost of maintaining the fleet of 691 hybrid buses is expected to double as these vehicles, purchased in 2006-09, come off warranty from 2014-17. I followed up on the comparative costs of diesel and hybrid buses with the TTC’s Brad Ross to put the anticipated rise in costs in context.
The increase in costs is primarily due to the hybrid components coming out of warranty and the high replacement costs associated to each item.
The major components of the hybrid buses include the Power Control System (PCS), AC Traction Motor and Generators, and the Energy Storage System (ESS).
Based on historical data, at year 5 the average operating costs for a typical diesel bus is in the order of $30K-$40K per bus (depending upon fleet model). As noted by the audit report, the average operating costs for the hybrid bus at year 5 was $45K.
That audit report noted that the annual cost of maintaining hybrids is expected to rise to over $90k. What the TTC did not state in their response was whether the diesel bus costs would also go up as they aged, but there is clearly a large premium to be paid to keep the hybrids in service, possibly over $30m/year, compared with their current cost. This premium will build into the operating budget over four years as each year’s buses comes off warranty.
To put this in context, $30m would represent approximately a 3% fare increase or about 8 cents. As a tax increase to fund added subsidy, this would be slightly more than 1%. Needless to say, we are unlikely to see either of these approaches, and service will almost certainly suffer if only through constraints in the rate of growth that might otherwise be possible.
Other Bus Maintenance Issues
TTC management agrees with the Auditor’s estimate of the potential savings from better pursuit of warranty claims and steps are already underway to improve this process.
On the subject of intervals between vehicle checks, Andy Byford noted that New York City is a good comparator for Toronto given the type of service they operate. A revised schedule for inspections will be tested at one garage to determine whether changes would be appropriate system-wide.
Commissioner Peter Milczyn asked whether issues with warranty claims extend to other parts of the TTC’s operations such as the new TR subway trains now being delivered. Byford replied that he has asked teams in each department to look into their practices to identify problems that might exist. He noted that auditors will always find something in a review, but potential losses are worth going after. A complete review of processes is required because they are now “archaic” and “prehistoric”.
Gary Shortt, Acting Chief Operating Officer, presented management’s detailed response to the audit. The highest priority will be in parts warranty management and in the evaluation of the 5,000km safety check.
The root causes of many problems lie in a labour-intensive, paper based system:
- incomplete or illegible information on repair tags
- defective parts failing to match up with documentation, or disposed of rather than claimed
- problems with correlating information to the divisional stores system which was itself paper-based
- bus maintenance staff are responsible for all claims rather than using expertise of the claims and purchasing departments
- the scope of the problem was not recognized until the audit
- the increased volume of claims due to hybrid buses overwhelmed the manual systems
A pilot of new processes is underway at Eglinton Garage to produce a “lessons learned” report by September 2014. An improved warranty management process will be completed by December 2014, and the new system will roll out one garage at a time starting in January 2015.
The 5,000km safety check differs from most transit agencies which operate on a 10,000km cycle. The need for this will be compared with vehicle repair data and practices from other systems. In New York City, vehicles that run in high traffic get a 5,000km checkup, but the frequency is lower for buses in outlying areas and on express routes. TTC operations should be compared with similar services elsewhere. Management will perform a risk analysis of extending the safety check cycle to 10,000km and will make a recommendation by June 2014 on changes, if any, to TTC practices.
Vice-Chair Maureen Adamson asked whether the failure to identify this problem earlier was related to staffing levels. Shortt’s reply suggested that this was partly due to the management which preceded his role as acting COO. Andy Byford jumped in to observe that there was a problem with a silo mentality at the TTC, a lack of recognition of the knowledge and expertise in other parts of the organization.
Commissioner John Parker wanted a sense of how many parts were involved, how big was the defective parts bin used at garages. Gary Shortt replied that the focus was on “late defects” (those that showed up well after a vehicle was in service) that were still under contract. Smaller parts did not get priority. Major parts such as engines were not ignored.
Josh Colle noted that the Commission often hears about its antiquated systems and asked whether replacements were provided for in the capital budget. Andy Byford replied that new CIS (the vehicle monitoring system), payroll, and human resources systems were already in the approved budget (as is a move to consolidate the financial systems on the same platform, SAP, used by the City of Toronto for ease of data exchange).
