[sustran] Re: Velib' costs and benefits - Note 2

Walter Hook whook at itdp.org
Fri Oct 12 23:46:58 JST 2007


We read somewhere that the bikes cost something like 3000 euros, which seems
impossible , and we could not confirm it.  There is some fancy electronic
gadgetry inside them to signal mechanical failures, etc, but how could they
be so expensive? Anyone got any intel on this?

walter

-----Original Message-----
From: sustran-discuss-bounces+whook=itdp.org at list.jca.apc.org
[mailto:sustran-discuss-bounces+whook=itdp.org at list.jca.apc.org] On Behalf
Of Lloyd Wright
Sent: Friday, October 12, 2007 10:41 AM
To: eric.britton at ecoplan.org; sustran-discuss at list.jca.apc.org;
NewMobilityCafe at yahoogroups.com
Subject: [sustran] Re: Velib' costs and benefits - Note 2

It would be interesting to know how much of the 90 million euros is for
the system infrastructure and management as opposed to the cost of the
advertising.  I would imagine the advertising side has both
infrastructure, management, and marketing (cost of attracting and
retaining clients) components.  It would be important to separate out
the bicycle system from the advertising business to understand the
costs.
 
Even at 200 euros per bike, 20,000 bicycles only comes to 4 million
euros.  The bicycles should have a life of perhaps 7 to 10 years.  Thus,
on an amortised basis, the bikes are only about 400,000 euros per year.
Certainly, the stations are an infrastructure investment (but again with
probably a long life) and there are annual management costs.
 
But it is difficult to see how it comes to 90 million euros.  Thus, I
suspect that the costs of advertising component must be huge.  Also, I
suspect that JCD has an incentive to inflate the numbers as much as
possible to claim the goodwill of their investment.
 
Best,
 
Lloyd 
 
 -----Original Message-----
From: Eric Britton [mailto:eric.britton at ecoplan.org] 
Sent: Friday, October 12, 2007 3:50 AM
To: sustran-discuss at list.jca.apc.org; NewMobilityCafe at yahoogroups.com
Subject: Velib' costs and benefits - Note 2



A few more pieces of the Euro puzzle from sent on by our friend Ronan
taken from recent articles in the financial press here.  I rough
translate and summarize for you if necessary.

 

1.       From La Tribune -
http://fr.biz.yahoo.com/13082007/155/velib-un-pari-risque-pour-jcdecaux.
html
JCD investing 90 million Euros (high figure to date), covering all
project costs but gaining access to those 1600 on-street (sidewalk
actually) panels. Penalties for underperformance on contact specs.  JCD
taking a risk/potential bath on the margins, cause they got to do it.

 

2.       From http://www.marchespublics.net/actualite/edito.php?id=1256 

 – The usual Vélib’ numbers +  guarantee of 285 full time
job-equivalents + all costs for system to be covered by JCD for the ten
years of the contract. + City of Paris to get all income from bikes +
3.5 Euros paid to city by JCD year – and all that against 1600 public
advertising spaces, which someone has figured should get them on the
order of 60 million Euros/year for the contract period.  And all that
with a system of penalties for failing to meet performance goals and
incentives for doing better.

The author of that piece -- Hervé Huguet, Citia, cabinet de conseil en
achat public – makes the point that in his view the margins are very
thin but that it’s a great showcase for KCD (which for sure it is).

 

That’s one vantage of our ballpark. But it’s really the benefits side
that holds the bottom line (that plus the necessary separation of the
deals into separate 2 contracts).  Which is where I need some help from
you.

 

And not in our enthusiasm for a kinder better world to kill the at least
carbon-lite goose of course (as Walter Hook so wisely reminds us).

 

Eric Britton

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