Picture 2.7 The analysis of Metronet's strengths and weaknesses

Source: The London Underground's failed PPP // Centre for Public Impact. A BCG Foundation URL: https://www.centreforpublicimpact.org/case-study/london-undergrounds-failed-ppp/

Today the London underground is a part of publicly-owned organisation TfL. TfL consists of a few departments: Buses, Underground, Docklands Light Railway (DLR), London Overground, TfL Rail, London Trams, Roads, River, London Dial-a-Ride, Coaches and Victoria Coach Station, Cycling and walking, Emirates Air Line, Taxis and private hire, London Transport museum, Non-travel activities.

TfL offers opportunities for companies to become its supplier. It sources products and services such as buses, track grease, train motor refurbishment, escalator chains, concrete tunnel lining, vehicle flooring, cables, street rails, trains, protective clothing, and track monitoring equipment. In 2017, TfL had around 7000 active suppliers from 24 countries. TfL's main goal is to build and support an excellent supply chain, so the organisation wants suppliers to be innovative, collaborative and embracing TfL's culture.

2.2.4 Funding and financial risk management

TfL is funded by revenues, grants and prudential borrowing, which is usually limited according to the Prudential Code and Treasury Management Code. These two documents regulate financial reporting and financial instruments such as borrowings, investments, derivatives, finance lease liabilities and receivables. In addition, they manage funding and liquidity requirements, and financial risks. The Treasury Management Code prioritizes security and liquidity over yield.

TfL is exposed to three key risks:

(1) Credit risk appears when a customer or counterparty to a financial instrument fails to meet contractual obligations. As TfL earns the large part of its revenue from prepaid fares, the counterparties are evaluated individually for their creditworthiness and get an internal credit rating. The investment portfolio is based on diversity and involves different counterparties, countries, and industries. It is allocated across government agencies, financial institutions, corporates, money market funds and individuals. Counterparties' limits are set according to the internal credit rating.

(2) Market risk is the risk of market prices changes. These include exchange rates, interest rates and inflation and are managed through derivative financial instruments. TfL has many contracts with foreign companies; therefore, it uses a strategy of retaining risk where it is possible and valuable. As for interest rates, their changes influence future borrowings, which are agreed with Government. To manage them, TfL renew a planned budget and produce a Business Plan annually that include the changes. Additionally, it uses sensitivity analysis to evaluate interest rate risk. Finally, inflation is exposed by staff pay awards and passenger income.

(3) Liquidity risk is the risk that TfL will not be able to meet its financial obligations [5]. The company manages this risk maintaining sources of funding. As it has many of them, the liquidity risk is not high.

In the budget for 2019/20, TfL has planned Ј10,3 billion sources of funds. 79% of them has been planned to spend on running and operating the network and 21% - on renewing and improving the network (see pictures 2.8 and 2.9). TfL's main challenge is to do more with less, which means costs reduction, revenue increase and becoming more efficient, while maintaining safety, frontline services and vital investment [55].

Picture 2.8 Sources of the London Underground funds, Ј billion

Source: Transport for London Budget 2019/20 // Transport for London URL: http://content.tfl.gov.uk/tfl-budget-2019-20.pdf



Picture 2.9 Uses of the London Underground funds, Ј billion

Source: Transport for London Budget 2019/20 // Transport for London URL: http://content.tfl.gov.uk/tfl-budget-2019-20.pdf

The company has a savings program that aims to reduce costs by changing an operating model, reducing and relocating head office, London Underground modernization savings and contract savings. Since 2015/16, the Tube has decreased its operating costs for Ј0,2 billion (see figure 1).

Picture 2.10 Operating costs of the London Underground since 2015/16, Ј billion

Source: Transport for London Budget 2019/20 // Transport for London URL: http://content.tfl.gov.uk/tfl-budget-2019-20.pdf

Turning to efficiency, TfL widens its scope by enhancing the service. It develops suburban rail through London Overground and TfL Rail, extends the London Underground, and launches the Emirates Air Line and the Night Tube. The environmental issue is an important part of cost reduction process. TfL tests the Elizabeth Line, which forms the Ultra Low Emission Zone, and introduces solar energy, which is the start of future projects on carbon emissions reduction. Finally, the company grows its income base by offering locations for small businesses and advertising placements, providing anonymised data about customers, building affordable homes, partnering with cities and consultancies to deploy specialist expertise.

As for the London Underground part of TfL, its operating cost per journey has decreased for Ј0,2 since 2015/16 (see table 2.3), but its operational income and cost are still the greatest in the whole system (see picture 2.11).

