BUS BENCHMARKING ACTIVITY REPORT

BANGALORE AND CHANDIGARH

MAY 2018

Improving Financial Reporting and Management Practices of STUs

INDIA
About Stakeholders:
Shakti Sustainable Energy Foundation works to strengthen the energy security of India by
aiding the design and implementation of policies that support renewable energy, energy
e ciency and sustainable transport solutions.

Contact:
The Capital Court, 104B/2 Left Wing, 4th Floor, Munirka Phase III, New Delhi 110067
Delhi Tel: +91 11 47474000 | Fax: +91 11 47474043 | Website: www.shaktifoundation.in

INTERNATIONAL ASSOCIATION OF PUBLIC TRANSPORT (UITP) is the

international network for public transport authorities and operators, policy decision-
makers, scientific institutes and the public transport supply and service industry. It is a
INDIA platform for worldwide cooperation, business development and the sharing of know-how
between its 1,500 members from 96 countries. UITP opened its first Liaison O ce in the
region in Bangalore in March 2007.

Contact:
UITP India Regional O ce, BMTC Shanthinagar Bus Station Complex, 2nd Floor, K. H. Road, Bengaluru 560027,
Karnataka Tel: +91-80-22952555 | Fax: +91-80-22952431 | Website: www.india.uitp.org

Special Thanks to: Authors:

BANGALORE CHANDIGARH Stephane KODECK
Mr. V Ponnuraj, IAS Mr. Amit Talwar, PCS Arno KERKHOF
Mr. K.R. Vishwanath Mr. Yashjeet Gupta Ravi GADEPALLI
Mr. P. Minulla Saheb Mr. Suresh Ruwar Jerome POURBAIX
Mr. B.C. Ganganna Gowda Other team members Karine SBIRRAZZUOLI
Mr. B.R. Krishnaiah Setty Jaspal SINGH
Mr. Vijaykumar Rai Siddharth RAYAROLU
Mr. B.C. Renukeswar
Mr. Nagendra
Ms. Manjusree
Ms. K. Hemalatha
Ms. S. Shyamala

Disclaimer:
The views/analysis expressed in this report/document do not necessarily reflect the views of Shakti Sustainable Energy
Foundation. The Foundation also does not guarantee the accuracy of any data included in this publication nor does it
accept any responsibility for the consequences of its use.

*For private circulation only.

Acknowledgements
UITP India would like to express its sincere gratitude to Shakti Sustainable Energy Foundation (SSEF) for supporting the
development of the first ever 'Bus Benchmarking' report for Indian State Transport Undertakings (STUs).

UITP would also like to express its gratitude for the continuous commitment of the 10 participating companies to this
international project, which is truly aligned with the UITP missions. Indeed, such e orts allow sharing of information
between companies and helps them understand their business better.

This exercise is intended to be performed on a yearly basis (next data collection during the first semester of 2018) and the
publication of the second benchmarking report is expected in September 2018. In the meantime, some more companies
are expected to join the initiative.

This first report has also generated innovative ideas for further development of UITP's 'Bus Benchmarking' model. This
model is multi-modal and can be applied for Trams, trolleys or any kind of transport activity. If a su cient number of
companies are interested, specific benchmarking reports can also be published.
Let's continue the excellent work together!
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 INDIA Bus Benchmarking Activity Report - Bangalore and Chandigarh
Improving Financial Reporting and Management Practices of STUs

1 Introduction
The 'Bus Benchmarking' exercise is intended to help bus operators understand their business better by benchmarking
themselves against other operators. Traditionally such comparisons have been carried out through various 'Key
Performance Indicators (KPIs)' that define the performance i.e. outcome of bus operations. These include KPIs
measuring physical, operational and financial performance of the operator, often defined according to the departmental
sub-divisions used for auditing purposes. However, the definitions and data sources for measuring KPIs vary between
operators, therefore making it di cult to compare them against each other.

In order to overcome the challenge of varying KPIs, the UITP Bus Committee initiated a working group in 2011 to develop
a framework to benchmark results between operators. After many deliberations, in the beginning of 2015, the committee
developed and finalized a macro-economic management model that compares operators based on a common set of
activities which are available across most bus operators. The details of the benchmarking mode and the methodology
adopted across cities are explained in the later sections of the report.

UITP started to roll out the model from mid-2015 and a total of 8 bus companies across the world were benchmarked by
2016. With support from Shakti Sustainable Energy Foundation (SSEF) the model is extended to two Indian Cities -
Bengaluru (Karnataka) and Chandigarh. The standard bus activity model is extended to each of these cities for a
comparative benchmarking exercise. The list of the 10 cities that participated in the exercise and their locations are
provided below.

