Delivering on route devolution
Source: RTM Dec/Jan 17
At RTM’s recent Northern Powerhouse Rail Conference, Andy Haynes, Network Rail’s contracts and procurement director, explained the infrastructure owner’s decision to establish eight devolved routes, each with a managing director responsible for aligning TOCs and FOCs in their area and engaging suppliers.
Back in 2011, Sir Roy McNulty’s major report on rail cost-effectiveness recommended wide-scale decentralisation and devolution within Network Rail, matched with less prescriptive franchises to allow operators more freedom to respond to market needs. McNulty hoped this shift would facilitate decision-making at a route level and spur greater localism through tighter involvement with regional authorities and PTEs.
Last year, Nicola Shaw’s report into the future of Network Rail identified much the same thing: whilst she steered clear of recommending either full nationalisation or full privatisation of the infrastructure owner, she made clear that the industry needed to focus more intently on its customers through deeper route devolution. There should be a step-change in the degree of autonomy of these routes, Shaw wrote, to ensure greater flexibility and responsiveness for Network Rail’s customers.
In response to these recommendations and in line with the shift towards devolution elsewhere, from 21 November 2016 Network Rail established that its eight devolved route services would be handed to locally-based managing directors, who would captain the procurement and management of regional supply chains.
The move, first publicly discussed in April during RTM’s supply chain engagement platform at Infrarail, would step away from the usual procedure of giving companies the services the infrastructure owner thinks they want, instead focusing on local needs. It would also ensure suppliers stop perceiving Network Rail as a monopsony, where there is only one door available into the market.
From directors to customers
Speaking about the decision at RTM’s inaugural Northern Powerhouse Rail Conference, Andy Haynes, Network Rail’s contracts and procurement director, said the move effectively meant route directors would become customers. He added that part of the tag line for route services nationally is “providing a service our route colleagues want to buy from us”.
“That’s going to be a big cultural change for us,” Haynes told delegates in the jam-packed auditorium. “Those colleagues [at a route level] will now become our customers; they will decide what is best for the safety and performance of that route and the right mix of services, the right approach to those services. And me and my team will have to respond to what they want to buy.”
As it stands, the rail supply chain can access Network Rail through two different organisations. One deals with large infrastructure projects – major programmes of work supplied by around 300 companies with a £20bn price tag in CP5 – while the other, Route Services, “deals with everything else”.
Amounting to around £10bn in CP5, this can include Digital Railway programmes, contingent labour, on-track machines and plants, food services and commercial property, amongst others. These route services are provided by around 4,000 suppliers. From the end of November last year, Haynes revealed, Network Rail started supplying services that these route-based companies want to buy from the infrastructure owner.
“It’s going to be quite a tricky mindset for us,” he added. “As opposed to just re-tendering something and giving people the services we think they want, we’re now going to ask them what they want, and figure out how to deliver that most effectively.
“My team will continue to contract nationally for enhancement schemes, but locally, the routes will decide how they go about those other services and I will try my best to support them.”
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