The process of quality : an alternative view on public transportation decision making processes

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UNIVERSITEIT VAN AMSTERDAM

The Process of Quality

An alternative view on public transportation

decision making processes

Vincent Holst 8/21/2013

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The process of quality

An alternative view on public transportation decision making processes

Vincent Holst

5635357

dhr. drs. R. ter Brugge

Mentor

dhr. dr. M.C.G. te Brömmelstroet

Examinator

Written in the context of the Urban Development Master thesis project: the

dilemma of urban mobility and beyond

University of Amsterdam

With the commissioning of the Wp2000, the Dutch government officially opted for the introduction of the private sector into the public transportation sector. It is expected that this will improve the quality of public transportation services, and will reduce the financial costs that are being spend for the provision of this service as well. Despite these positive assumptions that are related to this, there are some critiques as well, which are related to the different interpretation that the public and private sector may have with the term ‘quality’, and the ambitions and strategies that are related to this. Private entrepreneurs will likely orientate towards economic performance and profit maximizing strategies, where the public sector will be involved with many other considerations besides economic performance such as maximization of social welfare, or the desire to

implement preferred policy that comes with holding office. These various directions and interpretation for public transportation services form the basis for this research. The coordination between the public and private sector with regards to the provision of public transportation services in the Amsterdam Metropolitan Area will be reviewed. It will be attempted to figure out which service quality determinations are being designed for the public transportation service in this region by reviewing the service contracts between public transportation authorities and providers. The quality of these contracts will be compared with the perceived quality by public transportation customers to see whether the attempts to design this service are being

appreciated by its customers. Besides this comparison between design and perception, it will be reviewed how public

transportation authorities and providers shape competitive tendering processes, and how decisions are being distributed among these stakeholders. The assumption is that this decision making process will be leading for the design and contents of service contracts for public transportation services in which the public and private sectors are involved.

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Preface

This thesis that you are be about to read is a product that has been written in the context of finishing the master study Urban Planning that I started in September 2012 on the UvA. My interests have always been with mobility and transportation, and it was therefore no difficult decision at all to subscribe for the Master thesis project ‘the dilemma of urban mobility and beyond’ out of a wide variety of other projects. Like many other students might have experienced as well, such a choice will not help much, at least not enough, with the selection of a specific topic that seems suitable for an intensive relation from the beginning of February until the end of August. I eventually selected public transportation as my partner, and this selection proofed to be a good one. My opinion is that you have an acceptable relation when the subject continuous to fascinate you, and when the relation is open for new inputs. Although we have had our ups and downs, I will not deny that I have gotten attached to this thesis. Although I do not dare to state that my partner has gotten attached to me as well, I hope that the result that you have in front of you at this very moment shows that I have enjoyed this project.

During the process of this thesis I have been supervised by Roel, who provided a lot of useful information. Although the specific information that he provided me about the subject of thesis was very useful, I would like to thank Roel especially for the information about how to write a thesis in general, and for the ‘free environment’ in which I was able to ask questions and have conversations. Besides my supervisor, I would like to thank the interviewees who offered some of their time to answer the questions that I prepared. The conversation that I have had with these interviewees helped me in many ways.

My mentor at high school was able to define me, as a person, in two words. The first was optimistic, which is in my opinion on itself a positive attitude. The second word that defined me was nonchalant. Although the combination of optimistic and nonchalant has brought me many great and beautiful things during my current 25 years in Amstelveen/Amsterdam, it proofed also to be a dangerous combination, which is being reflected in the fact that I sometimes lack the pressure of urgency. I would therefore like to thank Steven, who has been my ‘thesis writing buddy’ for the whole period from Februari to August, for the many times that he urged me to go to the UvA to work in this Thesis. Besides this, I would also like to thank him for the many conversations that we had during this

period (about our thesis’s and other things), the many hilarious moment that we had on the UvA, and off course all the coffees that he offered me within this period.

Vincent

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Introduction

About the ‘why’ and ‘what’ of this thesis

On the 26 of August 2010, the board of the City Region of Amsterdam appointed the right to provide public transportation services in Amsterdam to GVB (Stadsregio Amsterdam, 2010). The

consequence of this specific decision is that this provider had obtained the exclusive right to provide public transportation services in the Dutch capital from 2012 until 2017. This might not sound like a significant turn of events when you realize that GVB was already providing this service for

Amsterdam before this specific appointment. This decision must however be placed in a broader discussion that is concerned with how public transportation services should be provided in the first place.

How public transportation services should be provided, and how the public transportation sector should be organized, is not only a relevant issue within the Netherlands, but is a topic of discussion in many other parts of the world. Two major trends caused many governments to review their public transportation provision practices, and to search for alternative strategies to supply this service. The first trend that could be observed was the increasing dependency upon mobility by car and the inability of alternatives to match the quality of accessibility provided by private motorized

transportation (Bertolini & le Clercq, 2003). Although the impact of the automobile is much higher in the United States, the usage of this private transportation mode has increased exponentially in Europe as well (Muller, 2004). Secondly, the financial costs for the provision of public transportation increased dramatically for the public sector (Karlaftis, McCarthy, 1999). The solution that was being put forth by many governments was to outsource the provision of public transportation services. This strategy has been applied for many other services as well (Shirley & Ménard, 2002; Baum & McGahan, 2009; Elinder & Jordahl, 2013). This resulted in the selection of partners from the private sector for the provision of such services. It is being expected that the private sector should be able to improve the quality of the concerning services for less financial costs (Cabral et al., 2013). There are however many different ways to shape processes of outsourcing by governmental bodies, and to establish a useful relation with the selected private partners. The Dutch national government has opted for the application of competitive tendering processes to arrange public transportation services.

