Paul has succinctly laid out Network Rail’s views on how to develop investment projects within Network Rail, and touched on the three key issues of economies of scale, contestability and prioritisation in the allocation of scarce resources.
Network Rail’s argument is that the difficulties inherent in these three key areas mean that only a single, nationally led management structure is capable of satisfactorily managing them. It is perhaps this line of thinking within the single National Grid structure which has led to multi-year lead times for new grid feeds onto the railway?
Stand one step back, and it seems that an argument is being advanced for a Stalinist-style centrally planned investment delivery economy. Is this what our railway really needs as we seek to encourage innovation and new sources of funding?
We should perhaps start our analysis by asking the customer what he or she thinks. If you do this a different picture emerges from the officially sanctioned one - most external parties find Network Rail extraordinarily difficult to deal with when they are seeking to develop infrastructure interventions. Part of this is down to a historical weakness within the Route structures, which Mark Carne’s reforms are now seeking to address; but partly it is poor-quality relationships between the Routes and their IP supply organisations.
Whisper it quietly, but IP has a reputation out there for being three things above all else: arrogant, late and very expensive. Network Rail will say that this is based on an out-of-date perception of its capabilities, but my contacts tell me otherwise.
In fact, there is intense frustration evident between Route teams (who carry the can with their customers and stakeholders when things run over time or budget) and their IP partners. This frustration frequently spills over into the Routes’ customers - the train operators and freight operators who have to deal with the consequences of IP problems and frequently bend over backwards to accommodate late changes to possession plans.
Now, I wouldn’t be naive enough to believe that if you devolved IP into the Route teams all these problems would disappear - of course they wouldn’t! But when I was a Regional Director for Railtrack and then Network Rail I had my own project development and delivery teams, so I had no one else to blame if things didn’t go well. It was my role to ensure that the organisation worked effectively together… my responsibility to make difficult decisions when trade-offs were required (as they always will be)… me who had the overall P&L responsibility for continuing operations and the investment programme… and me who had to front up to customers, the media and stakeholders. This single point of accountability at a level in the organisation where you are senior enough to have enough experience and understanding, yet not having such a wide-ranging portfolio that you are effectively some distance from the issues in play.
To make this work effectively you do need to have top-notch railway people in your Route Managing Director roles, otherwise the entire Route organisation will only ever be as good as its leader. I know that Mark Carne is on a journey to get to this point where all the Routes are headed by very high-calibre business leaders, but I hope that these will also be seasoned railway professionals, so that they can hit the ground running and understand the issues and dynamics they are faced with.
So my prescription for Network Rail’s next steps in investment projects would look like this:
n Ensure that sponsorship is treated with the importance it deserves, not a home for burnt-out people who have been over-promoted (I’m sure it isn’t) or junior managers posted to these roles to learn the business. Instead, jobs for railway experts with business brains and a can-do attitude. Make sure the job evaluation system recognises this, so that people of the right level of expertise and motivation are posted to become sponsors, and then train them in all the appropriate planning and evaluation techniques.
n Move from four regional IP delivery units to one per Route, and change the reporting line so that the solid line is to the RMD and a dotted line to the IP Director.
n Traditional track renewal is a production line activity and needs to be closely co-ordinated with heavy maintenance. So it should be managed and contracted out where appropriate within these units. All of them as configured today are big enough to have adequate scale to make this work properly.
n Retain national units (at least for the time being) for lumpy items such as S&C renewals and major signalling works, where resources are very scarce and expensive and whose utilisation must be carefully co-ordinated. But ensure that Routes are in the driving seat, as customers, and the centre is not granted monopoly supply status. In time this work should be migrated to become contestable within a market environment.
I have been very impressed with the calibre of managers Network Rail is developing through its graduate management training schemes - there are some extraordinarily keen and bright people coming through the ranks. We must ensure that the organisation as a whole adapts to prevent them becoming frustrated by inefficiency and poor decision-making, so that they don’t become disillusioned and eventually leave.
It’s now over five years since the first tentative steps towards devolving responsibility to routes. This article assesses what is probably the biggest non-devolved part of NR’s structure, and in considering my response, a couple of statistics stood out.
IP is stated to have 15,000 live projects on the go, with a supply chain of 3,000 companies, and takes 8,000 possessions a year to deliver its workload. These stats alone highlight the challenge of any attempt to split the organisation into geographic parts, and to maintain the economies of scale and consistency of approach currently in place when managed as one team supporting the routes. It’s easy to think of IP as only being involved in the big headline schemes - Crossrail, Thameslink, GWML - but as the 15,000 live projects shows, its reach extends much more widely and much deeper than many people think.
The article highlights the good progress that has been made to improve delivery in recent years. What stands out for me is the absolute importance of getting the relationship with the Routes right, which for me is even more important than any organisational structure changes.
The relationship needs to work well on many different levels. First and foremost, the Route has to feel like it is the customer and that IP behaves as any supplier would - responsive and focused on the customer’s needs. The relationship with the sponsor has to be first class, with a clear and unambiguous focus on requirements and deliverables. There has to be an ability to work closely with local operations and maintenance teams, both in respect of project delivery and also making sure that they, as the long-term custodians of what is being built, feel they have sufficient input and dialogue regarding the asset. It also helps if there can be some direct dialogue with the relevant TOCs and FOCs, so that they feel involved - and also to discuss any opportunities to improve access for work.
In the devolved Scotland Route we generally enjoyed excellent relationships with the non-devolved IP team across a whole range of projects. This was because IP’s leadership team fully bought into ‘route as customer’, backed up by fantastic people throughout IP’s team who took the time and trouble to build strong relationships both across the route team and with customers. As a result, the vast majority of schemes - from line re-openings through to minor works - were delivered on time and to budget, and there was very much a culture of ‘mutual assistance’ when needed on both sides. There was also healthy challenge, with the newly devolved route minor works team competing with IP for smaller schemes and sharpening prices as a result - further contestability, particularly at the smaller end of the 15,000 projects, is essential in the continuing drive to reduce industry costs.
As devolution continues, with scorecards, integrated teams, Supervisory Boards and alliances (deep and light) all changing the industry relationships, the need for IP to be fully participating in all these areas is greater than ever. This can be achieved by adopting the principles of alliancing and a strong customer/supplier relationship between Routes and their local IP teams to build on past success and drive further improvements.
