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Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

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Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum
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Page 1: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Rail Delivery Group2nd Industry Forum

8 November 2012

2nd Industry Forum

Page 2: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Opening remarks

8 November 2012

2nd Industry Forum

Tim O’Toole

Chairman, Rail Delivery Group

Chief Executive, First Group

Page 3: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Opening remarks

• The rail industry continues to experience significant growth but unwittingly finds itself on the front pages

• Despite commercial and financial uncertainties the Rail Delivery Group continues to bring together the train operators, freight operators and Network Rail

• The Group is evolving into the leadership body for the industry but recognises that this role comes from actions and deeds not words and structures

• The RDG continues to pursue a range of initiatives – some arising from the Rail Value for Money Study but an increasing number emerging from recent events

• The RDG’s 2nd Industry Forum will provide an update on the work being undertaken on franchising, focus on the industry’s plans for the future, reflect on the initiatives being pursued by the RDG and conclude with a briefing on the formalisation of the Group

Page 4: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Secretary of State for Transport

8 November 2012

2nd Industry Forum

Rt. Hon Patrick McLoughlin MP

Page 5: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Timetable for the morning

• Franchising – the independent review – Richard Brown

• Franchising – the RDG’s emerging views – Martin Griffiths

• Franchising – Taking the views of the Industry Forum

• Industry Strategic Business Plan – Paul Plummer

• Break

• The work of the Rail Delivery Group

• Case Study: Asset, Programme and Supply Chain Management working group

• Formalising the Rail Delivery Group – Graham Smith

• Concluding remarks – David Higgins

Page 6: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Franchising – the independent review

8 November 2012

2nd Industry Forum

Richard Brown

Chairman, Independent review of franchising

Chairman, Eurostar

Page 7: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Franchising – RDG’s emerging views

8 November 2012

2nd Industry Forum

Martin Griffiths

Member, Rail Delivery Group

Finance Director, Stagecoach Group

Page 8: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

RDG’s response to the review of franchising

• Passenger franchising has been at the heart of the growth of the railway

• Recent developments on passenger franchising have created uncertainty

• The Members of RDG involved in passenger franchising have come together to inform a unified input to Richard Brown’s review in the name of the Rail Delivery Group

• The group has met twice a week since the review was announced

Page 9: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Passenger franchising – RDG’s emerging views

• The Rail Delivery Group is looking at franchising issues under four headings

Franchising authority and process

Risk allocation, risk sharing and financial footprint

Flexibility of specification

Franchise length and investment

• The Rail Delivery Group is confident of producing a balanced submission that should be seen as a package of measures

Page 10: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Franchising Taking the views of the Industry Forum

8 November 2012

2nd Industry Forum

Page 11: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Industry Strategic Business Plan

8 November 2012

2nd Industry Forum

Paul Plummer

Member, Rail Delivery Group

Group Strategy Director, Network Rail

Page 12: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Why does the Strategic Business Plan matter?

• It is the industry response to:

Government output specifications

Challenges to improve value for money

• It builds on extensive cross-industry work including:

Route Utilisation Strategies

Planning Oversight Group

Technical Strategy Leadership Group

National Task Force

Rolling stock plans

RDG priority workstreams

• It leads to the establishment of:

Network Rail’s funding and outputs for 2014-19

As part of a longer term strategy for the railway and for Network Rail

Providing a baseline for further innovation for example through franchising

• This is therefore a key workstream for RDG

Page 13: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

13

Periodic Review Milestones

ORR

Governments

Industry

2011 2012 2013 2014

Sep 2011 – Initial Industry Plan

Mar 2012 – advice to Ministers

Network Rail

Jul 2012 – HLOSs/SOFAs

7 Jan 2013 – Strategic Business Plan

7 Jan 2013 – Industry Strategic Business Plan

Jun 2013 - Draft

Determination

Oct 2013 – Final

Determination

Jan 2014 – Decision on acceptance of FDs

Mar 2014 – CP5 Delivery Plan

Page 14: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

The Strategic Business Plan

• The Industry Strategic Business Plan will set out: Long term vision for rail How industry proposes to deliver the HLOS outputs Market sector strategies Industry affordability analysis

