INTRO: The dire state of Railtrack’s finances has delayed many ambitious proposals for investment in network expansion, reports Chris Jackson
THE SACKING on August 1 of Railtrack’s Chief Operating Officer Jonson Cox reflects the state of turmoil within Britain’s rail infrastructure company. Newly-appointed Chairman John Robinson told shareholders at the Annual General Meeting on July 24 that it had been ’an appalling year for Railtrack, and its going to be a year before we get back to the sort of levels [of performance] that people were used to.’ But he warned that even that was ’not good enough ... we have to step up our game considerably.’
Many of the grand plans for expansion and upgrading of Britain’s national rail network have been put on hold, as Railtrack has been floundering since the high-speed derailment at Hatfield in October 2000. This cruelly exposed the inadequacies of the post-privatisation structure, where Railtrack is reliant on contractors for all maintenance and renewal work, and on rafts of consultants for much of the basic knowledge about the state of its own assets.
Since his appointment as Rail Regulator in April 1999, Tom Winsor has been increasingly critical of Railtrack’s stewardship of the network. His criticism, combined with the near-collapse of inter-city services during the gauge corner cracking crisis (RG 12.00 p809) has reduced Railtrack’s credibility and its ability to raise finance for major projects. Just before the start of the company’s second five-year regulatory Control Period (CP2) on April 1, Railtrack was forced to turn to the government for an emergency injection of £1·5bn.
Under the terms of the agreement announced by Deputy Prime Minister and former Secretary of State for Transport John Prescott on April 2 (RG 5.01 p295), Railtrack has been released from many of its investment commitments. It will now concentrate on overcoming the growing backlog of routine maintenance. But whereas the cost of this work was forecast to fall by 20% thanks to competitive tendering and private sector economies, it has actually been rising by 30%. This is attributed to multiple players’ profit margins, the inefficiencies of the fragmented structure post-privatisation (right), and more intensive use of the network - there are more than 1700 extra trains a day compared to five years ago.
The government’s 10-year transport plan, launched in July 2000, envisaged investment of £63bn in the rail network, boosting passenger-km by 50% and freight tonne-km by 80%. Of the total investment, £29bn would come from the taxpayer, with the private sector contributing the rest.
Railtrack’s collapsing share price has curtailed its ability to borrow, and much of the public contribution has now been earmarked to fill the growing gap between the Regulator’s expectations in CP2 and the rapidly increasing cost of routine maintenance (RG 8.01 p491). As a result, the Strategic Rail Authority was forced to delay publication of its Strategic Plan, outlining a few key issues in its Strategic Agenda in March. The final plan is expected to appear in November, although Transport Secretary Stephen Byers wants to see input from the new SRA Chairman, now being recruited to replace Sir Alastair Morton whose contract expires next March.
Maintenance strategy
Railtrack set out its obligations and commitments to ’operate, maintain, renew and develop the network’ in the first part of its 2001 Network Management Statement, which was published on May 31, and later condemned by Winsor as ’profoundly unsatisfactory’. Railtrack’s three central themes are the need to rebuild its credibility; to strengthen ’delivery capability’; and to work with train operators, customers and funders ’to sustain and improve network outputs on a route-by-route basis’.
Increased levels of maintenance and renewals will be required to meet the outputs agreed with the Regulator for CP2. To achieve this, Railtrack plans ’a major upgrade to our engineering skills base and capabilities and closer adherence to documented asset management policies’.
General policy will be to renew assets to a standard which will meet forecast traffic and performance requirements for at least 10 years ahead. The quality of asset information will be enhanced by ’new automated inspection and measurement technologies’ and maintenance and renewal contract revisions.
A major review of maintenance and renewal processes should see Railtrack taking ’a more proactive role’ in asset inspection, monitoring contractors and ’determining what should be done and when’. The company is therefore ’rebuilding’ its front-line engineering skills base.
Seven years after it was created, Railtrack says it is ’in the process of a complete overhaul of the supply-chain arrangements inherited at that time’. ’Common themes’ include longer-term partnerships with a smaller number of suppliers. A major review of operational timetable and possession planning processes, systems architecture and organisational structure is also under way.
Legacy projects in trouble
Under the April 2 agreement, responsibility for most major network enhancements will pass to the SRA. ’Special Purpose Vehicle’ joint ventures will be formed to finance and build major projects, combining the train operators with investment companies, civil engineering contractors and project management consultancies (p591).
Railtrack has been left with responsibility for five schemes, which were described in the NMS as ’legacy projects’. These are the West Coast Route Modernisation, Thameslink 2000, Phase 1 of the East Coast Main Line upgrade, Channel Tunnel Rail Link Section 1, and a package of works to boost speeds and accommodate tilting trains on the Virgin CrossCountry network.
Railtrack claims the legacy projects’ were ’conceived prior to, or immediately after, privatisation’ when ’the company agreed to undertake these works before the complete project evaluation and scope definition had been tied down in the way it would be today.’ As a result, they face ’considerable cost increases’ caused by ’increasing work scope or unsuitable technology being applied to the original specification.’
For example, the cost of WCRM has increased from £2·1bn in 1995 to over £6·3bn, despite several cutbacks including the abandonment of plans for autotransformer feeding and moving-block ETCS Level 3 signalling. Phase 1 of the programme (to be completed by June 2002) is now said to be around 60% complete, but contracts have yet to be placed for three major resignalling schemes.
