Case Studies: The Lyon's Tramway T4, France

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Project Overview
Lyon.png
Figure 1: T4 Tramway, Lyon (France) Source: Cerema
Phase 1 of the Lyon T4 Tramway, France
Project Type: Both
Type of Project Financing: Public
Contract duration: 72 months (Project Management contract)
Project Time Line
June 2005: approval of the sustainable urban mobility plan for the Lyon urban area
February 2005/March 2005: Public consultation
April 2006: Public inquiry (only concerning phase 1 of the project)
July 2006: Declaration of Public Utility for phase 1
2006/2009: Works
April 2009: Commissioning of phase 1 of the line


Introduction

Lyon Tramline T4 provides a South-East/North-West connection between the Part Dieu in Lyon and the Minguettes neighbourhood in Vénissieux. It was built in two phases:

  • Phase 1: Construction of the South section between the T2 Tramway station (Jet d’Eau – Mendès France) and the Minguettes neighbourhood in Vénissieux. This phase was commissioned in April 2009;
  • Phase 2: construction of the section to the Part Dieu Dieu railway station, and then, using the T1 tramway infrastructure, between the Part Dieu railway station and university campus of “la Doua”. This second phase was commissioned in September 2013.

The present project description concerns Phase 1.

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Figure 2: T4 tramway route (phases 1 and 2), Lyon (France)
Source: Public inquiry prior to the Declaration of Public Utility (DUP) for the T4 tramway line.

The first phase of the tramway is for a linear distance of 9.5 km, and comprises of 18 stations. It replaces the route of bus no.36, offering a connection that is:

  • Faster (the commercial speed of the bus varies, at peak time, between 15 and 20 km/h, whereas the DUP file forecasted a commercial speed for the tramway of 23 km/h);
  • More reliable, being less affected by automobile congestion.

This new line connects two transport hubs: the Vénissieux railway station (D Metro line), and the Jet d’eau – Mendès France station (T2 Tramway). Its aim is, therefore, to improve accessibility to the centre of Lyon for the South-East quadrant of the urban area, and in particular the Minguettes district classified as a ZUS (sensitive urban area).

The Contracting Authority (Public Party)

In France, the development and operation of urban public transport networks is the responsibility of the Mobility Organising Authorities (AOMs). In the case of the Lyon public transport network, this responsibility is delegated to a specific public body named Sytral (Syndicat mixte des transports pour le Rhône et l’agglomération lyonnaise). This body includes the urban community of Grand Lyon (today called “Métropole de Lyon”) and the Rhône Departmental Council.

Sytral is the contracting authority for project construction and for the operation of the entire urban public transport network (including the tramway line 4). In 2009, Sytral assumed this role within an Urban Transport Perimeter (PTU) comprising 57 municipalities.

Sources of Financing

The project was financed exclusively by public subsidies. Its initial financial package of €185.3 million (in 2004 prices) was allocated as follows:

  • Urban community of Grand Lyon (today “Métropole de Lyon”): €24.1 million (13%)
  • Municipality of Vénissieux: €0.9 million (0.5%)
  • Municipality of Lyon: €1.0 million (0.5%)
  • Rhône Departmental Council €0.5 million (0.3%)
  • State through AFITF (Agency for Financing French Transport Infrastructures): €20 million (10.8%)
  • Sytral: €138.8 million (74.9%)

The main financial backer of the project is therefore Sytral. Its subsidy is based on two main sources of financing: the Versement-Transport (tax paid by employers and based on payroll) and loans.

Users

Due to the location of the stations, the first phase of the T4 line serves the municipalities of Lyon and Vénissieux. In terms of population, these two municipalities are respectively the largest and the third largest in the Métropole de Lyon (529,000 inhabitants in all in 2007). The line is also directly accessible to the inhabitants of Feyzin and Saint-Fons by means of the terminus station (Feyzin Vénissieux hospital).