With the commissioning of Wp2000 on the 1st of January 2001, the private sector has made its introduction into the Dutch public transportation sector (Buiren et al, 2012). Competitive tendering processes are being used to create competition between providers for the exclusive right to provide public transportation services (Mouwen & Rietveld, 2013). The provision of such a service is on itself not profitable, which is why the selected provider is being compensated with financial subsidies (Buiren et al., 2012). Despite the provision of such subsidies, it is expected that competitive

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8 of the Dutch public transportation sector. The introduction of the private sector in the Dutch public transportation sector therefore seems to be a profitable strategy.

Now, to get back to the discussion about the appointment of GVB as the public transportation provider for Amsterdam, there has been a discussion about whether this appointment is in line with the ambition of the Dutch national government to provide public transportation services by means of competitive tendering processes. The improvement of the service is expected to be realized by competition between providers, which means that more than one provider should be able to obtain the exclusive right to provide this service. The City Region of Amsterdam has however granted GVB this exclusive right without competitive offers from other providers. It is being argued that this process may however not reach the quality levels that could be achieved in a competitive tendering process with competition. Besides this argument about quality, it is argued that the appointment of GVB is unfair towards other providers since they are limited in their possibilities to perform their business.

This discussion is therefore related to the planning component of public transportation services. The Wp2000 has appointed several provincial and regional governmental bodies as responsible public transportation authorities. This means that they are responsible for the designation of concessions areas, and the selection procedure of a provider (Buiren et al., 2012). Besides these responsibilities, it may be expected that these public transportation authorities will have the ambition to realize various objectives with public transportation services. This assumption brings us to the main issue of this thesis. The objectives of public transportation authorities and providers might not always correspond to each other (Mouwen & Rietveld, 2013). Although both the public and private sector will aspire to attract many customers, their main interests might be contrasting. Private

entrepreneurs will likely orientate towards economic performance and profit maximizing strategies (Cabral et al., 2013). The public sector will however be involved with many other considerations besides economic performance (Elinder & Jordahl, 2013). Such considerations might for instance be maximization of social welfare, or the desire to implement preferred policy that comes with holding office. It is therefore inescapable that public transportation authorities and providers will have to bargain between these divergent interests.

This thesis will review competitive tendering processes for the public transportation service in the Amsterdam Metropolitan Area. This metropolitan region consists of various concession areas of which the responsibilities are being divided between four different public transportation authorities. These authorities have selected four different providers for the provision of public transportation services in these concessions. These providers are in most cases selected by means of a competitive tendering process. Two providers have however obtained this exclusive right because this was awarded to them privately. It will be reviewed how these selection processes take place from a planning perspective. Besides the selection process itself, it will be reviewed how public transportation services are being designed. The collaboration between public transportation

authorities and providers are based on service contracts, which contain quality indicators for various service characteristics. The contents of these quality indicators may be dependent on the

stakeholders that have been included within their designation process. The roles and decisions of public transportation authorities and providers have therefore a central position within this review.

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9 The designation process will thus lead to service contracts in which several service indicators have been defined. These contracts are therefore decisive for the quality of the provided public

transportation service. These service contracts for the concessions areas in the Amsterdam

Metropolitan Area will be reviewed to see what indicators have been defined, and which directions are being aspired for this specific service. Besides a review of the designed quality in service

contracts, it will also be reviewed how this quality is being perceived by customers. The perceived quality will give directions to how well the planning efforts by public transportation authorities and providers are being valued, and how they might improve the provided service.

These interests have resulted in the formulation of the following main research questions for this thesis: “What effects do competitive tendering processes have on the design process of the public

transportation service for the Amsterdam Metropolitan Area, and how is this service being perceived by its customers?”

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Literature review

A scientific discussion about leading concepts

This literature review has been prepared to give an overview of the concepts that are expected to be relevant for this research. Bryman (2008) gives several reasons that underline the importance of a well-established literature review within scientific research. First of all, it is a demonstration that the author is able to engage in scholarly review. More important, however, is that the literature review gives an overview of the work of others in the same fields of research, and that it develops an argument about the significance of the research itself. This means that it is both a framework for the author and for the research itself.

The first section will focus on competitive tendering processes, which have been introduced to the public transportation sector in order to improve the quality of public transportation services. These new processes lead to renewed relationships between the public and private sector, in which divergent goals and ambitions must be weighed. Competitive tendering processes primarily result in contractual agreements between public transprtation authorities and providers in which the desired quality of the concerning public transportation services is designed. After this explanation of

competitive tendering processes, the concept of quality, and quality research into the public

transportation sector, will be discussed. The various definitions that are attached to the term quality will be overviewed. It will be explained that quality in public transportation is reviewed in many different ways, and that the interest in the performance of public transportation services has increased. It will become clear that these definitions have some differences, but are also related in many ways. Within this chapter, the mentioned theoretical concepts will mainly be discussed as independent, freestanding concepts. This discussion has the purpose to explain how these concepts have been used in other studies, and therefore how these concepts may be interpreted and

substantiated form different perspectives. How these concepts are related, and how they will be used for this specific research will be explained in chapter three.

2.1 Decisions, interests and contracting in competitive tendering

processes

Competitive tendering is an instrument that is being used in many sectors. It refers to awarding an exclusive right to provide a service following a competitive process (Yvrande-Billion, 2006). It can be observed that the public sector is increasingly approaching private entrepreneurs in diverse activities where the presence of the state was normally widespread (Cabral et al., 2013). This wave of

outsourcing, which defines the process of search and selection of suppliers of services traditionally produced in-house within an organization, of various services from the private sector to the public sector has the underlying assumption that the public sector will reduce their financial costs, and expand the reach of public services at the same time (Cabral et al., 2013). In other words, the quality

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11 of the concerning service will improve, while it is being provided for lower financial costs. Examples of such strategies by the public sector can be encountered within various sectors, such as defence (Baum & McGahan, 2009), water distribution (Shirley & Ménard, 2002) and education (Elinder & Jordahl, 2013). Independently from the sector in which these processes are applied, it must be noted that competitive tendering processes, and outsourcing by the public sector in general, has led to renewed relations between the public and private sector. This is definitely the case for the public transportation sector, in which competitive tendering processes are increasingly being used to outsource the provision of public transportation services to private providers (Mouwen & Rietveld, 2013). The reformation of the public transportation sector is expected to contribute to better, economic performances of public transportation services (Domberger & Rimmer, 1994; Karlaftis & McCarthy, 1999; Yvrande-Billion, 2006). Many case studies have indeed shown an increase in the production of vehicle miles, serving more passengers while expending less recourses. However, some scholars take a sceptical attitude towards these findings, and argue that the economic performance of public transportation services is in many cases far from the initiated economic performance levels.

