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Open for Business: Network Rail is breaking down supplier barriers

The Open for Business programme – Network Rail’s response to the Hansford Review – is breaking down barriers in the organisation to ensure suppliers have a greater say in the way projects are run and funded. David Ollerhead, the programme’s director, calls on the industry to get involved.

Network Rail is Open for Business.

That’s our message to the industry. We’re transforming the way we do business.

Together, the railway industry is investing to innovate and improve journeys right across Britain. Network Rail currently spends £130m every single week on improvements for passengers through our Railway Upgrade Plan. As a result, by 2019 there will be an extra 170,000 seats into major cities across the country every single day, with 6,400 extra train services and 5,500 new train carriages – a 30% increase in capacity. Journeys will be quicker, trains will run more frequently, and it will be more comfortable on board. It’s the biggest programme of rail modernisation since the Victorian era. The railway is busier, bigger and more complex than ever before, and with passenger numbers continuing to rise, it means it’s costing more just to operate and maintain the network.

To meet this capacity challenge, there’s more to be done.

We’re delivering nearly a quarter of the entire spend on infrastructure in the UK. Our mega-projects are amongst some of the largest, most complex and challenging in the world – British engineering at its best. Right now, we have around 15,000 live projects on our books, delivering improvements for passengers across the country. Undoubtedly, we need to grow capacity, but we must recognise that government cannot afford to fund everything that’s needed.

New sources of investment

Our railway is a national asset and a key public service that is an enabler of economic growth, job creation and house-building nationally. Traditionally, these huge railway investments have been funded by the taxpayer through direct government grants, but with pressures on the public purse we also have to look for other sources of investment to help pay for much-needed railway improvements.

We are seeking third-party funding from people, businesses and organisations that will benefit from railway improvements – for example, train and freight operators, property developers, Local Enterprise Partnerships (LEPs) and local councils. This is the sensible way to build a bigger and better railway for our nation.

Most major infrastructure projects in the water, energy and communications industries are funded solely by the private sector. Yet in rail, most of the investment comes from government or the public purse. That is clearly unsustainable in the long term. We need to fundamentally change the way we depend on public investment for our projects – relying solely on taxpayers to pay for future railway investments, as we have done in the past, isn’t sustainable. We need to build partnerships with private sector funders as well as regional and local government funders, or financial investors, to find innovative and more cost-effective ways to build on our railway – without compromising on safety.

Our aim is to make it easier to bring in new sources of investment to the railway – creating and delivering local economic opportunities the private sector and other funders want to participate in. We’re undergoing a company-wide transformation programme – Open for Business – which will see valuable opportunities provided for other organisations to invest in and deliver projects on Britain’s railways.

^{David Ollerhead}

Project delivery

The programme is also bringing changes to make it easier for other organisations to carry out and deliver work on the railway.

There can be a perception within the industry that Network Rail acts like a gatekeeper and can be difficult to work with. Knowing this, in December 2016 we commissioned the Hansford Review to investigate how we could remove barriers and transform to make it easier for other organisations to invest in and build on the railway. The aim is to challenge ourselves to open up to new ideas from the supply chain so we can drive value for money and innovation, and clarify to what extent we are currently delivering value for money in our projects. Since July 2017, we have been implementing the recommendations of the Hansford Review though our Open for Business programme – a programme I am heading up – and we’ve made some significant steps in the right direction.

Asset protection and optimisation reforms

Rail is vital to economic growth – creating jobs, building houses and connecting communities, thus enhancing the productive potential of the UK economy by up to £10.2bn a year. We directly employ 38,000 people and support another 117,000 jobs in our supply chain, and it falls to Network Rail’s asset protection and optimisation (ASPRO) teams to make sure any work on or near the railway is done safely and to the right standards.

We officially have Europe’s safest railway, which is due in no small part to the hard work of our ASPRO teams. Yet the strict codes they operate by can sometimes mean they’re viewed as blockers, making it difficult for third parties to deliver railway projects. We are reforming the way our ASPRO teams work:

• We’ve undertaken a successful trial on our Anglia route to streamline our approach, and we’re rolling out a new structure and improved ASPRO processes across the business with those findings in mind. These are much slicker, less bureaucratic and easier to implement;
• To raise the professional competency and drive consistency within our route ASPRO teams, we have appointed a new, national professional head of ASPRO;
• We are in the process of creating a head of ASPRO in each route, who will work with project sponsors on third-party requirements. They will be directly accountable to the industry for ensuring service levels are delivered;
• A national ASPRO framework has been created and is in the process of being rolled out across the business. This will support in driving a consistent and transparent approach for our customers – something they are very keen on;
• We’re working with our industry partners – including Amey in a special advisory capacity – to formulate ASPRO service levels for customers dealing with Network Rail and ASPRO, so our customers know what to expect from the service and when to expect it by.