1. Italy Cagliari – CTM Spa

2. Turkey Kayseri Ulaşım
3. Switzerland Geneva – TPG
4. Canada Montreal - STM
5. Spain Barcelona – TB /TMB
6. Portugal Porto – STCP
7. Russia Moscow – Mosgortrans
8. Belgium The Flanders – De Lijn
9. India Chandigarh – CTU
10. India Bangalore – BMTC

The purpose of a business model is not to be perfectly correct. This is not a bookkeeping exercise. This is a management
tool, and sometimes assumptions are made, introducing some bias in the reasoning. However, these necessary short-cuts
do not impact the end result significantly. In other words, a more detailed exercise may not change the conclusions. This is
where the added value lies: in the pragmatism of the approach.

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The targeted audience of this macro-economic exercise are the top management of the bus operator including the Chief
Executive O cer (CEO) and the Board Members. The approach proposed is pragmatic and straightforward. Therefore,
with a limited investment in time and money, it allows decision-makers to quickly identify the areas for improvement and
opportunities.

1.1 Limitations of the benchmarking exercise

Even though multiple bus operators are benchmarked across various activities, this is not a comparative exercise. The
purpose of this exercise is not to award a specific company or to determine a ranking of the “best performing companies”.
There are no best or worst performers as the activities undertaken by bus operators are context specific. Nobody can be
best-in-class in everything, and spending more money on a context specific activity may be required if there is a return on
the investments made. The objective here is to tell leaders how the company they are responsible for is positioned
compared to the others. The model will not necessarily give all the answers but it will help to raise the right questions.
The benchmarking exercise does not focus on the technical aspects of a bus operation. It gives a holistic view on all the
activities performed within a company. The purpose is to present a new way of allocating costs and presenting other cities
for example.

1.2 Structure of the report

The report presents the detailed framework and implementation methodology of the Bus benchmarking model in Chapter
2. The Indian case cities selected for the exercise and the data collection methodology adopted in these cities is explained in
Chapter 3, along with an overview of the data collected in these cities. The benchmarking of the two Indian cities against
the 8 international case studies is presented in Chapter 4. Chapter 5 presents the conclusions and key recommendations
from the project.

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2 The Bus benchmarking model

Most bus operators perform an identical set of activities, like driving a bus, maintaining the engine, organizing the network,
salary payments, and development of Information technology (IT) systems, which are common across operators. By
segregating easily available data like the costs incurred by these operators on various activities, it becomes possible to
compare the results. Bus operators in India and also in many other countries, classify their costs of operation according to
various heads of expenditure like man-power, infrastructure, fuel etc. However, such allocation doesn't give a picture of
what costs are needed and what are not. It is important to invest in areas that'll result in improved returns and cut down on
unnecessary costs.

Therefore, the bus benchmarking model reviews the various costs incurred by operators and classifies them according to
various common activities identified across operators. The following sections explain the framework adopted by the 'Bus
Benchmarking Model' and the definitions of its sub-components.

2.1 Model definition

The 'Bus Benchmarking' model compares costs spent on various activities involved in operating a bus system across
operators, not in absolute numbers, but in terms of their relative importance. As simple costs are heavily influenced by the
local currency and the fluctuating exchange rates of the chosen reference country, we adopt proportional costs instead, to
make it more universal. Activity wise costs also help in overcoming sub-division/ department wise accounting practices
typically adopted by operators, as they are organisation specific and can't be used for benchmarking.

The Bus benchmarking exercise follows a 3 step methodology. Once the 3 first steps are completed, the final step is the
Benchmarking between networks.

Step 1: Define total cost of the bus operation

Step 2: Allocate costs to direct and support activities (direct allocation if one-to-one relationship between a cost center
and an activity exists, else through an allocation key)
Step 3: Allocate costs of support activities to direct activities (using common keys – see below) These three steps are
summarized in the following figure, while the detailed explanation of each of these steps is provided in the
following sections:

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Step 3 Direct Activities

Step 1 Direct Activities
Including Support
Activity costs

Support Activities
Cost Drivers

Step 2

Figure  1: Summary of Steps involved in the Bus Benchmarking Exercise

2.1.1 Defining total cost of bus operation

While some costs involved in any bus operation are directly made within the operation itself, some others can be shared
with other parts of the business too. For example, a company operating buses and metros might have shared services for
some activities (typically: General Management, Finance, HR, Legal to name a few). Therefore, the very first step of the
model is to gain an overview of all the costs (direct or indirect) related to bus operation.

