Good infrastructure is not only important for those who want to travel, it’s vital if the UK wants to be globally competitive, says Mark Loader

The value-for-money challenge facing the nation’s rail industry has been brought into sharp focus this month. The recent McNulty report’s findings have been a
long-awaited indicator of changes needed to ensure the industry’s interests are aligned and cost efficiencies remain at the heart of delivery. And on 1 September, Network Rail held a conference outlining progress on project DIME (a restructure of its investment projects division). This will introduce a new approach to project development and delivery within the industry - focusing on increased collaboration and improved value for money.

The ability of the UK to compete at a European and global level is to a large extent defined by its ability to provide an effective passage of information and produce. In order to maintain cost effectiveness a change is needed in terms of delivery and maintenance. The question is how to make this change happen.
McNulty’s report outlined that the government had an important role to play. Delivering more flexible, longer-term rail franchises, aligned incentives for infrastructure and train operators and backing the modernisation of outdated working practices is crucial to overcoming strategic structural barriers to efficiency.

Unfortunately, the fragmentation of the railway has served to create a culture of risk avoidance that stifles innovation and avoids creative challenge. There are positive examples of successful collaboration achieving benefits for railway customers, but the scale of these achievements has been modest compared with the size of the network and the opportunities potentially available.

The ability of the UK to compete at a European and global level is to a large extent defined by its ability to provide an effective passage of information and produce

The more tangible delivery outlined by McNulty, highlighting the potential for train operating companies to become more involved in infrastructure works, would facilitate the evaluation of fare increases against customer improvements. It will be a challenge for operators to transform themselves into project delivery organisations, but it is essential if the efficiencies outlined by McNulty are to be achieved.

The long term and commercially driven nature of future franchise arrangements, combined with station and track responsibility, should generate up-front investment opportunities, funded through an ongoing repayment scheme. Paying for the asset as it is used would enforce better management of rail fare prices to benefit customers proportionally.

The short-term benefit of reducing efficiency barriers would be to create an environment of industry collaboration between train operating companies and other industry partners, such as the external supply chain. Based on clear government guidance and alignment of objectives, not only would this encourage industry players to price in costs for uncertainty in the short term but may also serve to offset much of this uncertainty at the outset.

In the longer term, the benefits to the rail industry would be to reduce uncertainty and increase confidence in investment.

While there is a way to go before full implementation of Network Rail’s new structure in April next year, it is clear that they are moving towards a more collaborative contracting model. The elimination of man-marking and the engagement with industry and external supply chain earlier in project development will ensure construction maintenance works are considered when key design decisions are made.

The new approach, under a newly-formed autonomous company within Network Rail , will provide an excellent platform for achieving the levels of efficiency improvement recognised as needed by Network Rail, the McNulty report and most importantly by the travelling public who need reassurance that their fare increases are necessary and provide value for money.

Mark Loader is managing director of infrastructure delivery at Mace