These transformations will help reduce barriers, making it easier for other organisations to invest in and build on the railway.

Redefining our standards

In April, we announced our ‘standards challenge process.’ Standards are the detailed requirements underpinning how the railway and the delivery of improvement projects are run safely. We have standards for track, bridges, platforms, signals, overhead line equipment… you name it. They have in the past been criticised by the industry for being too prescriptive and over-engineered, which could mean some suppliers felt left out or they added unnecessary cost. So we have introduced a process to allow other organisations to let us know – or ‘challenge’ – when they feel this is the case to help us improve our standards, whilst still maintaining our relentless focus on safety. At the same time, we ourselves overhauled and updated 400 of our most important standards.

Now we’ve done this, we’re a step further to becoming Open for Business. Since launching the process we’ve already received a number of challenges, which we’re now working through. We remain unapologetically uncompromising about safety, so these aspects remain, but redefining our standards means we’ll see new and innovative solutions which could be more efficient and reduce cost.

For example, following a challenge received from TSP about the prescribed design life of station platforms and minimum steel galvanising levels, we are updating our civil engineering standards to provide improved clarity and consistency. Similarly, a challenge from British Steel has identified the potential for simplifying the design of some electrification masts, which we are exploring further.

The team is now assessing how we can incentivise the industry to submit more challenges, which could be, for example, via formal recognition.

Contestability and investment opportunities

In March 2018, we released details of a pipeline of railway projects we are seeking third-party funding for, with a promise we’d update the market as more projects became available. We’re now close to releasing details of the next instalment, this time focusing on projects we’re offering as private financing opportunities and also projects that we have funding for and want delivered by third parties.

As a government-owned business, raising private financing has some challenges, but by unlocking private funding we can potentially deliver railway improvements for passengers and communities that would otherwise not be possible. Internally, we’ve supported these developments with the creation of a dedicated project finance team and the recruitment of business development directors for each route; they will act as the front door for all new investment in the rail industry and will direct investors to other parts of Network Rail, such as our private finance team, as needed. 

Our next control period will have ‘contestability’ at its core; this is the opening up of Network Rail work for delivery by the market. This goes beyond our normal approach of contracting with the supply chain. In the future we will offer even the delivery manager role to the market for an agreed pipeline of work, and we will work with the supply chain to identify improvements in our contracting approach so that we can drive greater innovation and value for money.

We are working on a ‘guide to doing business with Network Rail,’ which will be available later this year, to support both the investment and the delivery party of the pipeline.

In demand

All across the country, we’re seeing demand for even more railway projects – many of them local improvements. Community leaders and developers say they want more stations, railways reopened, better connectivity, improved capacity and faster journeys. But they’ve also said Network Rail is often an impediment to their ambitions rather than a welcoming partner. The Open for Business programme will change all that. We are evolving to become a welcoming partner and aim to support these ambitions where they align with railway priorities and can be accommodated within the network system.

We will be increasingly dependent on the funding from the communities and businesses that directly benefit from better railways, so it is right that they have a greater say in the way projects are delivered. We know we have to change, which is why we are breaking down the barriers to entry that our customers and suppliers have highlighted for those who would like to fund, finance and build projects on our railway.

I know we have a lot to do and many of the deeper changes will not happen overnight, but that does not mean we are not committed to change – far from it. I am confident the changes we have already put in place are starting to make a difference and, as we roll out more transformations, our customers, suppliers and industry colleagues will see the improvements benefitting both them and the wider economy.

It’s an exciting time to be in the railway industry, with more opportunities than ever before. Network Rail is Open for Business – I’d encourage anyone who’s interested in getting involved or who has any suggestions to get in touch.

FOR MORE INFORMATION
Get in touch with David Ollerhead:
E: [email protected]
T: 07720 957680
W: www.networkrail.co.uk/OpenForBusiness