Nobina's business model generates multi-faceted value
Our business model is based on a structured tender process in combination with active contract management and comprises five clear stages. The Group’s sustainability agenda is an integrated and natural part of the business model.
Providing contracted public transport services to society
Nobina ensures that close to one million individuals get to work, school or other activities each day. We do this by providing contracted public transport services to society. We create the highest possible value for our clients, passengers, owners and employees by having a long-term business strategy, i.e. one that covers the entire contract period.
Selective tender process
1. Prospecting: Identification of appropriate contracts
We have a long-term business strategy that extends beyond current contract periods and thus places substantial emphasis on good relations with regional decision-makers and public transport authorities. We map, monitor and analyse public tenders continuously to identify appropriate contracts in terms of profitability potential and value creation for stakeholders. Identifying the right contract is key if we are to achieve the overall financial targets for the business.
>> Solid expertise in combination with the size of the company provide us with the capacity to tender for more contracts than our competitors, which in turn puts us in a better position to continue to win more of the right types of contract.
2. Selection: Active influence and dialogue
Every year, we take part in a large number of tender processes where regional public transport is subject to competition. Selecting available tenders is carried out by carefully identifying and prioritising tenders, which is done well before the tenders are announced. In certain instances, preparations begin up to three years before a tender is submitted. Contract design plays a crucial role in determining how well the tendered public transport solution will work. We maintain continual dialogue with politicians, clients and industry organisations to highlight the contract terms that enable efficient and safe operations and that attract more passengers. Balanced contract terms are essential to combine good delivery with profitability, which ensures benefits to society.A decision is taken in the final phase of the selection process about which tender processes to prioritise. Dedicated tender teams are responsible for preparing tenders. This work is sent for referral and quality assured by a central decision- making team that includes Nobina’s senior executives.
3. Tender process: Winning the right contracts
There is a great deal of variation in the design, terms and conditions for regionally tendered traffic contracts. After the initial prospecting and selection process, a comprehensive risk analysis begins, which is used as a basis for the final tender price. This includes both operational and contractual risks, determining the best structure for the bus fleet and negotiating third-party agreements regarding leasing depots, for example. Accordingly, all identified risks are analysed and quantified before a tender is submitted. The project team involves a number of employees who possess a variety of skills and who, during a period of many months, work with preparing and packaging Nobina’s tender.
Active contract management
4. Contract start: Efficient start-up and contract management
When a tender is successful and a contract signed with the client, the preparatory process can begin ahead of the start-up of traffic services. Since we often take over depots, support properties and employees from the previous public transport company, the takeover requires careful planning. Furthermore, the new contract always entails major traffic changes. Even if the actual start up of traffic services is achieved overnight, the start up phase typically stretches over a period of nine to twelve months. The planning phase ensures that the right number of buses, with the right specifications, are on site for the transition. Nobina’s size and long-standing experience means that this process is both effective and well-established in the organisation.
Continuous improvement work with each contract begins when traffic services start up and does not end until the contract period has terminated. Each contract is evaluated and analysed continually and when necessary we act to manage extensive changes in operations. Another critical aspect of our improvement efforts is a successful implementation and delivery to the society that opens up for valuable contract extensions.
5. Completion: Delivery quality and cost control
The start-up of traffic services is one important component. However, without efficient traffic planning on a daily basis, a contract quickly risks becoming unprofitable. We strive to deliver excellent value for clients and passengers together with profitable operations. We adapt to the aims of our client for the duration of the contract, but combine this with safe and efficient operations. Because most of the contractual costs are variable, cost control is important at every level. We achieve this through our efficient overall management system, continuous follow-up on the profitability of each contract, careful traffic planning and long-term financing and utilisation of our fleet of vehicles. We work with a centralised management system for traffic planning, which streamlines and improves the quality of service. Good traffic planning reduces the number of routes with empty seats, expands the use of eco-fuels and increases the number of passengers per bus, which systematically improves cost efficiency.