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Preview of the Year – Rail

Rail is a sector that has shone in recent years, but with clients such as Network Rail looking for stronger relationships with fewer contractors, 2014 will be a crucial year for those looking to secure long-term workloads as its next spending period gets under way.

Network Rail has been going full steam ahead for some time to recruit contractors for control period 5, which runs from 2014 to 2019.

The Office of Rail Regulation said in October 2013 that Network Rail could have £5.2bn for maintenance, £12.8bn for enhancements and £12.1bn for renewals.

“Some of Network Rail’s current main contractors will lose their roles and instead reshape themselves as subcontractors”

Network Rail has until 7 February 2014 to respond in detail to the settlement and decide whether to accept, reject or appeal it through the Competition Commission if it cannot reach agreement with the regulator.

It published a draft delivery plan for the industry covering the funding period in December and will issue the final version on 31 March 2014.

Busy 2014

Even though the final settlement has yet to be signed off, Network Rail has been keen to get moving: by April it will have let 65 per cent of the work for CP5 and there is plenty of work being tendered or awarded this year (see box).

Network Rail plans to put a total of 87 per cent of its work through frameworks and alliances, with just 13 per cent competitively tendered.

This will mean some of Network Rail’s current main contractors will lose their roles and instead reshape themselves as subcontractors, or decide to cut back on their UK rail work.

Beyond Network Rail

Network Rail is certainly the largest UK rail client, but it is not the only source of work for contractors.

All eyes will be fixed on the progress of High Speed 2 this year. The controversial scheme suffered plenty of public backlash in 2013, and political posturing left observers uncertain as to which politicians supported the scheme and which didn’t.

“Crossrail starts 2014 at the peak of its civil engineering work but will make the transition to station fit-out and systems work as the year continues”

Prominent Conservative backbenchers including Cheryl Gillan will continue to protect their constituents’ interests, but in the Labour Party division over the scheme seems to extend to the front bench – shadow chancellor Ed Balls in particular.

New HS2 chairman Sir David Higgins will report around Easter on how the timescale can be brought forward and the costs reduced. He has said he will promote early contractor involvement.

In April, Network Rail’s new chief executive Mark Carne will take over from Sir David, who will become HS2’s chairman full time in March.

Crossrail nears homes straight

Crossrail will tender its last main contractor deals this year for the Woolwich station box and portal fit-out and the Old Oak Common depot. Crossrail starts 2014 at the peak of its civil engineering work but will make the transition to station fit-out and systems work as the year continues.

“There hasn’t been this level of investment in these disciplines for quite some time, so the industry is bracing itself for a skills shortage”

Duncan Symonds, WSP

With these volumes of work, rail professionals will be in demand this year. Network Rail hopes that by procuring its work early and doing most of it through long-term deals such as frameworks, it will be easier for contractors to find and train the people they need.

WSP UK head of infrastructure at consultant Duncan Symonds says: “There hasn’t been this level of investment in these disciplines for quite some time, so the industry is bracing itself for a skills shortage.”

But he says collaboration with foreign contractors and consultants, creation of offshore hubs similar to WSP’s design centres in India and Sweden, and development of existing staff and new entrants will help to tackle the problem.

HS2 is expected to publish its own skills report within the next month, while Crossrail will continue to work towards creating a skills legacy for other major infrastructure schemes such as the Thames Tideway Tunnel.

Rail contracts expected in 2014

Q1 2014  Anticipated award date for £2bn Network Rail National Electrification Framework, £400m switch and crossing track framework, £550m plain line track framework and £5.2bn regional frameworks.

Q1 2014 Anticipated award date for £277m Network Rail Western and Wales building, structures and geotechnical renewals work; £700m London North Western and East Midlands programme including property, earthworks and structures; more than £1bn of multi-disciplinary route-based frameworks in the South.

Apr 2014 London Underground set to award its £25m to £50m sub-surface railway power upgrade package 5.

Spring 2014 £50m to £100m Crossrail Woolwich box and portal fit-out work to be shortlisted; an award will be made in October. Winner of £1bn combined new Crossrail depot at Old Oak Common, rolling stock and maintenance deal to be picked from Hitachi, Bombardier and CAF.

Jul to Sep 2014 Network Rail to tender £70m East Coast Mainline level crossing closure programme framework.

Oct to Dec 2014 Network Rail to award £275m-worth of projects for Waterloo’s major redevelopment.

 

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