Preliminary studies estimated the rate of use of the line at 21,700 trips per day. In 2012, prior to commissioning of phase 2, the number of trips per day ranged between 27,300 and 39,600.

Key Purpose for Public Financing Model Selection

Sytral decided to act as its own contracting authority for the project (with the support of a project management consortium), and to deal separately with the construction and operation of the new line.

There were several reasons for this choice:

  • In the past, Sytral has fulfilled the role of contracting authority for the three tramway lines in Lyon and Villeurbanne (T1, T2 and T3). It has, therefore, developed a high degree of technical expertise, enabling it to assume the design and construction risk and monitor construction;
  • The proportion of operating expenditure covered by fare revenue is high on the Lyon public transport network (in comparison with other French public transport networks). This coverage rate reduces Sytral's need for subsidies, therefore, enabling it to capitalise part of the Versement Transport payment. At the project definition stage, Sytral has financial resources and borrowing capacities, which make it unnecessary to seek further financing from a private sponsor.
  • Sytral is its own contracting authority. Financing sources are provided entirely from public subsidies. This high level of public involvement guarantees the local population a high level of control during the execution of the project.

Project Timing

The 1997 Lyon Sustainable Urban Mobility Plan (SUMP), followed by the 2005 SUMP, planned the construction of a backbone line of public transport named "A4". This line, in its Southern part, corresponds to the route of T4 tramway phase 1. In accordance with these plans, preliminary studies were carried out by Sytral (on the engineering structures, route variants, etc.).

In October 2004, Sytral issued a tender for the project management contract. The project management consortium (SYSTRA/ARCADIS ESG/ATTICA/ILEX) was selected in December 2004. This consortium drew up the design of the line in October 2005 and then compiled the public inquiry file necessary to obtain the Declaration of Public Utility (DUP).

The Declaration of Public Utility was obtained in July 2006. The works contracts (33 in total) were issued throughout the works phase between October 2006 and April 2009. Phase 1 of the project was commissioned in April 2009.

Project Locality and Market Geography

The T4 tramway is an urban transport project. However, this new line has been integrated into the Sytral public transport network (bus, tramway and metro). This integration is achieved through:

  • Links between the new line and the existing lines: in the case of phase 1, the T4 tramway links up with the D metro line at the Vénissieux railway station, with the T2 tramway line at the Jet d’Eau – Mendès France station, and with several bus lines. Following the commissioning of phase 2, the T4 tramway line makes it possible to access the Part Dieu transport hub (D metro, tramways T1 and T3, etc).
  • Fare integration: to access the T4 tramway passengers use the same tickets as for the rest of the urban public transport network. Connections between two lines on this network are free of charge.

Two park-and-ride facilities are also immediately accessible from the T4 tramway line: at Vénissieux railway station and Feyzin Vénissieux hospital station.

Procurement & Contractual Structure

Implementation of phase 1 of the T4 tramway clearly dissociated design/construction from operation/maintenance of the new line. This section, therefore, presents the contractual procedures for these two stages in succession.

  • For the construction of the line, there were two types of contracts:
    • A project management contract in accordance with law no.85-704 of 12 July 1985 concerning the role of the public contracting authority and its relations with the private sector project management consortium;
    • A series of 33 construction contracts drawn up separately with the different contractors responsible for the works.
  • Operation and maintenance of the T4 line is performed by adding an additional clause to the Public Service Delegation contract signed (for the entire public transport network) for the period 2005/2010.

Tendering

Construction of the line

The project management contract was awarded by means of a tendering procedure in accordance with article 74 of the Public Procurement code. The tendering procedure consisted of an open call for tenders.

The bids were submitted by 20 October 2004, and assessed by a jury, based on their technical value, their coherence and price. There were three bids submitted, all authorised. The SYSTRA/ATTICA/ILEX/ARTELIA consortium was selected in December 2004.

