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National Supply Chain Strategy Control Period 5

May 2013

Supply Chain Strategy Network Rail Infrastructure Projects

May 2013

Contents

1. Context................................................................................................................................... 1

2. Executive Summary.............................................................................................................. 3

3. Outline.................................................................................................................................... 5

4. Expenditure ......................................................................................................................... 10

5. Priorities / Key Considerations.......................................................................................... 12

6. Contracting Strategies........................................................................................................ 14

7. Highlights of individual Regional and Programme Strategies ....................................... 18

8. Engagement Strategies ...................................................................................................... 20

9. Contacts............................................................................................................................... 24

10. Tender / Contract Schedules ............................................................................................. 26


May 2013Page 1

1. Context

■ Network Rail is responsible for the successful delivery of £4.5bn of enhancement and renewal works to live operational infrastructure every year. During CP4 we have worked with over 6,000 suppliers, using traditional and progressive forms of contract to support safe and timely delivery whilst meeting progressively challenging efficiency targets, achieving 29% in CP3 and being on course to achieve a further 23% in CP4. Since April 2009 we have generated £17.3bn of work for our supply chain.

■ CP5 will bring a number of new challenges, including the safe delivery of increased volumes,

the drive for improved performance and illustrating value for money to stakeholders from across the rail industry. As a supplier dependant business, Network Rail recognises that a key pillar to meeting the CP5 efficiency challenge and supporting a more efficient industry is improved and better integrated supply chain relations.

■ During the last 18 months, Infrastructure Projects has embarked on an overt programme to

transform supplier relationships and improve the level of engagement and collaboration. Our ambition is for this transformation to have a lasting effect throughout the supply chain, changing the dynamics across the industry.


May 2013Page 2

■ Fundamental to this change is the need to create a platform for innovation and leading edge thinking and an environment of openness and trust from which tangible improvements to the way we work are deployed. The crucible for this change was the establishment of the Commercial Directors Forum (CDF) comprising 30 key suppliers who jointly committed to;

● Co-ordinate a whole industry approach to collaborative working and encourage collaborative working to be the normal mode of operation within the industry.

● Recognise the commercial functions’ influence as a key business process contributing to industry strategic aims and objectives.

● Improve the leadership of and influence of the commercial function in the rail industry.

■ Tangible, industry changing improvements deployed under the auspices of the CDF include:

● A Fair Payment Charter that vastly improves liquidity to our second tier suppliers ● Significantly shortened payment terms from 56 to 21days ● Removal of retentions, from 3% to zero ● A more efficient approach to the use of Parent Company Guarantees ● The incorporation of a standard 5% tender weighting for Sustainability ● BS11000 certification for collaborative working ● A new performance measurement process, designed to reward positive behaviours ● The creation of a number of alliances to deliver key programmes of works ● Agreement to deploy NEC3 and other advanced collaborative contract forms ● A mature and expanding industry forum, committed to pursuing commercial innovation ● Collaboration on training & development and the identification of tomorrows talent ● Improved work bank visibility and more effective cross industry communication

■ In keeping with improved visibility and better communication of our thinking is the development and publication of our current philosophy, priorities and outline work-plans for CP5 via this National Supply Chain Strategy. This document is intended to establish a common level of understanding of what we plan to do and why, stimulate further dialogue and promote engagement across the supply chain; an engagement designed to cement a collaboration that we know will benefit the delivery of the CP5 portfolio and our industry at large.


May 2013Page 3

2. Executive Summary

■ A Better Railway for a Better Britain details the 10 key themes that are the reference points for all that we do. Beneath them sit a number of priorities and key areas of focus that will directly support the business and broader industry in meeting the challenges inherent in the 10 key themes and the delivery of the CP5 portfolio. They are;

● Safety: Pursuit of a greater contribution in the procurement process to delivering a step change in safety.

● Engagement: Driving industry change through dialogue in industry forums, joint problem

solving and the development of progressive commercial relationships that improve industry performance.

● Collaboration: Greater use of frameworks with an emphasis on corporate behaviours

and values and the introduction of progressive forms of contract from NEC through to Pure Alliance Models. Expansion in the number of collaborations certified under BS11000 and active support to our key suppliers where they are seeking similar certification.

● Performance: Progress across three elements, namely; 1. Supplier Performance:

Increased focus on industry acceptable performance metrics and their use in supporting and illustrating improved performance; 2. Asset Performance: Procuring for asset resilience and performance surety; 3. Commercial Performance: Promoting consistency and clarity of costs and efficiencies through standard approaches to cost modelling, benchmarking and measurement.

● Innovation: Rewarding innovation by supporting the development, deployment and

promulgation of new and effective techniques of delivery and commercial stewardship.

● Sustainability: Building on the 5% weighting in tender evaluations to integrate and develop sustainability dimensions into all that we do.

