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Unprecedented investment creates rail capacity challenges

6th January 2014

As the sun sets on 2013 and we welcome 2014 now is a good time to reflect where we have been and where we are going as a rail industry.

In particular, it has never been more critical that we evaluate past performance and explore the future - especially as CP4 winds down and a new control period (CP5) starts with the substantial commitment to public investment over the next five years.
 
The rail industry is in a privileged position, enjoying unprecedented levels of public investment. 
 
With privilege comes responsibility and it is incumbent on everybody in the supply chain to continue to look at ways to reduce cost and deliver value for money, as set out in the Network Rail Strategy Business Plan for England & Wales.
 
It also recognises that “additional investment will be necessary if we are to address the remaining legacy and provide for further growth”.
 
So how do we balance the appropriate increases in capacity and improvements in the services provided with cost efficiencies? 
 
If key outcomes for 2019 in Network Rail’s SBP for Funding & Affordability such as “whole life optimal approach to costs and benchmarking with other railways to demonstrate relative efficiencies” are to be delivered, then it is a given that the rail industry as a whole must seek new ways of working that deliver improvements in efficiencies and value for money.
 
Network Rail has changed to provide better bottom-up focus and direct accountability at route level. 
 
If the rail industry is going to be at the centre of transportation and drive economic growth, it must be financially sustainable.
 
Network Rail’s director of infrastructure projects Simon Kirby has announced that 65 per cent of the investment for CP5 will be committed by 2014 and 85 per cent by 2015. The bulk of this will be procured via frameworks and alliances and even the competitive tenders will be evaluated on ‘while life costs’.
 
This opens challenging doors for the supply chain to work with Network Rail to deliver a regulatory framework that is business friendly whilst maintaining standards and protecting the tax payer’s investment in rail.
 
This requires an integrated and increasingly efficient supply chain encouraged by long term view of workload and an appropriate share of risks, as well as commitment and visibility of work. That will require transparency on ‘real costs’ and performance based contractual relationships such as NEC with target costs.
 
Network Rail will increasingly use alliances which can improve project focus and risk management, while demanding improved resources management, training and development.
 
And crucially, we need a safe industry that benchmarks against the best in the world. But one thing is clear, there are exciting opportunities ahead and for all of us, there has never been a better time to be in the rail industry.

Joseph Infante is a Director at Capita. This article previously appeared in Construction News, December 2013.

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