Automatic Fare Collection System (AFCS) Project

What COA Found

It has been observed that a formal assessment of the AFCS project's efficacy in achieving its stated objectives is currently lacking. This omission is primarily attributed to the absence of predefined KPIs specifically designed to measure the project's success in reducing travel time by 50% and enhancing mass transport efficiency. Furthermore, the existing concession agreement does not mandate such an assessment. While the DOTr-MRT 3 has reported operational improvements, such as a 14.60% to 49.38% reduction in platform transfer times between 2018 and 2022, these figures fall short of the AFCS project's 50% target reduction. Although the Commuter Usage Report from 2015 to 2023 presents data on Stored Value Card (SVC) utilization and identifies KPIs that contribute to increased efficiency, it does not provide conclusive evidence regarding the reduction in transaction times at ticketing booths and entry/exit gates, which is a crucial aspect of the AFCS project objective. Several factors have been identified as contributing to the fluctuation in annual SVC commuter usage, including limitations in the promotion of PWD/Senior Citizen concessionary cards, the impact of the COVID-19 pandemic, supply shortages in 2022, the absence of student discounts, budget constraints affecting card availability, limited promotional fare discounts on LRT 1 and LRT 2, and price discrepancies between in-station and out-of-station purchases. These factors suggest that the intended benefits of the SVC have not been fully realized, potentially hindering the overall achievement of the AFCS project objectives.

Our review found that the AFCS project has encountered certain challenges: (a) Transitional Challenges: The DOTr is not yet prepared to fully assume the operation of the AFCS program, and the identification of a suitable alternative concessionaire has been hampered by lack of preparedness. This situation may necessitate an extension of the current concessionaire's (AFPI) services beyond the contracted period, potentially for a minimum of one year. In such an event, the government would likely bear the financial responsibility for maintenance and associated operational costs (transaction payments, SJT card issuance fee, etc.); (b) Project Delays: The project experienced a delay of 106 days from the initial Full Systems Acceptance date due to various unforeseen circumstances beyond the concessionaire's control. This delay has consequently postponed the commencement of commercial operations and realizing the project's intended benefits; (c) Infrastructure Optimization: While Level 1 infrastructure devices (AGs, TVMs, and PoS terminals) have been fully procured, a portion of these devices remain unused (22 out of 753 AGs, 13 out of 138 TVMs, and 72 out of 168 PoS) due to suboptimal deployment strategies. This underutilization appears to stem from a lack of foresight regarding cost efficiency and anticipated passenger traffic patterns during the initial installation phase; (d) Operational Discrepancies: Variations have been observed in the operational procedures implemented by the various Public Transport Operators (PTOs). Notably, LRT Line 2 and MRT Line 3 rely primarily on manual monitoring, whereas LRT Line 1 exhibits more proactive security measures through the utilization of biometric controls at emergency gates. These variations may present potential security vulnerabilities; (e) System Functionality: While occasional errors occur within the Level 1 infrastructure devices, these are generally resolved promptly by the PTOs through the utilization of Level 2 support functions; (f) Performance Standards: Level 3 infrastructure functions generally meet the Minimum Performance Specification Standards, with the exception of real-time report generation. This shortcoming is attributed to data transmission delays caused by external factors such as rodent interference, deactivation of Level 1 devices, and intermittent disruptions in connectivity with the service provider; (g) Public Awareness: The IEC initiatives undertaken by the PTOs have demonstrated variability and inconsistency over time. This has resulted in limited public awareness and understanding regarding the proper utilization of the AFCS devices; and (h) Stakeholder Engagement: The Public-Private Partnership Center onset level of engagement in the ongoing discussions surrounding the AFCS transition appears to be less proactive than desired. This lack of proactive involvement and guidance, particularly regarding the potential extension of AFPI's services, represents a notable gap in effective stakeholder engagement.

Why COA did this study

Three urban rail transit systems support Metro Manila: Light Rail Transit Line 1 (LRT 1), Light Rail Transit Line 2 (LRT 2), and Mass Rail Transit Line 3 (MRT 3). These systems operate with distinct fare collection technologies, with MRT 3 utilizing a system separate from LRT 1 and LRT 2. To address this and enhance efficiency, the Department of Transportation (DOTr) and Light Rail Transit Authority (LRTA) initiated the AFCS Project. This endeavor, valued at P1.72 billion, represents a Public-Private Partnership (PPP) under the Build, Operate, and Transfer (BOT) Law framework, with the AF Consortium serving as the private partner. A key objective of the AFCS Project is to streamline passenger movement by reducing the time and complexities associated with ticket purchasing.

Despite its potential benefits, the AFCS Project has encountered operational challenges. AF Payments, Inc. (AFPI), the special purpose company established by the AF Consortium, has reported disruptions to AFCS cables within rail stations stemming from rodent damage, as well as planned maintenance activities during operational hours, impacting adherence to Key Performance Indicators (KPIs). Furthermore, an issue arose with Ticket Vending Machines (TVMs) accepting banknotes lacking security threads. Notably, a shortage of Beep Cards, the fare media for AFCS, surfaced in 2022 during the pandemic, raising concerns about the project's efficacy and the capacity of involved parties to fulfill its goals.

Given these, an audit of the AFCS Project was conducted to assess its progress and effectiveness. The audit sought to determine the extent to which the project has achieved its stated goals, objectives, and KPIs. Additionally, it examined the project's administration and infrastructure maintenance across various phases, including post-handback of Levels 1-3 infrastructure, pre-handback of Level 0, and the transfer of services, functions, and operations for Level 4 infrastructure.

This comprehensive evaluation, spanning October 2023 to July 2024, involved a thorough review of project documentation and accomplishment reports from 2015 to 2023, passenger surveys, observation of Automatic Gates (AGs), Point of Sale (PoS) equipment, and TVMs, interviews with key personnel, walkthrough of Level 0 to 3 infrastructure processes and controls and an assessment of stakeholders’ coordination.

What COA recommends

The COA recommends that DOTr proactively address operational and maintenance challenges to ensure efficient, effective, and economical implementation of the project. Furthermore, COA recommends that future concession agreements explicitly outline the requirements for assessing project objectives, thereby promoting accountability and ensuring outcomes align with expectations. To achieve this, clear guidelines should be established for: (a) tracking milestones; (b) taking timely corrective actions; (c) defining metrics and KPIs that directly measure time savings and assess the attainment of project goals; and (d) clarifying the roles, responsibilities, and coordination mechanisms of all parties involved in Information, Education, and Communication (IEC) activities, Level 1 infrastructure implementation, and the transition of project services. Additionally, the DOTr is suggested to meticulously plan the allocation and total number of Level 1 devices within the rail system, considering all factors that may impact device optimization. Moreover, the DOTr should develop an independent monitoring tool to validate the accuracy of monthly KPI reports and project implementation progress submitted by the concessionaire. Finally, develop a comprehensive transition plan that addresses post-concession period.