Improving Operating Expense Performance (Goal 11)

June 17, 2011

Countless studies in recent years have ranked SEPTA's operating efficiency among the top transit agencies in the United States. Among them, a seminal report submitted in 2006 to the Pennsylvania House of Representatives Transportation Committee featured a soup-to-nuts audit of SEPTA's operations, administration, management, and finances. It found:

"The management team at SEPTA is dedicated, highly experienced, and focused on important issues. They know the technical side of their business very well. The review team met person after person whose knowledge and commitment are as strong as any we have seen in the industry. ... One aspect of SEPTA's staff strength is the cost consciousness that seems to be inbred into so many of the managers. Perhaps it is the result of many years of living close to the edge. The review team met many people who spend the public's money as if it were their own. The report provides data that demonstrates that SEPTA's unit costs are quite reasonable and moderate when compared to others in the industry."

The House report noted, among other things, that SEPTA strategically reduced headcount by 14 percent between 1996 and 2006 while at the same time increasing worker productivity, as measured by an industry standard metric of vehicle revenue miles per employee, by 45 percent.

How were these gains achieved? By prioritizing a continuous cycle of administrative cost and quality control. For example, SEPTA has recently initiated efforts to improve the efficiency of its managerial and supervisory performance through a partnership with the Delaware Valley Industrial Resource Center (DVIRC). The DVIRC-led business strategy process, referred to as "Lean Journey," will provide SEPTA supervisory employees with training on principles and strategies for customer service, cost removal, and quality improvements in policies, processes and practices throughout the organization. The program will include technical training as well as soft skill training, featuring topics such as teaming, voice of customer, workplace organization, and process mapping, targeting both immediate and long-term skill development that is essential to evolve into a more self-sustaining lean enterprise organization.

Need for Speed

But perhaps even more noteworthy is that SEPTA's strong fiscal performance has been achieved in the face of unique operational constraints. Most significant among them is an unusually slow service speed, a measure that adds significant cost to the provision of many of SEPTA's services across the region.

Why is SEPTA's service slower than normal? According to a 2008 report by the Delaware Valley Regional Planning Commission (DVRPC), explanations vary by mode. For city bus and trolley operations, much of a vehicle's running time is spent loading passengers and waiting at traffic signals. In many cases, a vehicle will stop twice before each intersection: once in a traffic queue and once at the designated stop. Trolleys are vulnerable to additional delays if their right-of-way becomes blocked. On SEPTA's regional rail, which again is the slowest among its peers, low speeds are inherent to the system because of its unusually closely located stations. Interestingly, when accounting for the average distance between stations, SEPTA is fastest among 10 major commuter railroads in the US. Even so, time is lost at stations with low-level platforms because conductors are only able to open one entryway apiece, and along the rail network where equipment puts constraints on operating speeds.

SEPTA planners are doing their part to maximize service efficiency, even in the face of sub-optimal conditions. Regular evaluations of route operating performance are published in its Annual Service Plan. Routes are ranked by operating ratio - passenger revenue over fully allocated cost. The minimum acceptable operating ratio is determined to be 60 percent of the average operating ratio of the division (city transit, suburban, or regional rail). Routes that fall below the acceptable limit are evaluated in depth in the Annual Service Plan and are subject to service adjustments, route restructuring, consolidations, special subsidies, targeted marketing, or possible discontinuance.

But despite the effectiveness of SEPTA's Annual Service Planning process, the reality is that more significant structural changes are necessary for SEPTA to increase the speed - and therefore improve the cost-effectiveness - of its service. DVRPC's recommendations are grouped into three categories:

  • Transit First in the City of Philadelphia: The City and SEPTA should partner on service enhancement projects, with potential initiatives including stop consolidation and ultimately transit signal prioritization.
  • Enhancing the Effectiveness of Suburban Bus Service: Prioritize transit signal priority projects in locations where development patterns enable effective connections with transit service.
  • Regional Rail System Speed: Continue ongoing and successful efforts to install high-level platforms and address infrastructure bottlenecks through infrastructure modernization programs.

