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Contractors await rail renewals fate
10:44 02 Jun 2005
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Rail renewals contractors could know by the end of March 2006 whether or not their multi-million pound renewals contracts will be brought back in-house by Network Rail (NR).
The rail operator’s director of major projects and investment Simon Kirby told CJ that although he had no immediate plans to bring the contracts in-house, if NR began failing to meet its
five-year target of a 31% reduction in costs he would “consider different options”.
The new renewals contracts for plain line and switch and crossing installation – spread across 11 geographical areas and worth a combined value of £500m a year – have been operational for just over a year. Firms carrying out the work include First Engineering, Balfour Beatty, Carillion and Jarvis.
“Our position is to try and drive cost efficiencies with our contractors,” Kirby said. “However, we have made it quite clear to our contractors that if this plan doesn’t deliver then we will have to look at alternatives.”
It is expected that NR will drill home this message to its contractors at a supplier conference due to be held later this month.
Asked if a decision to bring the contracts in-house could come earlier than the five-year duration of the contract, Kirby said: “This second financial year is crucial and will be the test of whether our cost efficiency plan is working. We have already achieved our first year efficiency savings target of 8% on our renewals operations, although this has been a bedding-in year.”
Kirby also revealed that contractors would spend this year being put to the test, with NR now implementing a whole-life cycle programme management system called GRIP (guide to railway investment project). This allows greater interaction between the rail operator and its contractors and allows NR to monitor the quality of works prior to and after projects are signed off.
As part of this programme, NR has brought areas of design in-house so that it can now give specified designs to its contractors.
“This will allow us to know exactly what we want, how much it should cost, and what it should look like when it is finally handed back by the contractor,” added Kirby.
The rail operator’s director of major projects and investment Simon Kirby told CJ that although he had no immediate plans to bring the contracts in-house, if NR began failing to meet its
five-year target of a 31% reduction in costs he would “consider different options”.
The new renewals contracts for plain line and switch and crossing installation – spread across 11 geographical areas and worth a combined value of £500m a year – have been operational for just over a year. Firms carrying out the work include First Engineering, Balfour Beatty, Carillion and Jarvis.
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“Our position is to try and drive cost efficiencies with our contractors,” Kirby said. “However, we have made it quite clear to our contractors that if this plan doesn’t deliver then we will have to look at alternatives.”
It is expected that NR will drill home this message to its contractors at a supplier conference due to be held later this month.
Asked if a decision to bring the contracts in-house could come earlier than the five-year duration of the contract, Kirby said: “This second financial year is crucial and will be the test of whether our cost efficiency plan is working. We have already achieved our first year efficiency savings target of 8% on our renewals operations, although this has been a bedding-in year.”
Kirby also revealed that contractors would spend this year being put to the test, with NR now implementing a whole-life cycle programme management system called GRIP (guide to railway investment project). This allows greater interaction between the rail operator and its contractors and allows NR to monitor the quality of works prior to and after projects are signed off.
As part of this programme, NR has brought areas of design in-house so that it can now give specified designs to its contractors.
“This will allow us to know exactly what we want, how much it should cost, and what it should look like when it is finally handed back by the contractor,” added Kirby.
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