The relationship between bus contract costs, user perceived service quality and performance assessment

Author: Hensher, D.A. (2014)

Journal: International Journal of Sustainable Transportation 8(1), 5-27

Keywords: Benchmarking, bus contracts, competitive tendering, contract costs, contract negotiation, performance assessment, performance targets, service quality index

In contract tendering or negotiation there is a growing interest in identifying and integrating user perceptions of service quality into the determination of contract costs. This article develops a framework within which a cost–service quality relationship is quantified, and then implemented to identify benchmark targets for cost efficiency improvements required to achieve a pre-defined service quality performance target. We use data from metropolitan and non-metropolitan bus operators in New South Wales to demonstrate the way the method can be used in contract negotiation and ex-post monitoring of performance leading up to contract renegotiation or tendering.