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Myki on track to transfer to new supplier

by Pallavi Singhal and Euan Brown •
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Kamco, the major supplier for Victoria’s Myki electronic ticketing system, may soon be asked to hand over the keys to a new provider following a retendering process launched by Public Transport Victoria (PTV).

The open market approach for Expressions of Interest (EOI) “from experienced ticketing system operators within Australia and internationally, to operate the Myki system” follows amendments to Kamco’s contract in 2013 that reduced its term and introduced “enhanced transitional arrangements…for any potential transfer to a new contractor”.

Kamco was acquired by NTT Data in 2010, but continued to provide Myki services, and its current contract is due to expire in December 2016.

Although the implementation of Myki was completed in 2013 and the recent EOI notes that its “primary focus is the continuity of ticketing services…[through] a provider to operate the existing system”, it also outlines the potential for the successful supplier to “identify and deliver future technologies”.

The scope of the new contract outlined in EOI documents includes:

  • Operating and maintaining the existing Myki Ticketing System;
  • Renewing obsolete assets as required to maintain system functionality;
  • Enhancing performance and customer expe­rience; and
  • Working with PTV to identify opportunities to support service improvements and revenue growth over the contract term.

Over 9.9 million Myki cards were held by Victorians and eight million transactions across 22,600 Myki readers were being processed under the system every week by mid-2014. Electronic ticketing is currently used by over 500 trams across 24 routes, 15 train lines across 208 stations and 1,753 buses across 346 routes.

The Myki system architecture is based on an Open Architecture (OA) and the suite of business applications that make up the system are largely comprised of off-the-shelf products.

The agency will assess “respondents’ demonstrated experience managing and operating major smartcard ticketing systems or transaction systems of a similar size and complexity”, according to EOI documents.

The project to develop an electronic ticketing system was initiated in 2003. Work on the reloadable touch-on, touch-off system began in 2005 with the appointment of Kamco, under a contract initially worth $494 million over 12 years. However, the costs of the project, originally budgeted at $998.9 million, blew out by over $550 million in 2013 when the project budget was updated to $1.55 billion.

The project also missed its original timeframe to go live in 2007 following delays in development and implementation, and eventually launched in 2010. As well as shortening the term of the agreement, the renegotiation of Kamco’s contract in 2013 reduced its scope by removing services including call centre operations and adopted a “cost plus reimbursement model” rather than a fixed-price model.

“The total cost of the system under the contract is now not capped, and therefore the total cost to the state is variable,” according to a 2013 Auditor-General’s report.

The annual cost of operating the system is estimated to be $50-55 million.

In contrast to Victoria’s ticketing troubles, the NSW Opal card system, provided by Cubic Transportation and modelled on London’s Oyster card system, has also been completely rolled out and has so far been deemed successful.

However, only two million Opal cards have been issued, in comparison to Victoria’s 9.9 million Myki tickets, and system failures have been reported at a number of stations in Sydney.

EOI submissions close on 30 April 2015. PTV expects to shortlist respondents by June, and release an RFT to selected respondents in August for contract finalisation in early 2016. The handover is expected to take place by December of that year. 

The contract will have an initial term of six years, with extension options of up to four years.

 

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