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Choosing the Bus Rapid Transit System (BRTS) for Ahmedabad*

CASE STUDY, ORGANIZATIONAL BEHAVIOR
ET Cases - GSMC, 18 Pages
AUTHOR(S) : Margie Parikh, Lecturer, BK School of Business Management, Gujarat University, Ahmedabad and G. Raghuram, Professor, Indian Institute of Management, Ahmedabad.

Case Preview

Choosing the Bus Rapid Transit System (BRTS) for Ahmedabad

 

Following the initial presentation in August 2007 of the first volume of comprehensive mobility plan, the Steering Committee overseeing the development of Urban Infrastructure in Ahmedabad had some tough choices to make. Based on the deliberations within the committee, the commissioner of the Ahmedabad Municipal Corporation (AMC) was to decide if AMC should start the Bus Rapid Transit System (BRTS) project as part of its existing Ahmedabad Municipal Transport Service (AMTS) or create a Special Purpose Vehicle (SPV), mentioned as a possibility by the Project Review Committee (PRC) of the Jawaharlal Nehru National Urban Renewal Mission (JnNURM). The decision was strategically crucial and practically irreversible.

Choosing where to locate BRTS posed a challenge because there were pros and cons of each alternative, and no successful model existed for replication. The cities of Delhi and Pune had met with no or limited success of BRTS and there was resistance from the people. Project success, which heavily depended on acceptance by the people of the city, was critical, and it was necessary to figure out whether creation of a separate subunit will enhance the probability of success or not. Effective launch and management of service were needed, raising claims on administrative and managerial capability. Once the decision was finalized in consultation with the Mayor and the key senior managers in charge of the elected and executive wings of AMC, the Commissioner needed to seek the approval of the state Chief Minister (CM) before applying for funds under the JnNURM.

The initial presentation was made to the Steering Committee by the Associate Director of Centre for Environmental Planning and Technology (CEPT) University, Ahmedabad as the representative of the CEPT University, which was the Design Consultant (DC). DC team members were supported by Gujarat Infrastructure Development Board (GIDB), constituted in Gujarat for the specific purpose. The steering committee comprised the Chairman – Ahmedabad Urban Development Authority (AUDA), Municipal Commissioner – AMC, CEO – GIDB............

Brief History

AMTS was the first transport service nationalized by a municipal corporation4. In other cities of India, this service is provided either by the State Road Transport Corporations (for example in Kolkata, it is Calcutta State Transport Corporation), or by mixed-mode (for example, it is Delhi Transport Corporation as well as private operators in Delhi, or in the form of geographic delineation between Pune Municipal Transport Corporation and Pimpri-Chinchwad Municipal Corporation). At the time of launch of AMTS in 1947, three private sector transport services were already running. But the city planners considered a reliable transport service to be a critical success factor for implementation of its development and decongestion plans for the city..............

Main Issues

But over the years, this pioneering, once-award-winning service declined (Exhibit I). Additionally, the city transport had to adapt to the changing needs of its residents for transport. The city intended to offer BRTS to commuters, but it has to select the most appropriate organizational form for this service............

Decline of AMTS

As per the 2005-06 statistics, AMTS was operating one of the smallest fleet, with largest number of old and over-aged buses. Load factor6 and the number of passengers carried per day were also among the lowest. Its fleet utilization7 was also on the lower side..........

AMTS Fleet

The buses need to be periodically retired from service and new ones need to be acquired. Along with this regular investment, the buses on fleet should be maintained in prime condition to avoid on-road breakdown and to ensure adequate service and optimise fuel consumption. Thus, the annual AMTS budget should have fund requirement of two types – purchase of new buses and maintenance of fleet under operation............

