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Rail partners needed

SMEs need more opportunities to work in the rail sector, says Mark Elliott

You can see a strong link between commercial interests and the Government requirements in successful public private partnerships.

This is noticeable across a wide range of sectors, most obviously health, education and infrastructure.

While there is support for greater private sector involvement across roads, the PPP process for rail is so complex it can discourage companies from getting involved.

But there is huge demand for an increased rail network.

The Office of Rail Regulation 2007 report into user demand predicted that 130,000 extra passengers are likely to be using railways in the south-east every day by 2014.

Freight numbers are also on the increase, with such proposed new routes as the Felixstowe to Nuneaton scheme, which bypasses London.

Regardless of the ever expanding high-speed European network (demonstrated with the launch of St Pancras International last month), demand is similarly high for a trans-European network. The price tag to go with this is estimated at over 600 billion euros.

With this increase in rail demand, the Government is looking for rail to demonstrate how it can complement the road network.

So how can the private sector, and in particular SMEs, become more involved?

Well, it is difficult. Although the Government and other public sector bodies, such as the Olympic Delivery Authority, encourage private sector competition from across the industry, there are barriers to entry.

As a result, only companies of a certain size and delivery ability can become lead suppliers. In Europe, it is also difficult for many smaller companies to seek EU funding unless they can prove a robust business heritage.

In terms of moving forward, this could be changed by adopting best-practice business models from other sectors, for example partnering agreements as seen on T5, whereby risks are shared among the principal partners.

In addition, such agreements can assist the SME market as they increase the breadth of the supply chain. On the European front, the industry could also look beyond end delivery and concentrate more on the political point of view.

As governments change, so too do their key objectives, giving more scope for new business models to help support private sector involvement.

Mark Elliott is a partner with consultancy EC Harris