Case #1985.1

Cracking Oyster: Shashi Verma & Transport for London Confront a Tough Contract (B) (Sequel)

Publication Date: April 11, 2013
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This sequel accompanies case number 1985.0, "Cracking Oyster: Shashi Verma & Transport for London Confront a Tough Contract (B)." Cracking Oyster (B) is the second part of a two-part case set, Cracking Oyster (A) and (B), intended for use in a two-class sequence. The (B) case may also be taught on its own, but students will need to read (or at least skim) the (A) case in order to understand (B). Cracking Oyster (B) is accompanied by a six-and-a-half minute video companion piece. The (B) case describes how Shashi Verma (MPP 97), Director of Fares and Ticketing for London's super agency, Transport for London, copes with a frustrating contract at the heart of the agency's ticketing operation, the Prestige Contract, which is, when he assumes his position in 2006, at the midpoint of a 17-year contract term. While the (A) case lays out the nature of Verma's frustrations with Prestige (a cumbersome process for negotiating variations, excessive costs, inadequate performance requirements, and poor incentives for the contractor to collaborate with TfL on new innovations), the more provocative (B) case describes how Verma, using techniques of game theory and taking some political and legal risks, tries to negotiate much more favorable contract terms for TfL. The case ends with Verma, TfL, and the TfL board on the horns of a dilemma; whether to go forward or retreat after a high court grants one of the contractors an injunction that will require TfL to defend its actions in a court trial (or, more likely, settle out of court) if it goes forward with its plans. This one-page sequel describes what happens: TfL does decide to go forward, does settle the legal matter out of court, and ultimately obtains a contract on much more favorable terms than the original Prestige. The video companion piece shows Verma in conversation with HKS Professor Richard Zeckhauser, as the two reflect on Verma's use of game theory, a subject taught by Zeckhauser.

Learning Objective:
The case is used to introduce tools from the decision sciences, especially game theory, in the context of a complicated, dynamic negotiation that required decision-making in the face of uncertainty. 

Please note: the video portion of this case is included in the teaching plan and is intended for instructors to use in class. Here is more information on how to access teaching plans.

Other Details

Teaching Plan:
Available with Educator Access
Case Author:
Pamela Varley
Video Producer:
Patricia Garcia-Rios
Faculty Lead:
Richard Zeckhauser and John D. Donahue
Pages (incl. exhibits):
Europe, England