Despite whether the intended economic performance levels have been achieved, there is a broader discussion going on about the renewed relationship between the public and private sector within competitive tendering processes in general. This discussion is concerned with the divergent, somewhat contrasting goals and ambitions of both sectors. Private entrepreneurs will likely

orientate towards profit maximizing strategies, where these considerations are not always dominant for the public sector since they have to include social welfare and societal indicators (Domberger & Rimmer, 1994; Cabral et al., 2013; Elinder & Jordahl, 2013). Some therefore argue that competitive tendering will only lead to an increase of economic benefits, and will not necessarily increase the overall quality of the service that is to be provided. The consideration and inclusion of these divergent objectives may vary among various situations, and is somewhat dependent on the extent to which, and in which form outsourcing is encountered. In some cases, this process has been accompanied by the full privatization of formerly state-owned enterprises and state-controlled services. In others, the government has retained control over the productive assets and outsourced the internal operation of the corresponding activities to specialized private operators (Cabral et al., 2013). Within the public transportation sector, several forms of outsourcing can be encountered, of which competitive tendering is the most dominant form in Europe.

The variation between these forms, and therefore the relation between the public and private sector, may be explained by the interpretation of different decision making levels within the public

transportation sector (Van de Velde, 1999). The differences between these decision making levels are being determined according to the scope of the planning issues addressed, and their planning horizon. The different levels that can be distinguished are the strategic decision making level, the tactical decision making level and the operational decision making level. Figure 2.1 gives an overview of the contents of each of these levels. The first level is concerned with the designation of several long term policy goals and ambitions for the concerning public transportation service. This may for instance include decisions about general service characteristics like the development of various public transportation modes, the ambition to improve the environmental sustainability of the public transportation sector or the designation of specific target groups. The tactical level is concerned with decisions about more detailed service characteristics like the determination of fares, routes and

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concerned with the implementation and operation of the service characteristics that are designed at the tactical level.

The decision making levels from figure 2.1 are in many ways interrelated, and are hierarchically ordered. Decision that are being made on the strategic level will be translated into more detailed service characteristics at the tactical level, which will on their turn be implemented on the operational level. Within these different decision making levels, decisions will be made that are concerned with social and economic considerations. The balance between these

considerations that will be agreed upon by the concerning public transportation authorities and providers may vary among different public transportation services, in which some services might tend to quality objectives, where others might tend more to efficiency

objectives (Mouwen & Rietveld, 2013). The balance that is being found, and especially the renewed relation between the public and private sector in competitive tendering processes in which the balance between social and economic goals are being considered, is however still a topic of discussion. Hensher and Stanley (2008, pp. 1144)

suggested that the introduction of competitive tendering processes has resulted in an auction process which stifles the relation between public transportation authorities and providers,

preventing the public transportation authority from utilizing the providers expertise when designing the service. Others suggest that competitive tendering processes have not necessarily led to more deregulation, but to more regulation by public transportation authorities (Van de Velde et al., 2008). These suggestions are being shared by Twynstra Gudde & MuConsult (2005), who reviewed the consequences of the implementation of competitive tendering processes in the Netherlands. They state that providers have limited space for innovations due to the tight awarding criteria that have been designed by public transportation authorities.

This final suggestion by Twynstra Gudde & MuConsult (2005) brings us to the designation of service contracts, which are being used within most competitive tendering processes. These contracts serve as an instrument to set bilateral conditions between private operators and public transportation authorities, and to induce private operators in naturally non-competitive markets to act in line with social targets (Mouwen & Rietveld, 2013). The contents of these service contracts vary among public transportation services, and are dependent on the agreements that are being made between the concerning public transportation authorities and providers about several quality aspects that are being pursued. The contractual forms in the public transportation sector may vary from formalised, tightly specified and managed contracts to more flexible relationship-based contracts (Stanley & van de Velde, 2008). These service contracts are however also a means to select a provider in

competitive tendering processes. The result of such a process is that a specific provider will be selected on the basis of their bid, which is easier if the demands of the qualifications are well

specified and detailed (Lidestam, 2013). These detailed service contracts may however include a low level of inbuilt flexibility, since many service characteristics have already been specified within these service contracts. These may for instance vary from the specifications of the types of engines that are to be used within public transportation vehicles, to the colours of curtains in busses. Although

Figure 2.1: Decision making levels within the public transportation sector

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13 many service contracts within the public transportation sector end up being well specified and very detailed, Lidestam (2013) argues that both the public authority, the provider and the customers, will gain from more flexible and less detailed contracts. Stanley & van de Velde (2008) introduce the idea of a trusting partnership between the public transportation authority and the provider as a desirable foundation for relationship-based contracting to maximize goal achievement.

The call for less specific, more flexible contracting in the public transportation sector is related to the different decision making levels that are introduced in figure 2.1. It is being argued that in the current situation, in which detailed and well specified service contracts are dominant for many public transportation services, the focus is often limited to the tactical/operational interface (Stanley & van de Velde, 2008). This interface is already concerned with the designation of more detailed service characteristics, and misses therefore consultations between public transportation authorities and providers on the strategic decision making level. This is the level at which long term decisions are being made concerning the main goals and developments for the public transportation service that is to be provided. The scope of the service contracts in the public transportation sector should therefore not be restricted to the tactical/operational interface, but should also focus to the strategic/tactical interface in order to build a trusting partnership between public transportation authorities and providers, and to provide a successful contracting setting (Stanley & Smith, 2013). It is assumed that this will have a positive impact on the overall quality of public transportation services.