Table 2.3

Operating cost per journey since 2015/16, Ј

	Actual	Budget
	2015/16	2016/17	2017/18	2018/19	2019/20
Number of passenger journeys (millions)	1349	1378	1357	1382	1385
Average yield per passenger journey (Ј)	1,9	1,94	1,94	1,98	2,04
Operating cost per journey (Ј)	1,67	1,52	1,57	1,47	1,47

Source: Transport for London Budget 2019/20 // Transport for London URL: http://content.tfl.gov.uk/tfl-budget-2019-20.pdf



Picture 2.11 Operating income and cost, Ј million

Source: Transport for London Budget 2019/20 // Transport for London URL: http://content.tfl.gov.uk/tfl-budget-2019-20.pdf

To summarize the financial performance of TfL and the London Underground in particular, the organization is making a huge progress in cutting its operational costs and increasing its non-financial value.

2.2.5 Stakeholder risks and management

TfL makes everything to keep in touch with its key stakeholders. It publishes a schedule, which sets out when TfL publishes regular information such as annual and quarter reports, budget plans, advisors' reports, a supplier guide etc. In addition to the “resulting” and “planning” documents, the company also makes webcasts of Board meetings available on its YouTube channel and fulfills the Freedom of Information website with replies to online requests [36].

TfL has a general corporate strategy, one part of which is “People and stakeholders”. It describes the relationship between the company and its stakeholders, the main principal of which is “encouraging individuals and groups from all sections of the community to engage with, contribute to, and participate in the work of TfL” [55].

This strategy includes a few main risks such as failure to attract and retain skills required, not providing enough information and support to meet the changing demands, impact of changes on strategic goals and business transformation.

To summarize, TfL strives to be a transparent organisation for its stakeholders. It clears the vision and the objectives and publishes all the numbers from operating costs to top-management salaries.

2.2.6 Risks and opportunities

TfL defines success as measured through delivery of infrastructure projects and running a safe and reliable transport network in the most efficient manner. To achieve this success it needs to deal with risks and find opportunities for growth.

The whole risk management system consists of three global issues.

First, it focuses on safety and works toward the Vision Zero goal of decreasing all deaths and serious injuries to zero. London underground is one of the safest metros in the world. TfL pays attention to eliminating accidents relating to escalators, stairs, boarding and exiting trains, manual handling and working with electricity.

Second, challenging macro-economic and financial environments can affect the ability of TfL to pay for and deliver services. Financial instruments for risk management are described above. As for macro-economic environment, generally, the company develops alternative revenue streams and work on efficiency through the savings program. There is an Enterprise Risk Management framework that helps to evaluate strategic risks and approach to managing them.

A bright example of a high macro-economic risk is Brexit. TfL prepared well for it by developing plans to continue serving customers. It included an operational plan to continue working closely with partners, hedging to reduce exchange rate risk, placing orders for critical suppliers at fixed prices, reviewing financial projections and supporting non-UK citizens staff by providing guidance on applying for Settled Status.

Third, TfL provides a counter-fraud, bribery & corruption strategy to prevent risks of internal problems within the organisation. It consists of five components [9]:

(1) Prevention means strengthening controls to prevent financial crime and reduce associated losses. It includes review of employees' internal promotions and screening for all roles, review of procurement and supply chain management, work with HR to include responsibilities for prevention and detection of financial crime. Finally, TfL created a “mystery shopper” program to report on business financial crime systems.

(2) Detection is the improvement of capability to detect and respond of financial crime. TfL uses modern technologies such as analytics, AI and machine learning to identify suspicious activity before transactions take place.

(3) Punishment is pursuing prosecutions and recovery of financial losses. If prevention and detection did not help to avoid financial crime, it is vital to explore use of prosecutions and recovery options.

(4) Determination is publicizing TfL's Financial Crime Strategy and popularizing the idea of zero tolerance to financial crime. Here a good communication strategy can help to share information with employees, contractors, customers and other stakeholders.

(5) Education is providing trainings and knowledge on how to act when faced with financial crime and how to report such potential activity.

An audit review in 2019 showed that uncollected fares and fraud cost TfL over Ј116 million every year (Ј176 million in total with 34% recovery) [9, p.21].

Turning to reliability, TfL sees opportunities in decreasing excess journey time - the time spent over the expected time to complete an average journey. It includes potential delays, time taken to enter, purchase a ticket, wait for a train and exit stations. In addition, for TfL is important to receive positive feedback from customers. It extends the existing lines with new stations, provides open data to app developers so that customers could plan their journeys, and makes the underground inclusive for people with disabilities.

As for hierarchy of risks, there are three levels. L0 is for TfL strategic risks, L1 is for TfL's services risks and L2 is for operational and project risks (see picture 1). For example, strategic risks refer to achieving TfL's safety outcomes and major cyber security incidents, while London Underground strategic risks refer to LU cost savings and forecasts (see appendix 5 for more examples).

Picture 2.12 Hierarchy of TfL risks.

Source: Audit and Assurance Committee. Thursday 26 September 2019 // Transport for London URL: http://content.tfl.gov.uk/aac-20190926-agenda-and-papers.pdf

2.3 The New York City subway

2.3.1 The history of the subway

The New York City subway was opened in 1904, and since then it has become one of the most used systems with the greatest number of stations (472). The construction had started from the demonstration of a tunnel under Broadway in 1870. The idea was accepted and developed to the construction plan of the first two lines.

