WLA Smartcard Business Case
Final Report

November 28th 2005
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1.
EXECUTIVE SUMMARY

This report examines the business case for implementing smartcards in West London.

RSe Consulting built a model for this purpose which contains forty variables and tested a
number of different scenarios for implementing smartcards.

The model suggests that there is no business case for a local authority to develop a
smartcard either individually or in partnership – but that tackling it in partnership is
considerably less expensive:

•  over five years an individual local authority developing the Smartcard alone will
lose £2,470,000 based on costs of £2,918,000 and benefits of £448,000
•  over five years an individual local authority developing the Smartcard in
partnership with the other WLA authorities will lose £1,990,000 based on reduced
costs of £2,437,000 because of economies of scale and the same benefits of
£448,000

The main costs come from: upfront hardware costs, systems integration costs and
maintenance costs.

The main benefits come from reduced transaction costs from automated payments
and form-filling and an increased revenue col ection rate from a reduction in fraud and
bad debts.

The rationale for implementing sm COPY
artcards would therefore depend on the non-financial
strategic benefits of which the most significant are: improving customer service,
supporting the transformational Government strategy particularly around shared
services and implementing Smartcards as part of a wider channel migration strategy.

There are also some non-financial issues to consider; in particular the risks of
implementing Smartcards and the challenges around governance of Smartcards if
done in partnership.

Final y the WLA should consider working with Transport for London in this area, even
though the TFL proposition is not sufficiently clear to allow the WLA to make an informed
decision about this yet:
•  TFL has already developed the Oyster card and could therefore offer the WLA
resources and expertise
•  TFL is keen to extend the take up and use of the Oyster card amongst the WLA’s
customers
•  But they are in the process of developing TfL’s strategy for the Oyster card in
general and towards working with local authorities specifically
•  Modelling a highly optimistic scenario of sharing Oyster cards and setup costs
with TfL reveals that new card users would need to be worth at least £12 each to
TfL to justify them subsidising the negative payback
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2.
INTRODUCTION

2.1.
Purpose of this document

RSe Consulting has been commissioned by the West London Alliance e-Government
Group (WLA) to explore the business case for using Smartcards to deliver public services
in West London.

This report enables the WLA to decide whether to proceed to the detailed planning
stage of the Smartcard project by:

•  Explaining the vision for the WLA Smartcard
•  Outlining the process undertaken to identify the priority transactions to be put
onto the Smartcard
•  Setting out the anticipated costs and benefits from implementing these
transactions across different services
•  Assessing the benefits of working in partnership within the WLA, and also working
with TfL to share the Oyster card platform
•  Exploring the key next steps for the WLA in light of the analysis

2.2.
Background

There are many reas
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ons why now is the right time to consider Smartcards:

1.  Priority outcome G12: The Implementing Electronic Government (IEG)
programme and the associated Priority Service Transformation Outcomes
(PSTOs), in particular G12, have given prominence to Smartcards as a means of
transforming the way that citizens interact with their council
2.  Customer expectations are rising: Citizens expect to access council services in
the same manner as they access private sector services; Smartcard technology
may be a vital tool in meeting these raised expectations
3.  More mature technology: Smartcards are part of the general technological
advance which is transforming the way that citizens access council services
4.  Transport for London offer: TfL has indicated a desire to work with London
Boroughs to deliver local council services using the Oyster card platform. The fine
details of the offer have yet to be rubber-stamped; however, it is safe to say that
some costs will be shared under the scheme

Capitalising on these is all made possible by a very strong WLA partnership.

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2.3.
Methodology

We used the following methodology to investigate the business case for using
Smartcards to deliver public services in West London:

1.  Interviews with partners
•  To identify the strategic drivers behind the project (PSTO G12 / Gershon
etc.)
•  To engage all of the WLA partners in the project

2.  Identification of categories of benefit
•  Identification of the potential benefits of Smartcards using the Hillingdon
Traffic Light model
•  Testing of these against internal RSe business case templates (such as the
Brent-RSe Return on Investment model) for further categories

3.  Identification of priority transactions
•  Development of criteria list for what makes a priority transaction for
Smartcards
•  Testing of list against a full service list from the I&DeA toolkit
•  Identification of the four priority transactions

4.  Putting the model together
•  Obtaining information from key WLA partners through data collection
templates and inter COPY
views
•  Identification of supplementary data from sources such as the National
Smartcard Authentication Project
•  Building of spreadsheet-based business case model based on information
supplied

5.  Producing interim report
•  Putting together an interim report for discussion with lead client
•  Incorporating feedback into report

6.  Writing final report

2.4.
Partners’ Overview on Smartcards

WLA partners are primarily concerned with meeting Priority Outcome G12

Smartcards offer an excellent opportunity to transform the way that citizens interact with
their council. However, most WLA partners were primarily focused on meeting PSTOs
when appraising the likely strategic drivers for Smartcards.

Other strategic drivers, besides hitting PSTOs, include:
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•  Integration of service delivery: Customers will be able to pay for a range of
council services in one place at the same time
•  Cross boundary access to services: Smartcards will facilitate the joined-up
delivery of public services in West London
•  Citizen demand: Several of the WLA partners believe that the demand for
accessing council services through Smartcards is potentially significant, especially
with applications like parking

We also asked partners to rank the following possible benefits of Smartcards from the
perspective of their individual authority. The results, in rank order, were:

1.  Staff time savings from less cash-handling: Fewer staff wil  be needed to handle
cash transactions if citizens pre-pay for services with their Smartcards
2.  Improved cash flow: Citizens can use their Smartcards to pre-pay for services
before they are delivered which allows councils to earn more interest on cash
balances
3.  Front-office staff time savings from automated transactions: Smartcards will mean
that staff will ultimately spend less time “paper-chasing” due to citizens self-
serving
4.  Public Relations: Councils that have Smartcards and allow citizens to serve
themselves are increasingly seen as technology-savvy
5.  Rationalising systems: Issuing a Smartcard that covers multiple applications will
mean that fewer different cards will have to be issued overall
6.  Efficiencies in the back of
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fice: Smartcards offer an opportunity to make back
office systems and processes more efficient

There are of course risks involved with undertaking such a large scale capital project
within the WLA. Interviews with WLA partners identified three key risk areas:

1.  Financial: At this stage, partners do not know where the necessary funds for the
Smartcard project are going to come from. However, working in partnership
(both within the WLA and also with TfL) will ensure that economies of scale can
be exploited
2.  Legal & governance: The exact nature of the deal with TfL has yet to be
determined, as have governance1 issues around eventual ownership of the
Smartcard
a)  These issues are challenging for partnership schemes of this scale and
nature
b)  The issues become even more challenging with the involvement of TfL
3.  Technology: Given the pace at which technology develops, the solution
implemented by WLA partners has to be scalable so that:
a)  Cards have adequate capacity to facilitate the loading of new
applications

1 See Governance section for more details
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link to page 7 link to page 7
b)  The scheme has the flexibility to bring in new partners if necessary

3.
IDENTIFICATION OF BENEFITS & PRIORITY TRANSACTIONS

3.1.
Benefits

In order to build a business case model we had to identify two things upfront:

1.  The likely benefits from introducing smartcards
2.  The services to be put onto a smartcard

WLA partners identified the broad categories of cashable, non-cashable and
qualitative benefits anticipated from Smartcard deployment using the Hillingdon Traffic
Light Model in a meeting with lead partners. We then wrote up and tested the analysis
against RSe business case templates to ensure that no categories had been missed out.

