ceca rail forum 12 december 2017 - ceca.co.uk · 12.12.2017 · ceca rail forum 12 december 2017....

CECA Rail Forum

12 December 2017

Moving Britain Ahead

The Government perspective –Strategy and investment

December 17Presentation Title (edit this in Insert > Header and Footer, then click 'Apply to All') 2

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1. The Government’s strategy for rail

2. The SoFA – Funding rail infrastructure

3. A new approach to major investments

An important underpinning is our support for a

strong and effective supply chain


December 17

The Strategic perspective

Throughout 2017, the Government has provided further clarity on its strategic approach:

The Government set out its Strategic Vision for

Rail in November 2017:

A more reliable railway: HLOS, NR transformation, a

more joined up approach to track and train, support for

considerable Government investment focussed on

improving reliability, Digital railway

An expanding network, including building a new

generation of high capacity railways (including HS2 and

East-West Rail)

A better deal for passengers: including smart ticketing,

improving compensation and redress

A modern workforce: industrial relations, skills and

training

A productive and innovative sector: a more innovative

and sustainable railway, increasing exports and overseas

investment

Part of the Government’s wider strategic approach

to transport, infrastructure and the economy. This

includes:

Transport Investment Strategy

Industrial Strategy

National Infrastructure and Construction Pipeline

Global Britain Strategy – as UK exists the European

Union

Transport Investment Efficiency Strategy


December 17

The Statement of Funds AvailableFunding Rail Infrastructure: 2019 – 24

Government published the SoFA on 12 October. The Government is making available a direct grant of up £34.7bn to support

rail infrastructure spending of around £47.9bn in Control Period 6. This demonstrates Government’s continued commitment

to funding the railway that passengers and freight customers deserve, and that the economy and supply chain needs.

While final allocations are for the ORR to confirm,

we have assumed provision for:

Significantly increased renewals spending to put the

infrastructure on a more sustainable long-term footing and

support the supply chain

Increased maintenance spending: reflecting that despite

generally good progress on maintenance efficiency, the

challenges of a larger, busier and older network will require

an increase in funding for CP6

Completion of committed enhancements that now

span CP5/ CP6: subject to ongoing consideration of

business cases

Development funding: this will help get new

enhancement projects off the ground, recognising the need

to promote innovation and tackle emerging challenges

Funding for Freight and Accessibility: continuing to

provide explicit support for these key areas

In setting our HLOS and SoFA, we have listened

to the supply chain and to end-users. This has

driven our focus on getting the basics right; taking

forward reform, recovering performance and

continuing to protect safety, while positioning

ourselves to respond to the challenges of growth

Efficiency: Our SoFA assumes NR will make year on year

efficiency savings across CP6. Progress on renewals

efficiency, in particular, must improve. We need co-

ordinated action across industry and the supply chain

to help achieve this

Delivery: Problems delivering CP5 enhancements have

harmed the reputation of the industry. We’ve learned

lessons from CP5 and taken steps to improve our systems,

but we need co-ordinated action on delivery

Planning for the future: We have not used the HLOS or

SoFA to commit to new enhancement projects. We want to

work with industry to develop these through a new pipeline

process (next slide)


A new approach to major investments

Government

specifies strategic

objectives

Develop Design DeliverCommitment to

Develop

Commitment to

Design

Commitment to

Deliver

A key change for CP6 is the way we will deal with enhancements.

We will build a pipeline of enhancements, progressing the through 3 stages- Develop, Design, Deliver- and

only making commitments to schemes to reach the next stage of the pipeline.

This will help us form the Rail Upgrade Plan: which we will update annually and will take on board new criteria

for investment, which we will develop with our stakeholders, to ensure that we invest in schemes that will have

the greatest impact in improving our railways for everyone.