Financial Straits and Entry of Contract Bus Operators

Investing regularly in well-maintained and periodically upgraded fleet has been difficult for AMTS because it does not have its own source of funds. There is a Transport Fund that AMC maintains for AMTS, into which funds are transferred upon annual budget requests made by AMTS to AMC. For any reason, if AMTS requires more funds than budgeted, they would be provided additional funds as loans. The loans that remained unpaid by AMTS over decades because of insufficient revenue were turned into non-returnable, non-interest-bearing loans from AMC.............

Revenue and Cost Balance

A study of AMTS documents reveals a constant struggle to manage the deficit on capital as well as operational fronts. The operational deficit surfaced from the year 1959-60, persisted and deepened as the decades progressed. AMTS initially attempted to self-finance its operations as well as capital requirement through a ten year plan from 1964 to 1973. This plan provided for fare revision that met the operational expenses and allowed annual contribution to funds................

Transition

But this prolonged phase of hardships, stagnation and decline seems to be reversed, and AMTS is in transition. The AMC is treating the loans to AMTS as non-returnable and non-interest bearing. To augment the operational revenues, selected bus shelters have been awarded to private contractors who will build and operate the shelters for a fixed annual fee to AMTS.............

Questions and Concerns

The multiple private contract operators have very small fleets per party. As they are paid on the basis of daily kilometers run by them, there would be an incentive to keeping as much of their fleet on road as they can. Could this jeopardize the routine of preventive and breakdown maintenance and encourage poor fleet condition eventually? (Annexure IV)...........

Challenges Faced by AMTS: Expert View

Experts in PUT identified three major challenges faced by AMTS:

(a) Managing its own operations efficiently and remaining relevant in the face of city development

New goals are emerging for AMTS to reach to the urban population, who can afford private vehicles. As these new goals emerged, the older goal of providing service to the urban poor remained. Additionally, these goals include pressure from the regulatory bodies such as Environment Protection and Control Authority (EPCA) and JnNURM who establish the share of city passengers to be carried by AMTS...........

Entry of BRTS

The BRTS was influenced by the successful Transmilenio system built in Bogota and the BRT system of Curitiba8. This system gives top priority to buses and also segregates non-motorized modes from fast moving motorized traffic. Buses run on dedicated lanes provided in the centre of the road in a dedicated lane, in a model different from elsewhere in the country (for instance, New Delhi).

Inspired by the success of BRTS in Bogota and Brazil, and their replication in several other cities, the Ministry of Urban Development (MoUD) was supportive towards introduction of BRTS. But starting BRTS was technically lot more complex compared to the operation of existing bus service through AMTS. Technical expertise from a number of organizations were enlisted such as Institute for Transport and Development Policy (ITDP), a US-based NGO, CEPT University to provide technical assistance (with funds from Swedish International Development Agency (SIDA), through the Asian Development Bank and CAI Asia). CEPT and ITDP consolidated the ideas into plans and designs.............

Assignment Questions

I. What are the pros and cons of launching BRTS as a second service of AMTS?
II. What are the pros and cons of launching BRTS under a separate organization?
III. .................

Exhibits

Exhibit I: Selected Performance Indicators For Selected Transport Services For 2004-05 And 2005-06

Exhibit II: AMTS at a Glance: Daily % Population & Passengers Carried, Fleet, Fleet Utilization, Routes

Exhibit III: Comparison of Fare across Stages: AMTS and Some Other Public Bus Services

Exhibit IV: Bodies responsible for managing the Transport Service in Ahmedabad and Bangalore

Annexures

Annexure I: Comparison of Various Modes of Public Urban Transport

Annexure II: Selected AMTS Performance Indicators (1995-2001)

Annexure III: Management Structure at AMTS

Annexure IV: Fleet Size of AMTS Contract Operators

Teaching Note Preview

Choosing the Bus Rapid Transit System (BRTS) for Ahmedabad

 

Synopsis

This case study introduces the decision issue, the key decision-makers and the opportunities and challenges faced by the Ahmedabad Municipal Corporation (AMC) that manages the Public Urban Transport (PUT) in Ahmedabad. Since traditional bus service is already being provided by the AMTS, a background of AMTS is also given so as to enable the reader to determine whether the proposed BRTS could best be introduced as an extended service of AMTS or a new organization should be created for it. The case provides information from different perspectives, based on which the readers should identify and weigh the pros and cons of each of the two alternative ways of launching the service in Ahmedabad.

