Lowest cost focus upsets rail firms

One major civils contractor told CJ that it was finding itself increasingly torn between Egan principles and cost drive-downs by Network Rail, which include a renewed commitment to reverse or Dutch auctions following its use on a series of welding contracts (CJ 15 October).

Contractors may feel they have little choice but to move away from the rail market as the security of future workloads becomes ever more unsure following Network Rail's decision (CJ 29 October) to bring all maintenance contracts in-house to help reach its 20% cost reduction target by 2005. Network Rail had denied this would happen for months.

"The cost focus is getting worse. Do we move on from working with Network Rail or go against our group's move away from competitive tendering and stick with it?" asked the source.

A spokesman for Network Rail said: "We totally refute the suggestion. The quality and safety standards are specified in all contracts, and part of the pre-qualification process."

Concerns over a growing lowest cost culture at Network Rail have been fuelled by media reports suggesting that the rail operator is currently reviewing its procurement strategy for frameworks worth £1bn in structures work across seven zones.

Earlier this month, Network Rail's head of procurement Les Mosco left the company by "mutual agreement", casting doubts as to how Network Rail will forge ahead with its supply chain.

A Network Rail spokesman told CJ that the rail operator was in the advanced stages of finding a replacement for Mosco but that there would be changes to how the supply department would be run.

The current situation has prompted Constructing Excellence, the merger between Construction Best Practice and Rethinking Construction, to create an infrastructure working group to look into areas such as rail and roads.