The hidden cost overrun of the T-Mobilitat: maintaining cardboard tickets costs €6m a year

Delays in the roll-out of new public transport ticketing system T-Mobilitat have led to four changes in the awarded contract – three of them in the last two years – and huge cost overruns. There is no unanimity when it comes to specifying how much the bill adds up to (some people already put it at over €116m, double the initial price), but what had gone unnoticed by everyone was the cost of maintaining the old cardboard tickets with a magnetic stripe for longer than expected.

In fact, continuing with traditional tickets costs €6m a year, as the Metropolitan Transport Authority (ATM) has admitted in a recently published legal report. The new ticketing system is based on contactless plastic cards and was due to be fully deployed by 2018, but successive delays have meant that it is still not operational. Between 2019 and 2021, therefore, the cost overrun for cardboard cards already amounts to €18m.

A spokeswoman for ATM confirmed these figures to ARA. The calculations are taken from the legal report that the ATM drafted to justify the latest modification of the contract with SOC Mobilitat, the consortium that was awarded T-Mobilitat in 2014.

Why is it so expensive?

How can it be that maintaining cardboard tickets is so expensive? According to the ATM document, there are two explanations: on the one hand, that being "over 30 years old" and had "exhausted its life cycle", there are no suppliers who can even carry out the necessary maintenance. Often, the text explains, public transport operators have to take on these services "in an artisanal manner".

The second explanation is fraud. Since the system is outdated, "there is more and more fraud because technology allows it". In contrast, the ATM claims, contactless systems such as T-Mobilitat "implement much more sophisticated security measures that make fraud very difficult [...]".

According to ATM's estimate, out of the €6m extra costs generated by maintaining cardboard tickets, half corresponds to fraud and the other half to the lack of suppliers. Continuing with the old system, the report concludes, "has a significant economic impact".

Arguments for not breaking the contract

ATM makes these calculations to justify that it is better not to break the contract with the company currently awarded the contract, since it considers that this would delay the project by four more years and, therefore, the cost of maintaining the old system would continue to rise, at a rate of €6m per year. The report also claims that liquidating the contract would have a "reputational dimension" and would provoke an "adverse reaction from society, incomprehension and rejection of the T-Mobilitat brand". "Stopping the project would be considered [...] a failure by public administrations", it justifies.

According to ATM, if the contract were to be broken, it would take four more years to complete the deployment of the T-Mobilitat, which is why it believes it is better to continue with SOC Mobilitat, whose main shareholders are CaixaBank, Indra, Marfina and Fujitsu.

As this newspaper explained yesterday, the tension between partners, as well as between partners and the administration, has gone through very tense moments, such as the time when CaixaBank (which in addition to being a shareholder is financing the project) froze the funds for SOC Mobilitat, a fact that put the survival of the project at "serious risk". SOC Mobilitat had breached some conditions of the financing contract and this caused the auditor KPMG to question whether the company could be considered a "going concern".

Another chapter of tension was experienced in October 2020, when Indra announced that it was leaving T-Mobilitat. Finally, the two shareholders reconsidered their position for reasons that the report does not include.