• The Network Rail Strategic Business Plan will set out: Vision, role & purpose for Network Rail Network Rail’s contribution to the achievement of the HLOS Detailed forecasts of activity, expenditure and efficiency Network Rail’s funding requirement Underpinning Route Plans

Page 15: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

A long term vision for rail

• Passenger satisfaction levels of at least 90 per cent

• Capacity for approx twice as many passengers, with reduced journey times, as well as better connectivity

• Improved product offer for freight resulting in higher satisfaction and rail modal share

• Levels of reliability and safety are among the best in Europe

• A financially sustainable railway through improved efficiency and revenue generation

• Reduced carbon dioxide emissions in support of national targets

Page 16: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Outputs

• Safety

• Performance

• Capacity

• Availability

• Sustainable development

• Ring-fenced funds

Page 17: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Funding

• The Initial Industry Plan (IIP) assumed savings for Network Rail and operators

• Network Rail savings were consistent with previous ORR assumptions and McNulty low savings

• ORR advice to Ministers took this as the low end of the range of savings

• Governments appear to have taken the mid-point in the range

• TOC savings in the IIP were stated to be dependent upon franchise reform

Page 18: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

SBP Expenditure Predictions

• Network Rail’s current expenditure plans and efficiency assumptions will generally be consistent with the Initial Industry Plan

• Network Rail will make the case for additional expenditure in relation to: Earthworks and structures Investment to drive further efficiencies Delivery of higher outputs including once in a lifetime opportunities and outputs funded by

others

• There are risks in meeting the efficiency challenge and Network Rail is dependent on RDG and government to help it succeed

• Network Rail will continue to challenge itself to find further opportunities to reduce costs

Page 19: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Passenger Traffic & Demand

Passenger Traffic & Demand

0.80

0.90

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

2004/5 2005/6 2006/7 2007/8 2008/9 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Financial Year

Inde

x(2

004-

5 =

1.0

00)

Passenger Train KM Index

Passenger KM Index

CP4 CP5CP3

Page 20: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Freight Traffic & Demand

Freight Traffic

0.60

0.70

0.80

0.90

1.00

1.10

1.20

1.30

1.40

2004/5 2005/6 2006/7 2007/8 2008/9 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Financial Year

Inde

x(2

004-

5 =

1.0

00)

Freight Train KM Index

Freight Moved Index

CP4 CP5CP3

Page 21: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Punctuality

75%

80%

85%

90%

95%

100%

2003/042004/052005/062006/072007/082008/092009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

5,000

5,500

6,000

6,500

7,000

7,500

8,000

PPM - actual

PPM - forecast

Trains within PPM (1000s) - actual

Trains within PPM (1000s) - forecast

PP

M

Tra

ins

Pas

sing

PP

M (

1000

s)

CP3 CP4 CP5

Page 22: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Network Rail efficiency

0

10

20

30

40

50

60

70

80

90

100

2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Actual

IIP

CP3 CP4 CP5

27%

23%

16%%

Page 23: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

0

1

2

3

4

5

6

7

O&M - actual

O&M - IIP

O&M per train km - actual

O&M per train km - IIP

Network Rail opex and maintenance spend

O&

M e

xpen

dit

ure

(£m

in

201

1/12

pri

ces)

O&

M p

er t

rain

mil

lio

n k

m (

£ m

i 20

11/1

2 p

rice

s)

CP3 CP4 CP5

Page 24: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Network Rail renewals and enhancements spend

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19

Renewals - actual

Renewals - IIP

Enhancements - actual

Enhancements - IIP

£m in

201

1/12

pric

es

CP3 CP4 CP5

tbc

Page 25: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Industry subsidy

Total Government Support for the Railway(England, Wales & Scotland)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2016

-17

2017

-18

2018

-19

Year

£m (

2011

-12

pri

ces)

Figures for CP3, sourced from ORR's "National Rail Trends ", show total support including payments made to London and Continental Railways