The contracts for works were awarded by means of separate public procurement procedures. Contracts for works were awarded by means of open tenders, evaluated by a jury based on criteria defined within the tender. In total, it was necessary to award 33 contracts for works to complete the project, for amounts varying between €30.706 million (2007) and €0.039 million (2008), excluding VAT.

The largest contract for works concerned the construction of the railway platform. For this contract, the awarding procedure lasted roughly 2 months:

  • The candidates had to submit their bid before 5 December 2006;
  • The bids were analysed on 10 January 2007;
  • The contract was awarded on 7 February 2007, for an amount of €30.706 million excluding VAT.

Operation/maintenance of the line

The public transport network for the Lyon urban area (TCL) is operated by means of a Public Service Delegation contract (DSP). When this line was commissioned in April 2009, the DSP contract was defined for the period 2005/2010. Clause 8 of this contract indicated that the operator did not benefit from any guarantee of exclusive operation of the future tramway line. Hence, in December 2004, when the DSP contract was signed, Sytral was not certain that the future tramway line would be operated by the operator selected for the remainder of the network.

However, the appendices to the DSP contract described the arrangements for the operation of the future tramway line. The decision to assign operation of the new tramway line to the operator of the TCL network was finally taken by means of an amendment to the DSP contract. The amendment was signed in March 2009, one month before the commissioning date.

Contract Structure

Construction of the line

The structure adopted for the construction of phase 1 of the T4 tramway is based on allocation of tasks and responsibilities between the contracting authority (Sytral) and the project management consortium (SYSTRA/ATTICA /ILEX/ARTELIA). The allocation was defined as follows:

  • The contracting authority (Sytral) is responsible for defining the project and for verifying the conformity and quality of the services provided in order to implement this programme. More specifically, it manages the legal procedures and the land acquisition operations. Sytral assigns the contracts, validates financial expenditure and accepts the completed works. This actor is also responsible for external communication concerning the project, to local authorities and local residents. Some responsibilities, legally held by municipalities, were delegated to Sytral to facilitate coherence of the works.
  • The project manager is responsible for the detailed design of the project (in accordance with the programme defined by the contracting authority), and supervision of its construction (definition of works contracts, technical inspection of services provided, compliance with costs and deadlines, etc.).

Operation/maintenance of the line

Amendment no.3 to the DSP for the Lyon urban area transport network places on record that operation of the tramway line is delegated to the operator in place (Keolis) and defines:

  • The expected service supply for phase 1 of the T4 tramway;
  • The financial adjustments required due to this new offering (modification of revenue, and modification of the financial compensation paid by Sytral to Keolis).

Risk Allocation

Construction of the line

Although the contract defines the allocation of tasks between the contracting authority and the project management consortium, this allocation is quite different from the risk allocation.

Most of the risks concerning the T4 tramway project are borne by the public authority. Although the project management contract stipulates that the contract holder is given an incentive to comply with costs, this incentive cannot be considered as a sharing of the design and construction risk. This is because:

  • The project manager carries out detailed design of the project in accordance with the contracting authority's programme;
  • The project management contract only concerns part of the tramway works;
  • The incentive mechanism defined by the project management contract gives the contract holder an incentive to comply with the project costs. This system cannot be considered as a sharing of financial risk. In fact, any additional cost has to be borne by the public authority.

Operation/maintenance of the line

The public service delegation contract stipulates the following risk allocation between Sytral and the operator (Keolis) concerning:

  • operating costs (industrial risk);
  • commercial revenues.

The contract stipulates that an annual financial compensation shall be paid, the amount of which varies according to the fare revenue collected by the operator and transferred to Sytral.

This compensation is calculated on the basis of the operating costs borne by the operator. The operator therefore assumes the entire operating risk. Although the operator is not the owner of the revenue, it undertakes to generate a certain level of revenue. Below a certain threshold, the operator must compensate the loss of earnings to the organising authority. The commercial risk is therefore shared between the operator and the organising authority.

