Private sector could run almost one-quarter of infrastructure work
Network Rail is to ask the private sector to bid to take control of up to £400m of infrastructure projects each year, it revealed as it launched its new infrastructure projects business this week.
The strategy will see the UK rail infrastructure organisation, which has a pipeline of £2bn of capital investment each year, allow bidders to compete with Network Rail Infrastructure Projects to control and deliver up to 20% of the work from 2014.
In addition Network Rail is to shortly embark on a series of pilots of the new system with a package of smaller schemes, including bridge construction and platform extensions, in Kent.
Simon Kirby, managing director of Network Rail Infrastructure Projects, said bidders, which could include consortiums of contractors and consultants, would need to be willing to take on the entire risk for delivery of projects.
“We think between 10-20% of the programme will be competed on the open market. This is not just about programme management, we need people to take on the full risk of delivery,” he said.
Kirby said Network Rail was envisaging that only lower risk projects will be procured in this way.
The move is designed to ensure Network Rail’s infrastructure business can compete with commercial operators. It is part of a package of reforms of Network Rail introduced by chief executive David Higgins since joining the firm last year, designed to reduce the cost of capital work by up to 10-20%.
These reforms include adopting a more collaborative approach to procurement, which Kirby said his business will continue to drive, resulting in “fewer suppliers but deeper relationships.”
The Infrastructure Projects business will also bid for consultancy work overseas, although Kirby said he was not expecting it to build infrastructure in other countries.