Figures for CP4 & 5 sourced from the Initial Industry Plans ("Preferred Plan ", assuming Rail VfM "low" efficiencies")

CP3 CP4 CP5

Page 26: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

26

Periodic Review Milestones

ORR

Governments

Industry

2011 2012 2013 2014

Sep 2011 – Initial Industry Plan

Mar 2012 – advice to Ministers

Network Rail

Jul 2012 – HLOSs/SOFAs

7 Jan 2013 – Strategic Business Plan

7 Jan 2013 – Industry Strategic Business Plan

Jun 2013 - Draft

Determination

Oct 2013 – Final

Determination

Jan 2014 – Decision on acceptance of FDs

Mar 2014 – CP5 Delivery Plan

Page 27: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

27

Longer term planning milestones

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2012 2013 2014 2015 2016

Market Studies commence - May 2012

Publication of Draft Market Studies for Consultation - by April 2013

Cross boundary analysis – ongoing from Q1, 2013

Publication of final Market Studies – by October 2013

ORR Establishment – December 2013

Route Studies (Tranche 1) commence - 18 month duration

Route Studies (Tranche 2) commence - 18 month duration

ORR has agreed that LTPP outputs should be completed in time to inform September 2016 Initial Industry Plan (IIP) for Control Period 6

Page 28: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

2nd Industry ForumQuestions and Answers

8 November 2012

2nd Industry Forum

Page 29: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Break

8 November 2012

2nd Industry Forum

Page 30: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

The work of the Rail Delivery Group

8 November 2012

2nd Industry Forum

Page 31: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

RDG’s initiatives

• The RDG is pursuing a range of initiatives through its subject-specific working groups

Asset, programme and supply chain management Contractual and regulatory reform Train utilisation Technology, innovation and working practices Franchising Formalisation

• The RDG is giving guidance to existing cross-industry groups Planning oversight group Technical strategy leadership group National task force

• RDG is also involved in other industry initiatives Rolling stock planning, procurement and deployment Strategic Review of the RSSB

Page 32: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Case Study: Asset, Programme and Supply Chain management

8 November 2012

2nd Industry Forum

The Asset, Programme and Supply Chain Management working group

Page 33: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Asset, programme and supply chain management

• The management of assets, the management of investment programmes and the role of the supply-chain are all critical to the success of the GB rail industry

• Identifying efficiencies in these areas is a core role for Network Rail but the RDG identified that bringing together train and freight operators, the supply chain and Network Rail should allow cross-industry efficiencies to be realised

• The Rail Delivery Group set up the asset, programme and supply chain management (APSCM for short) to bring the industry together to identify new ways of working together that would create a more efficient industry

• The APSCM working group includes TOCs (Arriva and First), a FOC (DB Schenker), Network Rail, a supplier (Amey), the Railway Industry Association and the DfT

Page 34: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

APSCM workstream presentations

• Access planning – Steve Murphy

• Workbank planning – Simon Bunn

• Cost of contingency survey – Jeremy Candfield

• Network optimisation – Nigel Jones

• Major projects and conclusions – Tim O’Toole

Page 35: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Access Planning

8 November 2012

2nd Industry Forum

Steve Murphy

Team Leader, Industry Access Planning Improvement Programme

Managing Director, LOROL

Page 36: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Objectives

• Optimising access planning. Put simply, when is the most efficient time to maintain the network?

• Reducing costs across the industry

• Increasing revenues

• Improving performance and customer satisfaction

• Developing case studies to provide evidence for industry wide benefits

Page 37: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Method

Cross Industry

• Steering Group

Paul Hebditch – Programme Manager, NR Richard Stuart – Director of Rail Policy, Go-AheadSteve Murphy – MD London Overground, Arriva

• Supporting Project Team established in Network Rail led by Fiona Dolman, Interim Director, Operational Services

• All case studies are managed by a project board including the steering group, the Route MD & Directors representing each Passenger or Freight Company operating on the route

• Project updates at each RDG working group meeting

Page 38: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Total industry cost of maintenance South of Bedford – MML / 4 nights/week