Information management systems between companies are di erent, and there is no best-in-class data structure.
However, all the expenditure that is under the responsibility of a company have to be spread into its main businesses
(if there is more than one). This is a pre-requisite to calculate respective profitability.

2.1.2 Allocate costs to direct and support activities

Once the costs of the operation are available, they must be spread into activities as per the activity model described below.
A distinction must be made between direct and supporting activities:

• Direct activities are those that are directly linked to the core business. This includes bus maintenance or driving a
bus for transporting passengers
• Support activities are the one's necessary to run the operation, but are not directly linked to the core business.
For example- General Management or IT

The UITP Bus committee has deliberated and identified a total of 5 direct activities and 9 support activities required for bus
operations.

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2.1.2.1 Defining Direct Activities:

The following are the five direct activities identified for the model:
• D1: Bus maintenance and technical management
• D2: Transporting passengers (Driving bus)
• D3: Operational Management
• D4: Network planning
• D5: Dispatching + real time management and field support
The details of various sub-activities classified under each of these direct activities are presented in the following Figure.

Table  1: Definition of the Direct Activities

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2.1.2.2 Defining Support Activities:

The following are the nine support activities identified for the model
• S1: Asset Management and Procurement
• S2: Human Resources + Internal Communication
• S3: Commercial
• S4: Marketing and Customer Care (including external communication)
• S5: Intelligent Transport Systems (ITS)
• S6: Public contracts and legal a airs
• S7: Survey's, audits
• S8: Finance / Accounting
• S9: General Management
The details of various sub-activities reported under each of these activities are presented in the following Figures.

Table 2 : Definitions of the Support Activities

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2.1.3 Use cost drivers to allocate supporting activities to direct activities

The segregation of direct and supporting activities helps bus companies in a detailed evaluation of their cost structures and
helps them identify specific areas for course-correction. Additionally, the supporting activity costs have been allocated to
the specific direct activity they support, to estimate the total resource consumption across all direct activities.

The cost associated with each supporting activity has an impact on one or more direct activities. Therefore, cost drivers are
used as the basis for assigning the costs of various supporting activities to their corresponding direct activity. When a
supporting activity is allocated to two or more direct activities, a trade-o must be made on the proportion allocated to
each direct activity and pragmatic solutions are to be found. In other words, cost drivers are the proportion in which the
supporting activity costs were allocated to their corresponding direct activities.

Since this is the first ever exercise of benchmarking, the cost drivers are allocated based on feedback generated by the
members of the UITP Bus Committee. The following points explain the process adopted for this allocation while the figure
presents an overview of the direct activities to which each supporting activity is allocated:

• The HR & Internal Communication costs are necessary to support both Direct and Support activities. Therefore,
they will be allocated to both the activities.
• Some of these support activity costs represent marginal costs compared to total. In that case a simple allocation
key has been chosen. Indeed, the investment in time, to be more accurate, is useless as the impact on the results is
too limited.
• The support activity costs “Asset Management & Procurement” will be allocated to Direct Activity “Transporting
Passengers”.
• The support activity costs “Human resources and Internal Communication” will be allocated to all the activities
(with the exception of ITS and itself) based on the number of FTE's. It has been decided to weight a blue collar as
1 FTE and a white collar as 2 FTE. Reason is that management time from HR for white collars is much higher.
• The support activity costs “Commercial” will be fully allocated to the Direct Activity “Transporting passengers”.
• The support activity costs “Marketing and customer case (including external communication) will also be fully
allocated to the Direct Activity “Transporting passengers”.
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• The support activity costs “ITS” will be allocated to the 5 direct activities, using the following cost drivers:
o Bus maintenance and technical management: 15 %
o Transporting passengers: 15 %
o Operational Management: 10 %
o Network planning: 10 %
o Dispatching + real time management and field support: 50 %

• The support activity costs “Public contracts & Legal A airs” will be allocated to the 5 direct activities, based on
judgment.
• The support activity costs “Survey's, audits” will be allocated to 3 direct activities (“Bus maintenance and Technical
Management”, “Transporting passengers” and “Dispatching + Real time management and field support”) based on
judgment.
• The support activity costs “Finance & Accounting” will be allocated to the 5 direct activities, based on judgment.
• The support activity costs “General Management” will be allocated to 3 direct activities (“Bus maintenance and
Technical Management”, “Transporting passengers” and “Network Planning”) based on judgment.