In 1910s, the lines had been owned by two private companies and later, in 1940, the city government had bought them. In 1968, the subway was placed under control of the Metropolitan Transport Authority (MTA) and still works under MTA conditions.

Despite many incidents in the history of the subway, it is one of the most well managed systems. There had been strikes, natural disasters, terrorist attacks and vandalism, but the MTA has been learning on its own mistakes and built a working system. During the last twenty years, the MTA has developed a few projects to modernize the subway, such as moving block signal system that allowed to track and increase passenger capacity, partly closing lines at nights to clean them etc.

2.3.2 Scope and objectives

The New York City subway system has 472 stations within 10 main lines, which make it the largest metro system in the world. As MTA notices, “the subway is never referred to as the metro, underground or tube”, but is basically called just the “trains” [57]. The New York City subway operates in Manhattan, Queens, Brooklyn, and the Bronx, while the Staten Island Railway is a separate train system (see figure 1).

Each line has different services: there are local and express trains. Express trains skip some stations for faster service, while local trains stop at every station. There are trains that can be both express and local depending on day and time. To make this system clear, subway management designed a map and explaining signs (see pictures 2.13 and 2.14).



Pictures 2.13 and 2.14 The map of New York / Train services and lines

Source: Subway Map // NYC Subway Guide URL: https://www.nycsubwayguide.com/subway/subway_map.aspx

The MTA mission is the key to the MTA activities. “The Metropolitan Transportation Authority (MTA) preserves and enhances the quality of life and economic health of the region it serves through the cost-efficient provision of safe, on-time, reliable, and clean transportation services”. Based on it, the MTA developed a set of goals, which are divided by belonging to a particular stakeholder group. For example, for customers, the main goal is to ensure their safety, and it is measured by customer injury rates.

There are many performance indicators, but the most indicative is the annual ridership and other measurements of customer journey. The annual ridership has decreased from 2015 for almost 100 million passengers (see figure 1). Other objectives are the number of incidents, additional platform and train time, customer journey time performance, station comfort and convenience measured by appearance, information and equipment, wait assessment measured by how regularly trains are spaced, and sustainability. They are all tracked on the MTA website; this allows to analyze the subway performance in terms of progress in plans realization. Turning to sustainability, NYCT follows a long-term plan based on ISO 14001 standard. Its goals are saving natural resources, using less energy, preventing pollution, complying with legal requirements, creating positive feelings in communities [37].

Picture 2.15 Annual ridership in the New York City subway, million passengers

Source: ntroduction to Subway Ridership // MTA URL: http://web.mta.info/nyct/facts/ridership/index.htm

All performance indicators of the NYCT are divided into a few groups: subway service indicators, bus service indicators, paratransit service indicators, safety indicators, workforce indicators, financial indicators, and capital program indicators. They are revised each year and compared to each other in order to track progress.

MTA forecasts a decrease in ridership and its revenue and inability to work further in deficit. However, the organisation does not explain the reasons of such decline. Generally, MTA has a strategy “An eye on the future”, which contains information for prospective contractors, engineers and architects. All future contracts are fixed on the website of MTA, for example, the design and construction of a new station cost from $10 million to $50 million, while station renewal is cheaper - from $1 million to $5 million (see appendix 6). Therefore, future revenues are predicted on estimation of future contracts and ridership.

2.3.3 Organization

New York subway is managed by MTA NYC Transit agency (NYCT), which is the part of New York City Subways and Buses. The regional network of Metropolitan Transport Authority (MTA) also includes MTA Staten Island railway, MTA Long Island Rail Road, MTA Metro-North Railroad, MTA Bridges and Tunnels, and MTA Capital Construction.

The New York subway is owned by public authority, which places tenders for engineers, architects and contractors. Initially, in the early 1910s, two existed lines were consolidated into two private systems, owned by the Brooklyn Rapid Transit Company (BRT) and the Interborough Rapid Transit Company (IRT). In 1932, the first city-owned line was built, but it could not compete with two private companies.

In 1940, the government bought two private systems and integrated them into its own. There were many problems during the integration process, as BRT and IRT designed their lines differently. The IRT tunnels and stations were smaller, so they could not accommodate the BTR's trains. During this long process, several connections between two systems were built, and the subway became solid.

In 1953, the New York government created the New York City Transit Authority (NYCTA) to take control over buses, subway and streets. One of its divisions - the MTA - became responsible for the subway management. During the 1970s, the subway had been extended aggressively within the “Program for action”. Some stations were built despite the battles over their locations with stakeholders. Some lines were closed and replaced with the bus routes.

In 1973, “the graffiti epidemic exploded”, followed by high level of crime [50]. The car-washing program did not help. It was one of the reasons of ridership fall to the level of 1918. The MTA cut costs dramatically, but finally, politicians demanded an audit of MTA work. In 1986, a $40 million program to stop incidents was presented, and since then, poor management has began to reverse. Three years later the MTA won the graffiti war and made the subway a convenience transport system again.