In the process, the readers are expected to familiarize themselves with the context of public urban transport in a metro city like Ahmedabad, India, and explore the reasons that give rise to structural ambidexterity in established organizations. Note that the typical ambidextrous thinking is likely to arise at the time of transition and/or launch of a new product or service in complex organizations. From the perspective of organization theory, structural separation would also raise the need for integration. Over and above that, ambidexterity literature also highlights the significance of the role played by several organizational processes that are needed for attempted structural ambidexterity to lead to greater effectiveness, or the factor the weak presence of which raises the need for structural separation.

Pedagogical Objectives

The objective of this case is to facilitate the reader’s understanding of strategic and operational concerns that push for structural ambidexterity in an existing organization as it evolves through phases of its life cycle. This case study has the Ahmedabad Municipal Corporation (AMC) as the parent organization, the senior decision-makers of which have to decide who will provide their forthcoming Bus Rapid Transport System (BRTS) service: the existing Ahmedabad Municipal Transport Service (AMTS) that provides the traditional bus service in the city, or a special purpose vehicle (SPV).

Pedagogically, the analysis of this case is intended to help achieve the following objectives:

  • • Consider the factors influencing the choice of an organizational form
  • • Introduce the issues associated with the public urban transport in the Indian context

 

You will need to remind the class a few times that they need to analyze the available information as if the service is not launched yet.

Prerequisite Conceptual Understanding (PCU)/Before the Classroom Discussion

This case study can be used for post graduate or under-graduate students of Organization Theory and Design, as well as Macro OB. It can also be used for Management Development Programs on Publicor Urban Transport. A 75-minute session with previously distributed assignment questions would be adequate.

Case Positioning and Setting

This case can be used for post- or under- graduate students of Organization Theory and Design, as well as Macro OB. It can also be used for Management Development Programs on Public- or Urban Transport. A 75-minute session with previously distributed assignment questions would be adequate.

Assignment Questions

  • 1. What are the pros and cons of launching BRTS as a second service of AMTS?
  • 2. What are the pros and cons of launching BRTS under a separate organization?
  • 3. .............

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Product code: OB-1-0040, OB-1-0040A

Abstract

**IIM RAIPUR- ET CASES Award (GSMC 2016) – For a Case Having Interdisciplinary Scope

Award Winning Case Study

This case study describes how an organization managing public urban transport in the city of Ahmedabad lapsed into prolonged decline as its managers allowed its  ‘social goals’ to dominate over ‘business goals’ rather than balancing both, even if contradictory. This trade-off engendered neglect of changing commuter needs.  Various institutional pressures and incentives presented the managers with another contradiction: catering to the needs of traditional commuters while responding to  needs of emerging commuters. The managers had to decide if the initiative should be started in the existing subunit or in a specially created subunit.

 

Pedagogical Objectives

The objective of this case study is to facilitate the reader’s understanding of strategic and operational concerns that push for structural ambidexterity in an existing organization as it evolves through phases of its life cycle. This case study has the Ahmedabad Municipal Corporation (AMC) as the parent organization, the senior decision-makers of which have to decide who will provide their forthcoming Bus Rapid Transport System (BRTS) service: the existing Ahmedabad Municipal Transport Service (AMTS) that provides the traditional bus service in the city, or a special purpose vehicle (SPV).

 

Case Positioning and Setting

This case study can be used for post graduate or under-graduate students of Organization Theory and Design, as well as Macro OB. It can also be used for Management Development Programs on Public- or Urban Transport.


* GSMC 2016, IIM Raipur



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