● Communication: Continued dialogue through forums such as the CDF, industry bodies

and professional institutions, supplier forums and account meetings.

■ In what follows, we will highlight a range of key matters including the increased volumes anticipated for CP5, our proposed range of contracting strategies and how to reconcile a national approach with a devolved (Regional) organisation. We provide an extract of key work banks, many of which we will now support with minimum committed values and identify key stakeholders within Infrastructure Projects who will influence the refinement and deployment of our National Supply Chain Strategy.


May 2013Page 4

■ But embedded throughout are the priorities stated and aspirations to work with industry to not only drive a step change in our performance, but in our thinking. During the last 18 months we have illustrated what can be achieved by jointly leading industry change and this document is the natural ‘next step’ in that journey, illustrating what we have learned and our thoughts as to the key elements to successful delivery.

■ Regardless of where you are placed in the supply chain, if you are reading this

document you will probably have an active interest in the success of our endeavours and any contribution that can refine and enhance our thinking is most welcome.

David McLoughlin, Finance & Commercial Director, Infrastructure Projects


May 2013Page 5

3. Outline

■ This document sets out the structure and principles that will guide our contracting activity over the five years of Control Period 5. Engagement with our regional business units will provide a greater level of detail in respect of local tendering and contract letting plans, of which a summary is provided in Section 10.

■ With CP5 still 10 months away, there will be refinements to this strategy and development of

the specific plans. These will be summarised and issued as updates regularly over the next few months.

■ An example of such a development will be our approach to site labour resource; we are

determined to make significant improvements to site safety and are therefore already seeking increases in the levels of directly employed operatives in safety critical posts on our sites. As a consequence we will also seek to improve the management of contingent labour supplies including behavioural consistency and Tier 1 / 2 relationships.


May 2013Page 6

■ As Network Rail enters the last year of Control Period 4 we are firming up bold plans to move into Control Period 5. Infrastructure Projects (IP), together with its supply chain, will play a vital role in these plans and this document sets out the strategies for ensuring that together, we make a meaningful contribution to our future in terms of:

Generating outstanding value for customers and taxpayers

Creating a better railway for a better Britain

Becoming a trusted leaderIn the rail industry

Working with our partners to improve safety, reliability, capacity and value for customers and taxpayers

Achieving success through behaviours – being customer driven, accountable, collaborative and prepared to challenge

Generating outstanding value for customers and taxpayers

Creating a better railway for a better Britain

Becoming a trusted leaderIn the rail industry

Working with our partners to improve safety, reliability, capacity and value for customers and taxpayers

Achieving success through behaviours – being customer driven, accountable, collaborative and prepared to challenge

■ Infrastructure Projects (IP) has a clear vision to be recognised as the best rail infrastructure project delivery organisation in the UK and sees collaboration with our supply chain as a key means of unlocking the necessary and significant improvements to achieve that. By working closer with our supply partners we hope to attract innovative solutions and longer term investment.


May 2013Page 7

■ In April 2012, IP significantly changed its organisation structure to achieve closer alignment

with its customers – the Network Rail Route businesses. We created 4 regional business units and 4 major programme business units:

Scotland & North East

Southern

Central

Western & Wales

Thameslink

Track

FTN/GSM-R

Signalling


Southern

Central

Western & Wales

Thameslink

Track

FTN/GSM-R

Signalling

Figure 3.1 Business Units within Infrastructure Projects

■ So, whilst this document explains the drivers and themes of our strategic engagement with the supply chain, the individual business units will publish unique strategies that reflect their specific needs and challenges in the detail of their plans.


May 2013Page 8

■ To put the Control Period 5 challenge into perspective we will be delivering the biggest capacity increase on the railway for 100 years. This starts with a Strategic Business Plan that sees a £3bn increase in spend over that planned in Control Period 4.

■ IP will only achieve this level of project delivery through solid engagement with its supply

chain: some significant commitments have already been made, for example:

Area of Spend Q2

2013 Q3

2013 Q4

2013 Q1

2014 Forecast

Award Date

CONTROL PERIOD 5

Spend

Signalling Frameworks Awarded 1,200m

ETCS Frameworks Awarded 155m

Professional Services Framework Awarded 300m

Level Crossing Frameworks Jun-13 255m

Track – High Output Dec-13 425m

Track – S&C Jan-14 400m

Track – Plain Line Jan-14 550m

Electrification Framework Jan-14 2,000m

Regional Frameworks Jan-14 5,200m

10485155255300400

5200

2000

1200550

425

0

2000

4000

6000

8000

10000

12000

14000

RegionalFrameworks

ElectrificationFramework

SignallingFrameworks

Track – PlainLine

Track – HighOutput

Track – S&C ProfessionalServices

Framework

Level CrossingFrameworks

ETCSFrameworks

Total

Figure 3.2 Significant Commitments of up to £10.5 billion


May 2013Page 9

■ For projects not already committed some guiding principles will apply – we will seek to enter longer term supply arrangements with partners selected on the basis of behavioural fit as well as value. We will take account of sustainable approaches to delivery in addition to long term reliability and most importantly an approach to project delivery that ensures the safety of everyone involved. Earlier contractor involvement and the packaging of design with implementation will be promoted to ensure better planning, better execution, improved levels of innovation and investment together with smarter resource allocation.