The MTA faced many problems with law and environmental restrictions. Since 1940s, it mostly managed the existed subway rather than built it. Most lines were constructed before 1940 and just needed regular updates. Today the key role of MTA is to control the subway. In contrast to the case of London, the New York subway is limited by geographical boundaries (see the map in appendix 7), so it is mostly improved inside the city rather than is extended to suburban areas.

2.3.4 Funding and financial risk management

The New York subway is financed mostly by passenger income and taxes, by city, local and state subsidies, and by a few credit organizations (see picture 2.16). In order to evaluate the level of trust to a credit organization, MTA uses credit ratings, officially published on the MTA website.

Picture 2.16 Sources of funds of the New York City subway, billion $

Source: MTA 2020 Adopted Budget. February Financial Plan 2020 - 2023 // MTA URL: https://new.mta.info/document/15221

According to the 2020 Adopted Budget and the MTA strategy for 2020-2024, the priority investments are aimed at system improvement. They include renewal of signals, subway cars, stations, track, underground structures and power equipment (see picture 2.17). Total expenses include salaries payments, health & welfare expenditures, debt service and other (see picture 2.18).

Picture 2.17 NYCT 2020-2024 Capital Program by category, million $

Source: MTA Capital Program 2020-2024 // MTA URL: https://new.mta.info/document/10511

Picture 2.18 Uses of funds of the New York City subway, billion $

Source: MTA 2020 Adopted Budget. February Financial Plan 2020 - 2023 // MTA URL: https://new.mta.info/document/15221

To control the financial flows, MTA uses several types of reporting. (1) MTA BudgetWatch Reports reflect operating results through one month and subsidies received for the next month. Such reports allow maintaining quickly changing circumstances, such as COVID-19 pandemic in 2020. (2) MTA Consolidated Financial Statements are published after each quarter and are usually supported by independent auditors' review report. These statements provide information about the nature and amount. (3) MTA Budgets and Financial Plan Adoption Materials for the following four years. These documents state mid-term and long-term forecasts for the following year and for the next four years. For example, in December 2019, MTA published 2020 Budget and 2020-2023 Financial Plan Adoption Materials.

2.3.5 Stakeholder management

The New York City subway in particular and the MTA in general have such key stakeholder groups: customers; the businesses, residents, and taxpayers of the service area and the state; the MTA's employees and unions; the government partners. The MTA uses a stakeholder-based approach to the planning process and group its goals around stakeholders. The Mission statement, measurement and performance indicator report defines all groups of stakeholders, and sets goals and performance indicators for each of them (see appendix 8).

As the subway has many stakeholders, it strives to be a transparent organisation with clear vision and goals. The MTA follows the Freedom of Information Law (FOIL), which provides any person with the right to request copies of any documents. It also has a structured website that contains information about the current projects, policies, news and public hearings related to the subway.

Passengers, which are the key stakeholders, are coordinated with a step-by-step guide on a website and navigating signs on stations. The guide describes in detail the process of entering and exiting the stations, tickets buy and usage and other important steps to make a subway trip comfortable.

http://web.mta.info/mta/compliance/pdf/2018_annual/2018%20Mission_Statement.pdf

2.3.6 Risks and opportunities

Risks are managed through the MTA Enterprise Risk Management And Internal Control Guidelines. Its' purpose is to establish an effective system of control. The Guidelines comply with the requirements of New York City and state legislations, and are reviewed annually.

The Guidelines state four levels of control.

(1) “Internal control is a process, effected by an entity's board of directors, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objects relating to operations, reporting, and compliance” [28]. According to this definition, there are three objectives that MTA strives to achieve: effective operational and financial performance, internal and external transparent reporting, and adherence to laws. Internal control consists of five components and seventeen principles, which are associated with control environment, risk assessment, control activities, information and communication, and monitoring (see appendix 9).

(2) Enterprise risk management possesses questions such as strategy-setting, governance, communicating with stakeholders and measuring performance. It consists of five components and twenty principles that MTA relies on while creating and realizing its values: governance & culture, strategy and objective-setting, performance, review and revision, and information, communication and reporting (see appendix 10).

(3) Enterprise risk management committee advises and assists with risk strategies, reviews crisis management plans and supports the internal control program. The committee meets every quarter to suggest improvements to both - internal control and enterprise risk management - levels of risk management.

(4) Vulnerability assessments “is an analysis of potential threats to critical business functions”. In other words, it suggests controls need to be modified or added and tests them. All controls are divided into four types: key controls, which are the internal controls; subordinate controls, which support key controls; secondary controls, which are not the previous two types; and monitoring controls, which are designed to monitor non-critical risks. All risks are evaluated on a five-digit scale by two dimensions, significance and likelihood. The risk matrix is then used to test the activities with the highest risk level and to create a test instruction. After that, the MTA reviews control tools, completes a signed certification each year and provides a summer report. Finally, if control tools fail tests or certification, the MTA creates a corrective action plan.

