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Network Rail admits it was ‘overly ambitious’ with CP5 projects

Network Rail has admitted it was “overly ambitious” in what it could achieve with the funds and resources available in CP5. 

Responding to the Public Accounts Committee’s (PAC’s) report into Network Rail’s investment programme, the infrastructure owner stated that its “understanding of how best to plan and deliver major new electrification schemes was not good enough”. 

According to the PAC, the DfT, Network Rail and ORR agreed to an “unrealistic” programme of rail investment for CP5 that contained “too much uncertainty” on the costs of many large projects when it was signed off. 

During the Committee’s inquiry, Mark Carne also revealed that the expected cost for Great Western electrification had increased by up to £1.2bn from the £1.6bn agreed in 2014. This means the cost range is now between £2.5bn and £2.8bn. 

The MPs said it is “not clear” whether the cost escalation is due to Network Rail inefficiency, ORR lacking a full understanding of the work needed, or a combination of both. 

The Committee is now calling for Network Rail it to embed “much tighter” project planning, costing and cost control throughout the organisation. It must also be “clearer” with the DfT about what can and cannot be afforded. 

Following the “unacceptable” cost increase on Great Western electrification, it has been recommended that the DfT and Network Rail publish an updated schedule and cost forecast for the project – along with a full account of what has caused the cost increases to date and proposals for controlling future costs. 

PAC added that there is still “far too much uncertainty” on costs and eventual delivery dates for the other two major rail electrification programmes in the 2014-2019 programme: TransPennine and Midland Main Line, which have now been delayed into CP6. 

Sir Peter Hendy’s review of these and the other rail enhancement planned for CP5, which is to be published towards the end of this year, will bring more bad news on costs, said the MPs. 

A Network Rail spokesperson told RTM: “It is clear that we, as an industry, were overly ambitious about what could be accomplished with the funds and resources available to deliver the high levels of investment which will enable our railway to continue to cater for growing numbers of passengers and support economic growth. 

“Network Rail has successfully delivered over 5,000 projects over the past five years, but our understanding of how best to plan and deliver major new electrification schemes was not good enough. We have now made significant changes to the way we plan and deliver our investment programme, which will see schemes progress only once they are sufficiently developed that a reliable cost estimate can be established. 

“Sir Peter Hendy’s report on the deliverability of the current investment plan will be published later this month.” 

Additionally, for the next planning round of rail investment, and in all future investment planning, the government must assure itself that its plans can be delivered, stated the Committee. It has now called on the DfT and ORR to “assess and explain how uncertainty in key projects could affect the plan’s overall costs and schedule” for all rail spending decisions. 

PAC added that the five-year rail investment planning and funding model, which is appropriate for ongoing operations, maintenance and renewals, is “not adequate” for major enhancement work such as the current electrification schemes. 

In respect of this, the MPs want the ORR and DfT to put in place “sharper accountability arrangements” for major enhancement projects, such as the Great Western Main Line electrification, and agree principles on when it is appropriate to fund and manage these projects outside the five year rail funding cycle. 

A DfT spokesperson said: “We are proud to have a hugely ambitious investment programme, but agree that lessons should be learned on all sides. 

“We are committed to seeing the £38bn programme through and delivering the railway passengers deserve. That’s why the secretary of state asked Dame Colette Bowe to look at the lessons learned and make recommendations on what can be done better in future, and why Sir Peter Hendy is developing proposals to get the rail upgrade programme back on track and ensure it is both affordable and deliverable. Both reports will be published later in the autumn. We will respond to the PAC in due course.”