Benefits were split into three categories:

•  Red - Cashable benefits2. Typically, these are the cost savings resulting directly
from the implementation of Smartcards
•  Amber - Non-cashable benefits. These are usually staff time savings that may
require further management action to be realised
•  Green – Qualitative benefits. These are the benefits like social inclusion that, while
important to the success of a project, are hard to quantify from a financial
perspective

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The following table outlines how the benefits were classified3:

2 Another major benefit from introducing smartcards is the decommissioning of channels. However, the
benefits from closing down access channels are not necessarily realisable (and are also politically sensitive)
and are hence not captured by our model
3 For further detail on these benefits please see the appendix
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Red Benefits
Amber Benefit
efi s
Green Benefits
Green Bene

• Cash-f-lfow
• Staff ti
f me
m  sav
a ings
• Social
S
inclusion
• Reduced trans
an actions
• Efficienci
E
es in t
e
h
s in t e ba
e
ck
ba
ck
• Public r
c ela
e titon
o s
  cos
co ts
t
office
• Branding
• Incr
c ea
e sed  de
d bt t
• Bett
et e
t r man
e
a
r man ge
g ment
me
nt
  coll
co ec
e t
c iton
informa
info
tio
t n
io
• Ec
E on
o omies
e   of f sca
c le
• Exte
E
r
xte nal agenc
agen y bene
be
fit
ne s
fit
• Red
e uctiton  in  fr
f aud
u
• Brand awar
aw enes
en s
• Rational
at
ising syste
t m
e s
• Risk-sha
Risk-
r
sha ing amo
ing
n
amo g
n
g WL
W A
L
• Sav
a ings
g   in  co
c nsumabl
b es
e
• Citi
it ze
z n
e  des
e ire fo
re
r

smartcar
smar
ds
tcar

• Me
M etitng
g G1
G 2

• Ex
E te
t r
e nal  &
& inte
t r
e nal

custom
t
er sat
e
i
r sat sfacti
act on

• De
D v
e elopment of
e
a
  nothe
t
r

access channel

• Partn
t ership  wi
w th
t   Tf
T L

• Cro
r ss-boundary
oundar  serv
se ices
ice

• Olymp
m ics

3.2.
Priority transactions

To establish which priority transact COPY
ions to consider Smartcard implementation across, a
full service list from the I&DeA toolkit was tested against the following criteria:

•  Number of potential card users – i.e. the total possible users of each priority
transaction service
•  Number of current cards in use – i.e. the number of swipe cards currently in
use by citizens and hence, the number of channels that require
rationalising
•  Likely take-up – i.e. the percentage of citizens using smartcards to access
priority transaction service areas
•  Cost of replacing / integrating current systems – i.e. the cost of integrating
smartcard readers with legacy systems
•  Number of agencies involved – i.e. the different partners, whether in the
public or private-sector, involved in the delivery of priority transaction
services
•  Security risk – i.e. the level of appropriate authentication needed for
citizens to safely access the priority transaction services

We made two assumptions about priority transactions:

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1.  At some point in the future virtually all council services wil  be available on
smartcards
2.  Roll-out of smartcards into different service areas will be gradual and it is our task
to identify which service areas should be made available to access via
smartcards first

This exercise enabled us to identify the following four priority transactions:

1.  All Level 1 transactions4

Previously, Mrs. Smith had to fill in paper forms and show appropriation means of
identification before seeking advice about receiving help in her home. This often
required the assistance of customer service staff to answer questions and oversee the
form-filling. Staff then took the information provided and re-keyed it into back office
systems, often with typing errors. Mrs. Smith also used to make low-value level 1
payments face-to-face at the council one-stop shop. This required staff to receive cash,
provide change and then process the cash in the back office.

Now with Smartcards, Mrs. Smith hands her smartcard over to the customer service
agent when enquiring about home help. The card is held against a reader and her
details are instantly verified, saving all that time that used to taken up fil ing in forms.
Information is automatically sent through to the back office system, meaning that staff
have to do less data entry. The electronic purse on Mrs. Smith’ smartcard means that
she can pay for sundry discretionary services without handing over money. Council staff
are no longer required to provid
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e change and move the cash to the bank.

2.  Libraries

Previously, when Mrs. Smith forgot to renew her books on time, front-line library staff had
to take a cash payment, issue change and log the payment onto the system. Staff in
the back-office then had to go through the process of reconciling payments with the
council financial management system.

Now with Smartcards, Mrs. Smith hands over her smartcard and the amount she pays in
fines is automatically deducted from the e-purse. Staff no longer have to take
payments, issue change and reconcile any money in the tills with the library
management system. Fewer front-line officers are required on the issues desk, owing to
the fact that transactions take less time to complete, meaning that they can get on

4 Level 1 authentication relates to transactions where misappropriation causes only a minor financial loss or
inconvenience. In order to capture the potential for time-savings from the numerous services that require
Level 1 authentication, we decided to model putting Smartcard readers into all council offices that offer
services requiring Level 1 authentication. For further explanation and a full list of the 205 Level 1 transactions,
please see the appendix.

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with more value-added work helping citizens choose books, or putting together
detailed reading plans.

3.  Leisure

Previously, when Mrs. Smith went to book her weekly swimming class, she had to stand
in a queue at the customer service desk, give the attendant her details and then wait
for her details to be input onto the system before the class was booked. On the day of
the class, Mrs. Smith then has to make a cash payment. Officers have to handle the
cash, issue change and reconcile any money in the tills with the leisure management
system.

Now with Smartcards, Mrs. Smith can book her swimming class on the automated system
in the customer services area, and the money is automatically deducted from the e-
purse on her smartcard. This means staff spend less time handling payments,
transactions take significantly less time and reconciling cash receipts with the leisure
management system is much less time-consuming.

