Questions about the financing of public transport and local rail services have been on the market participants’ minds for quite a long time. Especially the transport companies have to face the challenge to reconcile ever increasing quality requirements and a persistent cost pressure, which already started before the various steps to deregulate public transport and regional rail transport markets (such as the EU Regulation 1370) were taken. Vulnerability assessments and subsequent systematic restructuring measures to optimise processes and the organisation of all business units have thus been important elements of corporate development for many years.
As a specialist consultancy for public and private transport and logistics companies, BSL Transportation Consultants was commissioned with an analysis of the cost structures in “classic” overheads (such as human resources and purchasing department) by a large German public transport company (city size > 0.5 million inhabitants), operating several modes of transport. These results were then compared to the target costs, which were an-alytically determined by using appropriate benchmarks and tools (Target Costing). This formed a sound basis for further considerations on optimisation and for the discussion of current and future funding requirements.
Three selected administrative areas of the public transport company (HR functions, incl. apprenticeship, legal, management) were again analysed in more detail, as they showed special peculiarities.
Central elements of the selected advisory approach were to intensely involve the relevant company representatives in the preparation and interpretation of the basic data and to de-rive conclusions from the benchmarks and target costs.
Accordingly, the benchmarking incorporated not only the data from financial controlling and human resources, it also comprised extensive interviews on site and workshops with various persons responsible for the organisation. Data was collected by using standard-ised questionnaires, which left enough freedom for individual aspects. To ensure a com-pany-independent, uniform allocation of tasks, BSL’s functional structure was used, which has been proven in practice many times.
Given the importance of a differentiated approach to the specific circumstances will have for a sound benchmarking and an analytical target costing, the evaluation and assessment of the basic data had to factor in also the service contents / catalogues of individual over-head functions, tasks of special character, structural differences and any given extraordi-nary factors (e.g. group structures).
Simultaneously, the logic and appropriateness of the internal cost allocation were verified, so that the company was also provided (as a “side effect”) with concrete indications on how to improve the control effect of cost accounting.
In this way, the cost and quantity structures could be allocated to the defined individual functions as accurately as possible. Public transport specific key performance indicators (KPIs) helped to scrutinise the use of resources and monetary costs (differentiated by type of cost).
Procedure and results of the analyses were discussed in joint workshops with the respon-sible persons, so that both the methodological basis and the composition of the actual and target values were comprehensible and could be verified before they were presented to the steering committee.
The final result was an analysis which contained a transparent comparison of actual costs with analytically determined targets for the individual overhead functions of the public transport company and which provided plausible explanations for potential differences in the use of resources. Above that, numerous approaches could be identified, which enable a gradual reduction of the cost disadvantages and the further professionalisation of the overhead function.
19. February 2016