■ We will continue to publish our pipeline of work and updated information will be available

through National and Regional conferences, Industry Associations and our existing Supplier Account Management process. We welcome input from the supply market – a contact list is provided in Section 9 of this document and all suppliers are encouraged to work with us to meet these significant challenges during Control Period 5.

■ As we rationalise CP5 contractual arrangements we will rely on supply market feedback to

make sure we “right-size” our supply base to balance availability of resources and opportunity for existing / new entrant contractors, whilst retaining a competitive spirit to ensure VfM and a sustainable pool of resource for the sake of longevity.

Supply Base Right size

Longer termEarly engagement

EngagementBehavioural fitOpen dialogue

Innovation & investment

ResourcesSafe

SustainableEfficient utilisation

VfM


May 2013Page 10

4. Expenditure

■ The expected settlement for Control Period (CP) 5 shows an unprecedented level of

investment in the railways. For Infrastructure Projects this equates to a step change in the level of expenditure and the volume of work that needs to be delivered safely and on time.

● Expected rise in Total Settlement from CP4 to CP5 £3.5 Billion (10%) ● Expected rise in Infrastructure Projects share £3 Billion (15%)

■ This is equivalent to a rise of £600 million per annum, and will require continuous improvement in the levels of engagement and performance amongst our supply chain to meet the challenge.

37.534

2320

0

10

20

30

40

50

CP4 IP CP5 IP CP4 Total CP5 Total

Figure 4.1 Comparison of CP4 and CP5 settlements and the IP proportion (£ Billion)


May 2013Page 11

■ Control Period 5 workbank values for Infrastructure Projects are broken down into the devolved business units.

■ The 4 Regions and 3 Major Programmes, shown below, account for the vast majority of

expected Control Period 5 expenditure.

Scotland & North East£2.5 Billion

Southern£2.6 Billion

Central£4.2 Billion

Western & Wales£4.7 Billion

(Including major projects)

Thameslink£1.6 Billion

Track£2.2 Billion

Signalling£4.3 Billion

(Including SP&C)Scotland & North East

£2.5 Billion

Southern£2.6 Billion

Central£4.2 Billion

Western & Wales£4.7 Billion

(Including major projects)

Thameslink£1.6 Billion

Track£2.2 Billion

Signalling£4.3 Billion

(Including SP&C)

Figure 4.2 Total Control Period 5 Workbanks by Business Unit (Gross business plan figures)


May 2013Page 12

5. Priorities / Key Considerations

IP’s Strategic principles for engaging with our supply chain and shaping contractual arrangements are driven by 10 key themes that are central to Network Rail’s plans for a better railway for a better Britain. As mentioned earlier, each business unit will incorporate these principles into their individual strategies but will tailor their application to meet local needs. Shown overleaf are the key themes and our Strategic Principles for how we intend to support Network Rail in improving performance in these fundamental areas.


May 2013Page 13

Reliable

infrastructure

Reducing public

subsidy

The biggest investment since the Victorian

era

Atechnology

enabled future

A railway fit for the future

Investing in our people

A customer focused

organisation

Opening up

Reliable timetables

Everyone Home Safe Every Day

■ We will engage contractors early to collaborate on programme delivery

■ We will seek support of our delivery partners to comply with the Doing Work Within Possessions (DWWP) process

■ We will develop our assessment tools to ensure sustainable proposals – building on the current 5% sustainability criterion in our tender evaluation model, putting value on demonstrable efforts such as BS14001

■ We will seek means of incentivising meaningful improvements to our sustainability position; as a starting point we will seek compliance with, and support of, our sustainability pledge, shown in Annexe 1

■ We will build on our membership with Business In The Community (BITC) ensuring that with our supply chain we promote responsible business practice, helping to transform communities by tackling key social and environmental issues, ensuring a sustainable future for all■ We will be expecting our supply partners fully to embrace the recent Social Value Act

■ We will evaluate safety culture as part of our supplier selection and will incorporate meaningful safety data into performance metrics

■ We will seek means of rewarding step change improvements in behavioural safety and encourage safety improvements through design

■ We will encourage direct employment of key site staff

■ We will develop the use of our assurance process in granting Principal Contractor Licences

■ We will develop team approaches through regional contracts and alliances to engage with and understand the needs of our customers

■ We will seek to engage teams meaningfully in accordance with BS11000 where appropriate

■ We will engage with the supply chain to understand the scale and complexity of this significant challenge

■ We will package works to maximise project delivery and minimise repetitive tendering

■ We will seek means to incentivise research and development within the industry

■ We will provide a listening environment for development and implementation of innovation to technology and process

■ We will seek opportunities, such as use of NEC contract forms, to develop joint teams focused on value and delivery

■ We will take proper account of behavioural competence and encourage joint teams with mutual objectives

■ We will welcome innovative ideas of resource utilisation that impart understanding between suppliers and project teams

■ We will continue to make use of external expertise to complement our own commercial resources, engage professionally with the supply market, and develop our people and processes.

