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Supply chain worried about more CP5 project delays under Hendy review

The heads of two of Network Rail’s most important suppliers say the “uncertainty” thrown up by the reviews into the company’s capabilities and future must end. 

Philip Hoare, head of the Transportation division at Atkins, covering rail and highways, told RTM there should be an “industry call-to-arms” to end the mixed messages. 

“There’s no doubt – as an industry and as an organisation – that we’re worried about the impact of the various reviews into Network Rail,” he said. 

“What we want as an industry is a really solid workbank and good visibility of when that work is going to come on-stream. To build and invest in the future you need to have good sight of that. At the moment, we haven’t really got that clear view.” 

Sir Peter Hendy was installed as Network Rail’s new chair in June, replacing Richard Parry-Jones. The former London transport commissioner’s proposals on re-planning the delivery of enhancements could see a big shake-up of CP5 projects, and both Midland Main Line electrification and TransPennine electrification are ‘paused’ pending his recommendations. 

Hendy’s review into Network Rail is one of a number announced by the government in June. Separately, Nicola Shaw, chief executive of HS1, is to ‘advise’ the government on how it should approach the longer-term future shape and financing of Network Rail, while Dame Colette Bowe, an experienced economist and regulator, looks at lessons learned. Richard Brown, who reviewed the rail franchising system for the government in 2012, has been appointed as a special director at Network Rail and will update McLoughlin directly on progress being made. 

Hoare said the supply chain must try to influence those reviews, to ensure they don’t have a long-lasting impact on delivery. 

He told RTM: “There have been significant slips in terms of programme at Network Rail, and challenges around budgets, and I’m sure the outcomes of the Hendy review will be pushing more and more schemes ‘to the right’ and into CP6 and possibly later.” 

Paul Copeland, managing director at Siemens Rail Automation UK, told us that he recognised the current evaluation of Network Rail and is watching carefully for the outcome. 

“We regard the digital railway initiative as a key component in the development of a sustainable railway and we continue to strongly invest in this programme, together with a range of other system developments and innovations. We believe that the main way to achieve improved efficiency and increased throughput is through the digital initiative and if possible, this should not be delayed,” he said. 

Copeland added that his main concern about the review and potential changes to the structure and funding of Network Rail is the “time taken to implement changes, once it has been decided what to do”. 

He told RTM that while Siemens fully support the drive for efficiency gains and cost reduction, “we believe the rail supply industry has to address this holistically, with the responsibility to drive change equally shared with both supplier and client”. 

Network Rail’s £38.5bn spending envelope for CP5 (2014-19) originally included £12bn of enhancements. Transport secretary Patrick McLoughlin recently told MPs that September 2014 projections put the CP5 enhancements over-spend at £2bn, which was then cut back by ‘de-scoping’ of projects and the new ECAM (enhancements cost adjustment mechanism), whereby Network Rail updates the Office of Rail & Road (ORR) on its business case assumptions after CP5 projects pass the GRIP 3 stage

The ORR recently described Network Rail’s project development and delivery problems as “systemic” and said the picture is so bad that the company may be in breach of its licence, having missed 16 of 44 (36%) of its GRIP 3 regulated outputs and 14 out of 40 (35%) GRIP 6 regulated outputs in 2014-15. 

Signalling workflow and Great Western electrification 

Copeland added that if the railway signalling sector were to contract as a result of changes to Network Rail, “we would lose skilled and experienced staff to other industry sectors”. 

“This would have a long-term effect on the industry and its ability to deliver future projects such as HS2 and Crossrail 2,” he said. 

Separately, Hoare told us that Atkins was having to consider reductions in its signalling workforce “because the workflow just hasn’t been in line with what we thought it would be”, despite the oft-repeated concerns in the industry about a lack of signalling renewals capacity and skills. “We haven’t quite got the balance right [as an industry],” he said. “We, as an organisation, are currently consulting with a number of our staff around reductions in the signalling space.” 

He also discussed Atkins’ involvement in important schemes like the Stafford Area Improvement Programme, the rebuild of Birmingham New Street, and its “intensive” bidding for HS2 contracts.                                                                                                                             

The company is also lead designer for Great Western Route Modernisation. Hoare suggested that earlier and closer collaboration between the parties involved, as at Stafford, could have prevented some of the current problems from arising. 

But he added: “I know the team – everybody – is behind [schedule], but there’s a significant amount of effort, and as a result some good thinking and new innovation being brought forward to try to bring that programme back on track.” 

He called it “a particularly challenging project” and said there was no one specific cause behind the delays and rising costs, or individual company that is culpable. “You can’t and wouldn’t want to blame any one particular organisation. 

“I think the team there would have benefited early on from taking some quite important decisions together, and planning and preparing that together. So if you draw a comparison between the Alliance model (as at Stafford), where everyone is equally incentivised to drive performance, you can see some of the challenges we’ve had on Great Western, where perhaps not everyone’s been pulling together at the same time. But what I do see on Great Western is everybody working really hard to deliver what is a pretty challenging and demanding programme.” 

RTM’s full interview with Atkins’ Philip Hoare will appear in our October/November 2015 edition. Subscribe for free here.


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