Across all aspects of rail spending – particularly renewals and enhancements, we are committed

to supporting a strong, effective supply chain – providing meaningful certainty. We will also

continue to work closely with the supply chain – important that it plays a full role in supporting

efficiency and effective delivery

The Hansford Review

Unlocking rail investment –

building confidence,

reducing costs

Professor Peter Hansford, FREng FICE FAPM

University College London

Overview

• Independent review of contestability• Builds on transformation already underway in Network Rail• Aimed at enabling better value infrastructure projects• Focused on creating confidence for wider investment in rail

infrastructure

Third party investment landscape (Figure 2)

Removing barriers (chapter 3)

• Lack of ownership for contestability• Lack of visibility of a pipeline of third party projects• Network Rail roles and behaviours• Inappropriate risk transfer• Standards and scope control• Asset protection agreements• Complexity of business cases and funding agreements

Increasing contestability (Figure 5)

Delivering more value for money (chapter 6)

Recommendation 1: Alternative delivery models

Network Rail to develop and embed processes and specialist commercial

capability consistently within the routes to establish and execute a range of

alternative design and delivery options for infrastructure projects.

Recommendation 2: Efficiency gains

Network Rail to demonstrate its commitment to creating a more

contestable market and evaluate resulting gains.

Broadening third party investment (chapter 7)

Recommendation 3: Contestability decision process

Network Rail in conjunction with government to develop clear, transparent

principles and processes for considering contestability at each investment

decision stage.

Recommendation 4: Appraisal methodology

Government to ensure that it gives due consideration to contestability in its

business case methodology, and to publish appraisal guidelines to assist

third parties to realise financial benefits associated with rail infrastructure

projects.

Recommendation 5: Early development fund

Government to establish an early development fund with clear criteria to assist in the creation of high quality investment proposals.

Broadening third party investment (chapter 7)

Recommendation 6: Forward view of investment opportunities

Network Rail in conjunction with government to create and maintain a

forward view of the scale of third party investment opportunities, giving

visibility and confidence to the market.

Recommendation 7: Pathfinder projects

Network Rail in conjunction with government to identify a range of

pathfinder projects to demonstrate the removal of barriers and the benefits

from alternative funding and delivery models.

Enabling third party projects (chapter 8)

Recommendation 8: Roles and accountabilities

Network Rail to define roles and accountabilities, build capability and

provide support to the routes for engaging with third party investors

(funders and deliverers); and to define the respective accountabilities of the

routes and Network Rail Infrastructure Projects directorate.

Recommendation 9: Culture and behaviours

Embed within Network Rail’s transformation programme the behavioural

changes required to create a welcoming, predictable and trusting

environment, providing more cost and risk certainty.

Enabling third party projects (chapter 8)

Recommendation 10: Terms of engagement

Network Rail to convert its Code of Practice into a Service Level Agreement,

refreshing its template agreements, asset protection agreements and

guidelines reflecting a more balanced risk transfer, in consultation with

industry.

Recommendation 11: Challenge of scope and standards

Create a transparent process to enable and facilitate third party challenge

of scope and standards application during project development, fixing them

before funding commitments are made.

Oversight arrangements (chapter 9)

Recommendation 12: Oversight

Establish effective oversight arrangements to provide strategic direction

for a more contestable rail infrastructure market, building on existing

Network Rail governance structures and involving government as

appropriate.

Conclusions - 1

Appetite in private sector to invest in rail infrastructure, but difficult to deal with monopoly owner

Need to: • reduce complexity• provide clear process and pathway• build confidence with investors

Contestability of part reduces cost of whole

Conclusions - 2

One of the five foundations of productivity in the new Industrial Strategy, Building a Britain fit for the future is a major upgrade to the UK’s infrastructure

This needs significant private investment, alongside public

Achieving this requires:• unlocking investment• building confidence • reducing costs

The Hansford Review

Unlocking rail investment –

building confidence,

reducing costs

Professor Peter Hansford, FREng FICE FAPM

University College London

www.thehansfordreview.co.uk

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East West Railway

New Delivery Models –East West Rail

5-Apr-17

Chris Nicholson

12th December 2017

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East West Railway

The OxCam Corridor

5-Apr-17

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2

/

East West Railway

5-Apr-17

Context

• National Infrastructure Commission highlighted potential for

substantial growth by 2050 as UK's Silicon Valley.

• Main constraints are lack of housing leading to high prices in

key growth areas and poor connectivity East West

• Target up to 1million new homes by 2050 more than doubling

current rate of housebuilding.