■ We will continue and develop our regime of local and national conferences

■ We will continue an open and frank dialogue with Industry bodies such as RIA, CECA, RICA and continue with Commercial Directors’ Forum and Tier 2 Conferences

■ We will develop and continue the publication of our work bank pipeline

■ We will further develop our process of Supplier Account Management

■ We will develop and continue to publish performance

■ We will focus on contract pricing techniques that maximise value – making use of economies of scale, standardised design, and modular build wherever possible

■ We will seek to eliminate needless bureaucracy and time around repeat tendering and post contract claims

■ We will focus on designs and proposals that demonstrate long term reliability and whole life value

■ We will encourage and be open to future proposals that incorporate ongoing maintenance with the provision of assets. These proposals will be linked with our drive for innovation and long term reliability


May 2013Page 14

6. Contracting Strategies

■ Our Strategic Principles form a framework for the business units within IP to approach their individual contracting strategies with a sensible level of consistency. They also provide a basis for the supply market to understand our drivers and our targets and allow it to work with us to deliver a world class railway fit for the 21st Century.

■ In IP’s devolved organisation structure, there is always a level of balance in terms of satisfying

local and national considerations. There are advantages to each approach and we recognise the importance of understanding the nature of each sourcing project in order to assess the best means of engagement.

Greater opportunityFor investment

NationalLocal Consistency

Economies of scale

Local knowledge

Proximity to customer

Project specific needs

Contracts to suit project portfolio

Use of local suppliers / labour

Opportunity to smooth critical resource

National sharing of best practice

Greater opportunityFor investment

NationalLocal Consistency

Economies of scale

Local knowledge

Proximity to customer

Project specific needs

Contracts to suit project portfolio

Use of local suppliers / labour

Opportunity to smooth critical resource

National sharing of best practice

Balancing Local & National Considerations


May 2013Page 15

■ Shown below are some details of a range of projects and categories where a variety of methods will be, or have been, used to engage the supply market. In this section a few will be dealt with in more detail.

Contract / Scheme Strategy Type Status

Signalling Frameworks National framework Awarded

ETCS Frameworks National framework Awarded

Track – High Output National framework Procurement

Track – S&C National framework Procurement

Level Crossing Frameworks National framework Procurement

Professional Services Frameworks National framework Awarded

Track – Plain Line Nationally let, regionally managed framework

Procurement

National Electrification Framework Nationally let, regionally managed framework

Procurement

Buildings & Civils works Regionally let and managed frameworks

Procurement

Enhancement & multidisciplinary works Regionally let and managed frameworks

Procurement

Great Western Electrification Programme Alliance Awarded (part)

Stafford Area Improvement Programme Alliance Awarded

EGIP Programme Alliance Procurement

ECML PSU/TPE Programme Alliance Procurement

Northern Hub Programme Alliance Procurement

West Coast Power Supply Upgrade Project specific contract Awarded

Thameslink Project specific contracts Awarded

Crossrail Project specific contracts Awarded (part)

Reading Project specific contracts Awarded

North West Electrification Project specific contracts Awarded

■ An effective balance can be struck between local and national considerations in different

ways depending on the nature of the contracts envisaged. A few examples are explored where different levels of local involvement have been utilised to work toward the best solution.


May 2013Page 16

Professional Services Frameworks

● National framework agreements that contain pre-agreed rates for design and professional services

● Provide the opportunity for our Tier 1 contractors and local teams to form longer term working relationships

● Worth approximately £300 million over Control Period 5 ● Managed by centre providing the opportunity to measure

performance and value with national oversight and the ability to share this information with local teams

● Frameworks due for re-tender before the end of Control Period 5

National Electrification

● National Electrification is a collection of regional electrification projects with an expected value of £2 billion over Control Period 5

● Approach is to retain regional ownership and management of frameworks but with a single, centre led, market approach, thereby enabling partnerships to form in the supply base and taking into account critical resources and individual supplier capacity

● Initial conference has been held for interested parties and a second conference is planned once the Pre-Qualification Questionnaire has been completed later this year.