2.2 Concepts of quality in public transportation services

It is not easy to define what is meant with quality in public transportation, and it may even be harder to measure the level of quality of a given public transportation service on a given moment in time. Nevertheless, service quality has been a dominant issue for both researchers and practitioners (Cunningham et al., 2000). It becomes essential to measure the level of service in order to identify the potential strengths and weaknesses of public transportation systems. This can provide clues to public transportation management in the process of evaluating alternative service improvements aimed at enhancing customer satisfaction and increasing market share (Cunningham et al., 2000; Bierão & Sarsfield Cabral, 2007). Many studies are conducted since then to measure the quality of public transportation services, and divergent strategies have been deployed in an attempt to achieve meaningful results. Some have focussed on the quality that is perceived by a selected group of users (Eboli & Mazzulla, 2007), where others have focussed on the quality aspects of certain modes of public transportation.

The quality of public transportation services is composed of different concepts, and is dependent on several attributes of the concerning service (Cascetta & Carteni, 2013). The quality attributes that are being distinguished may be classified as objective or subjective (Mouwen & Rietveld, 2013), or as quantitative or qualitative (Cascetta & Carteni, 2013). Despite the difference in terminology that is being used among the literature about attributes of the service quality in public transportation, the difference between objective and subjective, or quantitative and qualitative, is mainly concerned with the way in which they can be measured. Although these different concepts of quality in public transportation, and the attributes that are related to these different concepts, have in many occasions been treated as somewhat independent concepts, they may also be linked to each other in order to give a more comprehensive concept of public transportation service quality (Quattro, 1998; PricewaterhouseCoopers & VITO, 2009; Cascetta & Carteni, 2013). Different concepts of

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Figure 2.2: Public transportation service quality cycle

Source: Quattro (1998, pp.181)

service quality are being distinguished which form a service quality cycle in which all these concepts are interrelated. This public transportation service quality cycle is displayed in figure 2.2. It can be observed that this public transportation service quality cycle, which derives from Quattro (1998, pp. 181), includes both the service provider’s and the costumer’s point of view on service quality of public transportation services. It is therefore a good representation of which quality concepts can be distinguished, and more important, how these concepts relate to each other.

The targeted quality is the first concept of quality from the public transportation service quality cycle that will be discussed within this section.

This concept of quality is concerned with the level of quality that is being aspired by various public transportation service contributors (Quattro, 1998). As

mentioned earlier, these aspirations are, in competitive tendering processes, subject to negotiations between the concerning public transportation authorities and providers. These negotiations will result in service contracts which contain determinations

concerning several quality aspects of the service that is to be provided. Following the international trend, operators and authorities have tried to become more and more customer oriented, which has resulted in an increasing inclusion of quality aspects in public transportation service contracts (Mouwen & Rietveld, 2013). The service attributes that are being included and the specific contents of these attributes vary among different public transportation services.

The delivered quality is the translation of the targeted quality into the actual performance of the public transportation service. In other words, it is the production of the services that are related to the operational decision making level. Within competitive tendering, the delivered quality is usually being performed by the selected provider. The delivered quality does not necessarily have to be the exact translation of the established targeted quality. The delivered quality is in fact dependent on the amount of flexibility that is being allowed within the concerning service contracts, the

interpretation of the targeted quality by the provider when flexibility is actually built-in in this service contract and the operational management of the concerning provider.

The translation of the quality concepts that are mainly associated with the service provider’s point of view to quality concepts that are more associated with the customer’s point of view is made with the step from the delivered quality to the perceived quality. The perceived quality is the level of quality that is being perceived by customers during their journeys (Quattro, 1998). Hensher (2013) defines service quality in terms of a set of attributes that each customer perceives to be the source of satisfaction in public transportation use. There might be considerable differences in how the service is perceived by the customers, which may, in case of different perceptions about the same service, be explained due to customer differences (Fellesson & Friman, 2008). Despite these differences, it is generally accepted that some dimensions are of greater influence, and outweigh other dimensions when it comes the perception of the concerning public transportation service by its customers. These are dimensions that are related to the basic conditions of the service (Mouwen

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15 & Rietveld, 2013). It is argued that, when the service delivery of these basic conditions are not met, every effort to invest in enhancing other dimensions will not lead to an increase in satisfaction. Many studies into the perceived quality of public transportation services have used surveys in which customers were asked to what degree they were satisfied about the quality off several attributes during their journey. Although the contents of these surveys might vary among different studies, they mostly contain both statements about quantitative and qualitative attributes. The outcomes of such studies are however subjective, since they are based on the perception of quality by customers. One of the criticisms raised at the use of such subjective measures in these studies into perceived quality of public transportation services is that they are often based on public transportation users opinions, ignoring non-users perceptions (Cascetta & Carteni, 2013).

The expected quality, which is related to the costumer’s point of view, is about the level of quality that is desired by customers and citizens in general. A study on desired quality gives more in-depth information about what potential customers want from the concerning public transportation service (dell’Olio et al., 2011). The main difference between the expected quality and the perceived quality in terms of its measurement is that the expected quality also includes non-customers. The

expectations that potential customers might have from a given public transportation service will be influenced by a wide variety of factors which are all related to the specific context out of which these potential customers view this service. The expected service quality may for instance vary between regular public transportation users and car users (Redman et al., 2012). dell’Olio et al. (2011) underline that it is important to realize that the service desired by potential customers must always be feasible, which means that some expectations of users and/or non-users might be desirable (for instance waiting times and journey times equal to zero), but are not a feasible scenario. There are different means to measure the expected quality of public transportation services, of which the deployment of surveys is most often used (Quattro, 1998).