• Proposed doubling in size of Milton Keynes, a new city between

Bicester and Bletchley (Western Section) and a large town

between Bedford and Cambridge.

• A new garden town west of Cambridge, major development in

Bedford and along Marston Vale Line.

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East West Railway

• Successive reviews e.g. Bowe and Hansford have highlighted

need for greater contestability to Network Rail in delivering rail

infrastructure projects in order to drive greater innovation and

cost savings across the industry.

• Secretary of State keen to promote this alongside exploring

potential benefits of greater integration of train operations and

infrastructure and attracting private finance and funding into

the rail sector.

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4

New Delivery Models In Rail

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East West Railway 2

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Current Route Status

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East West Railway

Western Section

• Currently being delivered by Alliance of Network Rail, Atkins,

Laing O’Rourke and VolkerRail.

• Planned entry into service by end 2022.

• Limited scope for new delivery model without significant

timescale slippage.

• Scope to provide contestability in sponsorship and

subsequently in maintenance and operation of infrastructure.

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East West Railway

Central Section - Route Options

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East West Railway

Route Options

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Central Section Hi Low

Length KMs 53 41

Cut Volume Millions M3 11.2 1.2

Fill Volume Millions M3 6.5 1.6

Order of Magnitude £3.5 bn £2.0 bn

/

East West Railway

5-Apr-17

Exploring Design, Build, Finance, Maintain (DBFM)

Potential benefits.

• Private sector innovation and efficiencies

• Challenge to gold plating of technical standards by

Network Rail

• Greater cost and time certainty

• Helps develop contestability in rail sector

Delivery Models – DBFM Potential benefits

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/

East West Railway

5-Apr-17

• achieving innovation from private sector within constraints of

Development Consent Order (DCO) process

• likely higher cost of private finance

• lack of familiarity of private finance with UK heavy rail market

• possible reluctance of civils contractors to offer fixed price

contracts

• lack of private sector rail maintenance capability

• interfaces with Network Rail

Delivery Models – DBFM Challenges

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/

East West Railway

Delivery Models - DBFOM

Exploring Design, Build, Finance, Operate, Maintain (DBFOM)

Potential benefits

• single customer focus

• opportunity to integrate infrastructure and operations (e.g. digital railway)

• incentive to drive customer usage through high quality customer

experience

Challenges

• will transfer of demand risk be feasible/desirable

• debt providers willingness to take demand risk

• interfaces with rest of network

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/

East West Railway

5-Apr-17

Clear evidence from e.g. work for TfL that land value uplift from

infrastructure projects can exceed cost of infrastructure

Challenge is how to capture

Options

• Development Corporations

• S106/Strategic Infrastructure levy (Milton Keynes tariff)

• Bespoke agreements (e.g. Battersea Power station/Northern

Line extension)

• fully privately funded railway (may work in e.g. Hong Kong with

MTR but unlikely work here

Attracting private sector funding through capture of land value uplift

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/

East West Railway

5-Apr-17

Timeline for project

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/

East West Railway

5-Apr-17

Central Section Programme

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

Detailed Design and

Construction

DCODCO Preparation

DCO

ApplicationDCO granted

Preferred

Bidder

DBFM Procurement

Financial

Close

ConstructionDetailed Design

Central

Section Open

DBFM

Route &

Alignment

Selection

Route Selection

Route selected

Alignment

Selection

Alignment selected

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Presentation to CECA Rail Forum12 December 2017Graham Cross, Executive Director

What are we planning?

• 8 miles of new railway, shown in red

• Linking HAL’s Heathrow Terminal 5 station to existing rail network near Staines and Chertsey

• Initial estimate of capital cost: c£1.2bn, planning to privately finance

• HSR would provide the infrastructure but not run the trains

• Route designed to learn the lessons of Airtrack and avoid level crossing congestion issues

• Three shortlisted route options two of which are substantially tunnelled

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The Potential Network of rail services to Heathrow and Old Oak Common enabled by HSR

37• To aid clarity, not all stations are shown

• To aid clarity, not all stations are shown

Minutes Staines Hounslow Woking Guildford Basingstoke

Heathrow Terminal 5 6 20 16 26 40

Heathrow Terminals 1/2/3 9 23 20 30 44

Old Oak Common for HS2 and Crossrail

31 34 44 58

London Paddington 36 39 49 63

Beneficiaries from HSR infrastructure:

