Edward B. Pollan, P.E. LTK Engineering Services
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1 Fare Collection 101: System Planning Edward B. Pollan, P.E. Senior Systems Engineer LTK Engineering Services Seattle, Washington 2015 Revenue Management & Fare Collection Summit
2 System Planning You want a new fare collection system for your transit agency - WHY?!? 1. Your kids have IPhone 6's and want to know why your buses don t accept ApplePay. 2. There are now mobile apps to buy everything except the Mona Lisa and a $2 ride on your buses. 3. Your boss, the Executive Director, wants the really cool stuff his buddy just got for his agency. 4. Your transit agency still has $15 million in unused Grant Funding to spend before December.
3 System Planning To Build A Business Case for a New Fare Collection System: Follow an Objective Planning Approach That Results in a Justifiable Recommendation Supported by Management & Stakeholders
4 System Planning What have you got? What do you want to achieve? What can help you get there? What works, what doesn t? What is important to you? What is out there; does it work? Examine Existing Fare Policy & Collection Identify Agency Objectives & Priorities Examine Current Technologies & Approaches
5 Examine Existing Fare Policy & Collection Identify Agency Objectives & Priorities Examine Current Technologies & Approaches Define Evaluation Criteria Identify System Alternatives & Options Evaluate Alternatives Select Preferred Alternative
6 Examine Existing Fare Policy & Collection Identify Agency Objectives & Priorities Examine Current Technologies & Approaches Define Evaluation Criteria Identify System Alternatives & Options Evaluate Alternatives Select Preferred Alternative
7 Examine Existing Fare Policy & Collection Examining Your System Equipment Condition Annual O&M Costs Functionality Reliability & Maintainability Refurbish? Modify? Replace? Retire? Fare Policy / Payment Methods Rider Characteristics On-Board, Off-Vehicle, Off-Site, Online 1-Ride, Multi-Ride, Passes, Transfers Frequency: Commuter, Occasional Fare Product: Single-ride, Day-pass, Monthly Payment: Cash, Credit/Debit, Corporate Demographics: Banked, Unbanked (Title VI)
8 Examine Existing Fare Policy & Collection Identify Agency Objectives & Priorities Examine Current Technologies & Approaches Define Evaluation Criteria Identify System Alternatives & Options Evaluate Alternatives Select Preferred Alternative
9 Identify Agency Objectives & Priorities Talk to Key People; Get Early Involvement Stakeholder Involvement Revenue; Maintenance; Planning; Marketing; Engineering; Executive Mgmt Transportation; Finance/Accounting; Customer Service; Information Systems Security Regional Partners Focus Groups Operating Personnel Riders: Regular; Occasional Partners: Universities, schools, employers
10 Identify Agency Objectives & Priorities Objectives to Consider; Establish Priorities Increase Revenue Generate more revenue Collect the correct fare Decrease revenue theft Remove payment barriers Enable fare flexibility Facilitate partners/sponsors Minimize instances of: -unpaid fares; wrong fare - misused/altered fare media Improve process oversight Secure revenue & media Increase Ridership Decrease Costs
11 Identify Agency Objectives & Priorities Objectives to Consider; Establish Priorities Increase Revenue Increase Ridership Decrease Costs Improve service value Improve service quality Improve ease-of-use Open new markets Fares reflect service value Speed boarding times Special event surges Better rider data Simplify purchase, payment Adopt new payment methods Inform the customer Regional/Interagency fares Employer benefits programs Partnerships: universities, etc
12 Identify Agency Objectives & Priorities Objectives to Consider; Establish Priorities Increase Revenue Increase Ridership Decrease Costs Reduce annual costs cost of fare collection - in-house process improvements - outsource potential indirect costs - reduced dwell times - electronic data collection Maximize benefits of limited capital funds
13 Examine Existing Fare Policy & Collection Identify Agency Objectives & Priorities Examine Current Technologies & Approaches Define Evaluation Criteria Identify System Alternatives & Options Evaluate Alternatives Select Preferred Alternative
14 Examine Current Technologies & Approaches Understanding Technology & Lessons Learned Technology: proven; emerging Peer agency application: lessons learned Standards: existing & pending
15 Examine Current Technologies & Approaches Elements of Technology and Application Fare media Printed tickets & passes Magnetic fare cards Contactless smart cards Smart phone payments Card-based (encode card) Account-based (centralized) Open payments: Bank cards Gov t/corp. IDs; UPass QR (bar codes) NFC (near-field comm) Fare product sales Fare payment Equipment technology