By contrast, CTRL Section 1 is on budget and on time for completion in October 2003 (p625). According to Railtrack, ECML Phase 1 was ’some £80m above expectation’, due in part to difficulties with the Leeds area remodelling. The CrossCountry programme is now estimated to cost ’around £168m’ and is scheduled for completion in ’winter 2003’, although work has not started on several major elements.
SRA steps in
Railtrack has effectively abandoned the Thameslink 2000 project to upgrade the north-south cross-London suburban corridor, to which it committed £500m in exchange for a reduction in historic debt at flotation in May 1996. When powers were sought for the scheme in November 1991, it was budgeted at £620m in 2000-01 prices. The cost is now said to exceed £1·7bn.
Thameslink 2000 is now to be taken forward by a joint venture of SRA and Transport for London, alongside two other cross-London corridors: the east-west CrossRail and northeast-southwest Hackney - Wimbledon line. Further development studies were commissioned in June, and it seems unlikely that anything will be completed before 2008. CrossRail would follow by 2011, and Hackney - Wimbledon by 2015.
SRA has also taken over responsibility for future phases of the East Coast Main Line upgrade, and plans to set up an SPV to take forward the various projects proposed for phases 2 to 4. Led by SRA, this will include a project management company, the future InterCity East Coast franchisee, Railtrack and external investors. Although over £50m has already been spent on planning the project, Byers’ announcement on July 18 postponing the franchise replacement (p591) suggested that a further two years will be needed before any work can get under way.
Signal progress
On the signalling front, a substantial proportion of Railtrack’s resources is being targeted on installation of the Train Protection & Warning System, which must be fitted at around 11000 signals by December 31 2003. First costed at £33m, the lineside equipment alone is now priced at ’over £500m’.
Alstom Signal is developing ETCS Level 2 cab-signalling to allow 225 km/h operation on the WCML from June 2005, and the Tilt Authorisation & Speed Supervision system for Virgin’s Pendolino and Super Voyager fleets (RG 5.00 p313).
Railtrack is keen to introduce new signalling suppliers to the British market, and has contracted Ansaldo Trasporti to supply the computer-based interlocking at Stockport for the Manchester South remodelling. Unfortunately, problems with gaining safety approval mean the scheme may not be completed by the time the city is due to host the Commonwealth Games in July 2002.
Bombardier Signalling is well advanced with a prototype Ebilock CBI installation at Horsham, which is expected to go live early next year. Siemens is the preferred bidder to resignal the Glasgow Central and Birmingham Saltley areas with its Simis-W interlocking, which is now being piloted on the Dorset Coast resignalling at Bournemouth.
Complexity drives up the maintenance bill
It was widely expected at the time of privatisation that using contractors to maintain the infrastructure would cut costs by up to 30%. A very different picture was presented to the Railway Study Association by Jim Cohen, Group Managing Director of Balfour Beatty plc.
Cohen quoted one unidentified route as an example. Taking 1997 as the base year, the cost was 7% higher in 1998, 14% up in 1999, and by last year the increase over 1997 had reached 35%.
Railtrack’s RT1A contracts required both parties to take into account that the condition of assets is likely to be influenced by age, accumulated traffic and current traffic. But Cohen said there was no generally-accepted model quantifying the effect of these factors on maintenance or renewal costs. He thought the move to ’target costs’ under the IMC2000 partnership contracts now being awarded would help.
The Hatfield derailment demonstrated dramatically the consequences of poor rail management coupled with inadequate renewal rates. Cohen quoted figures for the average age of main line rail (right), demonstrating that renewal rates before Hatfield had been half what was needed to maintain stability, never mind coping with increased traffic.
Cohen believed that much of the cost increase stemmed from the complexity of the maintenance and renewal regime. Railway Safety or Railtrack had issued over 1100 standards, and these were being amended 45 times a month. Cohen said the aim should be to cut the total to ’a manageable number, say 100’, and ’keep them at the level of people with a low reading age’.
Track defect management procedures were far too complex, and the planning horizon for track renewal of 74 weeks was simply ’not realistic’. Possessions with a 6h block producing 4h of working time were unproductive. Insufficient priority was given to getting engineering trains into possessions on time. A recent count had revealed that out of 24 trains ordered, only four were on time. Seven were up to 30min late, six up to 60min late, and the rest more than 1h late.
The number of different organisations involved in supplying labour under contract for weekend work, coupled with a skills shortage that is particularly severe in the southeast, required a huge effort in terms of ’training and partnership’. Without this, workers were ’eight times more likely to be hurt as a subcontractor than as a direct employee.’
TABLE: Average age of British main line rail, in years
1996 26·0
1997 26·5
1998 27·0
1999 27·5
2000 28·3
CAPTION: Now nearing completion, the £165m ’Leeds 1st’ remodelling is one of the few projects in the East Coast Main Line upgrade to go ahead
Photo: John Sully
CAPTION: As well as conventional resignalling south of Crewe, and the installation of ETCS Level 2 and Level 1 automatic train protection, the West Coast Route Modernisation requires over 400 signals to be resited for higher speeds. The work is being undertaken by the WCRM 125 Alliance comprising GTRM, Amey, Jarvis, WS Atkins and Railtrack
Photo: Fastline
