Christian Wolmar
CHRISTIAN WOLMAR meets Network Rail Chief Executive MARK CARNE and Head of Infrastructure Projects FRANCIS PAONESSA, to discover how the company plans to improve efficiency and its management of projects
NR efficiencies.
Rail is changing. It has to. The national rail infrastructure company has had a rough few years: overspending on its investment programme; a series of highly publicised engineering overruns; widespread criticism from within the industry that earned it the nickname ‘Notwork Rail’; and declining performance of train services.
Even the organisation’s most fervent supporters must acknowledge that Control Period 5, the five-year investment programme which ends in March next year, has not been the company’s finest hour, with overspending on projects resulting in many schemes being delayed.
Chief Executive Mark Carne is determined to improve the organisation’s performance and reputation, and is keen to publicise how this will be done. He therefore invited me for a lengthy chat and to meet (separately) with Jeremy Westlake and Francis Paonessa - respectively the chief finance officer (whose comments I will discuss in my next column) and the head of infrastructure projects. This series of meetings was undoubtedly prompted by my recent columns in RAIL criticising Network Rail’s failings, but also by the company’s desire to put forward a new image.
Network Rail is easy to knock, given its size and scope. As Paonessa points out to me, NR represents a staggering 5% of all construction work in the UK, including housebuilding.
When I met him in the first week of January, he was in a confident mood. The Christmas rail engineering programme, which involved 32,000 workers on the ground, had passed off well, generating just 420 delay minutes. That is a great contrast with previous Christmases, which were marked by chaotic overruns, and prompts a little complaint from Paonessa: “Overruns last year contributed just 0.3% of overall delay minutes, yet attract levels of media coverage which are disproportionate.”
He accepts that part of this Christmas’s success was down to the fact that several schemes were postponed: “We looked at the UK supply industry as a whole and reckoned that there simply was not the capacity to do more than what we did.” Even so, he says it was the biggest Bank Holiday programme ever (although like all such claims it is difficult to prove one way or the other).
I respond by saying that I agree it can be a rough old world out there, and that the media rottweilers are frequently unnecessarily hostile to the rail industry. However, I ask, what about all those overruns and the reduction in Network Rail efficiency during CP5, in contrast to expectations from the Office of Rail and Road that the company would become more efficient?
Paonessa does not retreat from the fact that efficiency has not been NR’s strong point recently, but stresses that the major change in possession policy over the past few years has contributed greatly to the loss of efficiency. Longer possessions have become a thing of the past, he says, and provides figures: “We have seen a 40% drop in possessions of 12 hours or longer, and a 40% rise in those of eight hours or under. Indeed, the average of these is just 5½ hours, and yet, of course, we have to pay everyone for a full shift.”
While the impact of that should not be underestimated, I counter that much of the excess expenditure has actually come from projects and Network Rail’s failure to manage them. I have pointed out several times that NR does not have sufficient central resources to be able to develop and manage schemes.
One of the examples I have cited previously is that the company outsourced stages one and two of the unfortunately named GRIP (Guide to Railway Infrastructure Projects) process, which cover the definition of the output and the feasibility to outside contractors. I have long argued that if NR is unable to even define the project it needs undertaking and cannot assess its feasibility, then it is no wonder that schemes subsequently get into trouble.
Paonessa admits that actually, at the moment, only 10% of GRIP stages 1-3 are carried out in-house (three is option selection). I find this astonishing, amazing, ridiculous - actually I can’t quite find strong enough words to express it. This simple fact says everything about what is wrong with the organisation, and yet countless reports into Network Rail’s problems (Hansford, Shaw, McNulty, and so on) ignore the fact that Network Rail lacks the essential skills to carry out its core task.
It is a legacy of the early days of Railtrack, when John Edmonds was its first chief executive. He stripped the company of basic skills, which was the cause of the meltdown after the 2000 Hatfield accident. But remarkably, it has taken 20 years for the top team at Network Rail to realise that being able to develop and implement projects was its core competency.
Indeed, when I put to Paonessa and Carne
my view that this lack of in-house capability has been a fundamental mistake, rather shockingly they both agree with me.
“I accept we have to beef up our project management skills,” says Carne, while Paonessa stresses that “we are strengthening our engineering team rapidly”. Gosh, about time too, although one could ask why so little has been done in the past two decades by successive managers to remedy this basic lacuna.
The other main change at Network Rail is devolution, which goes hand in hand with the development of a department called the ‘System Operator’.
Devolution in NR started in 2011, and by 2014 the eight routes had become fully devolved businesses able to make many decisions without reference to the centre. Now the idea is to push that further, with the possibility that the routes might even commission work on schemes from other parties, rather than relying on Paonessa’s Infrastructure Projects team to commission the work.
The System Operator is there to ensure that functions that involve the whole network remain a central task. The obvious one is the timetable, which cannot be devolved to the routes, but the key change is for the System Operator to prioritise schemes. This, again astonishingly, has never been done before, but now there will be an attempt to assess all projects in terms of the benefit they bring to society as a whole, and prioritise those with the greatest impact. Instead of seeing projects in terms of input, such as electrification, Carne says: “We have to consider what is the best way to improve transport links in a particular area. In the past, they might have said ‘electrification’, but then they really meant faster trains.”
Carne and Paonessa both reckon that the other key change is to have much better preparation of schemes. They explain that Great Western electrification went wrong because NR did not properly assess what work was needed before, and just plucked a figure for the cost out of the air.
I am not entirely convinced by this, since the organisation had already started some electrification work, but it is undoubtedly part of the explanation. Again, however, I reckon it comes down to the lack of core skills within NR, which should have set up a permanent team to handle electrification rather than outsourcing the work.
To many in the industry, the promised changes by Carne and his team are long overdue. Network Rail needs to up its game, despite Paonessa’s justified satisfaction with the Christmas work.
The vast sum of nearly £48 billion allocated for rail investment in Control Period 6 was a vote of confidence by the Government in the railways. The top team at Network Rail have an unprecedented opportunity to modernise the railway, but they must respond by pushing through efficiencies and improving the organisation’s capabilities. Of course, changes to the possession regime make life more difficult, but on the other hand new technology should balance out much of the downside.
If the changes promised by Carne and his team for the next year or so do not result in a leaner and more flexible organisation, then some of them may well be looking for new jobs in 2019.