16 Examine Current Technologies & Approaches Elements of Technology and Application Fare media Fare product sales On-site Pre-pay Onboard: Driver; Farebox In-station: TVMs Agency: TVMs, Customer Service 3 rd Party: Merchant, Employer, Institution Direct: Online, Subscription/Autoload, Mobile Phone Fare payment System technology
17 Examine Current Technologies & Approaches Elements of Technology and Application Fare media Fare product sales Fare payment On-Board Off-Board Proof-of- Payment Driver monitored: Farebox, Validator Agent monitored: Farebox, Validator Barrier controlled: Faregates Random inspection: Visual, Handheld Readers System technology
18 Examine Current Technologies & Approaches Elements of Technology and Application Fare media Fare product sales Fare payment System technology Card-based Accountbased Open payments Open source Standards Fare processed on-site, recorded on card Nightly central system updates Fare processed by central system in real-time; Read-only cards Robust data network Payment using agency- & 3 rd -party media; outsourced processing Non-proprietary: can use equipment from multiple suppliers Media, Equipment, Communications, Accessibility, Payment card security
19 Examine Existing Fare Policy & Collection Identify Agency Objectives & Priorities Examine Current Technologies & Approaches Define Evaluation Criteria Identify System Alternatives & Options Evaluate Alternatives Select Preferred Alternative
20 Identify System Alternatives & Options Fare structure Fare products Key Factors Influencing Alternatives Flat; zoned; mileage-based Service-based: local, express Single ride; transfer; Period pass; stored-value Ridership characteristics Customer demographics Agency culture Infrastructure Systems integration Trip frequency; service type Adult-senior-student Pass-ticket-cash Credit card, check, voucher, cash Banked / Unbanked / Underbanked In-house vs. outsource Risk acceptance Surface transit; Open or enclosed stations Broadband wired & wireless network On-board; in-station; back-office; regional
21 Examine Existing Fare Policy & Collection Identify Agency Objectives & Priorities Examine Current Technologies & Approaches Define Evaluation Criteria Identify System Alternatives & Options Evaluate Alternatives Select Preferred Alternative
22 Evaluate Alternatives Base Your Criteria on Your Objectives Capital Costs O&M Costs Fare Flexibility Fare Enforcement Service Quality Revenue Security Convenience Data Quality Versatility Initial investment On-going costs Introduce and revise fares Deter evasion; Collect the right fare Speed the trip Protect revenue in all phases Ease of use and administration Rider travel and preferences Future-proof: adaptable; scalable
23 Evaluate Alternatives Systems Operating Costs Operations Maintenance Fare media Revenue processing Customer service Fare inspection Information systems; Data network In-station or dedicated on-board fare collection Field; component; inventory Stock inventory, sales/refunds; transit benefits; distribution/control Cash revenue collection & processing Sales & payment transaction charges Financial settlement & reconciliation Account management; Call center; Walk-in; Web-based Inspection; processing/tracking; adjudication Software & network maint/admin Software licenses; End-user support
24 Evaluate Alternatives Systems Capital Costs System Development & Design Staff project support/mgt Professional services System requirements; Spec preparation Procurement Management Procurement Contractor Implementation Solicitation / evaluation / selection; Project management; Design review; Systems interfaces Equipment; Media; Software; Engineering; Project mgt.; Installation & testing; Documentation; Training program, Warranty Infrastructure upgrade; Site preparation Recruitment; (re)training; procedures; public education; transition plan
25 Examine Existing Fare Policy & Collection Identify Agency Objectives & Priorities Examine Current Technologies & Approaches Define Evaluation Criteria Identify System Alternatives & Options Evaluate Alternatives Select Preferred Alternative
26 Select Preferred Alternative Consider all objectives; give greater weight to priorities Communicate: Be open about the selection process After Selection: Be open about the process: maintain support Have an executive-level champion for the project Identify and Address Key Decisions System Requirements/Operating Plan (ConOps) Implementation Plan and Schedule
27 References For further information: Transit Cooperative Research Program (Transportation Research Board) TCRP Report #94: Fare Policies, Structures and Technologies: Update, Washington, DC (2003) Transit Cooperative Research Program (Transportation Research Board) TCRP Report #95: Travel Response to Transportation System Changes Transit Pricing & Fares, Washington, DC (2004) American Public Transportation Association Automatic Fare Collection System Planning and Implementation Guidelines, Washington, DC (2006) Ed Pollan LTK Engineering Services Seattle, WA ext
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