Alan Heisey asked what would prevent the Commission waiting 20 years for another review of its practices. Gary Shortt replied that with the rolling five-year plan including reviews of staff and assets this should not occur. Andy Byford observed that over the years the TTC has lost the art of asking front line staff who know what can be changed.
From time to time, questions arise at TTC meetings about why project costs escalate and, on occasion, why contracts are awarded as they are. Three of these came up at the February meeting, and this did not go unnoticed by the Board.
The first dealt with the Leslie Barns where consulting engineers, AECOM Canada Limited, will be receive $9m additional to cover extra work on the design and supervision of construction for this project.
The second was for the Wilson Yard expansion project where Buttconn Limited will act as “constructor” for various projects now in progress that require overall co-ordination. This contract amendment has an upset limit of just over $2m.
The third was a dispute raised by a bidder, Ansaldo STS USA, Inc., about the award of contracts for signalling at Wilson Yard to Thales Canada, Transportation Solutions.
The circumstances for each report are different, but there are overlapping issues. The first is scope creep.
In some cases, the amount of work involved in a project grows because of decisions made after the project is underway, or because of situations that were not taken into account when it launched. Wilson Yard is an example of the former, and Leslie Barns the latter.
At Wilson, various sub-projects were originally expected to occur with separation in time and space so that each contractor would have sole posession of “their” section of the site for their work. In practice, this has not proven to be possible, notably for the signalling contract also awarded at this meeting. For safety and accountability reasons, including requirements by the Ministry of Labour, a single entity must have overall control of the site to ensure that works are co-ordinated and do not endanger workers who are unaware of the activities under other contracts. This created a new requirement for co-ordination that was awarded to Buttconn.
Leslie Barns has a long and checkered history of site selection and planning. From the outset, it was clear that this was the only site under serious consideration and that it would be chosen no matter what the objections. Three major problems have developed over the life of the project.
First off, some site conditions were not adequately understood during the evaluation stage including the remediation required to make it fit for use, the rerouting of a major Ontario Hydro cable running through the site, and the complexity of utility work required on Leslie Street in advance of track construction. Whether this was a case of willful ignorance or a political mandate to make the site work no matter what would make an interesting investigation, something possibly more interesting than bus repair cycles.
Second, the original plans for the reconstruction of Leslie Street deeply and needlessly annoyed the businesses and residents of the area by including a streetcar right-of-way for track that would only be used to access the carhouse. This was quickly dropped, but people were already sensitized to the effect of the connection track. Attempts to study alternate routes were met with hostility from the TTC including misrepresentation of the effects one alternative would have on Canada Post operations on their site nearby. The fallout from this experience was that additional work was added to the project to make improvements to nearby streets as payback for the upheaval of the construction period.
Third, the project is running well behind schedule, and alternative plans were drawn up to deal with different ways of completing the work. This is the lion’s share of the additional money going to AECOM.
In the case of the Wilson Yard signalling contracts, the bids were called for a base contract plus various options. Which bid “wins” depends on which options are included in the award. Ansaldo objected on the basis that they were the lower bid if all options were included. Detailed discussion of this award took place in camera, and in the end the Commission approved management’s recommendation making the award to Thales. Afterwards, Andy Byford agreed that the public report did not properly explain the rationale for asking for the various options in the first place, nor why the specific subset was chosen. He committed to making future bids and reports more transparent in that regard.
In some cases, a project will have an overall approval amount with a provision for future costs on a contingency basis. One example of this is the provision in the new streetcar contract for possible change orders. When the project was approved, staff did not know which specific changes might be made or how much they would cost, but for financing purposes (subsidy allocations and planning by the City and other government) they needed to include a provision for them. It is possible that this provision will not all be spent, and we would then be treated to criticism from the City that the TTC asks for more money than they need. Sometimes you can’t win either way.
As a long-time TTC watcher, what is fascinating here is the ebb and flow, almost like the tide, of requests for detailed financial and project management information from the Commissioners. At times, faced with a lot of detail, they cry off saying that it is far too complex for them to understand. At others, worrying that they might appear to be shirking their responsibility the taxpayers, they want to know all of the details. Whether they will like what they hear depends on whether the explanation is a reasonable one.
There is a fundamental need for Commissioners to understand the basics, and for management to provide reliable and complete information especially when project scopes change. One cannot be politically deaf when the aim is to downplay extra costs, only to rail against them when the bills come due.