Select Committee on Transport Written Evidence


Memorandum by Jarvis Rail (FOR 110)

THE FUTURE OF THE RAILWAYS

INTRODUCTION

  1.  The UK rail industry is socially and economically vital as described in the SRA's recently published "Case for Rail". However, since the Hatfield derailment in 2000, the cost of the Network has risen to an extent which threatens to become unaffordable.

  2.  This cost escalation is partially the consequence of a historic level of under investment, which has resulted in a backlog of asset renewals and rising maintenance costs. It appears, at the time of writing, that the outcome of the interim review will be to fund a level of renewal which will only be able to address this backlog very slowly with a consequent detrimental effect on asset condition. This will require very careful management if it is not to translate into additional safety risk.

  3.  However it seems that some opportunities to apply new and best practice to address the backlog are not being fully recognised in the interim review.

  4.  I will address three key questions by using track renewals as an illustration.

    —  Why do renewal volumes need to rise?

    —  Why have unit costs risen?

    —  How can costs be controlled to deliver more?

WHY DO RENEWAL VOLUMES NEED TO RISE?

  5.  The volume of plain line track renewal has risen by about 40% since 1999-2000. This is however appropriate and arguably inadequate in view of the renewals backlog illustrated in Figure 1. This is taken from Network Rail's March 2003 Business Plan in which they stated that, in a network of 20,000 miles, a 4,000 mile backlog of track renewals had developed over the previous 12 years.


  6.  In their June Business Plan Update Network Rail proposed a level of track renewals which, although a reduction on their March proposals, would have had a very significant beneficial effect. However in the process of the interim review these volumes have now been reduced in Network Rail's September Cost Submission to the Rail Regulator. The reduction is illustrated in Figure 2 which compares the volumes of composite kilometres (Rail + Sleepers+ Ballast) of plain line track renewal and Switch and Crossing (S&C) unit renewals with the level in 2002-03 as a datum.


  7.  Figure 2 shows that plain line Track Renewal volumes will fall to 74% of 2002-03 levels before rising to 150% of this level in 2007-08. Although this latter figure sounds a large increase it compares to 186% rise proposed in June which was itself below the level required to address the backlog.

  8.  The effect of these reductions is detailed in Network Rail's September cost submission, which contains a forecast (Figure 3) of the impact on Key Performance Indictors of meeting the combined aspirations of the SRA and ORR. In effect the track renewals backlog will not be addressed and resources will be diverted to primary routes.



  9.  Examining Figure 3 shows the predicted consequences are that in 10 years' time:

    —  The incidence of Broken Rails will not have improved.

    —  There will be significantly more Track Geometry Faults (L2s), these are the precursors to potential derailments.

    —  There will still be in excess of 500 Temporary Speed Restriction (TSRs) on the network.

    —  The Asset Stewardship Index, which we estimate was approximately 1.3 in 1994, will have worsened by 21% (to 1.21) compared to today.

    —  However, counter intuitively but presumably due to the diversion of resources to intensively used routes, Passenger Performance Measure (PPM) and Delay Minutes are predicted to improve.

  10.  Addressing this backlog would have the effect, not only of placing the network on a stable footing improving reliability, but also in the longer term reducing maintenance costs. Not addressing the backlog is predicted to result in a deterioration in some of the key measures of asset risk as shown in Figure 3.

  11.  The increase in expenditure required to eliminate this backlog is questioned, by the Rail Regulator in particular, not just on the basis of necessity but also on the question of whether it can be delivered efficiently in view of the rise in the cost of renewals in recent years.

WHY HAVE UNIT COSTS RISEN?

  12.  Track Renewal unit costs have risen in recent years for a number of reasons including:

    —  Rapid, unpredicted rise in volumes.

    —  Frequent change of plans resulting in abortive cost and inefficient working.

    —  Lack of long-term forecast.

    —  Reduced Possession opportunities.

  13.  Network Rail quite correctly intends to reduce the unit cost and have targeted a 20% reduction by 2006. They are fully supported, in this objective, by the rail contracting industry.

HOW CAN COSTS BE CONTROLLED TO DELIVER MORE?

  14.  I list here some practical and deliverable proposals which do not appear to have always been fully captured in the interim review debate.

  15.  Providing a stable plan would allow efficient planning and delivery. This is not currently been achieved due to the uncertainty around the ORR interim review. Even now jobs planned for next year are being cancelled due to the 30% reduction in volumes now envisaged for next year.

  16.  A reliable forecast of volumes would allow the supply chain to plan and invest in plant and staff. This is not currently being achieved, partially due to the interim review process. Although there will be increased certainty at the end of the interim review process it may be on the basis of a low forecast volume.

  17.  There could have been more engagement with the supply chain to establish what might be possible rather than assume continuing supply chain constraints as appears to be the case.

  18.  Increased Possession opportunities. The SRA's Specification of Network Outputs (NOS) paper and Network Rail's emerging possession strategy are very helpful here in that they offer longer possession times and thus allow more efficient use of resources.

  19.  One particular opportunity which should be grasped is the potential on those rural and secondary routes which will be reduced in priority in the NOS to recover some of the "lost" renewals volumes at no more cost by undertaking renewals in longer possessions during the working week. (Renewals have historically being mostly undertaken at weekends resulting in higher staff costs and under-utilised capital plant.)

  20.  Track Renewals have historically been specified on the basis of the minimum length of "poor" condition track whatever that might be. There has not tended to be much consideration in the past of the yardage that can be delivered per possession. Some (but not all) of the Regulator's Consultants have been critical of the recent practice of ordering longer jobs where the additional length can be delivered at the marginal cost of the materials with the resources that are needed for the minimum length that is justifiable purely on condition. This latter approach has to be the most economic in the long term and we should not consider investment in a national asset solely on the basis of least initial cost.

  21.  Network Rail has not yet firmly identified all of their 20% efficiency target but remains committed to its delivery. Already Jarvis have demonstrated how that target can be achieved by the introduction of innovative new plant and techniques. The company have developed in-house three entirely new British built track renewal machines.

    (a)  "Slinger" to remove and install track a train length at a time, rather than 20m at a time as was the previous practice with cranes. This means sleepers can be installed at a rate of 500m per hour.

    (b)  "Mole" to excavate the ballast beneath the track more quickly and to a better quality finish replacing up to six excavators on a typical job.

    (c)  "Clipper" to mechanise the removal and replacement of the clips which hold the rail to the sleepers.

  22.  "Clipper" is still in the final stages of development but "Mole" and "Slinger" are already proving their worth and delivering real savings on real jobs. For example, on a recent 1,600 yard track relaying project which was planned to deliver 400 yards a weekend over four weekend possessions it was possible to deliver the same work in two weekends using "Mole" and "Slinger". Not only did this release the resource from two possessions to be used elsewhere but it reduced the cost of the works by 20%.

CONCLUSION

  23.  The recent cost escalation can be reversed. Network Rail and the contracting industry are determined to achieve this reversal. There are, as yet unrealised, potential efficiencies to be gained.

  24.  Network Rail's targeted cost saving of 20% can be delivered whilst releasing resources to assist in addressing the backlog.

  25.  Addressing this backlog would have the effect, not only of placing the network on a stable footing improving reliability, but also in the longer term reducing maintenance costs.

  26.  This then leaves the question of whether funding will be available to address the backlog. The answer appears to be that it will be addressed at a rate which it is forecast will result in a deterioration of the key asset safety measures.

  27.  This forecast deterioration will require very careful management if it is not to translate into additional safety risk.

October 2003


 
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