The Relationship Between Bus Contract Costs, User Perceived Service Quality and Performance Assessment

Abstract

In contract tendering or negotiation there is a growing interest in identifying and integrating user perceptions of service quality into the determination of contract costs. This article develops a framework within which a cost–service quality relationship is quantified, and then implemented to identify benchmark targets for cost efficiency improvements required to achieve a pre-defined service quality performance target. We use data from metropolitan and non-metropolitan bus operators in New South Wales to demonstrate the way the method can be used in contract negotiation and ex-post monitoring of performance leading up to contract renegotiation or tendering.

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