The four concepts of quality that have been discussed above, which form the public transportation service quality cycle, are continuously affecting each other. When providers change their

performance of the service they provide (the delivered quality), the perceived quality of customers may change as well (positively or negatively), which will on its turn also influence the expectations that these customers will have the next time they will make use of this public transportation service. These expectations are an important input for the targeted quality. Public transportation authorities might for instance want to increase public transportation ridership, which means that new

customers have to be attracted that are currently using other transportation modes. The targeted quality will therefore include attributes that have the intention to improve the service and to increase ridership. This means that these attributes will be translated into determinations about the public transportation service in service contracts, which form the basis for the delivered quality. At this point, the public transportation service quality cycle has reached the delivered quality again, and has touched all quality concepts. This cycle will in practice not have the static characteristics as is described in this theoretical explanation, but will be more of a continuous process in which the different concepts affect each other.

2.3 Conclusion

In this literature review, different concepts have been discussed which form the theoretical basis for this research. The dominant assumption is that the introduction of competitive tendering processes in the public transportation sector will improve the quality of the service that is being provided. The

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16 main critique on this assumption is that it will only improve the economic performance of public transportation services, but will not necessarily improve the overall quality of these services. This critique is a consequence of the new relations that are being established between the public and private sector within competitive tendering processes. It is being expected that, where the public sector will aim to include a wide variety of social goals and objectives to the concerning public transportation service, economic consideration will be dominant for the private sector. These differences are in many situations being settled within service contracts, which are a result of agreements between public transportation authorities and providers in different decision making levels. The different levels of the decision making model by van de Velde (1999) are related to decisions that are made in different planning stages. Some arguments have been raised against the current division of responsibilities within these planning stages, which is mainly focussed on the tactical/operational interface. It is being argued that, as a result of this, service contracts often contain many well specified and detailed demands concerning the service that is to be provided, which causes these service contracts to be inflexible. It is being argued that trusting partnerships should be established in order to really improve the overall quality of public transportation services, which requires a shift from a tactical/operational interface to a more strategic/tactical interface. Many studies into quality of divergent public transportation services have increasingly been conducted in order to identify the potential strengths and weaknesses of public transportation systems. The content of service contracts form the input for the public transportation service that is to be provided. This targeted quality is however not the only concept of quality that is being

differentiated. Although some studies claim different methods to measure the quality of any given public transportation service, there is no one specific concept of quality that is dominant. Instead, different concepts of quality can be combined in a cycle in which they are interrelated, and continuously affect each other. This cycle combines both quality attributes from public transportation service contributors and (potential) customers.

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3

Research design & Methodology

A plan how to get from questions to answers

A research design is an essential element within social scientific research. Different definitions of what a research design is, and which elements a well-defined research design should entail are given in various scientific contributions about the application of research methods.

“Colloquially, a research design is a logical plan for getting from here to there, where here may be defined as the initial set of questions to be answered, and there is some set of conclusions (answers) about these questions. Between ‘here’ and ‘there’ may be found a number of major steps”.

Robert K. Yin (2009)

“A research design represents a structure that guides the execution of a research method and the analysis of the subsequent data”

Alan Bryman (2008)

The definitions that are provided by Yin (2003) and Bryman (2008) suggest that a research design is related to the strategy that a researcher will use to define a set of research questions, and the methods that will be deployed to generate an answer to these questions. Although it might seem obvious to create such a strategy for a research, there are many things that have to be taken into account in order to get meaningful, scientific substantiated results. This chapter will explain the steps that are made to translate the concepts within the literature review into a research design for this specific research. The first section will be dedicated to the development of a conceptual

framework in which the relations between the concepts from the literature review will be highlighted. This conceptual framework will form the basis for the research questions that will be drafted for this research. The second section will explain which methodological tools will be assessed to execute this research, and to generate answers to the formulated questions.

3.1 Research Questions & Framework

The main focus of this research is twofold, which makes it difficult to formulate a single research question that covers the subjects that are the main points of interest of this specific research. This might sound vague, since it generally agreed that it is essential to formulate a clear research question within social research (Bryman, 2008). He states that if you do not specify research questions, there is a risk that your research will be unfocused and that you will be unsure about what your research is about and what you are collecting data for. This section will therefore begin with the explanation of the relations between the main concepts which have been discussed in the literature review and the relation that these concepts have within this research before a main research question will be formulated. The concepts that have to be linked are competitive tendering processes and contracting on the one hand, and the different concepts of quality of public

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• Targeted

quality

Contractual

quality

Delivered

quality

Perceived

quality

management cycle1 in which these different concepts can be combined. The proposed policy- and management cycle is designed as a tool to review the effects of the introduction of new policy decisions on any public transportation service. The effects that are being measured vary from the effects that new policy initiatives may have on modal split to the effects on customer satisfaction. The aim of this research is however not to measure such a wide range of effects. Hence, the policy- and management cycle does offer an interesting way of thinking about relations between different concepts in public transportation. Just as is being suggested by Quattro (1998), thinking about different concepts that influence each other in a continuous cycle gives new viewpoints about how these concepts relate to each other in public transportation. Figure 3.1. displays the framework that will be used to explain how the concepts of competitive tendering, contracting and quality for public transportation services are related within this specific research. It will, besides explaining the relation of these concepts, also be used as a guiding framework that explains the steps that will lead to answering the main question and sub questions. The proposed framework is a combination of the policy- and management cycle by PricewaterhoudseCoopers & Vito (2009) and the public

transportation service quality cycle by Quattro (1998)

Figure 3.1: Conceptual framework

Source: Modification of PricewaterhouseCoopers & VITO (2009) and Quattro (1998)

This conceptual framework, which is in fact a cycle, shows the basic idea of this thesis. The base consists of different concepts of quality that continuously affect each other, as is the case with the public transportation service quality cycle. The main difference is that, compared with the public transportation service quality cycle, the expected quality has been removed, where the contractual quality is added. Instead of going directly from the targeted quality to the delivered quality, this cycle will treat the creation and contents of the service contracts in public transportation more

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19 comprehensively as is being done within the public transportation service quality cycle2. The

expected quality is on the other hand removed in comparison with the public transportation service quality cycle. This decision is made due to the fact that the data that will be used to measure quality from the perspective of customers does not contain the information that is needed in order to measure this expected quality. This will be explained in more detail on page 21. It can, due to the modifications that are made in comparison with the public transportation service quality cycle, be stated that the cycle for this specific research is more focussed on the service contributors side, which is concerned with public transportation decission making processes and the designation of service contracts, then on the customer side.

