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Benchmarking: good business practise

Posted: Wednesday 21 March 2007

RailCorp CEO Vince Graham today said under the legislation establishing RailCorp - The Transport Administration Act - it has an obligation to be a successful business and, to that end to operate at least as efficiently as any comparable business.

RailCorp engaged MTR as the first step of a benchmarking exercise which includes a review of other railway systems.

The objective of the exercise is to uncover where best practice exists around the world and in Australia with a view to considering areas for improving CityRail's customer service and operations.

Many businesses undertake benchmarking as a routine part of their continuous improvement programs and RailCorp is no exception.

In 2005 and 2006 the Auditor General recommended CityRail undertake benchmarking and the 2006 IPART Review of Fares for CityRail Report noted the future benefit of undertaking such an exercise.

While the benchmarking can be a useful process it is important to know when valid comparisons between different rail systems can be made.

By world standards RailCorp has a very large network with relatively low patronage.

This increases the operating costs of the RailCorp network when compared to other rail systems.

It also means that when it is compared with smaller higher patronage systems comparisons of some efficiency measures are simply not valid.

As an example the London Underground has almost four times the patronage of the RailCorp system (one billion compared to 275 million) with less than half of the network size.

Hong Kong railway's network has less than 100 route kilometres and RailCorp around 1,000 route kilometres.

RailCorp has 275 million passenger journeys per annum and Hong railway has around 900 million passenger journeys per annum.

The Report also acknowledges areas where RailCorp surpasses international railways.

Track renewals in particular, is an area where RailCorp has compared very well with other railways.

Benchmarking is an exercise that RailCorp has undertaken and will continue to undertake, Mr Graham said.