Carne welcomes recommendations for greater third party involvement
NETWORK RAIL chief executive Mark Carne says the company is ‘open for business’, and has welcomed the recommendations of Professor Peter Hansford’s review into contestability in the rail market.
In December 2016 Professor Hansford was commissioned by Mr Carne to carry out the review, which makes 12 recommendations in the areas of value for money, broadening third party investment, enabling third party projects and oversight arrangements. Mr Carne says NR is ‘committing to changing our behaviours and approaches so that a range of organisations can come forward with alternative solutions and new ways of working’.
Among the changes to be implemented include publication of a pipeline of opportunities for activities to be directly competed, a trial of a new approach to third parties and asset protection on Anglia Route later this year ahead of a full rollout in 2018, and introduction of incentives to encourage industry challenge of standards.
The publication of a pipeline of opportunities by devolved Route businesses will take place by the end of the year, initially focusing on smaller projects such as new stations, depots and car parks. Linked to this are a series of changes so that ‘contractors will have much greater confidence in what they will get from Network Rail’, aimed at addressing the perception that NR is ‘difficult to work with’. A particular barrier identified is asset protection, and NR says its new approach will involve provision of a project sponsor who is a single point of contact for third parties.
NR is also promising changes to its internal structures. Business development directors will be appointed for Routes by the autumn, and a new Head of Asset Protection role will be created in each Route, beginning with Anglia as part of the trial mentioned above. Overseeing this change will be a national director of asset protection. NR’s chief financial officer (CFO) is to take overall responsibility for a governance and reporting framework to support and monitor third party involvement on the network, supported by a comprehensive reporting system from Route finance teams.
In addition to a pipeline of NR funded projects, NR also intends to publish a regular pipeline of potential projects at a national level. Where it is established that third party development is the best way forward, NR says it will not compete for these projects itself. The company also intends to encourage suppliers to challenge standards, with incentives to do so to be introduced in 2018 following a pilot focusing specifically on ‘reviewing, updating and challenging [NR’s] electrification standards’ (see associated correspondence in ‘Forum’, this month). From 2018 an annual list of industry-inspired changes to standards will be published, along with the benefit generated.
NR has highlighted the deal with Resonate to provide integrated Traffic Management on the Great Western main line (p30, last month) as an example of the innovative approach to financing. Under the deal, Resonate will bear the risk of introducing the new TM technology, with it then sharing with NR the savings yielded from a reduction in delay minutes.
Although many of the recommendations in the Hansford review are directed at NR, some will require government involvement. The review has recommended government ensures it gives ‘due consideration to contestability in its business case methodology’ and publishes appraisal guidelines to assist third parties in realising the financial benefits associated with infrastructure projects. It has also called for the establishment of an early development fund with clear criteria to assist in the creation of high-quality investment proposals.
Other recommendations will require government involvement alongside NR, including the creation of clear, transparent principles and processes covering contestability at each investment decision stage, the forward view of investment opportunities, and the identification of pathfinder projects to demonstrate the removal of barriers and the benefits from alternative funding and delivery models. The review also calls for establishment of effective oversight arrangements, involving NR, Department for Transport and Office of Rail and Road input as necessary; it says this should be built into existing NR governance structures, perhaps via a sub-committee of NR’s board.