The first part of this conceptual framework is the targeted quality. This concept of quality is concerned with the level of quality that is begin pursued by public transportation contributors, which are mainly public transportation authorities and providers. The targeted quality may best be explained as the decision making proces on the operational and tactical decision making levels. These levels of the decision making model by van de Velde (1999) are in fact a process in which public transportation authorities and providers negotiatie about various aspects of the public transportation service that is to be provided. These strategic decisions wil result in policy directions, for which more specific determination are being designed on the tactical decision making level. As is being mentioned in the literature review, competitive tendering processes have resulted in a renewed relationship between public transportation authorities and providers. It is being argued that where this renewed relationship is ought to be profitable for the concerning public

transportation service, it is not always been put to use because public transportation authorities sometimes maintain very influencing in designing demands concerning the public transportation service, which prevents the usage of the providers expertise. Since this process is decisive for the contractual quality, the targeted quality should be included within the framework for this research. The second part of the conceptual framework is concerned with the contractual quality. The contractual quality is the direct result of the decisions that are being made on the tactical decision making level within competitive tendering processes. Many forms of contracts are existent within the public transportation sector, which vary from well specified, detailed contracts to flexible, relationship-based contracts. The contents of these contracts are however dependent on the specific context of the concerning public transportation service. These service contracts are, within public transportation services that are subject to competitive tendering processes, guiding for the provider that is selected to provide the concerning service. The contractual quality is therefore important for the service that eventually will be provided, and how this service is being perceived by its users. It should therefore be included within this research.

The contractual quality forms thus the input for the public transportation service. The delivered quality is on its turn the output that is being provided by the concerning provider. This delivered quality is dependent on the interpretation of the contractual quality. The delivered quality will therefore not always be exactly comparable with the quality that is agreed upon in the concerning public transportation contracts. Some aspects of the service might for instance deviate because of

2_{As mentioned within the literature review, there are many contractual forms which vary from well specified}

to flexible contractual agreements. These contracts are therefore decisive for the quality of the service that will be delivered by the concerning provider, and is therefore included within the conceptual framework for this specific research

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20 the influence of the operational management of the provider, or specific situations (for instance a traffic jam of accident) that prevent the provider to provide the service as is being demanded by the service contract. The ambition of the provider might be even higher then contractual necessary. Besides this, the delivered quality is also dependent on the amount of flexibility that is being allowed within these service contracts. It might for instance be more difficult to meet the exact targets when these are very detailed and specific then when these demands are flexible.

The final concept of quality that will be addressed in this thesis is the perceived quality, which is concerned with how the provided public transportation service is being perceived by its customers. The perceived quality is therefore the interpretation of the provided service. These interpretations might vary among different public transportation users, and form an important feedback for the targeted quality. A negative interpretation of specific attributes of the concerning public

transportation service might for instance be a reason to alter the designed targets to improve these attributes, and to increase customer satisfaction.

3.1.1 Research questions

As consequence of the choice to use the presented quality cycle as a study object, the following main research question has been formulated. In order to answer this question, several sub questions have been formulated as well. These sub questions are related to the different concepts of the presented conceptual framework.

Main Research Question:

“What effects do competitive tendering processes have on the designing process of the public transportation service for the Amsterdam Metropolitan Area, and how is the quality of this service being perceived by its customers?”

It can be noticed that a certain scope has been chosen to perform this research. This concerns the choice to focus on the public transportation service in the Amsterdam Metropolitan Area3. The introduction of competitive tendering processes for the public transportation service in this region has undoubtedly resulted in renewed relations between public transportation authorities and providers. The usage of the term ‘effects’ must therefore not be interpreted as an attempt to measure all possible effects that competitive tendering processes might have on the designing process, but must be approached as the effects that competitive tendering processes may have on the distribution of decisions between public transportation authorities and providers

Service contracts form the base for the public transportation service that is being provided. The contractual quality will therefore be the first issue that will be addressed in this thesis. This is a good starting point for this research since these service contracts are the result of negotiations between public transportation authorities and providers. It will be reviewed what quality indicators are being formulated in these service contracts, and whether these service contracts mostly contain well specified and detailed contents, or have more flexible characteristics. The first sub question will therefore be dedicated to the contractual quality for the Amsterdam Metropolitan Area, and is formulated as follows:

3

The scope that has been chosen for this research is the Amsterdam Metropolitan Area. As a consequence, this research will be performed as a case study. The considerations for the choice for this specific research design, and for this specific case, will further be explained on page 19/20.

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21 Sub Question 1:

“What is the contractual quality for the public transportation service in the Amsterdam Metropolitan Area?”

After focussing on the contractual quality for the public transportation service in the Amsterdam Metropolitan Area, the perceived quality will be addressed. This concept of quality is concerned with the satisfaction of customers about the public transportation service they make use of. It will be reviewed which attributes of the service are being perceived positively, and about which attributes the customers are more negative. Although customer satisfaction is mostly reviewed by deploying surveys during their journey, it will for this research be extracted from several reports4 of customer satisfaction researches that have already been executed by various authorities. The following sub question has been formulated to address the perceived quality for the public transportation service in the Amsterdam Metropolitan Area

Sub Question 2:

“What is the perceived quality for the public transportation service in the Amsterdam Metropolitan Area?”