4.  Parking

Previously, Mrs. Smith had to fiddle about with loose change when paying for parking in
her West London borough. Parking staff also have to drive around the borough
collecting income from the parking meters.

Now with Smartcards, Mrs. Smith
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holds her smartcard against the reader on the parking
meter and the requisite amount of money is deducted from the e-purse, meaning that
she doesn’t have to carry round as much change. The income collection team working
for parking services is now only half the size that it used to be.

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How the implementation might look:

Level 3
Introduced
TRANSACTIONS
MADE WITH
Libraries
SMARTCARDS
Level 1
Introduced
Introduced
onto
Smartcards
Leisure
Introduced
Parking
Introduced
2007?
YEAR
2020?

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4.
COST-BENEFIT ANALYSIS

We built a comprehensive spreadsheet-based Return on Investment model to analyse
the payback of Smartcards implementation. The model tested 4 scenarios with 40
variables. Each scenario considers the Smartcards when issued for multiple functions (i.e.
the three priority services of parking, leisure & libraries and also level one authentication
transactions) with implementation as follows5:

•  Setup year – Level 1 Authentication introduced
•  Year 1 – add in Parking
•  Year 2 – add in Leisure

5 Level 1 Authentication is assumed to be introduced first to provide the council-wide foundation for
Smartcard implementation. Subsequent services are added in order of the number of transactions made by
citizens in each service.

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•  Year 3 – add in Libraries

The key conclusions from the analysis are:

•  Smartcard implementation yields a negative payback for WLA boroughs over
five years
•  Working in partnership across WLA boroughs improves payback markedly
over working alone
•  The major costs of the Smartcard scheme come from:
o  Upfront hardware costs
o  Systems integration costs
o  Maintenance charges
•  The financial benefits from the Smartcard scheme are not substantial;
however, the more significant benefits come from:
o  Increased collection rate from a reduction in fraud and bad debts
o  Reduced cash handling costs
o  Reduced transaction costs from automated payment and form-filling
•  The benefits from each service per borough, from our base-case analysis are:
1.  Leisure (£72k in 5th year of implementation)
2.  Parking (£54k in 5th year of implementation)
3.  Level 1 Authentication (£12k in 5th year of implementation)
4.  Libraries (£7k in 5th year of implementation)

4.1.
Key variables

The results of the analysis are highly COPY
contingent on a number of key variables (the
impact of which are addressed in the Sensitivity Analysis section), including:

1.  Percentage take up
2.  Material cost of card
3.  Systems integration costs
4.  Cost of new parking meters
5.  Increased debt collection rate
6.  Revenue taken across 4 services
7.  Time saved per transaction
8.  Number of transactions per year

4.2.
Results

The key assumptions that underpin the analysis are documented in detail in the
spreadsheet model.

Note that all results are presented as the costs and benefits to ONE borough

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Partnership Implementation (High-Medium-Low analysis)

This presents a High-Medium-Low analysis of the payback per authority in partnership,
with authorities issuing Smartcards with multiple functions (i.e. the three priority services
of parking, leisure & libraries and also level one authentication transactions)

£000's
Setup
Year 1
Year 2
Year 3
Year 4
Year 5
Total









Partnership (Worst- The payback from a single WLA borough issuing multiple function Smartcards
case)  in partnership with all WLA boroughs (using worst-case assumptions)
Cost 523
949
297
505
251 251
2,775
Benefit 0
3
33
61
65 66
228
Cashflow
-523
-946
-264
-444
-186
-185
-2,547
Payback
-523
-1,469
-1,733
-2,177
-2,363
-2,547


Partnership (Base-case)  The payback from a single WLA borough issuing multiple function Smartcards
in partnership with all WLA boroughs (using base-case assumptions)
Cost 432
851
259
426
235 235
2,437
Benefit 0
7
60
118
128 134
448
Cashflow
-432
-844
-199
-308
-106
-100
-1,990
Payback
-432
-1,276
-1,475
-1,783
-1,889
-1,990


Partnership (Best-case)  The payback from a single WLA borough issuing multiple function Smartcards
in partne
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rship with all WLA boroughs (using best-case assumptions). This
model assumes that existing Oystercard top-up technology is used and
therefore no extra top-up machines are required
Cost 320
546
198
292
212 212
1,780
Benefit 0
24
121
260
303 334
1,042
Cashflow
-320
-522
-77
-33
90 122
-739
Payback
-320
-842
-918
-951
-860
-739


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Cumulative Payback in Partnership
0
Setup
Year 1
Year 2
Year 3
Year 4
Year 5
-500
s
)
000' -1,000
k
(£
c
a
Partnership (Worst-case)
b -1,500
Partnership (Base-case)
Pay
Partnership (Best-case)
t
i
ve
l
a -2,000
u
m
u
C -2,500
-3,000

Partnership vs. Single Borough Implementation

This presents a comparison of the base-case payback per authority working in
partnership with all other WLA authorities, versus the base-case payback per authority
working individually (in both cases with authorities issuing cards with multiple functions).

The difference in pay
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back stems from the economies of scale exploited from working in
partnership; economies that are impossible for an individual authority to enjoy.

£000's
Setup
Year 1
Year 2
Year 3
Year 4
Year 5
Total








Single Borough (Base-case)  The payback from a single WLA borough issuing multiple-function Smartcards
in isolation (using base-case assumptions)
Cost 531
1,002
333
505
274 274
2,918
Benefit 0
7
60
118
128 134
448
Cashflow
-531
-994
-273
-388
-145
-139
-2,470
Payback
-531
-1,525
-1,798
-2,185
-2,331
-2,470


Partnership (Base-case)  The payback from a single WLA borough issuing multiple function Smartcards
in partnership with all WLA boroughs (using base-case assumptions)
Cost 432
851
259
426
235 235
2,437
Benefit 0
7
60
118
128 134
448
Cashflow
-432
-844
-199
-308
-106
-100
-1,990
Payback
-432
-1,276
-1,475
-1,783
-1,889
-1,990


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Cumulative Payback (Single Borough vs. Partnership)
0
Setup
Year 1
Year 2
Year 3
Year 4
Year 5
-500
s
)
000' -1,000
k
(£
c
a
b
Single Borough
-1,500
Pay
Partnership (Base-case)
t
i
ve
l
a -2,000
u
m
u
C -2,500
-3,000

4.3.
One further scenario – a partnership with TfL

The above analysis demonstrates t COPY
hat payback is likely to be negative when Smartcards
are implemented by WLA authorities working alone or in partnership with other WLA
authorities. However, if card costs (through the use of Oystercards) or other fixed costs
are subsidised by TfL, there may be a business case for Smartcards.

