Island-bus Limited operates public bus services in Singapore. The company has been licensed by the government to operate the North and East regions of the country eight years ago. For the last few years, Island-bus has been paying reasonable dividends and is able to maintain good share prices for investors. The company expects to operate the routes for at least 20 years but however, its license may not be renewed when it expires in three years time. The government has warned Island-bus that it is unhappy about high returns to shareholders while there are many reports of unreliable transport services in a number of routes (frequent breakdown of buses), poor passenger service and over-crowded buses during peak times.

Island-bus owns a fleet of 5,820 buses (all double-decker) and has allocated 3,492 buses to operate the North region and the remaining 2,328 buses to operate the East region. The seating capacity of each double-decker bus is 80 commuters and it is not advisable to stand while the bus is moving in order to feel comfortable while travelling in the bus (May also be safer to be seated). On average, the Eastern region is not as busy as the Northern region. There are other competing operators in the country operating in other regions such as the central, southern and western regions.

The government regulates fares charged to passengers which are not the same per distance travelled for every operator in that region. There is also discrimination in bus fares regarding students, senior citizens (those above 60 years old) and some people in public services (e.g. military personnel, police, etc.) who are given concession. There are markings on the roads in the city where certain stretches are to be used only by buses during peak times to reduce traffic jams.

Most of Island-buss buses are almost 10 years of age and maintenance costs have increased significantly over the years. New buses are more fuel-efficient and provide a more comfortable ride for passengers. For instance, new buses come with digital and interactive information panel that continuously inform passengers of the next stop, stronger air-condition that is necessary when the weather is hot and seats with more comfortable cushion for a better ride. The new buses are also quieter but it costs about $500,000 per bus.

You are the management accountant and the CEO has asked you for advice: In view of the governments warning, we must develop performance measures balancing the needs of passengers with the requirements of the shareholders. I do not just want a list of suggested performance measures. I also need to understand why the performance measures will help to improve the performance of Island-bus.

	North region	East region
Bus Trips
Number of trips each bus is driven per day: Peak times	2	2
Number of trips each bus is driven per day: Other times	4	6
Passengers
Number of passengers per day: Peak times	600,000	370,000
Number of passengers per day: Other times	550,000	320,000

Required:

(a) Using the data given in the question, evaluate the comments made by the government that the buses are over-crowded during peak times. (24 marks)

(b) Suggest a balanced scorecard that could improve the performance management system of Island-bus. Identify one performance measure that the company could adopt to measure each of the four perspectives. (26 marks)