• Airport passengers• Airport employees• Not just about the airport• Link from Surrey and Hampshire to Crossrail at Old Oak Common• Link from Surrey and Hampshire to Old Oak Common for HS2 from 2026• Paddington becomes an alternative terminal to Waterloo for Surrey and

Hampshire

Illustrative Rail Journey Times and Network Benefits

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• Modal shift from road to rail

• Eases road congestion

• Improves air quality

• Time savings on rail network journeys

• Capacity freed up into Waterloo

• Direct trains from Heathrow Airport improve trade links to Surrey / Hampshire / Middlesex

Scheme Benefits

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Frankfurt Brussels

Ending the Dead End Airport Link - Learning from Europe

Schiphol and Brussels Charles de Gaulle (Roissy)

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• Not third runway dependent

• Benefit / Cost Ratio using Department for Transport WebTag guidance is “High / Very High” with capital cost @ £1.2bn

• HSR’s income comes from the train operators who use it paying an access charge designed to cover the scheme’s capital, financing and operating costs.

• Farebox revenues arising from new rail travellers are forecast to cover a large proportion of the access charges, resulting in minimal need for government subsidy

• Government will be asked for a Usage Undertaking

Business Model

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• DfT Engagement – process for Market Led Proposals Q1 2018?

• Further development funding to be raised once government indicates what the process will be

• We are aiming to submit a Development Consent Order application in late 2018.

• 3 ½ year construction period

• We currently plan an operational date of 2025.

Next Steps

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Project Timeline

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Chair

Baroness Jo Valentine, former Chief Executive London First (2003-2016)

Executive Directors

Graham Cross, former Business Development Director, Chiltern Railways

Steven Costello, architect and transport planner

Non-Executive Directors

David Barwell, Chief Executive Cities, AECOM

Mark Bostock, former Board member, Arup

Patrick Deane, former Senior Partner TT International, and Director Deutsche Morgan Grenfell

Christopher Garnett, former Chief Executive Great North Eastern Railway

Richard Morse, Deputy Chair Bazalgette Tunnel Ltd and Chair John Laing Environmental Assets Group

John O’Brien, former Franchising Director and Director Veolia Group,

Richard Robinson, Chief Executive Civil Infrastructure EMIA, AECOM

Chris Stokes, former Deputy Director Network South East and Deputy Franchising Director

• Company founded in 2016

• Financially backed by Non-Executive Directors and AECOM

Who We Are: Heathrow Southern Railway Ltd

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45Thank you – please visit heathrowrail.com

Key Metrics

Presentation title 12 December 2017 Confidentiality level

Supplier Audit – Key Metrics

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Registered in the scheme 4315Requiring an audit 2450Suppliers audited 1847Non-compliant as no audit 603 (25%)Audits undertaken - 12 months 2016Number of Failures in the year 81Audit failure rate 4%


Audits Per Month

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Buyer Searches

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RISQS Enhancement


RISQS

The Railway Industry Supplier Qualification Scheme (RISQS) is the supplier pre-qualification service used by buyers of products and services throughout the GB rail industry.

From May 2018, significant system & process enhancements, including an easier to use new interface with more functionality, will be added to the RISQS scheme to the benefit of buyers and suppliers.

RSSB as custodian of scheme are managing business as usual activities and transitioning the scheme from a concession to a service provision contract with ‘go-live’ on schedule for May 2018.

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Scheme History

• British Rail created Link-up as an internal supplier qualification process.

• Achilles was granted the concession to deliver the Link-up scheme following privatisation

• The Industry was not happy with the attitude of the scheme and felt as if they were ignored so the governance was changed to give more say to buyers and suppliers

• In 2013 the scheme changed to RISQS and the governance changes completed with RSSB as custodian of the scheme for industry

• A contract was put in place for Achilles to continue delivery of the concession with a defined end date

• 2017 RSSB tender for service providers to deliver RISQS under industry direction and control


“At Network Rail we fully support the use of RISQS as Network Rail's single supplier

qualification system and look forward to the increased benefits the project will enable for

the future.”

