MOVING REVENUE RISK TO OPERATORS IN GROSS COST CONTRACTS. THE SERBIAN EXPERIENCE

The past three decades have witnessed many different regulatory and institutional reforms in urban public transport (UPT) systems. Main goal of these changes was to deliver higher level of quality of transport services, defined through a diverse array of system objectives: ensuring cost-efficient service delivery, reducing subsidy, minimizing negative environmental impacts etc. To successfully achieve these objectives it is necessary to specify in detail all of the obligations, rights and risks that can be produced within and outside the system and have a strong impact on its efficiency and effectiveness. One of the main goals of defining a comprehensive contracting in the public transport of passengers is distribution of competencies and responsibilities between the parties. In the Republic of Serbia, majority of UPT systems have migrated from regulated monopoly to competitive tendering for parts or entire transport network, with dominant use of gross cost contracts. However, after initial benefits, mainly cost savings and increased quality of service, a number of deficiencies have emerged. This paper presents modified gross cost contract in which the authority remains responsible for revenues, but part of revenue risk is shared with operators based on their performance. Model is implemented in Serbian cities.