Ground Transportation Management System Ownership Options
Airport managers often tell us that they are convinced that a Ground Transportation (GTM) system would bring measureable benefits to their ground transportation program, but the purchasing process is a major obstacle that takes a very long time, lots of manpower and competes with other projects and objectives.
Most computer-based systems have been purchased just like you would buy a snow plow, (prepare a request for proposals or bids, publish the request to the vendor community, evaluate the bids and sign a contract with the winner). While this is a tried-and-true method, today’s economic climate and changes in technology now provide more options that could provide a better result for your airport. If you’re interested in an efficient and low-risk process to implement a GTM system at your airport, then take a few minutes to read this article to see if you can find a better way to make the benefits of a GTM system a reality for your airport.
GTM Ownership Options
While selecting the best approach to purchase and “own” your GTM system is an important and sometimes complex decision, the following table summarizes the pros and cons of the options covered in the article.
*Cost: Lifecycle cost of the system, including original purchase cost, support, upgrades and replacement of equipment.
**Risk: Likelihood of the system being delivered late, needing change orders, or being unable to meet acceptance criteria.
+Time Required: Length of time required from start of purchasing process to acceptance of the system
++System Result: Likelihood that the system will meet or exceed objectives and make a major impact on the ground transportation program at your airport.
The intent of this article is not to provide a “how to” manual, but to provide some examples and creative ideas that have been used by airports that may be worth consideration by your organization. Let’s divide the discussion into categories: variations of the outright purchase of your system and approaching the acquisition of the system as a “service” to be paid for over time.
If your airport is most comfortable with an outright purchase, one variation to consider is to buy some of the hardware equipment directly. We have seen a number of our airport customers purchase the computer servers, workstations, backup hardware, network components and other off-the-shelf components to be used in the system. Typically, but not always, airports have purchasing power and agreements that allow them to buy this hardware as cheaply as the system integrator. The more critical components for the project (software, testing, training, etc.) can then be purchased from a qualified GTM integrator. Adding this equipment to other airport purchases may provide additional volume for quantity discounts or other benefits. This approach splits the total cost into at least 2 smaller contracts that can simplify the purchasing process and reduce the overall cost. This approach does generally require the airport to assume more of the maintenance responsibility for the equipment purchased directly and this needs to be well-defined in your system contract to make sure the vendor remains responsible for the total system operation.
A related, but very viable, option is to plan more than 1 implementation phase for the project. Our experience is that many airports learn a great deal about the benefits of a GTM system in the first 6 months of operation. Problems that were anticipated may not appear and issues that were not anticipated become significant. The phased approach starts with identifying the key benefits that are desired from the system and purchasing only what is necessary to achieve those objectives. A second phase can then be planned to add the components that will generate the most significant benefits, based on actual operating experience with the system. Having the budget to modify or expand system functionality or change configuration has been proven more than once to make the difference between an acceptable system and a system that far exceeds expectations. This approach limits complexity that isn’t important and that may hold down the cost of the total system.
While the purchasing regulations for every airport and state are different, we have seen some very creative purchasing approaches that involve the addition of the GTM system to some other process such as a GT facility, a PRCS system or a ground transportation management contract. Our experience with this type of approach is mixed. Done carefully, this approach can eliminate a separate purchasing effort for your GTM system and that can save significant time and money. The difficulty lies in adding a GTM system to a contract that’s focused on something completely different. There are examples where the award criteria were not appropriate for the GTM system and the airport did not get the system it wanted. Another potential difficulty with this approach is the lack of attention given to the GTM system requirements when it’s included with another project. All the requirements of the GTM system should be identified separately in your RFP, not combined with the requirements for other elements of the project. Based on the experience of several airports that have used this approach, it appears that this path has some significant risk that must be addressed to ensure success.
Another approach that is gaining acceptance in many industries is treating the acquisition of this type of system as a “service” that is paid for as a monthly operating fee. Airports have vast experience in this type of agreement for parking management, terminal building cleaning, and other major costs that are constructed as a contract to provide manpower, equipment or both. The increasing popularity of internet-based systems and the opportunity for a much less costly system has vastly increased the use of this approach.
There are two primary benefits to airports from this approach:
- Lower Total Cost. The software provided serves several clients who take advantage of significant economies of scale. Each customer’s data is secured and available to only authorized users. In addition, the airport does not invest in additional sever equipment, which can save a significant amount of the total project cost. The “service” approach includes regular updates to software and hardware components, which can be a significant cost over the life of the system.
- Funding is “Pay-As –You –Go.” The cost of the system is no longer a large capital project, but becomes a monthly operating fee. This type of approach has been common for years in the technology fields where significant technological improvements are made frequently and taking advantage of those improvements is cost-prohibitive. One area that is constantly changing is the cost and capability of the servers in your system. Many airports struggle with the need to replace this server hardware and software on an all-too-frequent basis. Organizing your system acquisition process where these components are not dedicated equipment can have a sizable positive impact on the overall cost of your system.
Even within this “service” approach there are a number of variations and alternatives. You can elect to purchase some components and do just “software” as a service. You can also look at a more traditional lease arrangement that spreads out the cost over 3 to 5 years.