In contrast with the London case, the MTA does not provide information on opportunities and how it reacts to them.

2.4 Best practices and lessons learned

The structure of previously described cases allows to follow the best practices in metro systems management section by section.

(1) The long history of both the London Underground and the New York subway needs close attention for the next chapter. Same as the Moscow metro, the Tube and the subway were built in the beginning of 20^th century or even earlier. Therefore, the underground infrastructure, trains and stations are old and constantly need renewal and improvement. What can be taken from the cases, is the good planning and every-year revision of strategies. Actually, the best practice is a combined one, as the New York subway is perfect in short-, mid- and long-term planning, and the London Underground masters in detailed goals and strategies.

(2) Turning to scope and objectives, both cases showed the importance of global vision on an infrastructure megaproject. The London Underground works under the general strategy of the city development, and the New York subway has its own mission to enhance the quality of life and the economic welfare of the region. Metro systems are a specific type of projects as they depend on the government and organizations above them, however, today they function as a partly-independent organizations with its own goals. Therefore, the best practice for them is addressing their stakeholders four strategic components: mission, vision, goals and objectives. With all four, metro systems become transparent for customers, contractors and creditors as they provide information on their strategic plans. At the same time, this allows them to meet the clients' expectations and find partners with similar values to work in the same direction.

Additionally, both the London Underground and the New York subway use a strict structure to group their goals and objectives. The TfL bases its structure on three development directions - healthy streets and healthy people, a good public transport experience, and new homes and jobs, each of which is then grouped into four key areas of Safety and operations, Customers, People, and Finance. The MTA uses a stakeholder-based approach and develop goals and objectives for each stakeholder group. The best practice here is to choose one grouping principle and follow it in strategies development.

(3) The majority of metro systems work under a public organization such as Metropolitan Transportation Authority (MTA) and Transport for London (TfL). The history has proved that the metro systems work better under a public owner, as a public-private partnership requires more human and capital sources, and a more complex management team. Thus, the only issue to think about here is management of supplier contracts. The London Underground has developed the Supplier Guide that explains the algorithm of partnership. The same guidelines for potential partners are provided by the New York subway on its website. The best practice to use from this case is the development of clear instructions for all the potential contractors and suppliers.

(4) As financial risks are the most crucial for metro systems, they require more attention and actions. First, the organisation that controls a system should have a few funding sources. It is even better if a part of them are public and another part are private. In both cases, the Tube and the New York subway receive financial sources mainly from their own revenues, government subsidies and credit organisations. In addition, to choose the credit organisation they both use credit ratings. Finally, now both systems are shifting their focus from making profit to creating a high-quality client service and to decreasing their operational costs. In other words, they follow a Mobility-as-a-Service (MaaS) approach, which has already been used in Hannover, Gothenburg, Brussels, Helsinki and Montpelier [3].

(5) Contemporary trends place stakeholders in the centre of organisations' activities or, at least, give them an important role in decision-making process. TfL and MTA follow these trends and try to be as transparent for their stakeholders as possible. They provide them with reports, news, statistics and guidelines and give them an opportunity to participate in public hearings and share their opinion. Still some new stations are opened despite public protests and strikes. It is impossible to make a unified decision, but both organisations work on development of communication tools and decrease of controversies.

(6) Moving on to the last section on risks and opportunities, the first best practice to mention is preparing plans for both, risks and opportunities. Risk management is an essential part of any large project, but plans for opportunities are a rare document. As for the cases reviewed, only TfL has an action plan for opportunities, while the MTA focuses only on negative risks.

In addition, all risks should be classified, have an owner and a response plan. Both TfL and MTA group risks by their strategic level. In general, there are three levels: an owner-organisation level, a metro system level and an operational level.

Based on these best practices and lessons learned, the recommendations for Moscow metro will be provided in the end of chapter 3, but first the system will be described using the same structure as for the London Underground and the New York subway cases.



3. The Moscow metro

3.1 History of Moscow metro

The Moscow Metro began its history in 1935 with one 11-kilometre line and 13 stations from Sokolniki to the city centre. The construction of the first soviet metro was an ideological victory of socialism and was accompanied by cultural events and embodiment in art. For the same reason, the Moscow Metro was not only a transportation system, but also a cultural monument. Today it is called the most beautiful metro systems in the world.

Before the World War II, the government of Moscow completed three lines, which stations had been used as air-raid shelters. While building them, soviet engineers consulted with the London Underground workers, which suggested new technologies and shared their experience. After the war, construction of the Koltsevaya Line began, and the metro became to look like a present circle-radial system. During the Cold War, stations were placed more deeply than usual and planned as shelters in case of nuclear war. After this period, the metro had been extended with the increased pace and the stations design had been simplified.