Now that both the contractual quality and the perceived quality have been reviewed, it is interesting to see whether these different concepts of quality can be compared. It is first of all interesting to see if the quality indicators that are being mentioned for both concepts are comparable, or that the concerning service contracts contain different quality indicators than the perceived quality reports. It may be expected that, when the concerning service contracts contain mostly well specified and detailed demands concerning the public transportation service that is to be provided, the quality indicators will be better comparable then when these service contracts are flexible. Besides the difference in mentioned indicators, it is also interesting to see, when quality indicators are both mentioned in the contractual quality and the perceived quality, if the intended effect of the determinations in the contractual quality are also positively perceived. In other words, are the attempts to design a qualitative public transportation service by defining quality determinations in service contracts effective? The following research question is defined for this comparison

Sub Question 3:

“To what extend can the contractual quality and perceived quality be compared for the public transportation service in the Amsterdam Metropolitan Area?”

The outcomes of the third sub question, whether this is that the contractual quality and the

perceived quality can be compared or not, may be a consequence of the decision making process in which the quality for the concerning public transportation service is being determined. As

mentioned earlier in the literature review, this decision making process is coloured by the divergent goals and ambitions that public transportation authorities and providers may have. The public sector tends to define well specified and detailed service contracts in order to make sure that social targets are being secured. It is being argued that this decision making process should be aimed at a different contractual setting in which the interface should be reconsidered. In many situations, this interface is mainly restricted to the tactical/operational interface. It is considered to be remunerative when this interface would shift to a strategic/tactical interface, which could lead to a more flexible

4_{Which specific reports will be used for this, and how these reports will be reviewed will be explained on page}

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22 contractual setting. This sub question will therefore focus on the decision making process for the public transportation service in the Amsterdam Metropolitan Area. Interviews5 will be conducted with the public transportation authorities and providers that are involved with the public

transportation service for this region. The main issue is to find out to if this process is mainly focussed on the tactical/operational interface, or if this decision making process tends more to the strategic/tactical interface. An important remark is that this section will have an explorative character. This means that the outcomes must be approached as an interpretation instead of a scientific explanation of such processes. It is therefore more of a thinking exercise. The sub question will be formulated as follows:

Sub question 4:

“How can the decision making process concerning the public transportation service in the Amsterdam Metropolitan Area be characterized, and what consequences will this have for the provided public transportation service?”

The outcomes for the Amsterdam Metropolitan Area will not be representative for every public transportation service that is being provided by means of competitive tendering. To place these outcomes in perspective, another case will be reviewed. Although this review will not be as detailed as for the Amsterdam Metropolitan Area, it might give insights in how public transportation services might be provided in different ways. To make this comparison more interesting, a case has been selected which has a different setting. Competitive tendering has not yet been introduced in

Flanders6 in the same degree as is the case for the Amsterdam Metropolitan Area. It will be reviewed whether the contractual quality and the perceived quality are different from the Amsterdam

Metropolitan Area, or that these outcomes, despite the different setting in Flanders, are similar. The final sub question for this thesis will be formulated as follows:

Sub Question 5:

“Which differences and similarities can be observed between the contractual quality and the perceived quality for the public transportation services in the Amsterdam Metropolitan Area and Flanders?”

3.2 Methodology

After having explained the main relations between the concepts of quality have been explained, and a main research design is basically outlined, it is essential to clarify which strategies are going to be used to actually perform this research. First, the decision to perform a case study will be explained, and the selected cases will be introduced. After this, the different methods for the selection and collection of the required data will be introduced.

3.2.1 Case study design & Case selection

The case study is but one of many possible research designs. A case study may be understood as the intensive study of a single case where the purpose of the study is to shed light on a larger class of cases (Gerring, 2007). The most common use of the term ‘case’ associates the case study with a location, community or organization (Bryman, 2008). The case that will be used for this research is

5

There are many different strategies involved with interviewing. Which specific interview strategy will be used for this thesis, and which entities will be interviewed, will be explained on page 24

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23 the Amsterdam Metropolitan Area. Although this research will therefore be an intensive study of this case, the outcomes might contribute to the discussion about the effects of competitive tendering processes on public transportation services, and might therefore shed its light on other public transportation services in which competitive tendering has been introduced. Although the case study is a distinctive form of empirical enquiry, there are several prejudices against this research method (Yin, 2009). The risk of biased outcomes is for instance one of these prejudices, since the focus of a case study might easily shift to the case which will influence the outcomes, which might result in outcomes that are not generalizable for other cases. The main counter argument is that case studies are often conducted to expand and generalize theories, which is the case for this research. The main goal of this thesis is not to proof that competitive tendering has a specific effect on public transportation services, but is more concerned with the effects that this might have according to existing literature. This case study will be used to test how these effects emerge in the specific contest of the Amsterdam Metropolitan Area, which means that the outcomes will not always be representative for other public transportation services due to this specificity.

Different case study designs may be encountered within social research, of which the decision to focus on one or more cases is an important indicator. The advantage of a single case study is

predominantly that the researcher has the opportunity to test theories in a specific context, where a multiple case study has the main advantage that the evidence is often considered more compelling and regarded is more robust due to the fact that the same effect is measured within different contexts (Yin, 2009). It must be noted that this research is not exactly a single case study, but does neither meet all the requirements to be labelled as a multiple case study. It is more of a combination of both case study designs. On the one hand, it will consist of a detailed review of one specific case, which is the Amsterdam Metropolitan Area. The outcomes of this single case will however be compared with another case, which makes it easier to understand the effects of competitive tendering better, and to come with more generalized findings. Although this second case will be reviewed in similar fashion, it must be noted that main focus will be the outcomes for the

Amsterdam Metropolitan Area. The findings for the second case, which is Flanders, will mainly be used to put the outcomes for the Amsterdam Metropolitan Area in perspective.