Since the document's publication, SEPTA has taken significant strides to implement many of DVRPC's recommendations. A rejuvenated Transit First collaboration with the City of Philadelphia has yielded its first pilot project - on the Route 47 in South Philadelphia. Service enhancement initiatives include: consolidating the existing 63 stops between Oregon Avenue and Market Street to 34 stops; moving three stops to the far side of key intersections; and a shift to headway-based scheduling between 6:00 AM and 6:00 PM to improve the reliability of peak-period service. These carefully structured reforms will be monitored over a six-month pilot period to evaluate time-savings outcomes.

On the regional rail, SEPTA has continued to install high-level platforms at several key stations, and continues to address bottlenecks by modernizing its infrastructure through its capital improvement program. These improvements, combined with the introduction of faster-accelerating Silverliner V railcars, will improve the speed and reliability of SEPTA's rail system.

Over time, both administrative and service-based efficiency initiatives will pay dividends. SEPTA's long-valued approach to continuous improvement will ensure that it continues to perform in measures of organizational efficiency, even despite noteworthy operating constraints.

Baseline & Target

SEPTA has established a target to improve operating expense performance by 10 percent by 2015. Performance will be measured based on three indicators: operating expense per vehicle mile, per revenue vehicle hour, and per passenger mile traveled. Progress will be tracked against a 2009 baseline:

  • Operating Expense/Vehicle Mile: $11.15
  • Operating Expense/Revenue Vehicle Hour: $155.69
  • Operating Expense/Passenger Mile Traveled: $0.70

A Plan to Improve Performance

Leverage vehicle overhaul (VOH) program. VOH offer an alternate way to reduce operating expense by extending the life of SEPTA's fleet. VOH is carried out at scheduled periods over the lifetime of a fleet vehicle at shops across the SEPTA system. Beyond keeping its fleet running, VOH allows SEPTA to make vehicles more efficient in service. Virtually all of SEPTA's VOH initiatives save operating or capital dollars in the long run, but several recent initiatives stand out because they have yielded significant returns:

  • Replacing worn brake pads on M4 cars with a longer-lasting, environmentally friendly material brought both economic and environmental benefits to the Authority, saving $209,000 per year in avoided brake replacements.
  • Implementing a procedure to extend the life of rail vehicle batteries reduced SEPTA's recycling burden and returned $26,000 each year to the Authority.
  • Replacing Silverliner IV DEB DC blower motors with AC motors delivered an estimated return on investment of $231,000.

Increase rate of "Transit First" implementation. The Transit First pilot project on the Route 47 will provide SEPTA and City planners with valuable information to instruct the implementation of more widespread speed-related service enhancements across the City and region.

Evaluate non-revenue operations performance. Although extensive deadheads are sometimes unavoidable because of the distance between a depot and a route, tracking this data would provide a strong baseline for future investments in more proximate depot facilities.

Implement cost-saving recommendations in ancillary reports. A number of reports have been written recommending that SEPTA make capital investments to lower operating expenses. SEPTA's Shops and Yards study, which is currently in development, recommends strategies to better place the transit fleet throughout the region to reduce deadheads. Similarly, the 2030 Northeast Corridor Master Plan highlights projects that could reduce SEPTA's regional rail operating expenses considerably. For example, SEPTA planners estimate that owning a small rail yard in Trenton would save the Authority $1 million annually in operating expenses.

Recognize employee innovation in cost-saving techniques. SEPTA is fortunate to have an experienced and skilled workforce that thinks critically about SEPTA's daily functions. These innovations, sometimes small, improve back-end processes that take place in SEPTA's shops and yards and can lead to significant cost savings. While many managers know the benefits of having innovative employees, SEPTA should institutionalize a means to recognize and support employees who improve SEPTA's performance. Recently, First Class Machinist Sam Johnson was recently recognized by the SEPTA Board for inventing the "MIV Cup Cleaner," a power-buffing tool that cleans rust off metal cups that protect bearings inside the axle housing. Johnson built the cleaner entirely out of scrap parts from the shop, avoiding the six-month to one-year wait for new machines that would still cost $20,000. His machine takes approximately two minutes to finish each cup-a tremendous improvement over the 30 minutes it would take to buffer them by hand.

What's Next

This week marks the end of our description of the 11 goals and associated initiatives for SEPTA to proactively improve its own sustainability, and in so doing supporting regional sustainability. Next week, we describe Goal 12: SEPTA's intention to partner with its stakeholders to pursue support for sustainable funding and policy for public transportation at the federal, state, and local levels.

Next Week: Advocating for Public Transportation (Goal 12)