Today the Moscow Metro is one of the most efficient systems in the world. It has the greatest frequency - 39 trains per one hour - and follows the schedule with 98,9% accuracy [3]. In the last ten years, the Moscow Metro received an international award for the scope and pace of changes in public transportation by UITP (The International Association of Public Transport). The construction of Moscow Central Diameters (MCD) and Moscow Central Circle (MCC) made the greatest contribution to this result. In the beginning of 2020, Moscow has set a Guinness World Record in using 23 tunnel-passing mechanized complexes at the same time [21].

The Moscow Metro receives high evaluations and is recognized by different specialists as one of the most illustrative examples of successful city and transport development. It is then curious to study, how this system works and whether it is almost perfect or has significant disadvantages.

3.2 Scope and objectives

The Moscow Metro consists of 14 lines, 269 stations and 469 km of tunnels and overground tracks (see map in appendix 12) [4]. Initially it has been operating on a territory of Moscow city, however, with the extension of Sokolnicheskaya Line, it now serves the suburban areas too.

According to the development program for Moscow transportation system for 2012-2020, the Transport department set a few goals and objectives.

(1) Increase of transport services quality measured by an average passenger journey time during morning rush hours from the suburbs to the city centre. In 2020, this time has decreased for 12 minutes since 2012 and reached 50 minutes on average.

(2) Increase of transport availability for all population groups measured by the percentage of trains available for people with limited mobility. This objective has increased for 36 p.p. and reached 93%.

(3) Increase of safety and decrease of environmental impact measured by number of deaths per 100000 people. The number of deaths has decreased by 27 p.p. or, in other words, near 3000 lives was saved.

(4) Increase of comfort. This goal's objectives are not well specified, they consist of: modern trains, development of navigation and information systems for passengers, intermodal tickets and tariffs, and increase of transport capacity measured by millions places per one day. In 2015, the forecast of capacity for 2020 was 16,5 million passengers per day. However, in 2019 the greatest number of passengers was 9,4 million people (see figure 1) and an average ridership was 7 million people per day, so there is a reserve for a capacity increase.



Picture 3.1 Annual ridership in the Moscow Metro, million passengers

Source: Moscow Metro // Wikipedia. The Free Encyclopedia URL: https://en.wikipedia.org/wiki/Moscow_Metro

(5) Increase of availability. This goal is better specified and consists of extending the existing lines for 135,5 km, increase of the percentage of people living 2 km or closer from a metro station up to 87%, construction of transport interchange points, and purchase of 3242 new wagons (planned for the period 2018 - 2023).

(6) Pace increase. It is not well specified too and suggests construction of new lines, schedule optimization, decrease of intervals between trains, and implementation of IT-systems [33; 49].

Comparing to the cases of London and New York, the Moscow Metro lacks of official documents and a single website with all information. When searching for its strategy, it is difficult to find the existing reports as the data is usually presented in news and on different websites, each of which describes the projects of the government of Moscow.

The only mission available addresses the issues of quality and safety: “Improving the quality, reliability and safety of customer services by constantly improving the management system through improving technical and business processes”. It is supported by a vision that states: “Being the largest passenger carrier in Moscow, Moscow metro strives to improve the quality of its services, focusing on the consumer” [30]. These statements do not seem to be a part of a general strategy, as they represent only two issues of quality and safety.

Turning to the projects' descriptions, they also lack of detailed information. For example, when talking about the MCC results, the Moscow Metro has published an article with three statements: the city became closer; more space was created in the city centre; and the transportation system with many interchanges was developed. In fact, these results are not relevant without numbers, which are presented in another report. The only official document is a regulation of organisation's activities. It provides information on members, registered capital, list of services and other juridical information [10].

3.3 Organisation

The Moscow Metro is owned and managed by the State Unitary Enterprise “Moscow Metropolitan”, which is owned by the department of transport, a part of the government of Moscow. Initially it has been a public organization since the first line. Today it works under the government and offers contracts to suppliers and contractors.

The department of transport is an ecosystem today; it itself consists of seven companies and, additionally, cooperate with private organizations such as ridesharing, taxi and commercial carriers. The seven public companies are the Museum of Moscow transport, MosTransProject, Administrator of Moscow parking space, Centre of traffic management, Manager of transportation, Moscow city transport (Mosgortrans), and the Moscow Metro.

The Moscow Metro provides its contractors with a specific service with all the information on construction projects, their documents and other relevant information. The partnership discussion usually begins with a contractor creating a personal account and using a project calculator that forecasts the scope and creates a full list of documents required. Actually, the government creates a state order and searches for an executer.

During the period of Yury Luzhkov was a mayor, there were two key contractors, Mosmetrostroy and Metrogiprotrans. Today there are more than 20 companies that are hired by one key contractor Mosinjproekt. This situation has been discussed many times by independent media in terms of corruption. RBC published an investigation about companies that take part in metro construction. According to this research, five out of thirteen companies are created by Mosinjproekt management and financed for 32,2 billion roubles. The financial performance of these companies is unknown. In addition, RBC shows that since 2014, none of the stations was opened on time because of the project documentation partial absence [42].

