Institutional Requirements
Form, legal basis and functions
Under a public monopoly, despite the fact that the bus operator is 100% state owned, it’s still recommended that a separate regulator be created and the two functions of regulation and operation be kept quite separate, ideally with different reporting structures.

The authority might report via a dedicated transport department or the public works department or whichever department has responsibility for transport. The operating company might report to a state asset management department or a finance department whose main objective is to ensure that the state assets are being employed well and earning a return, even if this involves a payment by the state to cover operating losses. Any such payment should be agreed annually in advance between the operator, its controlling department and the finance department of the city.

The responsibilities of the operator and the authority will vary from city to city but should be clearly set out in writing.

The need for a dedicated department
Transport in cities is one of the major challenges of urban life and as such deserves a dedicated department of the city government — as opposed to a division of a public works department for example. While the exact form of this department will vary from city to city it should at least have divisions responsible for strategic planning, regulation and management of public transport, traffic engineering, and possibly also licensing.

If the urban area covers several jurisdictions, and if the public transport services serve some of them, there is often good reason to set up a passenger transport authority (PTA) to be responsible for all matters pertaining to public transport in the entire urban area. Where a city is fully self-contained there is less need but there may still be benefits in forming a PTA at arms length from government itself. Since most cities cover a number of political jurisdictions it has been assumed in general in this toolkit that a PTA is the more appropriate form of regulatory body.

Under a public monopoly with management contract there are three major actors – the PTA, the bus company and the external management team.

See also
Staffing and expertise