National Level Crossing Renewals Framework

● Programme is worth ca. £255 million over Control Period 5 ● Frameworks now let with 4 suppliers ● Contracts will be let within frameworks on a design &

build basis, encouraging innovative design and implementation

● Workbank will be allocated initially on a geographical basis and although individual projects will be run on a regional basis, performance will be measured nationally allowing future work allocation to be regulated dependent on levels of performance in respect of:

– Safety – Cost – Delivery – Approach to long-term reliability


May 2013Page 17

■ We intend to maximise the use of framework agreements over Control Period 5, this will help us achieve our targets by working closer and more consistently with fewer suppliers. The benefits of this approach are varied but include:

● Allowing our suppliers to plan more efficiently through giving greater visibility of workbank ● Enabling us to smooth the need for critical resource ● Helping us to drive the right behaviours over time ● Supporting investment in research and development and innovation by giving greater

certainty of workload ● Increasing the familiarity of our supply market with:

– The railway – Our corporate and Infrastructure Projects goals – Our organisation – helping them to become partners, not just suppliers

■ Greater detail of the tactical implementation of these strategic themes can be found in each business unit’s individual contracting strategy. Key contacts for each of these business units can be found in Section 9 of this document.

■ A fundamental difference between this and previous strategies is that we intend to procure the

bulk of Control Period 5 delivery before the end of Control Period 4. This will enable us to avoid the traditional hiatus between Control Periods and commence delivery at the earliest opportunity.

■ It is worth noting the increased focus on alliances and collaborative agreements for major

programmes of work. IP were accredited with BS11000 for a range of projects in 2012 but we are now actively seeking to better our achievements and become a truly collaborative client organisation. We will achieve this through a process of continuous development for the major elements of a collaborative working relationship, for example:

● People, skills and behaviours ● Processes, procedures and forms of contract that are fit for purpose ● Dissemination and adoption of best practice to and from sources such as:

– Other client organisations – Industry leaders

● Incorporation of more behavioural elements into tender evaluations


May 2013Page 18

Signalling

■ Use of Signalling Framework with declining SEU cost curve

■ Increasing use of collaboration and joint teams to deliver packages of work

■ Introduction of new technology e.g. Modular Signalling, ETCS

Track

■ Control Period 5 challenge to reduce unit costs by ca. 20%

■ Separate regimes for High-Output (ca. £85 million p.a), Plain Line (ca. £110 million p.a), and S&C (ca. £80 million p.a)

■ Increasing use of delivery alliances

Thameslink

■ 4 distinct work packages to accommodate differing timescales and the various internal and external drivers

■ Forming collaborative relationships capable of being BS11000 accredited

■ Use of existing competitively procured frameworks to select contractors

7. Highlights of individual Regional and Programme Strategies


May 2013Page 19

Central

■ 80% of the expenditure is represented by 4% of the schemes

■ 4 major Electrification schemes make up 32% of the total work bank

■ Intent to award Regional framework contracts in December 2013


■ Use of BS 11000 as enabler of cultural and behavioural change

■ Increasing use of Programme Alliances e.g. EGIP, Step Up and ECML Connectivity

■ Development of Co-located Engineering Integration to support working relationships

Southern

■ Establishment of 4 route aligned framework entities to support the bulk of delivery

■ Commitment to competitively tender 10% of the Buildings & Civils, and Enhancements workbank to demonstrate value

■ Introduction of NEC3 suite of contracts to facilitate collaborative relationships aiming for BS11000

Western & Wales

■ Intent to award design frameworks before the end of Control Period 4 and construction frameworks ca. 6 months into Control Period 5

■ Development of local design frameworks to complement national arrangements

■ Focus on programme not project e.g. programme long efficiency curves and incentivisation


May 2013Page 20

8. Engagement Strategies

■ We have put an increasing effort into engaging meaningfully with our supply chain and intend to continue developing its usefulness through Control Period 5. The feedback received so far indicates that our overall approach is being received positively.

■ Supplier Survey - A clear measure of the degree of success in our engagement with our

supply chain is reflected in the 2012 IPSOS Survey results. Satisfaction has continued to improve with the proportions who are dissatisfied now being below the benchmark target of 15%.

Figure 8.1 IPSOS MORI Satisfaction results

■ Key areas of improvement identified within the 2012 survey were:

● Suppliers are supportive of the direction of travel, reporting the highest level of advocacy seen since the survey began; Key Suppliers are notably more positive than before.

● For the first time more suppliers say Network Rail is easier to work with than say it is more difficult to work with.

● Almost four in five think NR has improved the way it collaborates with them in the last twelve months.

■ Conference Feedback – From the various conferences that we hold with our supply chain we have received positive feedback regarding our improved level of engagement. The key themes emerging from these have been endorsement of our collaborative working approach and support for our drive to embed sustainability issues within our procurement and delivery processes.


May 2013Page 21

■ Given the positive response received so far we intend maintaining and developing our

engagement regime as follows:

Industry Associations

■ A key part of our supplier engagement programme is regular dialogue with a range of rail industry trade associations, principally, RIA, CECA, and RICA each of which will also have some form of dialogue directly with the ORR.

