Transport for London's (TfL) new consulting arm is picking up steam, with the appointment of a new boss for the business, as the transport organisation eyes millions in fresh revenue to help boost its finances.
Last year, mayor Sadiq Khan said there was “significant scope” for the transport body to pursue opportunities to generate revenues to reinvest in the transport network.
Today, City A.M. can reveal that Helen Murphy is joining TfL as director of commercial consulting and international operations from engineering consultancy WSP next month. Murphy will lead the efforts to cash in on TfL's expertise from its ticketing systems to running services, across the globe.
TfL faces a near £1bn operational deficit next year, and plans to turn that around to an operating surplus by 2021, as it seeks out new revenue streams to plug investment into the capital's transport network.
Early conservative estimates had put the consulting arm bringing in tens of millions in revenue to reinvest in the capital's transport network, but TfL's commercial chief is reluctant to put a firm prediction on what the business could bring in.
"This is something that I see generating millions of pounds," said Graeme Craig, commercial development director at TfL.
"Ultimately is it capable of generating those sums of money? Yes I think it is, but I'm more conscious about coming up with a sensible trajectory for how we get there then to go chasing short-term quick sums of money,” Craig said. “I think it's much more important over course of the next couple of years, that we set things up for long-term success, rather than go chasing any bit of work that we can."
A revenue forecast for the consulting business will be firmed up by Murphy with the TfL board as part of the annual budget process.
Tapping into Oyster and contactless expertise
Trial projects have been carried out with initial work indicating that the greatest commercial potential for TfL lies in providing strategic transport planning services, and supporting the running of transport services in other cities across the world.
It will also look to share its expertise on the development of integrated control centres, and fares and ticketing systems, with Oyster and contactless now part and parcel of the capital’s transport network.
Craig said there was "nothing like that degree of ease in other cities", and there was huge interest and enthusiasm in deploying London's systems elsewhere.
In 2016 TfL signed a deal worth up to £15m with Cubic Transportation Systems, allowing it to adapt the capital's contactless ticketing system worldwide. Since then, New York, Sydney, Miami and Boston have all announced plans to introduce contactless payments.
Craig said other major cities were also keen to set up strategic transport planning and replicate the visibility TfL has across all transport modes in real time.
"A number of other cities have nothing like that degree of visibility across their transport networks and very much want to learn from London," Craig said.
Expansion on the horizon
Over the coming months, TfL will develop the arm into a "fully-fledged consulting business" under the TfL umbrella, with Craig budgeting for eight members of staff on the project this year.
He flags the pitfalls of TfL spreading itself too thinly, adding that the transport body is in the driving seat for being able to sift through which opportunities it wants to take up.
“We’ve had interest from every part of the world: north, south America, Europe, Asia, Australia,” he added, with requests coming in on “ a very regular basis” from cities keen to glean insight from TfL.
TfL has also said that international work will not impact on current operations, and to avoid significant upfront costs, it intends to partner with big-name consultancies and transport operators on larger and more complex opportunities.
Weighing up its options
TfL is though, expecting to be discerning in what it turns its hand to, with Craig saying the transport organisation has an ethical trading policy with the General London Assembly - so an “agreed responsible procurement policy”.
There are standards that we have, there are values that we have, and on that basis, there will be some places in the world that we are very happy to work, but other places where we would find it uncomfortable.
As for the risks of the new business, TfL’s commercial chief is not concerned the consulting arm may prove detrimental to London operations, saying: “The only way it could be a distraction would be if we were to not plan it properly”.
He does though, note the importance of being selective in the work TfL takes on.
“The risks are quite clear. The risks are reputational," Craig said. "We’ve got a fantastic brand, and it’s absolutely critical that we do nothing that undermines the reputation of London and the reputation of TfL.”
“The good news is the demand is there, we have huge expertise in London, there’s huge interest around the world in what we do, and we are in the fortunate position - Helen is in the fortunate position - of being able to pick and choose with whom we work and where we work,” Craig said. “It’s important we get this right and grow in the right way.”