The ProductIn

du

str

y C

ost

Total industry cost of maintenance North of Bedford – Midland Mainline

Page 39: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Midland Mainline Case Study

Key Findings

• Existing approach of variable length mid-week night possessions along with significant weekend possessions was not the industry optimum

• Moving to a recurring pattern of consistent 6.5 hour possessions at the north end of the route and 7 hour possessions at the south end of the route delivered the followingbenefits:

Approximately 5% reduction in Network Rail costs for maintenance/renewals on the route

Reduction in overall maintenance possession hours of 52% A 38% reduction in disruptive possessions at weekends A more reliable railway, that will attract more passengers

Page 40: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Next Steps

Activity Date

Implementation of savings identified by MML Case Study Underway

Completion of Kent Case Study Dec 2012

Phased delivery on a national basis Jan 2013onwards

Page 41: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Route based workbank planning

8 November 2012

2nd Industry Forum

Simon Bunn

Leader, Route Based Work Bank Planning

Business Director Track Renewals-Amey

Page 42: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery GroupRoute based workbank planning – scope and

objectives

• The Rail Delivery Group set up this workstream to examine how industry costs could be used by encouraging Network Rail, TOCs, FOCs and the supply chain to work more closely together in order to achieve

Clear visibility of planning process, providing smoothing of resource, through intelligent grouping of works – not just as a one off exercise

An understanding of planned work and the appropriate time for the work

Recognise the costs / risks of very peaked demand (smoother and predictable workbank)

Identify the blockers and subsequently the levers for improvement

Recognise the impact of the control periods and prevent this being a blocker to more efficient working

Page 43: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery GroupRoute based workbank planning – scope and

objectives

• Further benefits from the workbank planning workstream are expected to be

Ensuring that work delivered is fit for purpose, with pragmatic specifications

Reducing overall access time (and costs) by delivering some of the maintenance and inspection work when appropriate – e.g. maintenance tamping and CEFA inspections

Recognise the railway as a “system”

Reducing industry costs and keeping the railway open

Producing a model that can be used nationally to optimise the workbank in terms of cost and resource demand

Page 44: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Route based workbank planning – model project

• North and West Route Improvements (Shrewsbury to Chester)• Track renewals for track condition (remove jointed track / old fastenings) +

S&C + S&T

• Cefn Viaduct waterproofing

• Currently developing “piggyback” and scope optimisation options:

• Additional civils

• Examinations (e.g. CEFA could use the time to carry out inspection limiting access demand)

• Maintenance (could use the time to deliver some of their work e.g. maintenance tamping)

• Earthworks

• Changing complete rail lengths / optimising performance

Page 45: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Route Based workbank planning – next steps

• Sample is from a narrow baseline, but still has useful data

• Findings have been extended to reflect Territory Work Group Route category (Primary, secondary etc) Ramp up of savings impact

• Next steps are to extend the sample base by reviewing Combined study with access planning workstream Sample study of two- track section of northern WCML Project – GN / GE possible Track resource review – potentially Switches and Crossings

Page 46: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Cost of Contingency

8 November 2012

2nd Industry Forum

Jeremy Candfield

APSCM workstream

Director General, RIA

Page 47: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

The Issue

• Much anecdotal evidence, plus Network Rail’s benchmarking work, suggests that contingency allowances are greater in rail than in other industries

• And that this is substantially to minimise the risk of “possession over-run” – when engineering works take longer than scheduled

• Most such works are undertaken by contractors, members of the Railway Industry Association (RIA)

• The RDG’s APSCM working group set up a workstream to identify how the industry could work together to reduce the cost of contingency

• The APSCM working group asked RIA to conduct a survey on the Cost of Contingency

Page 48: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

The survey

• The survey was undertaken in August 2012 to seek to quantify the excess cost that could be involved

• 25 responses were received, spread across all main asset groups and turnover bands

• RIA analysed and anonymised the data

Page 49: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Key Findings

• Rail-specific contingency measures absorb additional people, plant, possessions and materials

• Contractual reasons predominate, but reputational risk is also a major issue

• Rail-specific contingency measures are applied to 63% of railway projects, and used in 49%

• Accounting for 11% of GRIP6 costs on those projects

• Allowing one-hour overruns would avoid 15% of the cost, two hours 23%

Page 50: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Comments Raised

• “Possession work is over-resourced because the possibility of overrun is too great a risk to take.”