Conferences and Forums

■ Supplier conferences with national, asset specific and regional focus will continue to be held and are programmed. These have been instrumental in engaging with the broader supply base, articulating the efficiency challenges that the industry faces and highlighting the key issues that our contracting strategies need to address.

■ Tier 2 Engagement – in addition to our established annual conferences with our Tier 1 suppliers we have now commenced a programme of conferences with our Tier 2 supply chain partners recognising the pivotal role that these smaller organisations play in the successful delivery of infrastructure works. A key goal is to facilitate closer T1 / T2 relationships.

■ We will continue to work extensively and closely with our key infrastructure suppliers via the Commercial Directors Forum. This has so far informed our approach in key areas of process improvement. This has driven change and innovation in areas such as:

● The implementation of our Fair Payment Charter.

● The removal of retention for all new infrastructure contracts from its previous default level of 3%.

● Agreement of a policy on the use of Parent Company Guarantees.

● The incorporation of Sustainability issues within a revised tender evaluation process.

Pipeline ■ We will continue to publish a procurement pipeline schedule on our external website to make the supply chain aware of forthcoming tender opportunities. This approach was developed earlier in CP4 and has been further refined over time to provide a consistent and coherent source of information to prospective bidders and the wider supply chain. This is available at http://www.networkrail.co.uk/aspx/9434.aspx.


May 2013Page 22

Press conferences ■ For the remainder of CP4 and as we enter CP5 we will hold formal round table press briefings to ensure that a consistent account is given of our priorities and intentions.

Supplier Account Management

■ In order to deal with specific issues and maintain close relationships with key suppliers we will continue to run a Supplier Account Management (SAM) process. We will review delivery performance, future workstreams, safety performance and any topical issues at a senior level – making use of performance data from PRISM and hands on knowledge from regional and IP centre directors.

Supplier Surveys ■ We will continue to undertake the Supplier Survey and act on the results as shown at the start of this section.

Performance Measurement and feedback

■ PRISM has proved a very visible means of measuring a blend of performance measures. As we enter CP5 we intend making it increasingly visible as a dashboard that measures IP and supply partner performance to drive better collaboration and resulting performance.

■ Currently our assurance process audits contractors and issues Principal Contractor Licences when appropriate – we intend further integrating behavioural safety and performance measures to provide a more meaningful understanding of supplier capability.

■ We will increasingly link work bank allocation to performance. As an example the National Level Crossing work bank allocations to the framework partners will be allocated according to performance around criteria of safety, value, innovation and long term reliability.


May 2013Page 23

Collaborative Working

■ In order to facilitate value, safety and prompt delivery of projects we recognise that collaboration will continue to be a fundamental enabler. We will make further use of BS11000 as the strategic framework for collaborative working within IP. Our industry leadership in this area has already seen a number of our key partners either certified to, or working towards, certification as a means of supporting the cultural and behavioural change necessary to embed collaboration.

■ New processes to support supply side alliancing – recognising international best practice we have developed and implemented a range of measures to support alliancing with our supply chain on designated projects. We will develop further projects such as the Stafford Area Improvements Programme where we have developed a new form of alliancing contract, incorporated collaborative capability as a fundamental part of the procurement process. This approach has so far been received very well and will form a key element of a significant proportion of our CP5 programmes.

Supplier selection ■ Increasingly, work programmes will be procured via long term frameworks – negating the need for repetitive supplier evaluation and tendering events.

■ A regime of tendering a portion of relatively minor works will be maintained in order that an up to date knowledge of market pricing is kept current and that new entrants to our market are not precluded.

■ Where significant tenders are sought our default position will be to use processes implied by the EU Utilities Directive, however we will continue to make use of the Link Up supplier qualification system to ensure we have a current understanding of suppliers available by category.


May 2013Page 24

9. Contacts

National Supply Chain

■ Finance & Commercial Director - David McLoughlin ([email protected])

■ National Supply Chain Director - Guy Stratford ([email protected])

■ Events & Communications Manager - Ebony Soltani ([email protected])

Central Region

■ Finance & Commercial Director - Rob Offord ([email protected])

■ Programme Procurement Manager - Andrew Williams ([email protected])

Scotland & North East Region

■ Commercial Director - Hugh O’Connor ([email protected])

■ Programme Procurement Manager - Paul Wilkinson ([email protected])

Southern Region

■ Finance & Commercial Director - Philip Bennett ([email protected])

■ Programme Procurement Manager - Dawn Hart ([email protected])

Western & Wales Region

■ Finance & Commercial Director - Andrew Haynes ([email protected])

■ Programme Procurement Manager - Kevin Tozer ([email protected])


May 2013Page 25

Signalling

■ Finance & Commercial Director - David Parkhouse ([email protected])

