Competitive pressure as an alternative to competitive tendering? The development of a performance contract in Oslo

Abstract

In 1991, a customer orientation project was launched in Oslo, spurred by reduced subsides, and the possibility of competitive tendering being introduced in the operation of public transport. The longterm goal was a 25% increase in traffic before year 2001, through a policy of «more satisfied customers». Public transport in Oslo has increased annually, from 136 million journeys in 1992, to roughly 153 million in 1997. In 1998 we proposed a new quality contract based on the quality monitoring system and performance-dependent subsidies. If the company fails to keep the quality level within defined borders, we propose that the contract will be cancelled and opened for tendering. The first step of this contract was introduced in January 1999. This paper will present the Oslo model and the experience after 7 years with the different types of quality monitoring systems and contracting public transport.