The distribution of risk in this contract is, therefore, as shown in Figure 3:

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Figure 3: Risk Allocation

Performance

Construction of the line

Each construction contract comprises of its own specific quality indicators. In the case of the contract for construction of the railway platform, the main quality indicator concerns the deadline for completion of construction. Although no bonus is paid if the mission is completed in advance of the deadline set, a penalty of 1/2000th of the total contract amount must be paid for each day of delay after the deadline.

However, the project management contract does not contain a performance indicator concerning compliance with deadlines. The main performance indicator concerns compliance with project costs. At different stages of the project, the project manager's financial estimates are compared with the real costs. The difference between these two values, multiplied by an incentive rate varying between 3.5% and 5%, gives rise to collection of bonuses, or payment of penalties.

Operation/maintenance of the line

The quality indicators applied to the tramway line are those defined in the DSP agreement for the entire network. Although some of these indicators are specific to the tramway, none of them are specifically defined for the T4 line.

These indicators are specified in the appendix to the agreement, and relate in particular to:

  • Cleanliness of the facilities;
  • Quality of user reception and level of information given to users;
  • Quality of the transport service provided (availability of the service, regularity of the service, quality of driving).

Each indicator is tracked on a quarterly basis and, depending on the outcome, leads to payment of penalties or collection of bonuses.

Project Outcomes

Overall, the outcomes of phase 1 of the T4 tramway project are very close to the objectives that were set for it initially. For the design/construction phase of the line, the additional construction costs were limited:

  • €177.0 million 2004 budgeted in the preliminary studies;
  • €185.3 million 2004: financial package adopted in 2004 by the different public financing bodies;
  • €207.249 million: final cost of the operation (calculated in December 2014).

The increase in costs observed between the preliminary studies and the definition of the financial package can be explained by isolated modifications, in most cases not linked directly to the tramway itself (public lighting, green areas, renovation of pavements, etc.). Increase in costs between the financial package in 2004 and the evaluation after implementation in 2014 can be explained mainly by the phenomenon of inflation.

In the final analysis, the construction of phase 1 of the tramway was not affected by significant additional costs or delays in commissioning:

  • financial additional costs in the order of 2.7% between the financial package adopted by the financial backers and the total cost of the operation, evaluated after the event;
  • at the DUP stage, commissioning of phase 1 had been planned to take place in two steps (January 2009/late 2009). In fact, the whole of phase 1 was commissioned in April 2009 (i.e. between the two dates initially planned).

Concerning the rate of use of the line, the preliminary studies estimated it at 21,700 trips per day. In 2012, (one year before commissioning of phase 2, which led to an increase in rate of use), the daily rate of use varied between 27,000 and 39,600 trips per day. The outcomes in terms of rate of use are therefore greater than had been envisaged.

Performance indicators are hardly ever calculated for a specific line, and so it is difficult to verify whether the performance of the T4 tramway line is in line with the forecasts. However, the line's commercial speed (estimated at the DUP stage at 22.86 km/h) is slightly lower than planned (20.30 km/h in 2012). The latter, therefore, slightly reduces the time saving for users, compared to the planned time saving. However, this difference in speed is only small (for a user travelling from terminus to terminus on the T4 line the reduction in time saved would be in the order of 3 minutes).

Although this performance is slightly weaker than had been anticipated, this does not seem to have limited the line's attractiveness.

References

  • SYTRAL, Convention portant délégation de service public du transport urbain de l’agglomération lyonnaise, (Public service delegation agreement for public transport in the Lyon urban area) December 2004, 77 pages (except appendices)
  • SYTRAL, Avant projet ligne T4 (T4 line concept design), October 2005, 38 pages.
  • SYTRAL, Dossier d’enquête publique préalable à la DUP des travaux de la ligne de tramway T4 Jet d’Eau – Mendès France / Vénissieux –Minguettes, (Public inquiry document prior to the DUP for T4 tramway works) July 2005, 305 pages.