Staff Report #4
March 27, 2024
To All Commissioners
Re: Financial and Operational Performance Review
Recommendation
The report be NOTED and FILED.
Background
At the February 27, 2024 meeting, the Commission requested administration to report back on the options for having a third party undertake a financial and operational performance review of London Transit which would also include consideration of the current system network and supporting guidelines.
The scope of a review of this nature requires two distinct areas of expertise, with the financial and operational review requiring accounting/operational expertise, and the system network review requiring specific transit system design and feasibility expertise.
Financial/Operational Review
Administration held discussions with representatives from KPMG (the Commission’s auditor) with respect to the option of extending the contract for annual audit services to include a financial/operational review to be conducted in 2024. KPMG indicated their approach to this engagement would be based on their four-step financial and operational performance review methodology which they have utilized in the completion of numerous other evaluations of this nature. In completing the evaluation, KPMG would assess London Transit’s business make-up, operations and financial performance relative to peer and industry benchmarks to identify gaps and evaluate opportunities for efficiency and improvement.
Given KPMG is the Commission’s auditor, they have a solid understanding of the financial data and major cost drivers impacting the operation. When conducting the peer review, industry data available through the Canadian Urban Transit Association (CUTA) would be utilized in addition to interviews with peer agencies which may identify leading and emerging practices and programs that support public transit financial and operational efficiency and effectiveness.
The final report including recommendations would be presented to the Commission and subsequently shared with Municipal Council.
Transit System Design Review
As the Commission is aware, Dillon Consulting is currently under contract for the completion of a 2024-2027 Business Plan and supporting Five Year Service Plans for the conventional and specialized services. The scope of work associated with this project includes the following.
- Vision, Mission and Strategic Direction
- Review the current vision, mission and strategic direction in consideration of the transformational initiatives that will impact London Transit in the four year Business Plan horizon.
- Review and consider the City of London Strategic Plan, Official Plan and Mobility Master Plan (in progress)
- Assess any long-term effects of the pandemic on ridership and fares
- Service Delivery Plan – Conventional
- Develop a detailed Annual Service Plan covering the next five years, aligned with the City of London Strategic Plan, Mobility Master Plan, Bus Rapid Transit Implementation and associated requirements for feeder routes and growth budget allocations
- Review and update service standards as necessary in light of current realities
- Assess accessibility requirements and readiness and incorporate recommendations into the annual service plans
- Identify the resources and assets required to support the Service Plan
- Incorporate initiatives from the Commission’s Ridership Growth Strategy as applicable
- Incorporate elements of the Commission’s Alternative Service Delivery Framework into the Service Plan as applicable
- Service Delivery Plan – Specialized
- Develop an Annual Service Plan covering the next five years, aligned with the City of London Strategic Plan, and growth budget allocations
- Develop a strategy and implementation plan for the integration of the conventional and specialized services
- Assess accessibility requirements and readiness and incorporate recommendations into the annual service plans
- Identify the resources and assets required to support the Service Plan
- Incorporate elements of the Commission’s Alternative Service Delivery Framework into the Service Plan as applicable
- Management and Systems Plans
- Identify new technologies as well as existing in need of upgrade in order to continue to support the delivery of the service plan
- Evaluate the organizational readiness to develop, implement and support the services in light of the numerous transformational projects that are scheduled to occur in the four year horizon. Key focus should be on identification of skill and capacity gaps.
- Develop a Technology Plan to address the identified shortfalls as well as planned improvements going forward
- Assess the organizational structure to identify any gaps in capacity or skills required to deliver on the Business Plan
- Financial Plans
- Assess the Commission’s Fare Strategy and update same to be consistent with current realities regarding ridership trends and financial structure
- Develop an overarching Financial Plan that delivers on all aspects of the Business Plan and is in keeping with available resources
- Marketing and Customer Experience
- Develop a marketing strategy that is responsive to customer’s preferred communication and information channels including self-service options
- Develop a strategy focussed on improving the overall customer experience
- Business Plan
- Develop a series of key strategic outcomes that will deliver on the plans and programs discussed in items 1-6
- Develop key performance indicators to measure and track progress against each strategic outcome
A key component of the work involved in items 2 and 3 above is to review the current operating practices, route structures and performance against the established service guidelines. In addition, Dillon will review same against peer systems to identify any new/best practices that could be incorporated into the respective 5 Year Service Plans. It should also be noted that a comprehensive system review for the conventional transit network was undertaken in 2019 which included a detailed review of the entire service structure in light of the planned rapid transit corridors and recommended a number of routing changes as well as significant improvements in frequencies system wide in order to ensure the routes supporting the future rapid transit corridors would be operating at adequate frequency to support the new bus rapid transit routes when they come on line. These improvements were incorporated in the Five Year Service Plan covering the period of 2020-2024. As discussed in previous reports, while a significant portion of that plan has been implemented, a number of the improvements included in the plan have been deferred for reconsideration as part of the current Five Year Service Plan update given shifts in ridership demand and ongoing issues on a number of routes relating to crowding and schedule adherence issues.
Given the breadth of issues covered within the scope of the current ongoing project with Dillon relating to the service review, no scope adjustments were deemed necessary to cover the assessments associated with a system design and route review.
Review Timelines
The project with Dillon continues to remain on track with a final report and recommendations to the Commission at the June 2024 meeting. KPMG indicated that, should confirmation to proceed be provided subsequent to the March 27, 2024 meeting, their work could be completed with a report to the Commission at the same time.
New Actions Proposed for Council Consideration
At the March 26, 2024 Strategic Priorities and Policy Committee will consider a motion calling for civic administration to undertake a request for proposal for a comprehensive audit of the London Transit Commission (see Enclosure I). A verbal update on the outcome of this discussion will be provided at the March 27, 2024 Commission meeting.
Enclosure
I – Motion to Strategic Priorities and Policy Committee
Recommended by:
Kelly S. Paleczny, General Manager