Figure  2: Chart showing Cost Drivers allocation

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2.2 Alternative model structures to incorporate variations between cities

There are two key findings regarding the model -based on the International exercises:
I) Activity segregation:
Companies purchase buses in diverse ways, with the warranty period being the main di erence. When a company
purchases a bus with a “normal” warranty period (normally 2 years), the purchase price is lower than when a
company purchases a supplementary warranty (for example: an extension of 3 years). Depending on book-
keeping practices, costs for maintenance will be partly covered through the depreciation mechanism or will fall into
the maintenance directly. In the model, depreciation costs are part of the activity “Asset Management &
Procurement” which is a support activity, and maintenance costs are part of direct activity “Maintenance &
Technical management”.

Furthermore, depreciation methodologies for buses are also di erent for di erent companies, even though the
basic principle remains the same, i.e. to spread the purchase price over the years following the acquisition. 3
di erent methodologies were identified:
- The purchase price is used as a base for linear depreciation
- The amount to be depreciated is based on the purchase price, added with the cost of a new engine that will
replace the existing one after 8 years. Depreciation is also linear
- The Depreciation is based on the usage of the bus (number of km) during a specific year, with a maximum of
number of km (resulting in a depreciation spread over 8 to 10 years). Depreciation in that case is not linear.

ii) Bus shelter management

Bus shelter management is carried out by various agencies across countries: by the bus company, by the
municipality or by a third party (with sometimes costs for maintenance that are recovered by advertising). The
number of bus stops equipped with shelters also varies from city to city. It is important to trace the costs on bus
shelters within the total cost of bus operation to allow their reconciliation with the various activities of the model.
Therefore, for benchmarking, all the costs related to the network assets have to be separated from the remaining
operational costs upfront, which can be di cult if the company doesn't maintain them separately.

VIEW 1 VIEW 2
Infrastructure and

Direct activities Operation

Maintenance
Bus

Support activities Support

Figure  3: Re-arranging activity costs to incorporate variance between bus operators

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In order to overcome the variance in warranty and bus shelter management costs between companies, the model is
rearranged such that asset creation and maintenance costs are taken out of direct and indirect costs and calculated as a
separate component. Since procurement and management are included under the same head, even if their methodology
of calculation varies between companies, they will still be included under the same head. The model will now be calculated in
three sub-components instead of 2, as shown in the following figure. The details of the three level segmentation are the
following:

I) Bus infrastructure and maintenance: Total of “Maintenance & Technical Management” and “Asset management”
(excluding procurement that will be part of the support activities): this is the total of the costs for buses and of all
the infrastructure that is needed to operate. This neutralizes the way buses are purchased (with more or less
warranty)
ii) Operation: Total of “transporting passenger”, “Operational Management”, “Network planning” and “Dispatching
& Real time Management” (These are the operational costs: the drivers and the management and support to the
drivers)
iii) Support: Total of all support activities (Procurement, HR, Commercial, Marketing, ITS, Public contracts and legal
a airs, Survey's & audits, Finance & Accounting, General Management)

Finally, for the sake of clarity of the report, 4 support activity costs will be grouped into one head- 'Other support activities'
as they represent a minor part of the costs. Therefore, the results will show a comparison of the following 6 support
activities:

i. HR & internal communication

ii. Commercial
iii. Marketing & Customer care (including external communication)
iv. ITS (Intelligent Transport System)
v. Finance
vi. Other support activities (General Management, Procurement, Public contracts and legal a airs, Surveys &
Audits)

A special attention has been given to the data collection itself: each participating company was visited by the same
consultant (Stéphane Kodeck) who presented the model to a large group of local stakeholders. Individual sessions with
many key players have taken place and have helped create a strong link between the available data and the model. This gives
a su cient level of confidence that the model has been applied consistently across cities. This is paramount for the
benchmarking exercise: it gives the guarantee that the comparisons are sound and reliable.

The model focuses on costs: how much money does a company spend each year to operate his bus network? To avoid the
exchange rate issue, the report shows the relative level of expense for a specific activity. No money conversions are made.

It does not include the revenues, as the revenue level is largely dependent on the ticket price. Pricing levels of bus trips is -
in the case of public transport companies - largely determined by the authorities and are dependent on specific local
circumstances. Benefits from a benchmarking remain limited.

