In message <s88fjc$o0u$1@dont-email.me>, at 14:20:28 on Fri, 21 May
2021, Recliner <recliner.usenet@gmail.com> remarked:
>Roland Perry <roland@perry.co.uk> wrote:
>> In message <s885g0$5ht$1@dont-email.me>, at 11:28:00 on Fri, 21 May
>> 2021, Tweed <usenet.tweed@gmail.com> remarked:
>>>> From
>>>>
>>>><https://news.railbusinessdaily.com/firstgroup-signs-new-national-rai
>>>>l-contracts-for-south-western-railway-and-transpennine-express/>
>>>>
>>>> National Rail Contracts are a new contract structure for agreements between
>>>> train operating companies and the DfT and the contracts for both SWR and
>>>> TPE are among the first wave of NRCs to be announced. NRCs replace the
>>>> previous revenue risk-based franchising system. The NRCs have a primary
>>>> two-year term to the end of May 2023 for both SWR and TPE, and both have an
>>>> option to be extended by up to two further years at the DfT’s discretion.
>>>>
>>>> Under the NRCs the DfT will retain all revenue risk and substantially all
>>>> cost risk. For the Group’s 70% share of the First MTR joint
>>>>venture for SWR
>>>> the fixed management fee is £3.3m per annum and there is the
>>>>opportunity to
>>>> earn an additional fee of up to £9.9m which is the maximum attainable
>>>> performance fee. For TPE the fixed management fee is £2.3m per annum and
>>>> there is the opportunity to earn an additional fee of up to £5.2m which is
>>>> the maximum attainable performance fee. The punctuality and other
>>>> operational targets required to achieve the maximum level of performance
>>>> fee are designed to incentivise the highest level of performance for
>>>> customers.
>>
>> And perhaps Shapps's 400 people arguing over whose fault a delay is,
>> *will* be needed after all. Because without knowing whose fault it is,
>> you can't apply a performance penalty to the transgressors.
>>
>>>> The NRCs achieve a more appropriate balance of risk and reward between
>>>> FirstGroup and the Government. They carry no significant contingent capital
>>>> risk, with the Group’s contingent capital for both the SWR and TPE NRCs
>>>> totalling £15m, 50% of which is bonded. There are limited scenarios in
>>>> which this contingent capital can be called upon, primarily in the event of
>>>> early termination of the contracts by the operator.
>>>>
>>>
>>> I’m surprised any company wants to do it. £13.2m tops per annum
>>>to run SWR
>>> doesn’t seem worth the bother.
>>
>> That must be the profit, because the DfT is said to be paying all the
>> costs, presumably including the staff, and managers are staff.
>
>Yes, I was wondering about that. There may be a few senior supervisory
>management on the First payroll, but all the other TOC staff costs will be
>covered by the DfT.
>
>But it's still confusing about whom the TOC management reports to. It must
>be both the DfT/GBR and their own company, depending on the issue. For
>example, how much involvement does Arriva have in the management of LO?
>Does it make available any corporate resources? I've not seen it reported.

The answer is going to be: the longer term the strategy/tactics are
expected to be needed, the further up the food chain will be involved.

The hierarchy of all sorts of companies isn't well understood outside of
them, just by the poor folks compiling/examining monthly/annual results
(financials and KPIs) to try to keep the show on the road and not too
many awkward questions asked.

I used to know some people in tech companies who you'd think were in
charge, but in fact because they were a subsidiary of something much
bigger (often international) would complain they'd spend 3/4 of each
month trying to explain away last-month to the next layer up, and only
1/4 of the time trying to make this-month go a bit better.
--
Roland Perry