• “The current possession regime requires significant lost time.”

• “Need to factor-in client change or poor project definition planning.”

• “The explosive and bitter recrimination many of us have had when a possession does overrun for whatever reason!”

• “Where scope definition or programme information is limited we would add up to 20%.”

• “Contingency is usually factored in to cover for poor planning in either the specification or the tender.”

Page 51: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Next Steps

• Further analysis There may be scope to capture differences between rail and non-

rail contingency more fully The survey undertaken was of contractors only, so excludes

contingency taken by the infrastructure manager – contingency on contingency

Although analysis costed impacts on labour, plant and materials, we have not yet properly quantified or costed the impact on possessions. Each of these would be expected to increase the cost estimate

RIA is considering another survey on behalf of RDG We have yet to address how to balance overruns against service

interruptions

• The Cost of Contingency workstream is bringing together operators, suppliers and Network Rail to identify further opportunities

Page 52: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Network Optimisation

8 November 2012

2nd Industry Forum

Nigel Jones

Leader, Network Optimisation workstream

Planning & Strategy Director, DB Schenker

Page 53: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

53

Background• Even in an expanding railway there are points and connections that

are rarely or never used. These are expensive to maintain and renew

• However, relatively little network rationalisation has occurred in recent years other than as part of a renewal or enhancement scheme

• On average 77 Switch & Crossing (S&C) units have been abandoned each year over Control Period 4 (CP4) – initial CP5 work suggested an abandonment rate of 64-69 S&C units pa

• Reasons for this include:

Difficulty in making a positive business case for stand-alone schemes

Perceived difficulty of securing operator agreement via the Network Change process

Perceived impact of standards on “What is possible”

Page 54: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

5454

What is Network Optimisation?

A RDG initiative where TOCs, FOCs and Network Rail are working together to eliminate a significant proportion of the unused, underused and problematic S&C units from the 23,276 point ends on the rail network, and replace them with plain line.

Why?• Avoid future capital expenditure and renewal costs• Reduce maintenance costs• Improve performance and reliability• Improve staff safety

Issues• Up-front capital costs• Savings generally realised in later Control Periods• Would there be a reduction in operational flexibility – or would this

be perception rather than reality?

Page 55: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

55

Method and Progress • Work has focused on Wessex and Sussex routes

• A combination of: High level analysis Cross-industry workshops focusing on discrete network

segments to review current & future use and identify redundancy

• Development of a national business case based on averages, sampling and overseas experiences

• Using ORBIS criticality data to inform workshops. A revised Network Rail standard, known as ERORA, is

currently on trial, allowing a risk-based and cost effective approach to removal

Page 56: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Benefits from the initiative

• The long-life nature of S&C assets makes the initiative worthwhile

• Without ERORA, “Do nothing” is more attractive until after year 16

• With ERORA, the proposal becomes positive after year 7

• A midpoint between these would see a break even after year 11

-150

-100

-50

0

50

100

150

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Cu

mu

lati

ve N

PV

(£m

)

ERORA

Without ERORA

Midpoint

Page 57: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Major Projects

8 November 2012

2nd Industry Forum

Tim O’Toole

Chairman, APSCM Working Group

Chief Executive, First Group

Page 58: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Major projects

• The APSCM working group believes that there could be significant benefits from a cross-industry approach to major projects

• The group needs to understand the incentives that will encourage earlier and closer engagement between operators, suppliers and infrastructure provider. This could lead to more efficient scoping, specification and implementation

• The working group will look at past, present and future major projects to identify how the outputs from these projects could be delivered for a lower cost

Page 59: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

APSCM conclusions

8 November 2012

2nd Industry Forum

Tim O’Toole

Chairman, APSCM Working Group

Chief Executive, First Group

Page 60: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

APSCM conclusions

• The APSCM working group has been a truly cross-industry effort to identify efficiencies from new ways of working together. The group has been putting values to the potential efficiencies by assessing the impact nationwide of a range of case studies

