Title: Recommendations for Revitalization: Saving the Metro Metro Internal Consulting Task Force Neal Dutta
1Recommendations for RevitalizationSaving the
MetroMetro Internal Consulting Task ForceNeal
Dutta, Jeronimo de Miguel, Bobby Gautam, Jon Kamin
2The Mandate
- To resolve urgent need for capital and operating
funding. - To resolve flawed funding allocation structure.
- To create and implement a communications strategy
that supports these initiatives.
3Objectives
- Address both immediate and systemic issues in
Metro funding. - Develop a comprehensive communications plan that
supports this pursuit of funding. - Adhere to Metros long-standing core mission,
values, and planning initiatives.
4Agenda for Change
- Analysis -
- Immediate Needs (Neal)
- Systemic Funding Allocation (Bobby)
- Integrated Communications Plan (Jon)
5Recommendations
- Bond Issuance to address capital needs.
- Enhanced Operational efficiency
- Fare Hikes, Advertising sales
- Lobby for creation of appropriate long-term
funding allocation structure. - Utilize dormant ad space to rally public support
for Metro funding. - PR initiatives
6Problem Urgent Funding Needs
- Capital Crisis
- Aging infrastructure in disrepair.
- Passenger safety and security at risk.
- 1.5 Billion needed over 6 Years - 250
million/year - Operating Budget Shortfall
- Additional 25 Million in revenue needed to cover
operating expenses in FY 2005.
7Analysis Decision Criteria
- Balances 2005 Operating Budget.
- Provides immediate capital funding for
infrastructure renewal. - Feasible to implement.
- Maintains passenger satisfaction with services.
8Alternative 1 Streamlining
- Reduce salary, operational expenses by 5 through
service cuts and related layoffs. - Advantages
- Balanced operating budget for Fiscal Year 2005.
- Disadvantages
- Low morale may impact quality of service.
- Alienation of passengers hit by service cuts.
- Conflict with labor unions.
9Alternative 2 Increased Fares
- Raise all passenger fares by 5
- Fares are sticky few alternatives.
- Advantages
- Balances operating budget for 2005.
- Relatively small increase.
- Disadvantages
- Third consecutive increase riders becoming
increasingly dissatisfied.
10Alternative 3 Bond Issuance
- Minimum issuance of 500M over 2-6 years.
- Federal backing of interest payments.
- Advantages
- Satisfies immediate infrastructure needs.
- Passenger experience enhanced by new
infrastructure. - Disadvantages
- Interest expense increases operational shortfall.
11Alternative 4 Ad Revenues
- Metro leases just ¼ of potential ad space.
- This revenue stream can potentially be doubled.
- Advantages
- Balances operating budget for 2005.
- Disadvantages
- Passenger resentment to bombardment of ads.
- Reduced aesthetics, contrary to Metro policy.
12Recommendation
- Issue 500 million in bonds over two years to
satisfy immediate capital requirements. - Increase sales of ad space by 50 in 2005 and 33
in 2006 to cover interest expense. - Increase fares by 5 in 2005 to cover operating
budget shortfall.
13Satisfaction of Decision Criteria
Operating Budget
Passenger Satisfaction
Capital for Infrastructure
Feasibility
Overall
Streamlining
Increased Fares
Bond Issuance
Ad Revenues
Blended Solution
Somewhat
To a great extent
Not at all
14Projected Cash Flows
15Problem Lack of Annual Support
- Negative media coverage has exposed Metros
serious lack of resources. - Two potential reasons for this economic
shortfall - Lack of sufficient levels of government support.
- Operational mis-management (as suggested by
negative tone in media).
16Analysis Not Metros Fault
- Second-highest cost-recovery ratio.
- GAO commended Metro management for capital
investment practices. - It is widely recognized that passenger fares are
insufficient to meet operating expenses.
17Analysis Not Metros Fault
- Various Government contributions
- Do not contribute to operating expenses.
- 2 of operating revenue comes from dedicated
sources national average is 33. - No longer eligible for Urbanized Area Formula
Program.
18Analysis Decision Criteria
- Equitably incorporate Federal, State assistance.
- Sustainable, feasible.
- Consistent with Metro Mission, Objectives, Values.
19The Proposed Solution
- Lobby for the tabling of a Bill through Congress.
- Proposal for a coherent, sustainable source of
funding. - Federal Government should match contributions
made by each of the three states / regions. - Guarantees some quantity of support from Federal
Government.
20The Proposed Solution
- Fixed levels of obligation for each contributor.
- Regions experiencing extreme fiscal difficulties
will be able to apply for partial relief.
21Satisfaction of Decision Criteria
LU/Tokyo
Seoul
TTC
Ours
Equitable Funding
Sustainable / Feasible
Mission
Somewhat
To a great extent
Not at all
22Funding Strategy 5 Years On
- Concentrate on consumer-friendly methods of
increasing passenger-revenues. - Allow Metro to sustain greater operating cost
burden, decrease reliance on governmental
assistance.
23Problem Acquiring Funding
- Efforts to procure funding can be greatly
enhanced with public support. - Public comprehension of problem Pressure
for funding Government acknowledgement of
will of constituents. - Ability to convince public of need will be
critical factor in ultimate success.
24Analysis Metro Riders
- Many Metro riders are key influencers.
- Commuter segment dominated by Federal
Government employees. - Media representatives.
- Target key influencers to re-shape public
opinion, indirectly secure funding.
25Analysis Metro Riders
- Clean, safe, reliable, inexpensive transit.
- Few viable alternatives
- Horrendous traffic
- Rising gas prices
- Lack of affordable housing in core
- Therefore, ridership is sticky.
- Metro riders often have few alternatives will be
highly receptive to communications.
26Analysis Negative Exposure
- Public support may be difficult to secure.
- Service deterioration has created negative image.
- Compounded by negative media exposure.
- The compelling, rational response
- Lack of funding Infrastructure decay.
- Management is not part of the equation.
- Harness negative spotlight into rallying cry.
27Decision Criteria
- Generate support amongst key influencers.
- Will pressure Government to act.
- Revitalize image.
- Cost-effectiveness
- Asking for funding, credibility could be damaged.
28The Proposed Solution
- Strategic communications campaign.
- Central message
- Lack of funding leading to deterioration - more
money will fix Metro. - Focus on Metros social, economic impact.
29The Proposed Solution
- Targeted reach interested parties directly.
- Transit advertising commands high recall /
comprehension rates. - Cost-effective do not need to pay for space.
30Expected Outcomes
- Shift blame from WMATA to Government.
- Pressure will force Government to consider
funding proposals. - Secure at least some portion of immediate 1.5B
funding needs.
31Implementation
- Internal advertising.
- Transit ad space.
- Metro website, sympathetic lobby groups.
- Only cost is for media development (500K - 2M)
and opportunity cost of lost ad sales. - Extensive PR (through traditional media).
32Implementation
- Successful Precedent Toronto Transit Commission
33Implementation
- Integration with Web Communications
34Implementation
- Integration with Web Communications
35Implementation
- Usage of Transit Media Space fully integrated.
36Implementation
- Public Relations push need 3rd party support.
37Implementation
- Printed material distribution, one-on-one
conversations. - Set-up information booths at key downtown
stations during evening rush hour. - Do not need to speak to every rider!
- Active citizens will demand information.
- Will also contact Government representatives.