Graham Hopkins

Group Director for Safety, Technical and Engineering

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Senior Stakeholder Support


Industry & Buyer Support

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“Our members regularly highlight the need to avoid the bureaucracy and red tape that

can arise with procurement in the infrastructure sector. We are very supportive of

anything that cuts duplication of effort. RISQS position covering the whole rail sector is

a great example of how we can work together to reduce wasted effort, through use of a

single system”

Alasdair Reisner, CECA Chief Executive

“Good suppliers don’t want to waste unnecessary time. RISQS cuts out the red tape

of continuous, duplicate auditing and checking by multiple buyers, because they will

only need to be assessed once by the scheme which is consistent and used by 118

different buying organisations.”

Lee Jones, Sector Director Rail and Metro, Amey Rail Ltd

Governance


▪ RISQS Committee

▪ RISQS Consultation and Working Groups

▪ Your feedback

▪ BAU Health monitoring by Scheme Manager

▪ Annual Independent Audit & Review

Scheme Governance

RISQS Committee

T&RS Buyer Group

Infrastructure Buyer Group

OTP Assurance Working Group

T&RS Assurance Working Group

Infrastructure Assurance working Group

Supplier Group

Transition


Invoicing

• From January 2018 invoices for RISQS will come from RSSB RISQS

• For:

• Annual membership renewal post 1st May 2018

• Audits taking place after 1st May 2018

• Payment requests where your annual membership renewal or audit expirydate is 1st May 2018 or later any payment request received from Achillesafter will not be for RISQS.

• If you receive any invoices for the scheme and you are unsure what to docontact the RISQS Helpdesk on 0800 4101 300 or email [email protected] forhelp

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mailto:[email protected]


Audit

• RISQS transition brings further improvement to the audit process anddelivery, from May 2018 RISQS audits will be carried out by CAPITA.

• There will be no changes to the RISQS audit requirements over thetransition period except to keep up with changes to standards andlegislation.

• From January 2018 The RISQS audit scheduling team will contact registeredsuppliers to arrange audit dates.

• Companies will be contacted to schedule audits 4 months prior to theirexpiry date.

• Audits can be undertaken up to 12 weeks prior to the expiry withoutaffecting the expiry date. If an audit is undertaken more than 12 weeks priorthe date the audit is completed becomes your new expiry date.

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Supplier Data

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All suppliers will have received an email on what to do for transition.

The email includes:

• Your log in details for the new RISQS portal

• Simple instructions on how to download a PDF of your company informationfrom the current system

• How to upload the PDF of your company information to the new portal

What to do if you have not received the email:

• Speak to one of the team here today

• Contact the helpline 0800 4101 300 or [email protected]

• Use the aide memoir cards

Make sure your information is up to date in the system and your spam filterdoes not block risqs.org

mailto:[email protected]


Product Codes

When RISQS transitions to the enhanced platform the product code structurewill change

The will change to a structure that is based on the European standard thatbreaks a railway system down to its constituent parts.

This is called the Railway Commodity Classification List or RICCL

We will map your product codes to theRICCL codes so you will not have to make areselection on transition.

The RISQS website has the RICCL detailedand there is current functionality to allowyou to search the RICCL and this can befound by following the link below

www.risqs.org/commodity-list/


Buyer & Supplier Benefits

Flexibility Configurable platform, more responsive to industry and legal changes, prompt

updates for industry requirements

Efficiency Auto population of PAS91 templates to save duplication, and the ability to

integrate with buyer systems (Bravo)

Value-add tools Auto alerts, buyer specific questioning, supplier survey templates, save all

searches including set criteria and ability to keep these as templates, built-in

workflows, Notice of EU tenders provided for free

Live supplier profiles Keeping data up to date

Increased Learning Analyse and identify data trends, and export results to MS formats

Customisable User Management to assign access and dashboard permissions per user

High-quality auditors Using the latest software providing consistency of audit

Improved Management

of audits

Through new scheduling software

Continuous

improvements

Collaborative, supportive approach to maintaining assurance

Questions?

ceca rail forum 12 december 2017 - ceca.co.uk · 12.12.2017 · ceca rail forum 12 december 2017....

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