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3 Case Cities for benchmarking and preliminary findings

Bangalore and Chandigarh were identified as the two Indian case-cities to undertake the Bus Benchmarking study. The
following is a brief background of the cities and preliminary findings of the visits for benchmarking exercise.
3.1 Bangalore and Chandigarh as case cities
3.1.1 BANGALORE, KARNATAKA
Bangalore Metropolitan Transport Corporation (BMTC) is the largest city bus operator in India with a fleet of more than
6,400 buses and an average daily ridership of approximately 5 million trips per day. BMTC is also one of the largest city bus
operators of premium buses in the country. They are in the process of procuring 1,500 more buses and inducting an
additional fleet of 1,500 buses under Public-Private Partnership (PPP) model.
The organisation is facing many challenges including old depot infrastructure, absence of scientific planning and
scheduling application, manpower structuring and maintenance. BMTC has installed Intelligent Transport Systems (ITS)
in the form of vehicle tracking devices and electronic ticketing machines in all the buses. However, the project hasn't yet
generated the intended benefits. The organization is su ering losses owing to increase in various costs.
Given the scale and importance of BMTC to the city, it is selected as a case city that can o er learnings to other
metropolitan cities in India
3.1.2 CHANDIGARH, UNION TERRITORY OF INDIA
Chandigarh Transport Undertakings (CTUs) is the public bus operator in the city of Chandigarh. CTU has a total fleet of
about 517 buses which include both long-distance regional buses and also city & suburban buses. There are currently
around 471 buses that are being operated after condemning the old buses which are operating from four depots of CTU.
Out of the 471 buses, 276 buses were running as city bus service, which serve the Tri-City Area of Chandigarh, Mohali and
Panchkula. There are 60 suburban buses to the nearby areas like Zirakpur, Kharar, etc. The fleet includes standard size
buses, semi low floor non-A/C buses, A/C buses, Low Floor A/C buses, Low floor non-A/C Buses, and mini A/C buses. 135
buses are running on long routes. CTU is also planning to induct 400 more BS IV-compliant buses to expand city transport
services.
CTU is currently su ering from significant losses from its bus operation owing to operational issues, including
maintenance, manpower structure and planning. The current exercise will help identify gaps in the existing practices of
CTUs and will recommend measures to improve the same. However, it is important to highlight that the losses made are
dependent on both the costs and revenues, while the benchmarking exercise focuses only on costs.
3.2 Data collection process
The data collection in the two cities was done by through personal visit of Mr. Stephane Kodeck, the UITP consultant for
the project and secondary data shared by BMTC and CTU. The detailed analysis of the data and benchmarking of the bus
companies is covered in the following sections. However, the following two points distinguish the two Indian bus companies
from the remaining 8 companies studied as a part of the bus benchmarking exercise:
i) Data on the activity-wise costs data from Indian cities (Chandigarh and Bangalore) are covering the period April 01,
2016 to March 31, 2017 as these companies close their annual accounts at the end of March. Many of the western bus
operators follow a January to December cycle

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ii) In both Chandigarh and Bangalore, a bus is operated by 2 people: the driver and conductor i.e. the person in charge of
cash collection. Both have been reported under the direct activity “Transporting passengers”. This is unique to India
since many of the western operators have single crew buses. However, given the manual ticketing practices of Indian
cities and the higher occupancy numbers, it is important to have a conductor to ensure adequate ticket collection
3.3 Overview of BMTC and CTU
The participating companies in the bus benchmarking exercise vary on various issues including their number of employees,
fleet, infrastructure etc. This section presents an overview of how BMTC and CTU compare to the rest of the participating
companies on various parameters and to highlight the key di erences. The remaining companies have been presented
anonymously due to the Non-Disclosure Agreements UITP signed with them.
3.3.1 No of employees
The number of employees (expressed in FTE's or “Full Time Equivalents”) represents the number of people contracted by
the company. It does not necessarily reflect the numbers of people working on the bus operation as some activities are
outsourced. The number of employees is summarized in the next table, with a split between Blue Collars (People mainly
working with their hands i.e. drivers, conductors and maintenance sta ) and White Collars (People mainly doing
“intellectual” work i.e. planners, management etc.).

Bangalore has the highest number of employees compared to any other company, chiefly due to the practice of having a
conductor in addition to the driver, which typically makes it 2 extra sta per day as they operate in two shifts of eight hours
each.