3.4 Funding and financial risks

The Moscow Metro budget is formed from a general budget of Moscow city. 90,8% of Moscow budget is financed by taxes, 9,2% - by non-tax revenues [20]. The non-tax revenues include income from state property and natural resources usage, administrative fees and penalties, and other paid services. The Moscow budget is partly spent on infrastructure and transport. The governmental program “Development of transportation system” is reviewed every year; the forecast for 2020 is 733,6 billion roubles (see picture 3.2).



Picture 3.2 Funding of the program “Development of transportation system”, billion roubles

Source: Guide to the budget of the city of Moscow // Departament finansov goroda Moskvy URL: https://budget.mos.ru/static/notice/%D0%9F%D1%83%D1%82%D0%B5%D0%B2%D0%BE%D0%B4%D0%B8%D1%82%D0%B5%D0%BB%D1%8C%20%D0%BF%D0%BE%20%D0%B1%D1%8E%D0%B4%D0%B6%D0%B5%D1%82%D1%83%20%D0%9C%D0%BE%D1%81%D0%BA%D0%B2%D1%8B%20%D0%BD%D0%B0%202020-2022%20%D0%B3%D0%BE%D0%B4%D1%8B.pdf

As for the structure of the Moscow Metro, it is impossible to find data for 2019 or 2020. The only available information is provided within the 2014 report. There it is showed that more than 90% of revenue is received from fares and spent on passengers' service. However, this information is old enough and requires renewal. According to the 2017 budget, near 43% of it was spent on metro, which is 225,7 billion roubles [20].

In addition, the structure of financial resources is a high-risk one, because more than 90% is received from fares. In situation of demand decrease, the organisation is going to lose huge part of revenue (see pictures 3.2 and 3.3).



Pictures 3.2 and 3.3 Total sources of funds and total expenditures of funds, %

Source: Moscow Metro annual report 2014 // Moscow Metro URL: http://gup.mosmetro.ru/upload/iblock/ef2/ef2e202be6b83ac8e26e1bb98c367900.pdf

3.5 Stakeholder management

The Moscow Metro does not provide any direct information about its stakeholders, but it has four website sections for different groups of people: passengers, urban planners, developers and constructors, and media. Talking about official documents, there are no plans for working with stakeholders and no public hearings. Therefore, the system is not transparent and can be studied only with the help of external sources.

Since a dynamic metro extension has begun in 2012, the amount of disagreements has increased. They related on different topics but most usually on environmental and redevelopment issues. For example, protests against the construction of the new Kommunarskaya line has started a year ago, in the beginning of 2019. Residents of areas where the line is built advocate for safety of old buildings and parks, as, according to the construction plans, they are going to be damaged. In addition, the Moscow Metro offered the locals to vote for or against only four months after the construction has begun [3].

Another case is construction of MCD on a nuclear burial near the Moscow river. The danger of this process is obvious, as nuclear waste can get in the water and spread across the city and even further. Public inspections have shown the excess of radiation by hundreds of times; however, the government did not react for this research and do not respond to people's requests. Moreover, the protesters are not allowed to attend public hearings. Actually, the government risks to harm people living in this area and cause an environmental disaster [52].

To sum up this section, stakeholder management is one of the weakest parts of Moscow Metro management system. It should be built from scratch, evaluated by external advisor and implemented in the organisation.



3.6 Risks and opportunities

This part of the third chapter supposed to be a description of risks identification and management, however, there is no data to analyse. The Moscow Metro does not have published reports and plans on risk management. Instead of this, it provides general information on striving to be safe and high-quality service for passengers. Therefore, it is relevant to study how the Moscow Metro system reacted on a real-life unpredictable risk of coronavirus pandemic.

On March 30, 2020 the government has established a self-isolation regime in Moscow. Since then, the ridership has decreased for more than 80% to 1,1 million passengers per day. Other metro systems worldwide experienced the same trend. They all performed differently, so it is relevant to study cases of London and New York again to compare actions.

The London Underground closed 40 non-interchange stations and followed a strict quarantine by appealing people to work from home. After that, for a few days, there were still peak hours and many people in the underground, however, the mayor of London recommended employers to transfer all the staff to remote work. In the end of May, the TfL has published a plan to help London re-open carefully. It recommends the underground to carry only 10-13% of normal passengers' numbers in order to keep social distancing and keep some stations closed. The TfL's approach is based on three ideas: remode, retime and rescale, in other words, encourage everyone to shop locally and walk or cycle, retime start and end times of different organisations, and make structural changes to road network. In addition, it provides passengers with a guide on how to travel safely in the underground [43].

The New York subway has increased the time between trains and offered new bus routes from 1 a.m. to 5 a.m. when the subway is closed. It also cancelled the ability to pay in cash at stations booths to avoid contacts between people [44].

Both networks created a special section on their websites about coronavirus counteraction. Both networks faced the problem of people continuing to use metro even after the beginning of quarantine. At the same time, the Moscow Metro itself did not provide any information on what passengers can do and how the metro is going to return back to a “new normal”.

