Assessing the Cost Impact of Competitive Tendering in Rail Infrastructure Maintenance Services: Evidence from the Swedish Reforms (1999 to 2011)

Abstract

This is the first paper in the literature to formally study the cost impact of competitive tendering in rail maintenance. Sweden progressively opened up the market for rail maintenance services, starting in 2002. We study the cost impacts based on an unbalanced panel of thirty-nine contract areas between 1999 and 2011, using econometric techniques. We conclude that competitive tendering reduced costs by around 11 per cent. Importantly, this cost reduction was not associated with falling quality; quite the reverse. We thus conclude that the gradual exposure of rail maintenance to competitive tendering in Sweden has been a success.