"I'm now talking to people in the industry who are worried that they won't have jobs in three months' time," a senior QS says. He estimates that the uncertainty could halve the productivity of staff. "The basic stuff on the ground has stopped because everyone is spending time worrying about jobs. It's terrifying to think that an enormous industry like that could come to a halt for three-to-six months."
The QS also voices the the widespread feeling of shock at last month's events. "Stephen Byers has gone roaring in without any knowledge of the business. I thought he'd take time to get his feet under the desk."
Another consultant warns of the wholesale departure of talented Railtrack staff as a response to the appointment of Ernst & Young as administrator. "I don't think there is anyone of any quality that has not been offered a position in the industry – whether the offers are by consultants, contractors, special purpose vehicles or train operating companies." Witness the departure from Railtrack late last month of Tony Fletcher, the West Coast Main Line's general manager of operations, who left to join WS Atkins' rail division.
"A lot of good people are upset"
Fletcher's departure, in the context of Railtrack's current plight, has aroused concern about the West Coast Main Line upgrade, which is the largest rail project currently under way in the UK. Richard Clare, chairman of EC Harris, which is heavily involved in it, warns: "With all this kerfuffle, there is serious risk that minds within Railtrack will be distracted."
Other upcoming projects have also been affected. Major infrastructure enhancements between London and Brighton and in the Wessex and Thames region, worth a combined total of £1.3bn, are on hold until future plans for Railtrack are clarified.
And while contractors publicly keep to their business as usual line, a senior Railtrack source says there are jitters among the big rail players, including Jarvis, Amec, Balfour Beatty and Carillion. "They are all a bit nervous and worried about their workloads, which is completely natural." He adds that the government's decision to pull the plug on Railtrack could undermine the strengthening relationship between the infrastructure company and its contractors. "When Railtrack first started, the contracts were terrible," he says. "Slowly we have worked together and created a better partnership – now this has put that all back. There are a lot of good people on both sides that are upset."
One contractor expresses his frustration that the government has yet to consult external firms on the future direction of the rail industry. "All the talk so far has been about discussions with the train operating companies, which is like asking haulage firms about the future of the road network," he complains. "They need to talk to contractors and engineers about the infrastructure. There's been no contact yet, but we have a lot of opinions on what's wrong with the infrastructure and how it can be put right."
The need for consultation is backed by the Association of Consulting Engineers. "One of the reasons the rail crisis had got so bad was that engineering was neglected," says an ACE spokesperson. "Railtrack was beginning to address that by appointing engineers to its board, but this now needs to be at the top of the government's agenda."
Everyone is worrying about jobs. It’s terrifying to think the industry could come to halt for three-to-six months
Senior rail QS
There have been some crumbs of comfort since last month's debacle. For instance, suppliers were given immediate assurances on payment. "That's certainly been dealt with well," says Robert Kendall, finance director at Jarvis. "Everyone has made sure that payment has been sorted out – it's been a pretty seamless transition from day one [of the administration]." The ACE has also received an assurance from administrator Ernst & Young that consultants working on feasibility studies and proposals will be paid.
And the industry has even been offered a potential olive branch by Byers, who said last week that contractors could become members of the new, not-for-profit Railtrack. But contractors have been cagey in their response to the offer. Amey, Jarvis and Carillion all said they needed more clarification on issues of concern – such as the conflict of interest that could arise if a company was a member of a contract-awarding client body – before making a decision.
Carillion communications director John Denning says: "We would be glad to consider any opportunity to contribute constructively to the future of the railways. We would need to know more about it before deciding it's an opportunity we would want to pursue." But construction analyst Alastair Stewart, of Credit Lyonnais Securities, reckons Byers' move is a positive sign. "It could be a more effective way of getting maintenance on the network done quicker, which would be an improvement," he says.
Lessons learned
Byers has confirmed that future megaprojects, such as the East Coast Main Line, will be procured through public–private partnerships. However there is a debate in progress over the type of PPP that will be used. James Stewart, chief executive of Partnerships UK, a body set up by the Treasury to facilitate PPPs, called last week for "bright ideas" from contractors about what form they may take. For their part, contractors believe that this could be an opportunity to learn from mistakes made on the West Coast Main Line, where the budget started at £2.3bn and could finish somewhere around £8bn. "It's an opportunity to make sure these projects can be structured effectively," says Jarvis' Kendall.
Another potential benefit is that the train operating companies may be spending more on infrastructure. One contractor, which is involved in upgrading networks run by South West Trains and Great North Eastern Railways, anticipates that these programmes could speed up. For instance, South West Trains plans to spend £360m on station improvements.
"The TOCs are treating Railtrack as an absentee landlord," says the contractor. "Before, they had to go through complicated procedures with Railtrack on their improvement plans – now they are getting on with them on their own."
Despite these bits of good news, an air of depression surrounds the sector. One concerned consultant sums up the current feeling among suppliers. "Right now, we are hanging on and waiting to see what the new regime is. But if there is not the commitment there from the government, people will be walking away."
