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Rail is the place to be but supply chain must meet challenges

As the sun sets on 2013 and we prepare to welcome 2014, it is a good time to reflect where we have been and where we are going as a rail industry.

In particular, it has never been more critical that we evaluate past performance and explore the future, especially as CP4 winds down and a new control period – CP5 – gets under way, with a substantial commitment to public investment over the next five years.

The rail industry is in a privileged position, enjoying unprecedented levels of public investment.

With privilege comes responsibility and it is incumbent on everybody in the supply chain to continue to look at ways to reduce cost and deliver value for money, as set out in this year’s Network Rail Strategy Business Plan for England and Wales.

It also recognises that “additional investment will be necessary if we are to address the remaining legacy and provide for further growth”.

Improvement vs efficiencies

So how do we balance the appropriate increases in capacity and improvements in the services provided with cost efficiencies?

If crucial outcomes for 2019 in Network Rail’s SBP for Funding and Affordability such as “whole-life optimal approach to costs and benchmarking with other railways to demonstrate relative efficiencies” are to be delivered, then it is a given that the rail industry as a whole must seek new ways of working that deliver improvements in efficiencies and value for money.

“If the rail industry is going to be at the centre of transportation and drive economic growth, it must be financially sustainable”

Network Rail has changed to provide better bottom-up focus and direct accountability at route level.

If the rail industry is going to be at the centre of transportation and drive economic growth, it must be financially sustainable.

Network Rail director of infrastructure projects Simon Kirby has announced that 65 per cent of the investment for CP5 will be committed by 2014 and 85 per cent by 2015.

The bulk of this will be procured via frameworks and alliances and even the competitive tenders will be evaluated on ‘whole-life costs’.

Supply chain challenge

This opens challenging doors for the supply chain to work with Network Rail to deliver a regulatory framework that is business friendly while maintaining standards and protecting the taxpayer’s investment in rail.

This requires an integrated and increasingly efficient supply chain encouraged by a long-term view of workloads and an appropriate share of risks, as well as commitment and visibility of work.

That will require transparency on ‘real costs’ and performance-based contractual relationships such as NEC with target costs.

Network Rail will increasingly use alliances that can improve project focus and risk management, while demanding improved resources management, training and development.

And crucially, we need a safe industry that benchmarks against the best in the world.

But one thing is clear: there are exciting opportunities ahead and there has never been a better time to be in the rail industry.

Joseph Infante is a director at Capita

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