LCC and other energy-related quantities may be effectively optimised by creating incentives for manufacturers.

Procurement contracts often contain penalty agreements, i.e. clauses specifying the amount of money to be paid by the manufacturer if certain agreed parameters (especially maximum downtime or maintenance) are not fulfilled by the product. However, the reverse case is usually not foreseen by the contracts, i.e. operators usually do not pay back to the manufacturer part of their LCC benefits if a product performs better than expected. Such a bonus-penalty system could create an additional incentive for manufacturers of rolling stock.

Bonus-penalty clauses work as follows: A target value for some relevant quantity is specified. If manufacturers do better than that, they are rewarded by a price increment, if they do worse, there's a certain price reduction.

Bonus / penalty rules can be applied to a number of energy relevant parameters:

• efficiency of traction equipment
• mass per seat
• k-values of passenger coaches

Difficulties in defining a reference value

Whereas penalties are usually only applied if a parameter (such as downtime) exceeds a certain limit of acceptability, a bonus / penalty system aims at dynamic pricing which requires the definition of a reference value. For example, if bonus / penalty rules are applied to mass per seat in MU stock, an "average" value must be defined for which neither bonus nor penalty payments are realised. However, this is very difficult and will often lead to long negotiations with manufacturers, especially since the relevant quantities for energy consumption are usually governed by the laws of physics and can only be influenced to a limited extent.

Separation of budgets within railways

Bonus / penalty rules are essentially aimed at giving a part of LCC savings back to the manufacturer. On the part of railways, this would however require that the department benefitting from low LCC has a well-defined financial interface with the purchasing department. This is rarely the case in railway organisations. In practice, those responsible for the procurement of new stock have a certain budget, and those operating the vehicles have a separate budget. Therefore the procurement department is mostly reluctant to make bonus payments for benefits received by another department.

International standardisation of relevant quantities

Bonus / penalty rules do not only require a reference value for the involved quantity (e.g. efficiency of traction equipment) but (even more fundamentally) a well-defined quantity. The definition of the quantity "mass per seat" is evident, but for other parameters such as k-value or energy efficiency, this is far from being straight-forward. K-values have been defined by the UIC in a satisfactory manner. The efficiency of traction equipment is more intricate and requires a set of standardised reference cycles as well as well-defined ways of verifying them.

Bonus/penalty rules at NS Reizigers

In several recent rolling stock projects Dutch NS Reizigers decided to create an incentive for suppliers to reduce the weight of supplied stock. An agreement was made with manufacturers fixing maximum weight as well as a bonus/penalty for each kg of weight reduction/increase beyond that target value. The amount of the bonus is based on the energy cost benefits NS Reizigers realises as a consequence of the weight reduction.