Passenger Services Cost Benchmarking Study

The Office of Rail and Road (ORR) is the independent economic and safety regulator of Britain's railways. ORR is developing its capability to assess the efficiency, productivity and value for money of passenger train operations.

Historically, passenger services have been delivered through a range of Train Operating Companies (TOCs), each with differing operating characteristics, service patterns and cost structures. As most of the industry moves towards a more integrated railway structure, ORR requires a robust framework for understanding variations in train operating expenditure and for benchmarking performance across the railway.

Previous analytical work has demonstrated that econometric benchmarking of the cost of passenger operators is feasible using Great Britain rail industry data and has identified several statistically significant drivers of operating costs. However, further work is required to strengthen understanding of the key cost drivers and the relationships between them, identify appropriate benchmarking methodologies, and develop a practical framework that drives better value for money through comparative analysis, helping to identify opportunities for efficiency improvements and enhanced cost control.

A robust cost benchmarking framework will support ORR's future regulatory role by providing an evidence base for understanding cost variation, assessing relative efficiency and identifying opportunities for improvement. The outputs from this study will help inform future cost performance assessment, advice to funders and value-for-money analysis across passenger rail services.