SMRT

[maximillian]

Base on the review report, the committee have recommended a revised cost minus model. They reduce the productivity extraction from 1.5 to 0.5. Maybe not as good as cost plus, but imo almost there.

Vested.

[CityFarmer]

Base on the review report, the committee have recommended a revised cost minus model. They reduce the productivity extraction from 1.5 to 0.5. Maybe not as good as cost plus, but imo almost there.

Vested.

Have a glimpse on the FRMC report. It is true that the report recommended existing model, rather the cost-plus model, as highlighted by chialc88.

Let's see the response from LTA/MOT. There are uncertainties ahead. If SMRT revenue still be regulated and be constrained by fare formula, then may be not worth to put my money in.

(not vested)

[ForeverAlone]

sorry guys I'm quite newbie at analyzing smrt and CD
may I know whats the difference between cost-minus and cost-plus??

I'm quite confused but very interested to learn

thanks for the information and explanations so far, you guys are very helpful and I will up your reps for the help thanks

[CityFarmer]

sorry guys I'm quite newbie at analyzing smrt and CD
may I know whats the difference between cost-minus and cost-plus??

I'm quite confused but very interested to learn

thanks for the information and explanations so far, you guys are very helpful and I will up your reps for the help thanks

Please don't solicit with reputation point. It is not allowed.

Anyway, a google with "cost-plus" gave the following from investopedia

"Definition of 'Cost-Plus Contract'
An agreement to pay a company for a job based on the amount of money used to buy the materials required to complete that job plus an added payment. A cost-plus contract fully reimburses a contractor for the cost of materials and then adds additional money to arrive at the total cost of the job. Cost-plus contracts are commonly used in research and development activities, where it is difficult to determine in advance how much a job should cost. For example, the U.S. government has agreed to cost-plus contracts with military defense companies that are developing new technologies for national defense."
- Ref: http://www.investopedia.com/terms/c/cost...ntract.asp

Cost-minus is coined by FRMC report IIRC. You may want to read the report for its definition.

Ref: http://frmcommittee2012.files.wordpress....-5-nov.pdf

[ForeverAlone]

thanks a lot~

[chialc]

Base on the review report, the committee have recommended a revised cost minus model. They reduce the productivity extraction from 1.5 to 0.5. Maybe not as good as cost plus, but imo almost there.

Vested.

First post!
Thank you very much for creating this userid just to post this info.

[Clement]

I think both models apply. The model Mr Kuek is looking forward to for SMRT's bus services is a cost plus model based on the Citi-direct routes. In this model, the operator receives a fixed fee, independent of the fares, to operate the buses. This fee will be based on a cost plus contract. The fares themselves can be governed by the current framework, but the fares go to the government.

"The bus business has been running losses, and we are working with the authorities to resolve the structural issues and improve its viability. Judging from statements made by the authorities, and the recent tenders for the new City-Direct routes, we assess that the move towards greater contestability will see a shift towards an operating model based on cost plus margin. We welcome this, and are preparing for this eventuality. As this model will see operators paid a fixed fee for services based on defined performance metrics, we aim to turn around the bus business from our current losses in the near term." Desmond Kuek at the AGM

[chialc]

Clement highlighted another interesting weapon for SMRT.

Funny that the new FMRC recommended something called Revenue allocation.

Basically, total revenue that SMRT get will be fixed (more or less by the cost-minus model).

However, FMRC encourage (sort of) SMRT to shift more revenue % (aka fare hike) to Road so that the road route does not seems to be lossing so much money.

After I read Clement comments on citi-route, I think FMRC might be tricked on this Revenue allocation recommendation.

My stand corrected: Revenue allocation becomes a big big +ve for SMRT moving forward.

[CityFarmer]

It will shed more light on the fare review, on coming Monday...

Govt to respond to fare review proposals on Monday

SINGAPORE — Transport Minister Lui Tuck Yew has said he will respond to the Fare Review Mechanism Committee’s recommendations when Parliament sits on Monday (Nov 11).

In post on his Facebook page today, Mr Lui also said several Members of Parliament have filed questions related to public transport affordability, and that he would respond on Monday.

He will also address questions on when the fare concessions will be implemented, whether and when there will be a fare increase, as well as what will happen to the 2012 fare review which was suspended pending the committee’s report.

Mr Lui said he was encouraged that many Singaporeans are supportive of the fare review recommendations, particularly those on fare concessions. CHANNEL NEWSASIA
http://www.todayonline.com/singapore/gov...ons-monday

[chialc88]

Fare concession?

Well without feb 2013 TOR, the report will not dare to propose them.




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