Figure  4: Number of blue and white collared employees in bus companies

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Improving Financial Reporting and Management Practices of STUs

There are significant di erences in the proportion of Blue and White Collars as illustrated in the next graph. The following
table shows for each activity if it is performed internally or externally. An activity is considered as “external” if at least 10 %
is done by third parties. As expected, most of the activities are performed by the companies themselves.
Even in the case of Bangalore and Chandigarh, although some activities are partly or fully outsourced, most of the
activities are performed internally.

Table  3: Outsourced and Insourced activities by various bus operators

3.3.2 Number of buses in operation

The following table shows the number of buses in operation across various participating companies. BMTC operates more
number of buses than any other city bus companies while CTU with 434 buses is in the middle-range of companies.

Figure  5: Number of buses currently with the bus company

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 INDIA Bus Benchmarking Activity Report - Bangalore and Chandigarh
Improving Financial Reporting and Management Practices of STUs

The following graph illustrates the number of FTE's per bus. Results show significant variations, primarily due to the
variation in number of outsourced activities. Both Bangalore and Chandigarh are observed to have a higher than average
sta s per bus, primarily due to the Indian practice of having a conductor and a driver on-board the bus. Many cities are
observed to have only a driver on-board the bus, with passengers using vending machines and validators for their tickets.
However, given the limited technology penetration in Indian bus systems and the high peak hour occupancy observed in
buses, it may be di cult to reduce the number of conductors in the short term.

Figure  6: Number of Full-Time Equivalent employees (FTE's) per bus

3.3.3 Age of fleet

In the following chart, the average age of the fleet across cities is reported. It is observed that CTU has the youngest fleet
amongst all participating companies, while Bangalore with an average age of 7.1 years is still lower than the average age of
most companies. Given the limited funding that Indian bus companies have for bus procurement, it is likely that the
younger fleet age is caused due to early scrappage of vehicles rather than recent fleet additions. Therefore, such a low
average age points to the need for improving the maintenance practices of the fleet and keep them on-road longer.

Figure  7: Average age of fleet in di erent companies

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3.3.4 Annual mileage of buses

The next chart represents the average annual mileage of buses i.e. (yearly number of km travelled) / (number of buses).
Bangalore and Chandigarh with 66,630 km and 69,970 km annual mileages respectively, perform slightly better than the
numeric average of all participating companies. However, it has to be noted that while higher mileage points towards better
service availability, the provision of these services without adequate planning will lead to services in low-demand routes and
hours which further lead to losses to the bus operator. Therefore, this statistic has to be seen in combination with planning
to get a better picture.

Figure  8: Annual mileage of buses in di erent companies

3.3.5 Infrastructure
This section summarizes the number of buildings that are in operation for each bus company. Some companies have
reported a large number of buildings under the line “other buildings”, which are mainly ticket sales o ces. A depot is
defined as an area for bus parking and maintenance, while garage only has parking facilities. The following tables give an
overview of their numbers. Bangalore, which has the highest fleet among all companies also has the highest number of
supporting infrastructure like depots and garages.
It is to be noted here that a large majority of cities do not have terminals (buildings / areas as defined in India, where buses
stop for a significant time - more than a few minutes – during a trip). To reconcile with the total number of buildings, the
number of terminals are reported under the item “others”.

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Table  4: Number and types of buildings used by BMTC and CTU

From the previous table, the total number of depots and garages were calculated by combining exclusive garage or depot
numbers with combined Depot and Garage location and are summarized in the following table.

Table  5: Summary of total number of Depots and Garages in various cities

The following two graphs present the average number of buses for each depot and the number of buses for each garage. It
can be observed that the number of buses handled per depot or garage in Bangalore and Chandigarh are much lower than
many International bus companies, indicating a significant scope for improvement.

Figure  9: Number of buses per garage

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Figure  10: Number of buses per depot

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4 Benchmarking of Bangalore and Chandigarh

The data presented in the previous chapter is segregated into direct and supporting activity-wise costs using the 'Bus
Benchmarking methodology' presented in section 2.1. This chapter explains the results of benchmarking for Bangalore and
Chandigarh.
4.1 General data
This following chart shows the proportion of direct and support activities within the total cost of the company. It is
observed that on average companies spend 81% of their costs on direct activities, while Bangalore and Chandigarh spend
approximately 91% on direct activities. The high direct activity proportions are primarily driven by relatively high
manpower cost due to the presence of conductors' on-board buses and manpower intensive maintenance practices of
Indian bus companies.

