Bus services in Queensland are provided under a series of service contracts with the Queensland Government. Between urban, regional and school contracts, new contracts were valued at more than $7 billion over a 10 year period. In 2010, Robin Barlow and James Orford were part of a team that worked with TransLink and the Department of Transport and Main Roads staff to develop new bus contracting models for services across the State.
Our approach focused on five stages:
1. Understanding and developing the reform agenda
2. Developing contracting models
3. Developing a procurement strategy
4. Implementation of the strategy including negotiation strategy and assistance
5. Transition of both organisations to allow the effective management of the new contracts
A key part of the approach was the development of analytic models and data-centric decision making to develop policy positions and allow effective responses to industry demands. Decisions on key issues such as appropriate operating margins and margins on the risk free rate for asset purchases were supported by a detailed understanding of the current rates of return on the business as a whole, market expectations given the level of contract risk being held by operators and future expected returns assuming various growth scenarios. Detailed financial modelling was also undertaken in relation to access arrangements and asset financing.