The benefits for the WLA of working with TfL would include:

•  Cost sharing: The precise nature of TfL’s offer has yet to be rubber-stamped;
however, it is safe to say that certain costs, such as systems integration costs, will
be shared under the scheme
•  Larger take-up of smartcards: This will be driven by (a) the existing Oyster users in
West London (b) the additional services that Oyster offers West London citizens
around transport
•  Joined-up services: Combining the facilities for paying for transport and other
council services joins-up services for customers
•  Marketing: West London boroughs will have a lot more leverage when it comes
to marketing if the proposed smartcard has Oyster capability


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The benefits for TfL of working with the WLA include:

•  Extending the oyster brand: Having oyster functionality on council smartcards will
ultimately extend the Oyster brand and take it nearer to that of a ‘lifestyle’ card
like the Octopus brand in Hong Kong
•  Increasing the number of passengers using Oyster… West London citizens that
are only irregular users of London Transport are more likely to pay with their
council smartcard than cash, therefore increasing Oyster usage
•  …especially amongst drivers: For TfL these are a hard to reach but critical group;
by using the smartcard for parking the WLA can deliver many of these customers
to Oyster
•  Wider infrastructure: Readers will be in more places enabling passengers to top
up more frequently
•  Perceived public sector partnership: This sort of liaison wil  help TfL prove that they
are a good public sector partner

However, in order to progress any partnership working with TfL, a number of issues would
need to be resolved:

•  Governance: Who will own the Oyster card or handle customer complaints?
•  Balance of funding: The balance of funding between the different partners needs
to be determined
•  Cost sharing: What is the exact nature of the TfL deal? This could be established
by a consideration of the fi COPY
nancial benefits to TfL from:
o  How many additional Oyster users the WLA can deliver to TfL
o  How much each of these users is worth to TfL
•  Partnership working: How much more complex will it be to work with TfL/Transys
than to go it alone?

4.4.
TfL Scenario - Results

Using the partnership best-case scenario as the basis for our analysis, we ran the model
using optimistic forecasts for TfL’s contribution to costs6 (including, among others, the
assumption that the WLA use the spare capacity on the revamped Oyster card and
hence incur no card costs).


6 See appendix 9.8 for further details of the assumptions made in order to model the possible
cost-sharing arrangements with TfL
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Best-case TfL partnership scenario
  Partnership (Best-case)  The payback from a single WLA borough issuing multiple function
Smartcards in partnership with all WLA boroughs (using best-case
assumptions). This model assumes that existing Oystercard top-up
technology is used and therefore no extra top-up machines are required
Cost 225 471
145
216
160 160
1,377
Benefit 0 24
121
260
303 334
1,042
Cashflow
-225
-447
-24
44
143 174
-336
Payback
-225
-672
-696
-653
-510
-336


This table indicates that payback is likely to be negative, even when the most optimistic
forecasts are used to take account of TfL’s potential leverage as a partner within the
WLA Smartcard project.

Using the following assumptions we can examine further the contribution necessary from
TfL:

•  45% take-up of smartcards by year 5 in one West London borough (as per the
Partnership best-case TfL scenario)
•  25% of these people are new Oyster card users (this will amount to approximately
28,125 new Oyster card users in one borough by year 5)

In addition to sharing the costs outl COPY
ined in appendix 9.8, each of these new users would
have to be worth at least £12 to TfL over 5 years in order to justify them subsidising the
remaining £336,000 negative payback per borough.

5.
SENSITIVITY ANALYSIS

The overall results of the analysis are contingent upon a number of key variables. These
key variables are highlighted in the table below along with the impact that changing
the variables would have on cumulative payback in the base-case analysis in each
service.

Base-case
Amount of change in  Effect of change on 5-year
Key Variable
Source
Value
sensitivity
payback
% take up (in Year
1)
Assumption 10%
5%
a decrease of £4,000
% take up (in
subsequent years)
Assumption 5%
2.5%
a decrease of £37,000
Material cost of
card
Smartex £1.50  £0.5 (per card)
a decrease of £37,000
Systems integration
costs
LB Hounslow
£27,000 per
system
£5000 (per system)
a decrease of £110,000
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Cost of new
parking meters
LB Brent
£2,516
£500
a decrease of £115,000
Increased debt
collection rate
LB Hillingdon
1%
0.5%
a decrease of £126,000
Revenue taken
Various
10% (in each
across 4 services
boroughs
See model
service)
a decrease of £16,000
Time saved per
transaction
Assumption 0.5
minutes
0.25 minutes
a decrease of £18,000
(payment)
Time saved per
Level 1 transaction
Assumption 5
minutes
3 minutes
a decrease of £7,000
(form-filling)
Number of
payment
Various
boroughs
See model
10% (per year)
a decrease of £3,000
transactions
Number of form-
Various
filling transactions
boroughs
See model
10% (per year)
a decrease of £1,000

6.
LEVEL 3 AUTHENTICATION

To supplement the above analysis, we have also performed a high-level analysis of
Level 3 authentication being brought within Smartcards. As explained in the appendix,
Level 3 transactions
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include those where misappropriation of identity causes a
substantial financial loss or inconvenience, or a risk to personal safety. Council services
requiring Level 3 authentication include benefits, payments over £80 and social care
information.

Note that due to the security issues around Level 3 transactions, a new type of java-
card would need to be issued with increased security functionality to cover Level 3
transactions.

6.1.
Cost-benefit analysis

A quick and dirty analysis of Smartcards in Level 3 transactions was performed, assuming
implementation without other services on the card (principally because the reissuing of
Smartcards would be required to contend with the increased security considerations).

The implementation of Smartcards in Level 3 transactions has the fol owing implications
for costs and benefits when compared with analysis for Level 1 transactions:

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link to page 19
Costs
Benefits
Material cost: Java cards are £4.50 per
Revenue: Revenue collected is estimated
card including printing. With bulk-buying
to be £25m7 (this is the value of the
the WLA may be able to get them for £4
council tax payments collected).
a go
Cost per reader: Dual readers cost £500
Transactions: This is estimated to be 800k
each rather than £150
(i.e. the number of payments over £10
taken by a London Borough according
to the e-Pay National Project)
Top up machines: 25 required under this

scenario rather than 10
Legal fees: Increase in setup costs to £50k
due to the higher level nature of the
transactions
API’s (Software interfaces): The number

required increased from 1 to 10
Development costs: Doubled from £30k

to £60k and the licence fees increased to
£6k p.a.
Maintenance costs: Three maintenance

staff are required (£30k salary) rather
than 1

6.2.
Results

The results show that there is potent COPY
ial for payback in the long term from implementing
Smartcards for level three authentication services. This is largely due to both the:

1.  Amount of revenue taken in this area - providing an increased benefit from
reduced fraud and debt collection
2.  Number of higher-level security transactions – providing an increased benefit
from reduced transaction costs

The majority of the benefits would come from increased debt collection and reduction
transaction costs.

