Metro Trains and Yarra Trams have failed to meet tough new targets set by the Andrews Government in their first month operating under renewed $7 billion, seven-year contracts.

Public Transport Victoria chief executive Jeroen Weimar​ has conceded that both transport operators must significantly improve their performance in order to meet beefed-up punctuality and reliability targets under the new contracts, which came into effect on November 30.

Metro Trains and Yarra Trams fail to meet tough new standards Credit:Darrian Traynor

"After the first full month of the new contracts, both operators still need to lift their game," Mr Weimar said.

Metro Trains could be penalised up to $1.25 million each month and Yarra Trams up to $500,000.