The Varsity Lakes Station will be an impressive piece of community infrastructure, but to the urban transport user, it literally adds no value. Photo: QR

It is worth dwelling on how the marketing concept of the ‘value proposition’ and the productivity/business improvement concept of ‘value adding’ are dealt with in urban transport.

My training track series has dealt with concepts at length which arise from viewing urban transport from the customer (passenger) perspective rather than the operator, policy or expert position.

Concepts such as “true end-to-end journey time” “median wait time” and so on actually deal with the customer’s experience of urban transport, not the operators. Some operators might be tempted to say that these things are beyond their control; in reality that is not the case. From station layouts to reliability statistics to network planning, each decision or action affects the customer’s experience of urban transport, and accordingly, the customer’s future decision-making.

In a free market (where there is still government intervention to reduce the costs of road and rail, but I digress) the customer will assign a value to a product or service they are buying, and the value must equal or exceed the cost they are paying for the customer to want to use it. I refer you to Phin’s excellent posts on demand functions for more on this.

In urban transport the value proposition (what the customer believes they are paying for) can be broken down into its crudest element as “getting from point A to point B”. The customer has a ‘need’ to be at point B when they are at point A, and they gain value from this being resolved.

Private motoring has numerous advantages at this level, most of which relate to the road network covering far more (or reaching closer to) all the points A and B across the city. From the customer’s origin (A) door to the customer’s destination (B) door, a car and a road are usually closer.

But while the positional advantage is strong for road, the temporal advantage is stronger. Not only is the car and road closer to the origin and destination doors, it is available at call, which minimises the wait time. Public transport systems that aren’t available on demand (for example, all modes except taxi) suffer a disadvantage in this respect.

These two elements of value have already moved public transport a long way from the starting line, before the comparison on other factors, including comfort and price, begins. It will become evident to the reader that all these attributes except price shape the demand for public transport, and the price will then determine the level which apparent demand is manifested.

So how does this relate to the concept of value adding?

By stating what the value proposition actually is, we can then examine each aspect of the public transport service to see if it adds value, and recommend it be discontinued and the cost saved, if it doesn’t. In business improvement circles, value adding also refers to any part of a business process that directly builds value into the product for sale. Activities that don’t, for example, back-office administration, overservicing or waste, are not valued by the customer and end up reducing the value of the business.

The crude value proposition, that urban transport solves my need to be at Point B when at point A, suggests that the customer simply doesn’t value any of the trimmings.

The supply model can then be broken down into a very crude response: a proximity response of having transport available as close to the origin door and as close to the destination door as possible; a frequency response (or at call response if a frequency response can’t be economically provided); and various measures to improve the transit time, incidentals and reliability (so as to improve the true average end-to-end time).

So what value do such items as modal interchanges, electronic signage or new rollingstock add? The answer is very simple: none. They are artifacts of the operator, and are needed to overcome the operator’s problems, not the customer’s.

The customer would rather have a bus or train direct to their destination, of course this is not feasible, but the operator and policy makers should not get carried away regarding interchanges and new signage as a panacea or somehow worthy of public praise. At best the use of these things will mitigate the bad experiences a customer might have in using the system.

If we add elements to the value proposition, however, the equation will shift slightly. If the customer is valuing the experience, as opposed to simply getting from A to B, then the value proposition and value added can increase.

First class will be sought when economy is no longer good enough; people will value better signage, better rollingstock and less crowding.

But how do we value these things when we know that ticket prices (and road user costs) are not a true reflection of the cost of provision? We don’t – and we have lost the granularity that tells us whether a proposed investment is merited by its appeal to the simple value proposition, or the more complex ones.

We end up with paradoxes such as the trains that in peak times run express from Caulfield to Oakleigh: not satisfying the needs of those of the intermediate stations, and not really reducing the time elapsed for those on the express. And because it is only double track, it doesn’t even allow an express to overtake an all stations, hence the expressing train is only running to the usual headway in any event.

And the salt in the wound is that if these expresses were replaced with all-stations trains, you could actually enhance the frequency and reduce wait time and total travel time.

So the question is: what value do these services add, and whose value proposition do they address?

I suspect I have the answer, and it is positional rather than real. The outer commuters need to ‘feel’ they are on a train that is bypassing, ignoring and overlooking the needs of those in the bypassed stations, though they get no actual benefit from it.

And the ribbon-cutting effect means that these multi-million dollar enhancements in the way of modal interchanges, electronic gizmos and so on are preferred by politicians over simple enhancements though the former add no value to the customer’s value proposition. Railfans aside, customers don’t buy tickets for the sake of having the ticket. They buy the ticket to ride, as they say.

So the entire Myki investment is a no-value add investment. It is simply an impost on the operator and from the operator, and should be viewed as such.