The Moscow Metro did not close for the period of pandemic, but the time between trains has increased due to the low daily number of passengers. All recommendations provided by the government of Moscow were general for all transportation modes. The problems appeared on April 15, the first day of digital passes usage (a digital pass is a QR-code registered to a person who moves by public transport). In the morning, police caused overcrowded entrances by checking the passes manually. After this situation, many people complained about being late for work and police causing a high risk of infection. The government of Moscow explained it as a lack of time to prepare well, however, the opposition filled an application for irresponsibility of authorities [53].

Comparing these three cases, the Moscow Metro is the only system that does not have a plan to get back to normal. Moreover, it itself made a mistake that could cause many deaths due to the coronavirus spread. In sum with no data on risk management, it can be concluded that the Moscow Metro does not have a clear strategy to maintain risks and opportunities and that it reacts post-factum on unexpected events.

3.7 SWOT analysis and recommendations

Based on three cases and mobility trends, a SWOT analysis of the metro management system can be conducted. Strengths and weaknesses are based on a comparison of Moscow Metro with best practices of London Underground and New York City subway. Strengths and opportunities are external factors, in this case - mobility trends, that can influence the work of a metro system. After the SWOT-table completion, we take a look at possible strategies for the Moscow Metro development based on the SWOT-analysis: how strengths can help to take the most from external opportunities and how they can help to cope with threats, and how weaknesses can be overcome with the help of opportunities and which of them are better to get rid of inside the organisation.

Table 3.1

SWOT-analysis of the Moscow metro management system

Strengths 1. Rich cultural heritage 2. High results: the quickest, the most beautiful, one of the busiest metros in the world 3. Public ownership, a single control centre 4. Well-designed navigation 5. Quick response to unexpected events	Weaknesses 1. Old infrastructure and communications that require renewal 2. No general mission, vision, goals and objectives. Existing goals and objectives are not specified 3. One key contractor that limits free competition and provokes corruption 4. Almost single source of funds (90,8% from fares), high dependence on demand 5. No transparency, information on websites is limited 6. Many conflicts with stakeholders, especially with citizens. No stakeholder management plans and reports 7. No risk management plans and reports
Opportunities 1. New technologies are tested and implemented: driverless vehicles, contactless payments, transit planning apps. Governments are interested in innovations 2. Data-driven planning and analysis of operational efficiency 3. Sustainability becomes the key trend 4. Customer is the centre of a decision-making process 5. Mobility-as-a-Service (MaaS) concept development	Threats 1. Competition from emerging transport modes such as taxi and carsharing 2. Increasing popularity of delivery services as people are staying home rather than going somewhere to buy a thing 3. Increase of uncertainty and pace of changes 4. Unpredictable events such as terrorists attack or coronavirus pandemic

Table 3.2

A model of recommendations

	Strengths	Weaknesses
Opportunities	SO How strengths can help to take the most from external opportunities	WO How weaknesses can be overcome with the help of external opportunities
Threats	ST How strengths can help to cope with threats	WT Which weaknesses are better to get rid of

Strengths + Opportunities

S1O1: Rich cultural heritage in cope with innovative technologies development can be transferred into a new touristic destination. Today there are many mobile apps and other services that provide self-guides for tourists. The Moscow Metro can create cultural programs not only for foreign tourists, but also take part in local Russian and Moscow events.

S2O1 + S2O2: Using new technologies and data-driven approach to information analysis, the Moscow Metro can increase its performance indicators and improve operations. It already has ones of the highest results in the world, and with innovative technologies it can create new indicators and collect more data to make more accurate plans and strategies.

S2O3: The Moscow Metro results show that it has a high potential in development, therefore, it has an opportunity to become one of the most sustainable systems in the world. Today some work is done in this direction, for example, one of the objectives measured is a level of CO2 emissions, however, it is only the beginning. In cope with new technologies and trends, the sustainability may be implemented not only as an environmental issue, but also as a social and financial one, as it is usually understood as a complex term, consisted of 3P: people, planet, profit. In addition, sustainability can be learnt from other metro systems, for example, the London Underground, where it is the central concept of the strategy.

S2O4: Having such high results, the Moscow Metro can focus on providing customers with a perfect service. Following trends on placing a customer in the centre of a decision-making process, the government may develop goals and objectives around needs of its customers, as the New York City subway has done it.

S2O5: As a satisfaction level of passengers is high, nowadays the metro may also provide service on transport modes change. The Moscow government already builds intercepting parking and passages from metro stations to MCC and MCD, and plans to improve the whole transport system including bicycles, carsharing and other vehicles.

S4O4 + S4O5: A well-designed navigation helps passengers to save their time and shows that they are important for the city. In addition, it helps making transport interchanges easier and clearer.

S5O1 + S5O2: There were many situations in which employees of the metro performed quickly. For example, during the beginning of self-isolation regime, they had developed a system with QR-codes in two weeks. New technologies and data-driven analysis and planning can help to predict more risks and response more quickly.