Archive for October, 2016

Clear Focus, New Heights – #8

Thursday, October 27th, 2016

Contractual Outcomes

Wednesday, October 26th, 2016

I travelled down to London from Yorkshire by train last Sunday as I often do. It’s usually an uneventful trip, however, it was different this time. Overhead power cables at Retford weren’t working so Virgin East Coast Trains had to take a detour generally used by freight traffic which wasn’t an ‘electrified’ route. This meant they had to borrow non-electric trains from other rail companies. So I boarded my East Midlands train an hour late and ended up in London about two and a half hours late – and after the tube trains and other lines had closed for the night.

In fairness to Virgin Trains, they handled the situation as efficiently as possible and sorted out taxis for everyone for their onward journeys.

Their staff were also keen to make sure travellers knew about their Delay Repay scheme, which, as the name suggests, means that travellers get a percentage of their fare returned where they have arrived at their destination over half an hour late. This is a good scheme, and I’m sure it acts as a financial motivator to train companies – having been stopped in a field in North Dakota, USA on an Amtrak train for 9 hours recently, such a scheme would possibly change Amtrak’s mindset, or put them out of business within 3 months.

Earlier this month the UK Government announced that it would be reducing this half hour to fifteen minutes – so any delays over a quarter of an hour will mean the train companies having to compensate passengers.

Which? Magazine has been campaigning heavily on another aspect of this too – their view is that as only an estimated 20% of people claim their Delay Repay compensation, the train companies need to raise awareness of its existence and make it easier for people to claim.  That may be the case, and it is great that the time at which compensation kicks in is being reduced, but I think this issue needs to be approached from a different angle.

The contract with the traveller needs to be fairer.

What happens if I get stuck in traffic and cannot make the specific train I am booked on to due to arriving at the station 10 minutes late? I have to buy a completely new full-fare ticket – as you can only amend tickets for specific trains prior to the departure time.

What Which? should be pushing for, and the Government should be introducing, is a scheme whereby if such a situation arises, I don’t have to buy a whole new ticket, but have to pay an administrative fee or additional percentage due to being late – which could be linked to how late I was getting to the station. A scheme that echoes Delay Repay, for when the customer is later rather than the train. This could have been complicated a few years ago, but a software solution to calculate such penalties would now be straight forward to create.

And this isn’t just the case for trains – it happens in other situations.

If I return a hire car more than an hour late, I have to pay a fee. If it breaks down for part of my hire period I get no compensation.

The unfairness of contracts isn’t the only issue though – and in the situations already described we, the consumers, have to accept the offer that the Goliath has put on the table.  We have more influence in smaller scale situations. How do we create more meaningful contracts in the first place? How do we contract for business focused outcomes rather than simplistic outputs?

If I want to employ someone to cut my lawn, he or she may offer to cut it once a fortnight, however, I might want the contract to be that they cut it every time it gets above a certain height – the latter being a more effective approach for me but a potentially more difficult contract to manage for the provider.

It has been interesting reading the debates about contracts to run private sector prisons. The move towards payments for how a company reduces repeat offending as opposed to just running a prison are very positive. The Government is encouraging this more widely through Social Impact Bonds. Again, more difficult contractually, but focused on the required outcome rather than a more simplistic output or activity.

Which brings me to my primary line of work – training. I struggle to understand why companies almost all the time contract for courses to be delivered. If a provider is offering training, it should be to up-skill people, improve performance, change behaviours, etc. So why don’t organisations push for the contracts to be about up-skilling people, improving performance or changing behaviours – and pay providers for that, as opposed to just delivering training.  Focus on the required outcomes, not the simplistic outputs.

Harder to contract for, but ultimately more business focused – and it drives up performance within the training sector, and the really poor performers (of which there are too many) either improve or are consigned to history.

Contractually, industry shouldn’t give training providers such an easy ride, in the same way that the Government shouldn’t be giving rail companies such an easy ride.

Paul