Memorandum by Parsons Brinckerhoff Ltd.
LONDON UNDERGROUND STANDARDS EVALUATION RELATIVE
TO MANAGEMENT OF PPP
This document serves as written testimony to
the Transport Select Committee's inquiry into the London Underground
Parsons Brinckerhoff (PB) is an international,
employee-owned, professional engineering and management services
company with an annual turnover of £900 million. The firm
employs over 9,500 staff, 1,400 of which are managed from the
UK. PB's headquarters are in New York City and PB has over 150
offices worldwide. The Europe/Africa/Middle East head office for
PB is located in Godalming, Surrey.
The firm was founded in 1885 with the design
of the New York subway system. During its 116 year history, PB
has been involved with the planning, design, construction and
operation of transit systems throughout the world including current
assignments in London, Dublin, Washington, Boston, Chicago, Los
Angeles, Seattle, New York, Cairo, Delhi, Bangkok and Hong Kong.
Many of PB's transit professionals began their careers working
for transit authorities in engineering, operations or administrative
roles. These individuals have the ability to utilise their hands-on
transit experience in assisting PB transit clients in resolving
the issues and concerns they face in these challenging times.
PB has worked on numerous LUL assignments, including
the following recent projects; the Power PFI, the Jubilee Line
Extension, tunnel and public area ventilation and the Central
and Northern Line modernisation. PB is also involved in supporting
One Arup as the technical engineer for implementation of the PPP.
In June 2001 Robert Kiley, in his then position
as Chairman of London Transport, requested PB to support the ongoing
negotiations with the private sector bidders for the PPP contracts.
PB's role focused on evaluating how the PPP Infraco contracts
could be managed by LUL and culminated in the issue of an LUL
Standards Report dated 14 July 2001 (attachment A) that responded
to the following question,
"Is the current LUL Standards Regime adequate
to control the standards of workmanship and safety related activities
of the Infracos under the anticipated PPP contracts?"
This question was deemed critical in London
Transport's evaluation of the PPP arrangement since the public
interest and standards of workmanship are to be protected by the
PPP Infracos adherence to the LUL Standards Regime.
PB mobilised 16 staff with varying specialist
disciplines and previous experience over a period of approximately
1 month with the majority of the input focused on the issue of
the LUL Standards Regime.
The two representatives who will be providing
testimony to the Transport Select Committee are Tony Mustard and
Jerome Forman. Tony Mustard leads PB's Railway Division for the
Europe/Africa/Middle East region, which includes the UK. Tony
has over 30 years experience in transportation projects including
metro projects in London, Hong Kong, Taipei, Bangkok, Kuala Lumpur
and others. Jerome Forman is a PB Vice President based in New
York. He provided a transit operational perspective to the analysis.
Jerome has over 33 years experience and most notably up until
1996 he served as Senior Vice President of Capital Program Management
for the New York City Transit system.
LUL STANDARDS APPRAISAL
PB reviewed a sample of the 1204 standards relating
to Engineering (Rolling Stock, Track, Civil Engineering Structures,
Lifts and Escalators, Mechanical and Electrical Systems, Station
Systems, Communications and Signalling), 113 related Procedures,
Manuals and Guidance Notes together with the 11 standards relating
to safety. It should be noted that the study was to determine
the effectiveness of the standards as a management tool to control
workmanship not specifically a study to determine if the standards
were effective in controlling safety of the system.
The specific methods of appraisal were:
A desk-top study of a limited selection
of specific standards;
Group discussion with relevant principal
LUL staff responsible for standards, concessions maintenance and
Individual discussions with relevant
principal Shadow Infraco staff responsible for compliance with
standards and concessions (Infraco BCV and JNP);
Following preparation of a draft
report, comments received from the LUL Chief Engineer's Directorate
and Transport for London were evaluated and incorporated, as appropriate
in the Final Report.
The present structure and composition of LUL
standards, together with the varying ages of the assets has resulted
in some assets not complying with the latest industry standards
and non-compliance existing throughout the system. The use (or
non use) of current standards is determined and implemented by
staff from the original LUL organisation who are familiar with
the standards, the inadequacies and the working methods which
are based, to some degree, on trust.
Going forward into the private sector controlled
PPP, 71 per cent of the existing standards have been designated
as mandatory and are under the control of LUL. The remaining 29
per cent will be under the control of the PPP Infraco contractors.
A concession and non-compliance process is proposed, and is currently
being tested, which will allow the Infraco to apply for an exemption
from the mandatory standards and also to continue work (which
is not in accordance with the standards) on the system for a period
of seven days under a temporary non-compliance arrangement.
LUL recognise that the current standards are
inappropriate and too prescriptive for the PPP environment and
initiated a programme several years previously to update the standards
in anticipation of the PPP. However, funding constraints have
frustrated the effort and a three year programme to provide the
needed comprehensive update has only recently begun.
LUL have been running the Shadow PPP since September
1999 with a high degree of co-operation between LUL and the Shadow
Infracos. It has been PB's experience, and a working assumption
during this study that, upon award of the actual PPP contracts
to the private sector, the working relationship between LUL and
the Infracos would inevitably become more contractual.
PB's Standards Report highlighted specific concerns
The current Standards Regime not
being an appropriate tool to manage the standards of workmanship
in a performance based contract and there are risks in trying
to accomplish an update of the standards after award of the PPP
The potential for contractual abuse
of the concession and non-compliance process
The three Infracos being under no
obligation to co-operate with each other resulting in LUL having
three different sets of standards controlling working methods;
The degree of self-regulation by
the Infracos entailed in the use of the non-mandatory standards
and work carried out during the periods of non-compliance.
Overall, PB concluded that the LUL Standards
Regime, in their form as of July 2001, were inappropriate and
inadequate to serve as an effective management control mechanism
to protect the public interest in performance based PPP contracts
with privately owned Infracos. There was a major concern that
after the award of the PPP contracts to the private sector, the
working relationships between LUL and the Infracos will inevitably
become more controversial and LUL could be subject to uncontrolled
In order to move forward PB recommended that:
The standards update process should
be implemented on an accelerated basis. The process to be completed
in a period of the order of 18 months;
A top-level suite of standards be
provided appropriate to LUL's needs to control the standards of
workmanship and associated safety of the PPP contracts;
The whole issue of non-compliance
should be reviewed to ensure that the concessions process is not
open to abuse;
A single authority be set up for
all standards led by LUL, but including Infracos and third parties,
to maintain consistency of standards across the system;
PPP contracts should contain Owner
Variation and Directive rights to permit LUL to change standards
when warranted by the public interest.
17 October 2001