NB: These conclusions are based on a high-level analysis of Level 3 transactions and are
highly contingent on a number of key variables. The benefits outlined above, in
particular, need to be probed further before establishing the exact nature of the
business case for Level 3 transactions being undertaken with Smartcards.


7 This £25m would not be taken F2F (only 10% would). However, there are other sources of
payments that count as level three (such as parking permits – approx. £7m) that would be
covered by Smartcards, so £25m is thought to be good proxy.
Page 18

The following table shows the estimated payback over a five year payback for
Smartcards in Level 3:
£000's
Setup Year
1
Year 2
Year 3
Year 4
Year 5
Total

Base Case

Cost 1,290
270
201
291
291
291
2,635
Benefit 0
357
408
459
510
561
2,295
Cashflow -1,290
87
207
168
219
270
-340
Payback  -1,290 -1,203
-997
-829
-610
-340

This shows that there is no positive payback within 5 years from implementing
Smartcards for level three authentication services. However, as the following graph
illustrates, there is a possible positive payback sometime thereafter (dependent on the
benefits outlined above):

1,500
1,000
500
Costs
0
Benefits
Setup
Year 1
Year 2
Year 3
Year 4
Year 5
Payback
- 500
- 1,000
- 1,500
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7.
GOVERNANCE

The National Smartcard Authentication Project outlined 7 key issues regarding
Governance, all of which should be taken into consideration when establishing and
operating a Smartcard scheme:

1.  Project ownership: There are three stages to any Smartcard project:
Development, Implementation & Operational. The WLA must establish a clear
chain of command in relation to management of the scheme’s stages. Ideally, a
project manager should take ownership of the project. This is particularly
important if the partnership is made up of more than two bodies
2.  Physical Smartcard & reader issues: The design of Smartcards and readers must
be accessible, reliable and physically durable. The card issuer needs to exert
overall quality control in these areas
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3.  Accessibility: Accessibility and social inclusion are key planks to any Smartcard
scheme
4.  Technical standards: Partners should develop series of technical standards
relating to software applications to ensure that the system operates successfully.
Nation-wide initiatives to establish smartcard standards have been launched; the
Integrated Transport Smartcard Organisation (ITSO) has developed
interoperability specifications for the transport industry. In addition, the local
authority smartcard standards e-organisation (LASSeO) has been formed to look
at these issues from a local authority perspective. Developments in this area
should be closely monitored
5.  Voluntary vs. mandatory scheme: Where a scheme is voluntary, card users should
be given a genuine choice between using a Smartcard and the more traditional
delivery methods
6.  Ownership: It is essential that ownership of the Smartcard is established at the
start of the project. This includes contractual negotiations with the card provider
for the testing of the technology prior to terms of agreement. Governance
arrangements are complicated enough when only one partner implements
smartcards; when the partnership becomes multi-agency (with partners like TfL),
then the ownership and governance issues become all the more critical
7.  Terms & conditions: The terms & conditions will govern the relationship between
Smartcard issuer and user and will need to cover:
a)  Permitted uses and restrictions on use of the Smartcard
b)  Data protection
c)  Policies & procedures on lost or stolen cards
d)  Relationships with
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secondary service providers

Recognition and consideration of al  these issues is made al  the more vital given the
number of parties involved in the prospective Smartcard project in West London. The
respective roles and responsibilities between the WLA, individual councils and TfL can
be established through a formal review of the governance issues outlined above.

8.
NEXT STEPS

Given the results of our analysis, there are three key next steps for WLA partners:

1.  Interrogate results: In order that they get comfortable about assumptions made,
WLA partners should spend time critically assessing and probing the results of our
analysis
2.  Further research critical variables: Our analysis took the best data currently
available from WLA partners and other sources, but no primary research was
carried out. Further research may therefore involve investigating the following,
either through primary data collection or through the commissioning of further
work:
•  Debt collection: TfL estimated a 3% improvement in revenue lost to fraud
and bad debts as a result of introducing Oyster cards. Interviews with WLA
Page 20

partners revealed expectation of only a 1% improvement. This is potential y
very significant, as currently, the financial benefits of implementing
smartcards are underwhelming
•  Economies of scale: What discounts could WLA partners secure when bulk-
buying smartcards, readers and top-up machines?
•  Take-up: What is take-up likely to be? Market research and some more
examination of best practice would help to firm up these numbers
3.  Negotiate with TfL: There are many issues that need to be resolved with TfL, as
described in Section 4.3, including:
•  How many additional Oyster users the WLA can deliver to TfL
•  How much each of these users is worth to TfL
•  What form any cost-sharing arrangement might take

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Page 21

9.
APPENDICES

9.1.
Who we interviewed

We sought information from the following people during the course of the Smartcard
project:

Name
Authority
Subject
Pacey Cheales
LB Hillingdon
Strategic drivers
Tony Ellis
LB Brent
Level 1 authentication services
Staveley Ferguson
LB Hammersmith & Fulham
Level 1 authentication services
Brian Silk
LB Hammersmith & Fulham
Level 1 authentication services
Gary Kears
LB Harrow
Strategic drivers
Gerard Gough
LB Hounslow
Strategic drivers, Leisure
John Anderson
LB Ealing
Strategic drivers
Rav Roberts
LB Brent
Strategic drivers
Mike Fahey
LB Hounslow (CIP)
Leisure
Helen Vincent
LB Hillingdon
Libraries
Judith Young
LB Brent
Parking
Dorothy Higginson
Smartex
Smartcard costs & benefits
John Defoe
LB Newham
Smartcard costs & benefits
Brian Taylor
LB Newham
Smartcard costs & benefits
Will Judge
TfL
COPYSmartcard costs & benefits

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9.2.
Summary of interview questions

Strategic Drivers: We asked the following when interviewing WLA partners about
strategic drivers for the Smartcard project:

