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Network Rail alliance model hailed, but concern over new project unit

Network Rail is holding talks with contractors to ensure it addresses concerns about its new investment projects business unit, due to launch in April.

The rail body is seeking the views of contractors through groups such as the Railway Industry Association, which represents top contractors including Balfour Beatty Rail, Costain and Laing O’Rourke.

The new business unit will be able to bid for work, some of which will be open to competing bids, initially on trial projects until 2014.

Network Rail’s investment projects director Simon Kirby told CN that if the market allows, the move could lead to greater use of joint ventures and consolidation among contractors and consultants as they bid against the rail body on ‘cradle-to-grave’ packages.

One contractor source said: “I’m struggling to see how they will maintain a wall between the client and bid team and we’re still not entirely sure how it will work.

“Will it mean less transparency of the work coming out, whereby we don’t even hear about some work because it’s just getting done by Network Rail?”

Mr Kirby acknowledged there was concern among contractors, who were already asking whether they would be “a supplier, partner and competitor to Network Rail” in future. He said the rail body would strive to prove the new unit is completely independent.

RIA director Graham Coombs said: “The general feeling is that this is a good thing and that there will be more opportunities for greater involvement for contractors and the concerns aren’t too great once it is sensibly implemented.”

Mr Coombs added that project supply chains were already changing to meet the new focus on alliances and co-operation.

He said the London Bridge station scheme, where Costain, Balfour Beatty and Invensys are engaged in the redevelopment design two years before the start of construction work, was a positive move that should be replicated on other projects.

EC Harris’s head of rail, Mark Prior, said the big challenge for Network Rail was to prove it was providing value to taxpayers.

“National Rail has not been able to benchmark costs in the way that the water sector, for example, has a high visibility around performance. They have to get transparency around their own performance so they become a truly contestable organisation.”

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