Figure  11: Proportion of direct and support activity costs of each bus company

The direct and support activity costs are restructured into bus infrastructure and maintenance, operation and support
costs as explained in section 2.2. The following charts present the restructured costs for all the benchmarked companies.
Even these charts highlight that more than 50% of costs in Bangalore and Chandigarh are spent on infrastructure and
maintenance. Despite having extra manpower in the form of conductors, maintenance of assets i.e. fleet and
infrastructure was observed to have a higher cost. This is surprising considering the fact that the age of fleet of BMTC and
CTU is lower than most other companies. This is explored further in the following section.
4.2 Maintenance costs
In the following charts, comparisons are made between:
- Age of the fleet and the costs for “Maintenance & Technical Management”;
- Age of the fleet and the costs for “Maintenance & Technical Management” + “Operational Assets”;

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- Number of kilometers per year per bus and the costs for “Maintenance & Technical Management”;

- Number of kilometers per year per bus and the costs for “Maintenance & Technical Management” + “Operational
Assets”.

The idea behind these charts is to check for the common perception that the age and usage of the fleet has an impact on
the Technical & Maintenance costs. The lack of a clear trend shows these perceptions cannot be conclusively supported.
Bangalore and Chandigarh, with a very young fleet compared to the average still have very high maintenance, technical
management and operational costs. Similarly, their costs are significantly higher per km operated, when compared with
the remaining cities. Both these findings highlight how buses of low quality generate high maintenance costs
independently of the age and mileage of the fleet. It clearly points to the need for Indian cities to focus on inducting better
quality fleets.

Furthermore, cities with older fleets carry out mid-life engine review (in many networks, after 7 or 8 years) which has a
large impact on maintenance costs during these years, but allows reduction of costs later for several years. Such practices
can also be adopted in India to increase the average age of usage of fleet while simultaneously reducing the operating costs.

The Indian tra c conditions which lead to more wear and tear of vehicles compared to more developed countries could be
one of the reasons for the higher maintenance costs. Additionally, limited mechanization of depots and majority of the
work done by manual methods could have contributed to the higher costs.

The Indian tra c conditions which lead to more wear and tear of vehicles compared to more developed countries could be
one of the reasons for the higher maintenance costs. Additionally, limited mechanization of depots and majority of the
work done by manual methods could have contributed to the higher costs.

Figure  12: Age of the fleet vs Maintenance & Technical Management

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 INDIA Bus Benchmarking Activity Report - Bangalore and Chandigarh
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Figure  16: Percentage of Operational costs, Maintenance + Operational assets

and Support activities in each bus company

4.3 Operational data

This section will focus specifically on the Operational costs and their related Full-time Equivalent employees (FTE's). As a
reminder, Operational costs consist of 4 direct activities:
- Transporting passengers: essentially the drivers (and cash collectors for the Indian companies)
- Operational management: the management of the drivers
- Network planning: everything that is done in advance of the operation
- Dispatching & real-time management: everything that is done during the operation
This first chart shows the proportion of costs spent on each of these activities.

Figure  17: Proportion of cost spent on various direct activities

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The following charts present the number of people working for “Network planning” and the number of people working for
“Dispatching & real-time management” related to the number of buses and/or people working for the activity
“Transporting passengers” and/or number of km.
Network planning:
Network planning contains all activities related to planning done in advance (no real time management). The ratio of
number of FTE's doing network planning with respect to the number of buses, gives a ratio that will show the intensity of
the planning activity. Bangalore has a very low number, indicating that there is very little planning activity within the
company compared to the number of buses and to the yearly total distance (see figures 18 and 19). Increased investment in
planning activities could generate benefits that o set costs under other heads like fleet required for operations, crew
required for operations and management etc. In this context, Chandigarh has an average position.

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Dispatching & real-time management:

Dispatching and real-time management leads to increased service reliability for the bus users. Good dispatching ensures
that buses leave the depots on-time. Real-time management helps the operator to incorporate any changes in schedules
due to on-ground variations in tra c conditions, route diversions etc. Both Bangalore and Chandigarh have less than
average numbers on dispatching and real-time management, thereby not giving themselves the best chance of schedule
adherence.

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4.4 Analysis of support activity costs

It is important to notice that not all companies have activities in every support activity. Therefore, a comparison in
percentage of each of the support activity relative to the total cost for support activity can be misleading. The below tables
show the proportion of cost incurred on various supporting activities compared to their total costs.
It observed that Bangalore and Chandigarh have significantly lower supporting costs compared to all other international
examples. Given the importance of activities listed here, this points to a significant need for re-structuring their costs.
These cities should look into increasing the proportion of supporting costs, thereby giving themselves the best chance for
adequate support to their direct activities.