■ Programme Procurement Manager - Harj Singh ([email protected])

Track

■ Commercial Director - Eoin O’Neill ([email protected])

■ Programme Procurement Manager - Stephen Dyes ([email protected])

Thameslink

■ Head of Project & Commercial Services - Rob Carr ([email protected])

■ Head of Commercial - Lee Baldwin ([email protected])

FTN/GSM-R

■ Finance & Commercial Director - David Parkhouse ([email protected])

Safety & Sustainable Development

■ Director, Safety & SD - Roan Willmore ([email protected])

Licensing & Assurance

■ Assurance Manager (Licensing) - Gillian Scott ([email protected])


May 2013Page 26

10. Tender / Contract Schedules

10.1 Central

Supply Category

Contract Approach Tender Date (est.)

Award Date (est.)

Contract Length (est.)

CP5 Value (est.)

REGIONAL

LNW and East Mids Programmes of Work

Programme Tenders to cover: Property, E&P, Earthworks and Structures. Will be split into three sub-regions of LNW North, LNW South and East Midlands. Will utilise a programme contract approach as developed on the footbridges pilot.

Q2-13/14 Q4-13/14 5 years 700m

LNW and East Mids Mid-Size Projects

Will cover: Railway engineering, Buildings, Civils and Multi-Disciplinary works. Will be split into three sub-regions of LNW North, LNW South and East Midlands. Contract format tbc

Q2-13/14 Q4-13/14 5 years 900m


May 2013Page 27

10.2 Scotland & North East

Supply Category


Award Date (est.)


CP5 Value (est.)

REGIONAL

Buildings and

Civils Works (low

value)

Region wide replacement Framework to

B&C DP. The framework will include a

cost book and KRA's to measure

performance of commission contracts

against a pre-determined workbank (by

geography or work type). The framework

will also facilitate competitive mini

tenders within the framework community

and STA's for emergency/urgent works.

Q3-13/14 Q4-13/14 5 Years 760m

Multi-disciplinary

Region wide replacement Framework to

MAFA. The 'nil value' framework will

facilitate competitive mini tenders within

the framework community and STA's for

urgent works.

Q3-13/14 Q4-13/14 5 Years 580m

Electrification

Individual call-off contracts let under

regionally managed centrally procured

Electrification framework

Q2-14/15 Q4-14/15 5 Years incl in 580m

above

LNE

Multi-disciplinary

(Electrification)

STEP UP Programme Alliance to deliver

ECML Power Supply upgrade and Trans-

pennine electrification and associated

branches and enhancements

Q3-12/13 Q2-13/14 6 Years 809m

Multi-disciplinary

West and South Yorkshire Works.

Implementation works packages as part

of client participant works into Step Up

Alliance

Q4-13/14 Q2-14/15 5 Years 224m

Multi-disciplinary ECML Connectivity Programme Alliance Q2-13/14 Q4-13/14 5 Years 370m

Level crossing

ECML LX Crossing closure programme -

committed framework for implementation

works

Q1-14/15 Q2-14/15 5 Years 70m

Buildings Competitively tendered Building works Various Various 5 Years subject to

funding

SCOTLAND

Multi-disciplinary

Borders Railway - Target cost with

collaborative agreement under closed

Framework Agreement.

n/a Q3-12/13 3 Years 150m

Multi-disciplinary EGIP - Programme alliance for OHL and

Civils Q1-13/14 Q3-13/14 3 Years 452m


May 2013Page 28

10.3 Southern

Supply Category

Contract Approach

Tender Date (est.)

Award Date (est.)


CP5 Value (est.)

Major Projects

with complex

interfaces

Collaborative/alliance

based project specific

contract strategies

established on project

by project basis and

competitively tendered

Waterloo Major

Redevelopment Q1-14/15 Q3-14/15 4 years 275m

90% of all other

works (except

E&P)

Multidisciplinary Route based Frameworks –

1 per Route. D&B relationships to maximise

ECI, use of NEC3 contract form.

Q1-13/14 Q4-13/14 5 years 1,044m

10% of all other

works (except

E&P)

Competitive tendering

Various Various Various 116m

Electrification &

Plant

Hub and Spoke discipline approach utilising

Regional Frameworks for each discipline with

NR to supply key materials via Materials

Frameworks

Q2-13/14 Q4-13/14 5 years 518m


May 2013Page 29

10.4 Western & Wales

Supply Category


Award Date (est.)


CP5 Value (est.)

Western

Renewals

(Buildings,

structures and

geotech)

Framework arrangement to replace

BCDP. The framework will be

tendered on early year’s workbank

and incorporate efficiency curves.

The framework will also provide

option for mini competitions for

some planned and

emergency/urgent works.

Q2-13/14 Q4-13/14 5 Years 277m

Multi-disciplinary

Western access to London

Heathrow Airport. Final strategy to

be determined but likely to be the

form of an alliance. Programme

indicative only and subject to agreed

funding drawdown with DfT.

