Estimating the Cost Impacts of Transit Service Contracting

Federal Transit Administration 50th Anniversaryhttps://doi.org/10.21949/15273131987PDFTech ReportUniversity of California, Irvine. Institute of Transportation StudiesUnited States. Urban Mass Transportation Administrationreport no. UMTA-CA-06-0220-1This study reports the results of an analysis of the potential cost impacts of private sector service contracting by transit agencies as well as the results of a nationwide survey of the magnitude and characteristics of existing transit service contracting. Using cost models developed during the study, an evaluation was made of the cost impacts of contracting out 5 to 20 percent of the existing services of 19 medium and large transit agencies, and all service of 3 small agencies. This evaluation determined that large agencies would save 2 to 49 percent of the costs of the contracted service, with a mean savings of 28 percent, and that medium size agencies would save up to 31 percent of the cost of service they contracted, with a mean savings of 14 percent. No cost savings were indicated for some small and medium agencies. A separate analysis of potential cost savings, using a statistical model developed from data supplied by agencies which currently contract for fixed-route bus service, predicted that agencies of 100 or more vehicles would save 26 percent of the cost of contracted services. The nationwide survey of transit contracting found that 35 percent of all public agencies responsible for transit currently contract for some or all of their transit service. Transit service contracting is concentrated among small agencies, particularly municipalities. Consequently, contracted service represents only 5 percent of national transit expenditures and only 8.5 percent of transit service miles.140