1.  Can you please give us a quick overview of what you know about Smartcards?
2.  Have you ever run any consultations on the possibility of having Smartcards within
your area? Or have you considered the possibility? If yes, could you tell us more?
3.  Do you know of any other councils or perhaps government organisations in other
countries that use Smartcards? If so, what is good about them? What would you
like to see imported into this project?
4.  Are you excited at the opportunity this project may provide to be innovative?
The card could eventually become a common platform for access to other
services, such as health, that may be outside your authority's remit.
5.  Obviously, implementing Smartcards is NOT a low-risk project. Which of the
following risks do you think could apply to this project? (Tick as many as are
applicable: customer expectations; political; financial; legal & governance; lack
of partnership cohesion; technical; capacity & commitment)
6.  Which of the following strategic goals most drives your authority's eagerness to
use Smartcards? (Social inclusion; community leadership; government policy;
meeting citizen demand; integrated services; economies of scale; cross-
boundary services)
7.  What is your overall vision for Smartcards? Which services do you envision being
made available & why?
8.  Which of the following do yoCOPY
u think wil  emerge as the priority transactions during
this project and why? (Tick as many as may apply.) How might we back up your
conclusions with data? (Libraries; leisure; school meals; benefits; parking; social
services)
9.  Please rank the following potential benefits of Smartcards in order of importance
(1 being the most important and 6 being the least important) – (Cash-flow;
reduced transaction costs; rationalising systems; staff time savings; efficiencies in
the back office; public relations)
10. Do you think there is a commercial opportunity to exploit with Smartcards; such
as advertisement, promotion of tourism etc.?) How significant do you think that
this opportunity may be?
11. How do you think Smartcards will improve current processes?
12. Do you have any other questions about either our role or the proposal we wrote?

Services: We asked Judith Young, Helen Vincent and Mike Fahey the following questions
about parking, libraries and leisure respectively:

1.  How many service facilities do you have in your borough? (This will tell us roughly
how many Smartcard readers are required)
2.  How many staff work in the delivery of these services?
3.  What is the average wage of these staff?
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4.  Very approximately and roughly, how long do staff currently spend processing
transactions in your service area?
5.  By approximately how much time might this processing decrease if Smartcards
were introduced?
6.  How many transactions do you currently handle? (i.e. service users)
7.  What systems do you currently have for the processing of transactions? (i.e.
number of systems)
8.  How many of these will probably require integrating with Smartcard readers?
9.  Will staff currently working in your service area require training on the new
system? (Y/N)
10. Apart from readers, do you think that any other pieces of hardware will be
required? (Tills, computers etc.)
11. If new hardware is required, how much will be needed? Approximately how
much will this cost?
12. What are the costs of maintaining the current system(s)?
13. Are these maintenance costs likely to decrease with the introduction of
Smartcards? If so, by approx. how much?
14. How much revenue does your borough currently take from this service area?
15. What are the current processes for handling cash? Very approximately, how long
does this take? How might this change with the introduction of Smartcards? (Will
it take less time to reconcile systems?)

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9.3.
Authentication levels
Authentication: The process by which an electronic identity of a user is asserted to,
and validated by, an information system for a specific occasion using a credential
issued following a registration process. It may also involve establishing that the user is
the true holder of that credential, by means of a password or biometric
Source: National Smartcard Authentication Project

The National Smartcard Authentication Project defines three levels of citizen
authentication. Each level relates to the degree of damage that could arise from
misappropriation of electronic identity during the transaction:
•  Level 0: No damage – misappropriation causes no financial loss or
inconvenience, and no risk to personal safety
•  Level 1: Minor damage – misappropriation causes only a minor financial loss or
inconvenience, and no risk to personal safety
•  Level 2: Significant damage – misappropriation causes a significant financial loss
or inconvenience, but no risk to personal safety
•  Level 3: Substantial damage – misappropriation causes a substantial financial loss
or inconvenience, or a risk to personal safety

The actual distinction between each stage comes down to the interpretation of the
words “minor”, “significant” and “substantial”.

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Page 25

9.4.
Level 1 authentication services

In order to arrive at a list of level one authentication services offered by West London
boroughs, we took some previous work we had done with an authority in the South-West
to map authentication levels to council services and updated it by interviewing staff at
the London Borough of Hammersmith & Fulham. The following 205 services were
classified as requiring level one authentication:

CONSULTATION
DOCC
  Best Value or CPA - performance information
  Civil emergencies - Trauma Support Service
  Customer satisfaction surveys
  Town twinning
ENVIRONMENT AND PROPERTY
  Abnormal loads
  Accommodation certificates (fitness for human habitation)
  Archaeological consultancy
  Fair rents inspection - homes in multiple occupation
  Food business - health promotion
  Local plan - minerals
  Local plan - waste
  Parking bay
  Planning business
  Planning policies - transport policy
  Pollution control - asbestos
  Pollution control - constructi
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on information
  Property demolition - regeneration service - properties affected
  Public rights of way - general
  Spillage - roads
FINANCE
  Discount
  General information (incl. valuation, arrears, refunds)
HOUSING
  Advice for young people
  Existing council tenancy
  Home modernisation - council properties
  Housing repairs - rechargeable repairs
  Security services
  Supported tenancies
  Young people's drop-in activities
  Young people's organised activities

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CONSULTATION CONT.
OTHER SERVICES
  Abandoned vehicles
  Activities for older people
  Bereavement
  Burial
  Coaching courses and schools
  Commercial waste - clinical waste disposal
  Commercial waste - disposal sites
  Commercial waste - special trade collections
  Countryside volunteers
  Cremation
  Events
  Fishing
  Flytipping
  General information
  General information (location, facilities etc.)
  General information and booking
  Graffiti
  Grass cutting
  Horticultural standards
  Household waste - disposal sites
  Household waste - garden waste
  Household waste - special collecti COPY
ons for large items
  Household waste - collection
  Household waste - domestic bins
  Independent funerals
  Municipal funerals
  Ordering a memorial
  Play facilities
  Public conveniences
  Recycling - bags
  Recycling - collection sites
  Recycling - composters
  Recycling -general information
  Sports employment
  Sports facilities
  Sports pitches/courts
  Street cleaning programme
  Street litter [incl. street sweeping]
  Street litter bins
  Vandalism
  Visitor centres
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CONSULTATION CONT.
SOCIAL SERVICES
  Alcohol advisory service
  Benefits and bills
  Help leaving hospital
  Respite care for children
  Welfare rights

