Transit Service Contracting and Cost Efficiency
The federal government, along with many states, has adopted policies favoring the provision of public transit by the private sector. During the 1980's, this turn to contracting to halt rising operating deficits prompted several studies into the impact of contracting on operating efficiencies. Most research found that service contracting saves 10 to 60 percent over publicly operated services. However, no research has yet examined the long-term cost trends of private contracting vis-a-vis public operations. The evaluations done to date often make inappropriate comparisons between small single mode private carriers and large multi-service transit authorities with greater political and social obligations. As a result the findings from these studies are certain to show dramatic savings, yet do not address the underlying dynamics driving transit costs such as political pressures to provide service. This study examined cost efficiency trends for 142 transit operators providing fixed-route bus transit between 1989 and 1993. This analysis produced no evidence that fully contracted operations cost less per revenue hour than publicly operated services doing no contracting. Vehicle and driver scheduling inefficiencies were found to contribute the most unit costs. Estimated elasticities indicate that a 10 percent reduction in vehicle scheduling inefficiency may produce a 19 percent improvement in cost efficiency. A 10 percent improvement in operator scheduling efficiency shows a 6 percent reduction in operating costs per revenue hour. These findings indicate that transit service contracting may not produce cost savings over the long-term and that strategies of decentralization and changes in the craft structure for labor may be more appropriate ways for relieving the fiscal crisis of public transit.
|Date of creation:||01 Jan 1997|
|Contact details of provider:|| Postal: 109 McLaughlin Hall, Mail Code 1720, Berkeley, CA 94720-1720|
Web page: http://www.escholarship.org/repec/uctc/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:cdl:uctcwp:qt6m8293j1. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lisa Schiff)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.