This was followed less than a year later by the Hendy Report, which re-baselined IP’s portfolio to help rectify the over-optimistic timescales and inaccurate cost estimates applied to several major projects, including the much-maligned Great Western Route Modernisation.
Hendy therefore tasked IP to better understand the cost and delivery challenges associated with projects going forward, which has led to some notable improvements in its schedule and budgetary adherence.
In 2014, IP was hitting just 62% of its entry-into-service milestones (GRIP stage 6). In 2016, that figure had climbed to 93%, giving greater certainty of delivery. Meanwhile, Chandarana reports that IP is currently delivering projects that are no longer in development to within 2.7% of budget, owing to the advances made in how IP completes its estimation and costing of projects.
This includes mitigating high levels of optimism bias, which research published by University College London in January concluded could be as much as 66% at GRIP stage 1, and which needed to be properly reflected in costings.
IP also launched an Enhancements Improvement Programme in October 2015, with seven workstreams including the creation of a new portfolio reporting system, and the insertion of final decision points at key stages of the project lifecycle to prevent commitments being made until project development is complete.
“There have been many improvements since 2015 in how we cost and plan projects,” adds Chandarana.
“We’ve now agreed with the DfT to allow for optimism bias which will resolve issues for future programmes, but it still means we have some legacy schemes that it hasn’t been applied to, such as Great Western.
“This is about de-risking rail by developing projects properly and being disciplined about when we declare price and scheme duration, because it is tempting to commit too early on those things. We also have to hold ourselves open to challenge internally, so that we can be really confident that the price we give the customer can be one we deliver at.”
Passengers and train operators will also be much happier that possession overrun delay minutes have been halved since 2014, and now contribute just 0.3% of total network delay minutes. Meanwhile, possessions lasting more than 12 hours are down 40% on CP4, and two-thirds of the 40,000 possessions IP requires each year now last less than eight hours.
Looking to the future, IP’s next challenge will be an external one - it is increasingly being opened up to contestability from the supply chain to enable its efficiency and competitiveness to be properly benchmarked.
The Hansford Review published on July 31 recommended a series of reforms within NR to enable third parties to not only fund enhancements, but also have choice over who delivers them. NR responded with commitments that will help remove those barriers, such as publishing a list of third party opportunities, introducing flexibility into railway standards, and launching a rewards scheme to share any savings achieved from innovative ideas between NR and the company or individual.
Paonessa says he welcomes these recommendations and the increased contestability it will bring IP - it will either confirm that IP is delivering projects in an optimal way, or bring better practices to the fore that will help it improve.
He explains: “It’s easy to see the things we don’t do well, but it’s very difficult to see the things that we do well, because there’s no one to compare to. I’d really like to see other people delivering the same kinds of projects as us in the same challenging environment, and we’ll either find we’re doing a good job, or other people will set the bar even higher. I think we’ve moved forward a lot in the last three years, and I can see lots of opportunities from this.”
However, Paonessa also warns that projects such as the Great Western Route Modernisation demonstrate the difficulties that a commercial organisation could face by working on the operational railway, where overruns come with financial penalties.
Suitable mechanisms have yet to be created to balance that risk, but it is one of the focuses of a report commissioned by Secretary of State for Transport Chris Grayling into the potential private delivery and operation of the East West Rail link between Oxford and Cambridge.
It is being written by NR non-executive director and East West Rail Chairman Rob Brighouse, and is expected to pave the way for the line to be delivered independently of NR. But until the report’s recommendations are known, it leaves IP almost certainly better placed (for now) to manage risk by integrating enhancements with other workstreams.
“Access can massively drive your costs, which can be quite a difficult thing for commercial organisations to deal with. It’s the same reason that Crossrail Ltd is delivering work within the portals, and we’re delivering the £2.3bn worth of working which is on network,” says Paonessa.
“There are some complex interfaces with the operational railway, and what we need to see from Rob’s report is how best to manage those. But cost-effectiveness is at the heart of all this, and we really want to be able to compare and contrast by opening up our schemes. It’s up to us to convince people that investing in the railways is a good thing, and that to have that investment delivered by IP is a good thing.”