APPLICATIONS
DOCC
  Complaints - procedure
  Co-operative development
  Major emergency incident
  Sale of sundry items and publications
EDUCATION
  After and/or before school childcare
  Nursery school places
  Paid work or work experience and school aged pupils
  Parents centres
  Performance/stage licences for school age children
  Primary school places
  Private nurseries - nursery grants
  School governors
  Secondary school places
  Services for childminders
  Special educational needs (SEN) - COPY
assessment
  Special educational needs (SEN) - disabled students allowance
  Special educational needs (SEN) - placement in mainstream schools
ENVIRONMENT AND PROPERTY
  Advice to business
  Advice to consumers
  Animal - fouling
  Animals - dead
  Archaeological consultancy
  Building control
  Catalogue - searches, availability and reservations
  Children's library service
  Conservation and urban design planning - conservation advice
  Conservation and urban design planning - tree preservation orders
  Dropped kerbs /crossover
  Environmental health training
  Fair rents inspection - homes in multiple occupation
  Flyposting
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APPLICATIONS CONT.
  Food business - food safety regulations
  Food business - health promotion
  General arts information (inc. location, events)
  Health and safety - occupational health services
  Instrumental tuition
  Internet computers
  Library facilities (incl. location, opening hours)
  Licence - weighbridge operator
  Lighting - street lights
  Lighting - traffic lights
  Local plan - minerals
  On street parking enforcement - wheel clamps - car removal
  Ordering service
  Pavements
  Pavements (including dangerous paving)
  Paving stone - theft
  Pest control
  Planning - residential
  Planning business
  Pollution control - Clean Air Act approval
  Potholes
  Road adoption
  Road markings and signage - streetCOPY
name plates
  Roads - school crossing patrols
  Roads and highways - access requests
  Roads and highways - flooding (drains and gullies)
  Roads and highways - obstructions
  Roads and highways - works
  Spillage - roads
FINANCE
  General information (incl. valuation, arrears, refunds)
  General information (incl. valuation, arrears, refunds)
HOUSING
  Care/scan/community alarm services
  Council housing - nuisance/threatening behaviour
  Garden maintenance
  Housing allocations - allocation points
  Housing allocations - general information
  Housing allocations - hard to let/easy access properties
  Housing repairs - communal areas
  Introductory tenancies
  Residential study centres
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APPLICATIONS CONT.
  Sheltered and supported housing
  Supported tenancies
LAW AND CORPORATE GOVERNANCE
  Births historical searches
  Data Protection Act
  Elections - proxy votes
  Elections - voting
  Freedom of Information Act
  Involvement with budgetary process
  Marriages historical searches
  Witness support
OTHER SERVICES
  Abandoned vehicles
  Coaching courses and schools
  Conservation and urban design planning - tree management
  Flytipping
  General information (location, facilities etc.)
  General information and booking
  Graffiti
  Grass cutting
  Horticultural standards
  Household waste - garden waste
  Household waste - special collecti COPY
ons for large items
  Household waste - domestic bins
  Lighting - council communal flats
  Public conveniences
  Recycling - bags
  Street litter [incl. street sweeping]
  Street litter bins
  Vandalism
SOCIAL SERVICES
  Support groups and organisations
  Support groups and organisations

BOOKINGS
ENVIRONMENT AND PROPERTY
  Children's library service
  General arts information (inc. location, events)
  Library facilities (incl. location, opening hours)
  Ordering service
HOUSING
  Hall /venue bookings
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BOOKINGS CONT.
  Young people's drop-in activities
LAW AND CORPORATE GOVERNANCE
  Wills and testaments
OTHER SERVICES
  Activities for older people
  General information and booking
  Independent funerals
  Municipal golf courses
  Sports clubs
  Sports pitches/courts
SOCIAL SERVICES
  Advocacy for social services clients
  Alcohol advisory service
  Home care
  Mobile meals (meals on wheels)

PAYMENTS
DOCC
  Sale of sundry items and publications
OTHER SERVICES
  General information and booking

E-FORMS
EDUCATION
  Educational awards and benefits COPY
- free school meals
HOUSING
  Parking permits (blue badge)
  Rail card
MISCELLANEOUS
  Corporate Complaints/comments
  Data Protection Act
SOCIAL SERVICES
  Adult carers
  Equipment and adaptations to the home
  Home assessment
  Mobile meals (meals on wheels)
  Occupational therapy
  Respite care

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9.5.
Smartcard technology

There are two main types of Smartcard technology available to the WLA: Mifare® cards
and java-based cards. The use of either has its own inherent advantages and
disadvantages, summarised in the table below:

Mifare cards
Java-based cards
Meets priority outcome G12

Oyster ticketing

Suitable for Government Connect

Inexpensive cards

Contact interface

Contact-less interface

Low security applications (libraries etc.)

Therefore, the main reasons to use Mifare cards:

1.  Java-based cards are currently too expensive: Even though they only cost 80p
per card, the business case for moving forward with Mifare cards is border-line at
best. Java Smartcards are over £4 each; at that price there is no business case,
as yet, for such higher-end Smartcards
2.  Virtually all citizen ne
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eds are covered by Mifare cards: The vast majority of citizen
needs, ranging from low value payments to verification of identity, are covered
by Mifare cards
3.  Working with TfL: If the WLA is to work in partnership with TfL then Mifare is the only
option. Oyster ticketing is currently incompatible with Java technology platforms
and this is unlikely to change in the short-run as it involves the Oyster application
being ported onto Java cards

The major disadvantages of Mifare cards (described below) are not considered
significant enough to outweigh the advantages:

1.  Unsuitable for higher security functions: Many in the Smartcard industry feel that
the Mifare platform is too basic to deal with applications that involve a significant
amount of risk, such as benefits, payments above £808 and social care
information. This also means that Mifare cards are incompatible with Government
Connect
2.  Incompatible with contact readers: Mifare cards only work with contact-less
readers

8 The maximum value of money currently allowed to sit in an electronic purse, according to
industry opinion
Page 32

9.6.
Smartcard benefits in detail

•  Red - Cashable benefits. Typically, these are the cost savings resulting directly
from the implementation of Smartcards
•  Amber - Non-cashable benefits. These are usually staff time savings that may
require further management action to be realised
•  Green – Qualitative benefits. These are the benefits like social inclusion that, while
important to the success of a project, are hard to quantify from a financial
perspective

Red benefits
Amber benefits
Green benefits
Cash-flow: Citizens can use
Staff time savings: Smartcards  Social inclusion: Smartcards
their Smartcards to pre-pay for  will mean staff spend less time  may bolster social inclusion in
council services before they
“paper-chasing” and taking
that they conceal whether
are delivered. This means that
payments from citizens due to  citizens enjoy concessionary
more interest can be earned
self-service
rates for certain public services
on cash balances
Reduced transaction costs:
Efficiencies in the back office:  Public relations: Councils that
Fewer staff will be needed to
Smartcards will offer an
have Smartcards and allow
handle cash if citizens pre-pay  opportunity to make back-
citizens to serve themselves are
for services with their
office systems and processes
increasingly seen as
Smartcards. This will lead to an  more efficient
technology-savvy
overall reduction in the cost of
transactions
Increased debt collection:

