Wednesday, July 25, 2012

Poor Mans Performance Parking II - A Matter of Balance

Like most things in life, balance will always bring most rewards to most people.  Once influences get involved that do not understand the need for balance and they try to manipulate the system to their favour, or move the system out of a lack of or full competence, then the system is out of balance and undue pressures occur. In parking, this will look like queues, circulating traffic, or streets of vacant spaces …. and frustration for all.

My definition of ‘balanced parking’ is as one car pulls out, another pulls in, that is, supply and demand are in balance.

Balanced Parking is a system where all of the levers that a parking resource manager has at their disposal are being used to create a system that favours access for all who require it, has little or no queuing, little or no circulating, little or no vacancy, is well communicated and has the trust to be managed at a low level. 

Levers of a Balanced Parking system are those that affect the supply or demand of the car park resource.  These influencers are things like time-restrictions, number of spaces, proximity of the car park to the demand drivers, lighting, security, safety record, neighbourhood, geography, barrier versus pay & display, lack of acceptance of payments, look & feel, product categories, staff or lack of staff, marketing, technology, enforcement and of course, price. 

Mt definition of supply is car parks, and demand, are cars looking for a car park.

Abstract pricing is inefficient.  We need to understanding that a one size fits all approach creates anomalies and favouritism to a few.  In some cities they have a single on-street price for parking.  The anomalies that this system has created are huge.  In Christchurch where an earthquake decimated the CBD of the city, now has activity beavering away on the west of the city but the east is still to have any new activity appear.  The response to the one size fits all policy there, is that the west is under priced and queues and traffic circulation is occurring and the east has 6 cars per week parking on one street, but the price is still the same.  Abstract pricing does not work.  It must be micro managed.  Technology and new management techniques allow for micro-managing parking operations to a much lower level now.

The city’s resource must include all of its stock, which includes private resources as well.  There is little point in trying to understand and then respond to what the demand is telling you, without understanding the supply.  This is clearly a difficult task, especially if the records of supply have been ineffectually kept over time.  Understanding what is happening in front of you each day will make a lot more sense if you do know your supply.

Occupancy is the ultimate indicator of balance.  We will not be able to get to a true 100% occupancy measure ever for obvious reasons but we should be able to get to a figure that you are comfortable with.  Operating at 90% plus occupancy will require some very efficient technology, such as space detectors etc.  Shoup spoke one space per block as the general figure for occupancy that delivers general balance.  I suggest that if you only have a low tech approach, you may have to put a simple system in place and sneak up on the occupancy figure over time by refining your processes and procedures.

A simple low tech method of getting your occupancy figure and balance, is to use the revenue transposed to time.  This is the system that makes a few assumptions, but is a simple method to use and can be easily set up and understood. 

First, we make the assumption that revenue equals the appropriate time spent parking.  In truth, this is inaccurate for example, people will buy an hours worth of parking and then leave after 50 minutes.  The next person does the same, and on a busy day, you can end up with revenue equalling 120% of the actual time purchased.  Conversely, you can have someone sit in a space using up the time, and only paying when prompted by the visit of an Enforcement Officer.  Occupancy will be at low levels here.  But if we understand these possibilities, then we can be happy with the assumption that revenue equals the appropriate time spent parking.  For our example we will say that the revenue for the day was $21.00.

Secondly, we take the possible revenue that a system allows, for example, if your parking system allows for parking between the hours of 09:00 to 17:00 and the rate is $3.00 per hour, then the possible revenue is $24.00 per day.

Thirdly, we divide the revenue by the possible revenue and our occupancy for the day is $21/$24 = 87.5%.   Our low tech system is close to being in balance or demand equalling demand.

Working out what the ideal number is for your city is difficult as it is unique to your city, so saying 87.5% is the right number is wrong.  One precinct of our city has a hospital in it.  The occupancy, based on revenue, spikes at 7am to 8am, as the staff change over shifts.  The rest of the day is at about 60%.  So do you set about amending your pricing to reflect the 400% before 8am or the rest of the day?  Each precinct and each city is different and needs to be worked out over time.

One of my projects has been to develop a low tech system to understand the balance, divide the city into relevant precincts and to start to collect occupancy data on each precinct to show how supply meets demand in each area.  The results have shown that recommendations for some serous price reductions are called for in some areas, price maintenance in other areas, but no price rises can be justified yet.

The simple system we have implemented can deliver data that can be reviewed at anytime, for anytime that money is being put into machines, and face it, these are generally the only times we need to monitor ‘balance’ anyway.

Kevin Warwood


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  2. Great article, clear calculations that help set the right price. In the long run, the "right price" is most beneficial to everyone. Local government, operator and especially the customer.

    Customers / drivers that realize they pay a fair price based on supply and demand will be happy customers. And happy customers are returning customers. A good job done in price setting will support long term sustainable growth for all involved, including local business.

  3. These are some great calculations. I liked it. I am trying to develop a model for the Parking lots. Where I can tell them how much traffic congestion cost them.

  4. Hi Thanks guys, I have used revenue to work out Occupancy, which has its risks but it is cheaper than puttiing new sensors in .... but not as accurate.