How time flies in the rail industry.
It was March 2014 when the then transport secretary Patrick McLoughlin fired the starting gun for CP5, and announced the government would be spending £38bn on improving the UK’s railways.
Mr McLoughlin promised “bigger and better stations”, the electrification of more than 1,350 km of track, and the biggest investment in the UK rail network since the Victorian era.
Fast-forward to 2018 and, with CP6 looming, both the nature of rail work and the companies carrying it out are changing.
Who would have expected in 2014 that Carillion, the rail giant that scooped so much CP5 work, would be no more by the next funding cycle?
The collapse of Carillion, Network Rail’s second biggest supplier, hit the rail sector more than most. The fallout has since seen the rail client take action to protect its supply chain, with retentions banned and 28-day payments mandated.
But others are now filling the gap left by Carillion, as shown by CN’s Network Rail supplier league today.
Amey has recorded significant growth in the last couple of years, now boosted further by its acquisition of Carillion’s rail contracts in February.
These contracts have made Amey Network Rail’s third biggest supplier by spend, while companies such as Colas Rail and VolkerRail have grown their shares in the market since the launch of CP5.
Others have fallen away, with a number of firms impacted by the drop-off in electrification work.
Hailed at the start of CP5 as crucial to the future of UK railways, the last four years have seen the national electrification programme hit by high-profile delays, cost overruns and cancellations.
Some big players have taken a proactive approach.
Keltbray, which had invested significantly in electrification skills, has looked at opportunities in Canada to offset the UK drop-off.
We can expect other contractors that helped deliver CP5’s electrification and enhancements to also consider their future roles.
While Network Rail will spend £48bn over CP6, only £10bn of this will go towards enhancement projects. This includes around £7bn on jobs left over from CP5, £1bn for development of new schemes and only £2bn on the construction of new projects.
Instead, work will be selected on a project-by-project basis, potentially increasing uncertainty and making it difficult for companies to plan their resources.
Some may look to clients other than Network Rail for major wins.
For those that remain, Network Rail might expect them to increase their stake in projects through public-private partnerships.
East West Rail and the Heathrow Rail links are being planned with public-private tie-ups as delivery options.
Whether there will be an appetite for contractors to get involved in these partnerships, particularly in a post-Carillion world, remains to be seen.
The rail sector doesn’t exactly have a track record of success with this approach.
Then there is the question of whether new-build construction is the most cost-effective way to improve the network. As the digital railway movement continues to grow, areas such as signalling are set to take priority.
If you look at Network Rail’s forecasting for the next three funding periods, the level of investment in signalling will take up a growing part of the organisation’s spend – more than doubling between CP6 and CP8.
As CP6 approaches, it is clear that the rail sector is on the cusp of major change. The structure of workloads, the types of project and the models of funding will soon look markedly different.
For contractors to succeed, they must be willing to adapt.