Branding: Offering pan-London
Smartcards offer citizens a
services in West London will
more convenient means of
offer a more joined-up
paying for council services.
approach to delivering public
This, along with the possibility
services
of subtracting owed balances
COPY
from their e-purse, means that
the collection of sundry debts
should increase
Economies of scale: Spreading
Better management
the set-up costs among the
information: Smartcards will
WLA partners will mean lower
allow better management
costs overall
information to be collected.
Citizen profiling and more
sophisticated marketing will
result from the increase in data
quality
Reduction in fraud: Smartcards
External agency benefits: The
offer a convenient means of
use of Smartcards may
validating that citizens are
increase the leverage partners
who they say they are. This
have with organisations like
may result in a reduction in
private-sector leisure providers,
fraud and therefore an
to negotiate discounts and
increase in revenue
concessions for its citizens
Page 33

Rationalising systems: Using

Brand awareness: Coverage
the Oyster card as a universal
and penetration of the oyster
Smartcard will mean that
card is already significant;
fewer cards will have to be
building on this recognition is
issued overall and wil also
an obvious benefit
offer an opportunity to
integrate systems
Savings in consumables: Less

Risk-sharing among the WLA
money may have to be spent
partners: While introducing
on paper invoices, electricity,
Smartcards is definitely NOT
office supplies and other such
low-risk, the risks are lessened
consumables
by undertaking the project in
partnership

Citizen desire to complete
transactions electronically

Meeting priority outcome G12
by the deadline of April 2006
and also other central
government targets, such as
Gershon

External and internal customer
satisfaction: Citizens and staff
alike should be more satisfied
with service delivery once
Smartcards have been
introduced

Development of another
COPY access channel: Smartcards
are another means for citizens
to interact with their council

Strategic partnership with TFL:
WLA can tap into the
purchasing power of TFL

Cross-boundary public
services: Citizens will be able
services in neighbouring
authorities with a minimum
amount of fuss. This may
increase the overall number of
citizens accessing public
services such as leisure facilities

Olympics: Smartcards fit in with
the image and spirit of the
Olympics

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9.7.
Meeting the brief

Stream /
Requirement
Activities
Met?
stage
Statement of
Clear statement of the strategic drivers
•
Face to face interviews with

strategic
for WLA partners proposed use of
representatives from each
drivers
smartcards (local and national priorities,
Authority
social inclusion, community leadership,
•
Desk research re. national
Gershon AES etc’).
implementation of smart cards by
Local Authorities including
transactional uses and strategic
benefits
•
Write up, distribute & incorporate
feedback
Identification
Identification of broad categories of
•
Meeting with lead officer (Pacey

of categories
cash, non-cash and intangible benefits
Cheales) to identify benefits of
of benefit
anticipated from smartcard deployment
smart cards using the Hillingdon
(ie using a simple but effective “traffic
traffic light model
light” categorisation).
•
Write up and test against internal
RSe business case templates for
further categories
Identification
Identification of the top priority
•
Develop criteria list for what

of priority
transactions (ie 5-10) for deployment via
makes a priority transaction for
transactions
smartcard (using service volumes, costs,
smartcards; e.g. cost, volume,
take-up levels etc’ as basis for
complexity of implementation
determining initial selection).
•
Test it against a full service list

based on the I&DeA toolkit

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•
Collate any additional information
required from partners9
•
Test list with TfL to ensure that the
priority transactions would be easy
to implement on the existing
oyster card platform
Cost-benefit
Develop the top line financial aspects of  •
Collate and review data of

analysis
the business case for a smartcard
current baseline and expected
deployment – for one or more of the
savings / non cashable benefits
priority transactions (ie including top line
•
Detailed research into the TfL
total cost of ownership, cash, non-cash
model
efficiency gains, breakeven and ROI
•
Identification and notification of
analysis). This work will seek to identify in
additional data requirements from
broad terms the scale of the gains
partners and TfL to complete
achievable by working in partnership to
business case (e.g. cash flow
share costs and risks to maximise
figures)
benefits.
•
Build business case based on

Brent-RSe ROI model dependant

on different scenarios (e.g.
different numbers of partners
coming on board, different ‘suites’

9 This data is in addition to the template already sent out to partners though hopefully shouldn’t
be a significant amount
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link to page 37
Stream /
Requirement
Activities
Met?
stage
of transactions)
•
Results tested by RSe staff and
WLA partners
Analysis of
The business case will also need to
•
Prepare, distribute and amend
10
governance
address the governance and business
document on governance /
requirements
model issues relevant to the use of TFL
accountability requirements; this
smartcard – ie who owns the card, what
output will be based on the initial
are the respective roles and
partner interviews and insight
responsibilities between WLA, individual
picked up during the project
councils and TFL.
Development
Deliver final outputs
•
Write up of Draft Business Case for

and delivery of
using TfL Oyster card for Council
final outputs
services
•
Proactively collate feedback from
all partners including views on the
implications of the findings
•
Incorporate feedback into the
final document
•
Discuss implications of numbers
being produced by the ROI model
with partners at board meeting

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10 We did capture the major governance issues from implementing smartcards in partnership in
this report but, due to the delivery of a detailed interim report (not in the original brief) we did not
produce a separate document on governance
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9.8.
TfL Partnership Scenario

This table demonstrates the differences between the best-case partnership scenario
and the TfL best-case scenario

Area for
Optimistic forecast  Included
Included
Reason
negotiation
in best-
in TfL best-
case
case
scenario
scenario
Materials
The WLA can use

Although TfL has given no
costs
spare capacity on
indication that this is viable
a revamped
in the short-term, we
Oyster card and
included it in the TfL best-
incur no card costs
case scenario
Admin
The WLA can use

Although TfL has given no
costs
spare capacity on
indication that this is viable
a revamped
in the short-term, we
Oyster card and
included it in the TfL best-
incur no admin
case scenario
costs
Systems
50% reduction in

We assumed that TfL would
integration  the cost per
bear around 20% of the cost
costs
integrating one
of integrating one system
system
Smartcard  5% increase on

Any percentage increase
take-up
base case
larger than this would be
assumption of 10%
very optimistic
take-up in year 1
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due to Oyster
functionality on the
card
Cost of
20% reduction in

Joint procurement is unlikely
readers
the purchase price
to secure larger discounts
of readers due to
than 20%
procuring with TfL
Legal costs  50% reduction in

This is an optimistic forecast
legal costs through
but was included due to the
presence of TfL as
relative immateriality of
partner
legal costs
Marketing
50% reduction in

See above entry for legal
costs
marketing costs
costs
through presence
of TfL as partner

Page 37

Document Outline

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