• There needs to be care to avoid double-counting savings between workstreams or between the working group and Network Rail’s own work for the Strategic Business Plan

• Work to date, excluding major projects where work is just beginning, suggests a range of savings of

Between £100m and £300m in 2018/19

Between £430m and £1130m across CP5

Page 61: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

The work of the Rail Delivery Group

8 November 2012

2nd Industry Forum

Page 62: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Formalising the Rail Delivery Group

8 November 2012

2nd Industry Forum

Graham Smith

Secretary, Rail Delivery Group

Page 63: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

Formalisation• The Rail Delivery Group has operated on a voluntary basis for 18 months.

To enable the RDG to fulfil its leadership role and to maintain involvement at a time of commercial and political change the RDG, with support from Government, decided to

Formalise the Group as a company limited by guarantee

Support the introduction of a licence condition requiring participation in the RDG

Establish a better defined relationship with, and give guidance to, cross-industry groups such as Planning Oversight Group, National Task Force and Technical Strategy Leadership Group

Develop relationships with other industry bodies such as RSSB

Enhance its communications with the industry, funders and other stakeholders

• The ORR consulted on the proposal to formalise RDG during the summer

Page 64: Rail Delivery Group Rail Delivery Group 2 nd Industry Forum 8 November 2012 2 nd Industry Forum.

Rail Delivery Group

ORR consultation and conclusions• The ORR made a number of points in its conclusions document

regarding structure and membership of the leadership group, communication and transparency of RDG and the rights of those who would fall into the licensed and associate membership groups

• The ORR stated that

The leadership group is likely to be more effective as a relatively small body (comprising those who have the biggest influence to drive change across the industry)

There are sufficient safeguards in place to ensure that the interests of operators, funders, suppliers, employees and others not directly represented on the board will be protected

RDG Members will actively seek the views and involvement of those bodies to whom the specific matter being considered is directly relevant

ORR is content to support the formalisation of RDG through the incorporation of a new membership condition into the licences of Network Rail and passenger and freight train operators that operate over the mainline network

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Rail Delivery Group

Membership• There will be three membership categories

Leadership Group Members

Licensed members

Associate members

• Leadership Group Members are

Network Rail and

Owning groups involved in passenger or rail freight operations and whose membership will be determined by the level of UK rail turnover and leadership of their group

• Licensed members are all passenger and freight train operators operating on Network Rail’s infrastructure

• Associate members will be bodies that are likely to be able to make a material contribution to the achievement of the RDG’s objects

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Rail Delivery Group

Communication

• The RDG recognises that it can only be fully effective with the support and engagement of its customers, employees, suppliers and other stakeholders

• The RDG has to be transparent about its activities and to communicate with licensed members, associate members, funders and other industry stakeholders whilst recognising that that there are some issues of commercial confidentiality

• Formal communications activity will include continuing to produce a summary of its proceedings to post on the RDG’s website producing an electronic written report on progress every six months that will be

posted on its website publishing an annual report describing its achievements in the previous year and

laying out its plans for the coming year and continuing to hold an annual forum

• But this only part of the RDG’s communications activity

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Rail Delivery Group

Communication

• RDG will build on the existing involvement of the wider industry in the initiatives being pursued by the subject-specific working groups

• RDG will seek the views of licensed and associate members on particular topics. This may involve asking members for information and evidence to help RDG understand a particular issue or testing potential solutions in discussion with individual members or their representative bodies

• RDG will meet licensed and associate members either directly or through their trade associations or representative bodies

• This will allow the RDG to understand members’ views on the various initiatives being pursued by the RDG and will be an opportunity to brief members on progress

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Rail Delivery Group

Formalising the Rail Delivery Group

8 November 2012

2nd Industry Forum

Graham Smith

Secretary, Rail Delivery Group

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Rail Delivery Group

Concluding remarks

8 December 2012

Industry Forum

David Higgins

Deputy Chairman, Rail Delivery Group

Chief Executive, Network Rail


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