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Exclusive: Network Rail in breach of enhancements delivery licence – ORR

Network Rail has been found to be in breach of its licence in the delivery of its enhancement programmes, but is “taking steps” to address the gaps in its capability and planning, according to the Office of Rail and Road (ORR). 

In early August, RTM exclusively reported on the regulator’s verdict that “Network Rail may not have done, and is not doing, everything reasonably practicable to comply with condition 1 of its network licence in relation to the delivery of its enhancements programme”. 

At the time, the ORR gave Network Rail the chance to make further representations to explain itself by 1 September 2015, after which the regulator would decide whether a licence breach had taken place. 

RTM has now been told that in the context of delays in delivering the CP5 enhancement programme, the ORR has identified a series of problems in relation of NR’s enhancement capability. 

“While finding Network Rail in breach of its licence ORR recognises the company is taking steps towards addressing gaps in its capability and planning,” said an ORR spokesperson. 

“We [are] therefore giving Network Rail the opportunity to show how it will adopt good practice across its business in delivery of enhancements across the network, and how it will robustly implement these to deliver for its customers and taxpayers.” 

The regulator did not say how long it had given the infrastructure owner to address these issues, but the organisation’s new chair, Sir Peter Hendy, is expected to produce his long-awaited review into the deliverability of Network Rail’s CP5 enhancements programme later this autumn – some sources say October, others November. 

The review’s terms of reference confirm that “all CP5 enhancements projects and programmes are in scope for this review, including those included in the Investment Framework and ringfenced funds”. 

However, RTM has also been told by some of Network Rail’s most important suppliers that the “uncertainty” thrown up by these reviews into company’s future and project capability must end. 

When the ORR’s preliminary decision was announced in August, Francis Paonessa, managing director infrastructure projects at Network Rail, told RTM: “Since 2009, Network Rail has successfully delivered over 5,000 projects worth more than £15bn. The projects set before us for our current five-year funding period to 2019 were bigger and more complex than ever and required a step-change in delivery – both for the company and its supply chain. 

“Despite this challenge, over three-quarters of our regulatory project milestones have been delivered to time or within weeks of target. But we know we can and must do better which is why, earlier this year, we set up a special Board-led task force to strengthen our major project delivery. The task force has produced a detailed improvement plan that is already underway and good progress is being made.” 

CP5 Missed Milestones 

Earlier this year, the ORR said it was investigating Network Rail’s performance and its capability to deliver the massive CP5 enhancements programme, having missed 30 of its 84 milestones for 2014-15 and with many projects facing delays and rising costs. 

The regulator said its concerns could be summarised as shortcomings in project design and development, including inadequate rigour in cost estimating; late project delivery; shortcomings in how Network Rail delivers its part in cross-industry programmes such as Great Western Route Modernisation; and lack of evidence that Network Rail is managing the CP5 investment portfolio to achieve efficiencies. 

The ORR also gave RTM the full list of 30 missed milestones: 

Missed Project Completion Milestones (GRIP 6 milestones) 

• Package 7, 10 Car South West Suburban Railway - Reynes Park to Dorking
• Motherwell Area Stabling - Phase 1
• Barry - Cardiff Queen Street Corridor - Phase 2 - Valley Lines
• Barry - Cardiff Queen Street Corridor - Phase 3 - Barry Lines
• Strategic Freight Network (SFN) - Ipswich Yard
• Chiltern Main Line Lengthening - Except High Wycombe DOWN platform
• Rolling Programme of Electrification - Rutherglen and Coatbridge (R&C) Electrification
• Barry - Cardiff Queen Street Corridor - Phase 4 - Cardiff East
• Strategic Freight Network (SFN) - Peak Forest
• North of England Programmes (LNW) - Phase 2 (c) - (NW Electrification Phase 2 Configuration State 3)
• Belcombe to Copyhold Bi-directional Signalling Upgrade
• North of England Programmes (LNW) - Phase 2 (a&b) - (NW Electrification Phase 2 Configuration State 3)
• St Pancras - Sheffield Linespeed Improvements
• Stations - Access for All (AfA) - New Cross Gate 

Missed Project Development Milestones (GRIP 3 milestones) 

• Great Western Electrification - Maidenhead to Newbury, Oxford, Chippenham and Bristol Parkway
• Great Western Electrification - Chippenham to Bristol Temple Meads
• North of England Programmes (LNW) - Phase 4 - Manchester to Preston Electrification and Preston JTI - (NW Electrification Phase 4 - Configuration State 5)
• Intercity Express Programme: Western Capability - Route wide (gauge capacity works all routes)
• Oxford Corridor Capacity Improvements - Phase 1
• London Victoria Station Capacity Improvements
• Great Western Electrification - Bristol Temple Meads and Bristol Parkway to Cardiff
• Acton (GWML) to Wilesden (WCML) Electrification (Acton West to Acton Wells)
• Anglia Traction Power Supply Upgrade - GE bulk supply point & AT
• Ely North Junction Capacity Improvement
• North of England Programmes (LNW) - Phase 3 - Preston to Blackpool Electrification - (NW Electrification Phase 3 - Configuration State 5)
• North of England Programmes (LNW) - Phase 5 - Guide Bridge to Stalybridge Jcn Electrification - (NW Electrification Phase 5 TPE West - Configuration State 7)
• North of England Programmes (LNW) - Phase 5 - Manchester Victoria to Stalybridge Jcn Electrification and JTI - NW Electrification Phase 5 TPE West - Configuration State 5)
• Northern Programme (Yorkshire) - Calder Valley
• Oxford Corridor Capacity Improvements - Phase 1
• Sussex Power Supply Upgrade 

In September, it was also announced that the Commons Public Accounts Committee (PAC) had launched an inquiry into Network Rail’s 2014-2019 rail investment programme. 

Drawing on evidence from the National Audit Office, the inquiry will examine the current difficulties in delivering the planned programme, to understand how rail investment is planned; and how CP5 differs from the 2009-2014 CP4 investment programme and the implications of the decision to reclassify Network Rail as a public sector body.

(Image: Borders Railway Kings Gate Junction c. Network Rail)