This is the fourth review in six years (McNulty, Bowe, Shaw and now Hansford) relating to the railway industry’s
delivery of capital investment. All have made significant recommendations, and the question I often ask is not ‘what?’ but ‘how?’.
Recognising that the reviews are to provide an overview with recommendations, the ‘how’ is slightly more challenging. The Hansford report states a lot of common sense, but ‘how?’ is the question. And this is where the frustration exists.
One of my observations of the industry that I have been part of for over 30 years is that it looks inwards more than outwards. Currently the water industry, led by OFWAT, is promoting alternative funding and procurement models. This is being grabbed by the water companies, referred to as Procurement 19. The basis of this has been the Tideway project, providing London with its new sewer that will manage the increased capacity and renewal of the existing systems.
This project uses private finance and is being delivered by a separate organisation to the water company. To be clear, alternative funding and delivery mechanisms still require the basics of good scope definition, strong client and resourced supply chain.
In the review there is reference to Network Rail costs. The alternative delivery mechanisms allow this to be tested and support NR in identifying efficiencies through bringing competition. It has long been recognised that competition drives innovation and efficiency, so all parties benefit… and ultimately the customer and the taxpayer.
One of the challenges is scale to make alternative funding work and be efficient. The report identifies HS2, Crossrail, and then mentions Formby lifts. There needs to be further work to see how you would deliver these types of programmes and projects - ‘one size does not fit all’.
A challenge for the current industry is the fact that Network Rail is not one organisation, and has multiple internal and external stakeholders that can affect delivery. In some cases there is no accountability, and this is probably one of the biggest areas where private finance has concerns.
The area that has been discussed at length over the years is Standards, and this is an area in itself that has ranging views. I do not propose to discuss Standards, but we do need to develop a ‘real’ performance-based contract and allow the market to deliver an output product with whole-life commitments. This will challenge the industry. It is something other industries embrace, and needs to be embraced if this is going to work.
With respect to NR, CP5 provided a process for enhancements where, with definition of scope and align off for GRIP 4, projects could be ‘signed off’ to an agreed budget. But this has not generally succeeded. I would question how you can get the scope definition with agreed programmes such as Great Western electrification - the scale creates an iterative development in relation to scope and geography.
However, projects such as Crossrail are being delivered to time and budget, so what do we need to do differently? The proposal for Network Rail to develop a commercial capability is welcomed - this role should report to the Route MD to have the necessary impact and ensure the role can give clear direction and guidance to external parties.
Finally, I hope the Hansford report does not follow the paths of many before, and is embraced by NR and supported by the Government, with opportunities given to the private sector, where there is significant enthusiasm to contribute to improving our railways.
When our industry takes so many years to give towns such as Ilkeston a railway station, it’s time we worked together and improved things.
The Hansford Review has some elements of revolutionary change, but it also points to the need to go with the grain of Network Rail’s capabilities and skills. The introduction of Business Development Managers into NR Routes signals the intent to embrace change and to provide a single point of accountability for third party projects. It’s certainly a positive step.
Hansford focuses on the larger schemes of £50 million and above. Many of us in the industry have an appetite to support the funding of rail projects, and to deliver them more quickly and efficiently. AECOM has worked on some of the Case Study schemes, and through funding, planning or design, is currently contributing to developing contestable projects. As the main article highlights, there is also a huge appetite at local level for smaller schemes such as new stations and capacity enhancement.
There is a real opportunity for organisations such as those in the Urban Transport Group to take schemes down a more contestable route and make them more deliverable and more affordable. It’s happening already (albeit in a piecemeal way) with projects such as Ilkeston and the Merseytravel schemes, and several Parkway stations in the Midlands over recent years. Promoters can certainly learn a lot by building on each of these project’s challenges and successes, instead of treating them as isolated successes. One response to Hansford must be around momentum - creating a wave of progress in contestability that builds across each project, sharing the lessons of what has worked and what must improve.
The Pathfinder Projects of all sizes are already there, and labelling them ‘Hansford Pilot’ can only serve to fast-track them more effectively and create that momentum. Hansford’s call to remove barriers to third party investment is a key part of his report - schemes need confidence in delivery and costs if they are to succeed.
If the industry is to change for the better, we have to see beyond our processes and focus on the key risks: clearly understanding the existing assets; separating upgrades from latent defects rather than building them in and increasing costs; capacity constraints; and how the asset owner (typically a Network Rail Route) expects to operate and maintain efficiently. Smart delivery understands these risks, the necessary rail processes and where they can be challenged, because the processes are there to help manage the risks. Treating processes as an end in themselves makes successful projects more difficult. Moving the rail industry into more output-based procurement will overcome this barrier, but it needs vision, leadership and real insight.
Sir Peter Hendy regularly remarks that rail provides jobs, growth, and housing. This is so clearly true - there’s nothing better than seeing the regenerative effect of major rail investment like Birmingham Gateway or Borders Rail.
But the railway vision is also about sustainable mobility. Smaller-scale investments such as new stations get people out of cars and off our roads. This in turn reduces emissions, increases safety of the travelling public, and improves healthy outcomes for all. Hansford’s review is undoubtedly a call to many players in the industry to make rail projects of all sizes more affordable, so that we can see more of these economic and environmental benefits.