In the following chart, the number of FTE's working within the HR department is compared to the number of FTE's
working for the company. In other words, how many people does an HR person manage in average. This can only be done
for companies that perform this activity internally. Bangalore has less than average number of HR sta to manage their
activities while Chandigarh has approximately twice the average. This points to a significant scope for improvement in HR
sta e ciency in Chandigarh.

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4.5 Total activity costs (including support activity costs)

The supporting activity costs presented above have been allocated to their corresponding direct activities using the cost
drivers explained in section 2.3. This results in a new aggregate view of the results with a total for each of the 5 direct
activities. The following chart presents these results. Bangalore and Chandigarh have the least proportion of costs
allocated to transporting passengers, dispatching buses and their management. This is due to a significantly higher
proportion of costs allocated to maintenance activities.

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5 Conclusions and Recommendations

The report presented the UITP's Bus benchmarking activity carried out for two Indian Cities-Bangalore and Chandigarh,
comparing their results with 9 other cities globally for which a similar exercise was carried out over the past one year. The
exercise helped in applying and testing the model and to refer that certain activities carried out by various bus companies
are similar across the world. The following are a few key takeaways:

5.1 Observations on the Bus benchmarking model

This direct and support activity classification of the model now proven: it has been successfully implemented in 10
companies in a slightly more than a year of time. This is a significant achievement made possible through the active
participation of many people, including Board Members from various agencies. Involvement of their finance departments
was needed to ensure the right allocation between the costs or cost centres to the respective activities. Extensive
discussion took place to safeguard the model integrity. The validation process, including the company visits, has worked.

In 14 months, the model was successfully rolled-out in 10 companies. Data were provided allowing the development and
publication of this report. Changes to the original model while benchmarking various operators were marginal, it confirms
that the methodology for benchmarking as defined by the working group is robust.

5.2 Observations specific to Bangalore and Chandigarh

While the activities remain similar across all bus operators, the results for the Indian cities were di erent to most other
International organisations. The specific observations corresponding to various activities have been provided in the report,
while the overarching observations that we feel are crucial even for other Indian bus operators are highlighted below.

BMTC, the Bangalore bus operator with 6400 buses is the largest operator among the 10 cities that were benchmarked.
The number of employees per bus is found to be highest in Indian cities, primarily due to the presence of a conductor in
each bus i.e. two or more sta per bus per day, considering an average of two eight hour shift for the crew. Even the
maintenance sta per bus is the highest in India, presumably due to lesser mechanization of depot and workshop activities.

It was observed that both Bangalore and Chandigarh have similar cost patterns. They have the least amount of cost
allocated to transporting passengers, which is the most important function of any bus operator. It is to be noted that such
low cost proportions were observed is in spite of having higher sta allocated per bus.

The maintenance costs of Bangalore and Chandigarh are the highest among all cities that were compared through the
exercise. These cities also have a very young fleet compared to the remaining companies. Both these statistics point to the
need for Indian bus companies to procure better quality buses and also improve their maintenance practices. Various
alternatives like mechanization of depots, outsourcing maintenance activities etc. should be explored to bring down the
maintenance costs, thereby allowing the bus companies invest more in transporting passengers.

The proportion of costs of Indian bus operators on supporting activities like Intelligent Transport Systems (ITS) for
improved dispatching and real time management, network planning, scheduling and operations optimisation is limited. In

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fact, they are the least among all the companies compared in this exercise. The limited investment in these activities can
lead to ine cient operations which further lead to higher operational cost for the same ridership. Therefore, companies
need to invest more in such activities to reduce their overall cost of operations and improve productivity of their resources.

This is the first benchmarking report for Bengaluru and Chandigarh based on the data collected so far. The foundations are
laid for further model extension in the coming years and extending the benchmarking model to other city and inter-city
bus systems as well. The community of participating companies can only benefit from any improvement idea. More
specifically, there is a need to identify supplementary activities and cost drivers beyond the ones included in the current
project that can be used for further detailed comparisons.

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9-12 JUNE
STOCKHOLM 2019
GLOBAL PUBLIC
TRANSPORT SUMMIT
Note

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 INDIA

UITP India Regional O ce, BMTC Shanthinagar

Bus Station Complex, 2nd Floor, K. H. Road,
Bengaluru 560027, Karnataka
Tel: +91-80-22952555
Fax: +91-80-22952431
Website: www.india.uitp.org