On track

The fatal Hatfield rail crash on 17 October was blamed on a "massive local failure" in the chain of accountability between Railtrack and its maintenance companies. Bizarrely, although Railtrack knew about the cracked rail, inefficiencies in its relationship with its suppliers meant it could not get repairs carried out in time. Clearly, someone at Railtrack has to take back control of the situation.

After the departure of Gerald Corbett on Friday, the man with the job of sorting out how Railtrack organises its maintenance is Les Mosco, director of the Railtrack supply chain. He is co-ordinating the frantic safety programme now being undertaken and is starting an accelerated review of Railtrack's track renewal and maintenance programme.

With three rail crashes caused by signalling or track failures in the last three years, Corbett was called to appear before a House of Commons transport select committee last month. He told the MPs that too many levels of management at Railtrack and at its contractors made the chain of accountability too complex, and proposed that it should be simplified. He then made the startling announcement that Railtrack would consider taking its maintenance, or some of the engineering and inspection, in-house. The select committee report, due out before Christmas, will call for Railtrack to do so.

This means that, although Railtrack has just named Jarvis preferred bidder for a £200m track maintenance contract, it will now freeze the rest of its work while it looks at how best to control the maintenance schedule. A big question mark now hangs over what guarantees will be required from those contractors intending to bid for work in one of the most lucrative parts of the UK construction market.

Whatever revisions Railtrack makes to the next generation of maintenance contracts, it is clear that they will be harder than ever to win. Mosco predicts a steep learning curve for Railtrack's managers, and contractors and consultants. "I don't think a lot of contractors' project management is up to handling larger contracts. Clearly there is an education and training element to all this."

How will the new system work?

Now that the messenger has been shot, Mosco is left to elaborate on the message. So what did Corbett mean when he said Railtrack would consider taking in-house maintenance currently carried out by 18 000 contractors?

Mosco evades the question. "There is a spectrum of degrees to which maintenance activity can be carried out between completely in-house, as British Rail did it, and completely outsourced," he says. "What Gerald is referring to – the balance between what we do internally what is done externally – is the debate we are having."

He goes on to say, however, that Railtrack is examining ways of simplifying its complex management structure – which suggests that external contractors will still be used in some capacity. "The line of management control goes through a large number of contractual and management interfaces. There have been discussions between Railtrack, train operating companies, infrastructure and maintenance companies and the regulators and we have broadly agreed that we would all be better served if we could somehow simplify the management structure.

"Among the things that make the picture complex and confusing is that we have a large number of contractors performing slightly different tasks on the same bit of track, each making competing demands for access. So now, for example, we might want fewer contractors in place. Fewer types of contract; more comprehensive contracts."

Mosco sees his job as smoothing out the clashes in the supply chain. "Some of the multiplicity of contractors is inevitable due to the very different nature of the work out there. The skills to repair fencing and cut back vegetation are very different from signalling maintenance. Could one contractor do all that? Probably not. But some low-grade track renewal could be incorporated into maintenance contracts in some areas."

I don’t think a lot of contractors’ project management is up to handling larger contracts

Mosco's emergence at the front line, after only four months at Railtrack, is no accident. His appointment in July to the newly created position of director of supply chain was part of a major overhaul of Railtrack's £2.7bn procurement budget. Mosco, who has 26 years experience at US oil explorer Amerada Hess, British Coal and the Scottish Office, has a remit to modernise Railtrack's supply chain management, logistics and project delivery. So far, contractors seem to welcome the objectivity and the expertise he brings from outside the industry. "He is a breath of fresh air. He is going out of his way to learn how the industry is structured, the dynamics of it. He is very experienced in supply chain management," said one.

However, it remains to be seen how effective Mosco will be. He is clearly full of energy, but vague about Railtrack's precise plan of action – no doubt as a result of corporate paranoia after the Hatfield tragedy. Installation of procurement best practice in Railtrack is hampered by an onerous regulatory regime that often exerts conflicting pressures. Rail regulator Tom Winsor has demanded that Railtrack invest £15bn in rail infrastructure between 2001 and 2006 while shaving 3.1% a year off its total cost base.

Meanwhile, the Shadow Strategic Rail Authority is impatient for Railtrack to get on with a programme of main line enhancement to cater for the government's targeted passenger growth of 50% over the next 10 years. SRA is also reviewing Railtrack's performance and growth targets and the impact these have on efficiency and safety.

In January 2001, the SRA will publish its plan for increasing the rail network's capacity and performance. And in 2001 Winsor's new financial regime will come into force.

Getting more for less

To achieve the ambitious cost savings demanded by the regulator, Railtrack has already recognised that it needs the help of its contractors and suppliers. With this in mind, it changed its maintenance regime a year ago from fixed annual lump sum contracts to a partnering, open-book contract called IMC 2000 supported by improved reporting systems. However, the Hatfield derailment proves that these reporting systems are either flawed or are not being adhered to. In this light the new contracts may be revised further still, says Mosco: "We are talking about an alliance form of contract, where we form much closer teams with joint decision making, shared cost and performance targets, 'gain and pain' share."

While Mosco acknowledges that Railtrack needs to improve its management efficiency, he warns that contractors will need to do the same. Railtrack is already relaying 250 km of worn track in the next six months, and will go on to renew 2000 km over the next five years, as well as progressing major infrastructure projects such as the Channel Tunnel Rail Link and the West Coast Main Line. Last year, Railtrack set out a £27bn 10 year programme of infrastructure-related expenditure, comprising £6.4bn for maintenance, £10bn to renew the existing network and a further £10.7bn for enhancing capacity and capability.

Mosco will be able to set out the post-Hatfield challenges for its maintenance contractors more clearly when the results of the Health and Safety Executive's report into the crash are published. However he warns that, to deliver the work under the regulator's financing rules while meeting stringent performance and safety targets, Railtrack can only afford to work with contractors who can come up with innovative and cost-effective solutions.

This is another reason it may partner with a reduced number of contractors, to allow them to generate the profits from a greater volume that they can reinvest in R&D and high-tech machinery. "We would hope they would become more efficient in their own right, able to share efficiencies with us as well as making sensible profits in their own right. We would also encourage them to seek efficiencies through technology. There has been insufficient R&D in the industry."