The two cases for this research have not been chosen randomly. The Amsterdam Metropolitan Area is a representative case, which means that it exemplifies a broader category of which it is a member (Bryman, 2008). This broader category is for this research public transportation services which are subject to competitive tendering processes. With the commissioning of the ‘Wet personenvervoer 2000’ (Wp2000), the Dutch national government officially opted for the introduction of competitive tendering in the public transportation sector, which means that the Amsterdam Metropolitan Area is subject to competitive tendering processes as well. Besides these criteria, the Amsterdam

Metropolitan Area has been selected due to the availability of data that is required for this thesis. First of all, publications that contain much information about the contractual quality are online available, just as many studies into the perceived quality are being conducted for this specific case which are online available as well. Information about the decision making process will be collected by conducting interviews with concerning public transportation authorities and providers. The fact that these public transportation authorities and providers are located relatively close to the UvA, which is the university where this research is being performed, makes it possible to conduct these interviews face to face, which is preferred to interviews by phone or internet.

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24 Flanders has not necessarily been selected due to its experience with competitive tendering

processes. Instead, this region is selected because it lacks this experience. Since one of the main goals of this research is to find out what effects competitive tendering might have on the contractual quality and perceived quality, it might be interesting to compare the contractual quality and

perceived quality between a case which is subject to competitive tendering, and a case which is not. Besides this difference, there have already been some researches into the public transportation sectors in both research areas, which makes it easier to obtain much information about the state of affairs of both cases.

3.2.2 Data selection

This section will introduce the methods that will be used to select and collect the information that is required to answer the research questions for this thesis. There are many ways to do this, and there is no particular data selection procedure that is dominant over others. The selection of data, and especially the technique that is used to collect this selection, must be seen as a strategy to collect the case study evidence that is needed to answer the research questions, and to verify or falsify the hypothesis that is related to these research questions. This research will make use of different techniques, which are interviews and reviewing various existing documents

The first source of data that will be used are various existing documents. Documentary information is likely to be relevant for every case study topic (Yin, 2009). There are many various documents available online, which makes them very accessible. This research will make use of ‘programs of requirements’, which are documents in which many demands concerning the public transportation service are being formulated, which forms the base for the contractual quality. These documents have been published online by the concerning public transportation authorities, and are freely accessible. Other documents that will be used to obtain the perceived quality are customer satisfaction surveys, which are being published by private research companies. These documents7 contain the outcomes of various surveys that have been conducted with public transportation customers during their journey, and are online available. Much of the information that is required for this research will therefore come from available documents

Besides documentary information, this research will also make use of interviews. Interviews are useful tools to find out what interviewees have experienced and what they think and feel about something you are interested in (Fylan, 2005). The interviews that will be conducted will be structured as semi-structured interviews. A semi-structured interview can be approached as a combined version of structured and unstructured interviews. This combination consists of many positive elements of both these interview forms, and conducting semi-structured interviews has therefore many advantages (Bryman, 2008). On the one hand, flexibility will be retained within this type of interview. Although an interview guide is included within semi-structured interviews, it is possible to change the order of the question, or to add or skip some of these questions during the interview. In other words, the interviewer can continuously adapt his strategy in order to get the

7

As is being mentioned within the literature review, surveys are often used to obtain the perceived quality for public transportation services. This research will however not use own surveys to obtain the perceived quality. This has two reasons. First of all, the researcher does not have enough time and financial means to be able to conduct enough surveys under public transportation customers during their journeys. Second, such surveys have already been conducted by private research companies, and the outcomes of these surveys have been published online.

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25 desired information. By changing the questions and areas discussed within the interview, important aspects to the interviewees can be addressed, which grants the possibility to the interviewer to gain more knowledge about the concerning subjects (Fylan, 2005). Since the fashion of several interviews may vary, and cannot completely be predicted at forehand, the interviewer has to improvise during the interviews where needed. Although maintaining flexibility within interviews has many

advantages, it has also some disadvantages which are being addressed by structured interviews. Maintaining flexibility creates the possibility for ‘missed opportunities’ during interviews. This may take place when the interviewer gets caught up in the concerning interview, and afterwards realizes that not all information has been acquired that he/she wished for. To overcome the possibility of ‘missed opportunities’, an interview guide will be drafted that serves as a guidance for the

interviewer during the interviews (Bryman, 2008). The interview guide also serves as a preparation for the researcher since in entails formulating interview questions out of relevant literature. The possible disadvantages of such an interview guide may be that it limits the boundaries of the

interview, which may lead to a limited response by the interviewee since there are no possibilities to deviate from the questions that are formulated at forehand by the researcher.

For this research, interviews will be conducted with the concerned public transportation authorities and providers. The reason for this is that these are all stakeholders within the decision making process for the public transportation services in the Amsterdam Metropolitan Area. It may therefore be expected that they will have much knowledge about this decision making process, which is useful information for this specific thesis. The initial intention was to conduct interviews with all involved public transportation authorities and providers in both cases. Due to the lack of responsiveness of some of these stakeholders, and the unavailability of time of others, this has not been achieved. Figure 3.2 gives an overview of the intended interviews, and the actual conducted interviews

Figure 3.2: Stakeholders for intended interviews

Amsterdam Metropolitan Area Flanders

Intended Conducted Intended Conducted

Public transportation Authorities Ministry of transportation and Environment No Belgian Federal government No Province of Noord-Holland Yes Department of Mobility

and Public Works

No Municipality of Almere Yes

City Region of Amsterdam Yes

Providers NS No NMBS No

Connexxion Yes ´de Lijn´ No

GVB No

EBS Yes

The process of quality : an alternative view on public transportation decision making processes

The Process of Quality

An alternative view on public transportation

decision making processes

The process of quality

Vincent Holst

5635357

dhr. drs. R. ter Brugge

Mentor

dhr. dr. M.C.G. te Brömmelstroet

Examinator

Contents

Preface

1

Introduction

About the ‘why’ and ‘what’ of this thesis

2

Literature review

A scientific discussion about leading concepts

2.1 Decisions, interests and contracting in competitive tendering

processes

2.2 Concepts of quality in public transportation services

2.3 Conclusion

3

Research design & Methodology

A plan how to get from questions to answers

3.1 Research Questions & Framework

•

Targeted

quality

Contractual

quality

Delivered

quality

Perceived

quality

3.2 Methodology