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Alliance wanted for £1bn rail upgrade

Network Rail is seeking contractors to deliver a £1 billion upgrade of the Edinburgh-to-Glasgow rail link under a radical procurement and delivery system first used by oil giant BP.

The rail operator is planning to use the Edinburgh Glasgow Improvement Programme to trial a model where contractors will form a partnership with designers and the client to deliver all station civils, electrification, signalling and track improvements under one ‘alliance board’.

The contractors in the alliance would each have representatives on the board, which in turn would report to an overall project director who could be chosen from any of the partners.

Each member will share the risk and reward on the entire project, based on pre-agreed caps to try to encourage innovation to get work completed on time and under budget.

Network Rail programme director Ian Ballentine told Construction News: “This alliance allows us to work with life partners for the EGIP where, rather than a contract on an individual basis, we get one target cost across the programme of works for the entire delivery team.

“This is our first major trial of this type of supply chain model and we will look at whether it works before using it again, but we are hugely excited about the supply chain being encouraged to innovate and find solutions under an alliance model.”

He added: “This means the supply chain has to work together, so if one contractor is falling behind or over budget the alliance works out how it can support that part of the works so everyone is working together towards delivering on the total project cost.”

The alliance model is one of seven to be trialled across £6 billion of upcoming Network Rail contracts. Others include outsourcing and working with delivery partners.

The move follows the recent suggestion from Sir Roy McNulty that contractors could be used as delivery partners in rail projects and that there should be a greater role for integrated project teams in future procurement.

Network Rail has been researching procurement methods used both nationally and internationally and used its research to deliver a procure-ment overhaul which fed into Sir Roy’s recent rail review.

The EGIP alliance has been modelled on BP’s Andrew oilfield exploration in the 1990s, which was delivered by an alliance of BP and seven contractors with financial rewards tied to the final cost of the project.

The total cost will be continually re-evaluated and if savings are made they will be distributed among the alliance based on their share of cost risk in the project.

Network Rail has identified seven schemes where it will involve contractors, engineers and designers at an earlier stage in a bid to improve innovation and reduce costs.

Among the schemes is work on the £800m upgrade for London Bridge; national major re-signalling projects and the £600m Birmingham Gateway project, where Mace has been employed as a delivery partner.

Network Rail chiefs see early contractor involvement through alliances, delivery partners and early engagement as a vital way of delivering future projects greater in value than £50m.

Mr Ballentine said he had received the backing of both chief executive David Higgins and chairman Rick Haythornthwaite for the procurement overhaul, internally dubbed ‘Project Open Book’.

Mr Ballentine said: “We have selected the projects where we want to use alliance models and early contractor involvement, and we have already shown which projects will be alliance-based.

“We are already at a stage where the supply chain is asking us to change existing contracts to become more alliance orientated, but it takes a huge amount of focus and changes to the way people are used to working.”

He added: “The model means the alliance partners can’t be passive as there is a huge commercial imperative to working together and problems can’t just be passed down the supply chain.”

 

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