Q1-16/17 Q4-16/17 4 Years 160m

Multi-disciplinary

Bristol Area Enhancement works.

Bespoke final strategy to be

determined dependant upon other

schemes within the area.

Q2-15/16 Q4-16/17 3 Years 209m

Multi-disciplinary

Oxford Corridor Capacity

Improvements. Overall final strategy

to be determined dependant upon

other schemes within the area.

Q2-15/16 Q3-15/16 2 Years 85m

Multi-disciplinary W12 Gauge Clearance - likely to be

competitively tendered Q2-14/15 Q3-14/15 2 Years 38m

Multi-disciplinary Capability, Capacity and Clearance

Works tba tba tba 180m


May 2013Page 30

Wales

Renewals

(Buildings,

structures and

geotech)

Framework arrangement to replace

BCDP. The framework will be

tendered on early year’s workbank

and incorporate efficiency curves.

The framework will also provide

option for mini competitions for

some planned and

emergency/urgent works.

Q2-13/14 Q4-13/14 5 Years 214m

Multi-disciplinary

Welsh Enhancements Partnership.

Single supplier arrangement for third

party enhancement schemes across

North and South Wales.

Q2-13/14 Q4-13/14 5 Years 160m

Multi-disciplinary Valley Lines Electrification -

competitively tendered Q4-13/14 Q1-14/15 5 Years 349m


May 2013Page 31

10.5 Signalling

Supply Category


Award Date (est.)


CP5 Value (est.)

Signalling

National Signalling Framework (MasReF); Based on NR9 and NR12 S&T terms. The Framework is split by supplier within geographical boundaries

N/a Q1-12/13 7 Years 3,200m

Signalling

Signalling Control Re-Tender: Establish a rate book covering the life of the asset. Potential delivery of 8,000 SEUs nationally over CP5, aligned to the ROCs.

Q2-13/14 Q3-13/14 5 Years 49m

Signalling

ETCS Framework: contracting for the development, design and implementation of the ETCS schemes over the life of the programme.

N/A Q1-12/13 6 Years 250m

Signalling

Traffic Management: Framework awarded for undertaking development in August 2012 following a competitive tendering exercise to Thales, Hitachi and SSL and each are under contract via a 3yr plus 5 bespoke framework and Statements of Work (SoW).

N/A Q2-12/13 4 Years 50m

Signalling

Delivery of Traffic Management for 14 ROCs nationally, based on NR13c.3 potential contracts will be awarded based on a Target based contract for 3 years plus option of 5 year extension.

Q1-13/14 Q2-13/14 4 Years 500m

Signalling (SP&C)

Level Crossing Framework: National 7 year framework, based on six LXEUs per annum. Framework is awarded on a regional basis with potential for ECI and Target Cost Pricing.

Q1-13/14 Q1-13/14 5 Years 268m


May 2013Page 32

Telecomms (SP&C)

Telecomms framework Nationally based Framework Agreement awarded February 2012, to 3 suppliers, for an initial 3 year term with options to extend for a further 2 years

N/A Q4-11/12 5 Years 233m

Signalling (SP&C)

Type C Signalling Minor Works to be re-tendered 2014. Extension sought for 1 year in June 2013 and then strategy to be developed at Regional level.

14/15 TBA TBA 327m


May 2013Page 33

10.6 Track

Supply Category


Award Date (est.)


CP5 Value (est.)

Conventional -

Plain Line Track

Works

Lotting strategy across 8 areas.

Resulting in minimum of 3 and

maximum of 8 contracts.

Remeasurable contract model with

volume commitment at 75% of

forecast

Contract length 5+1+1+1+1+1

Q2-13/14 Q2-14/15 5 Years 385m

Switch & Crossing

Track Works and

Design

Alliance agreement based in a

target cost contract model

recommended as the best route to

deliver

1) Deliver the revised asset

management approach

2) Reach European cost

benchmarks and ORR CP5

business plan targets

3) Reduce interface losses

Two lots covering North and South

Contract length 5+5

Q2-13/14 Q2-14/15 5 Years 450m

Conventional -

High Output Track

works

ITT option being explored in lieu of

contract extension with incumbent.

Contract strategy to be developed

for Gateway 2 on 6 August 2013

Q3-13/14 Q1-14/15 5 Years 505m


May 2013Page 34

Supply Chain Commitment To achieve these goals we need a responsible and committed supply chain capable of delivering the

following sustainable procurement principles:

Sustainable Development Sustainable development is at the heart of our rail transport solutions and aims to deliver value for

money without compromising the wellbeing of our people, the environment, and the diverse

communities we serve

Health, Safety & Wellbeing:

Work with us to protect and improve the health, safety and wellbeing of staff.

Sustainable Employment:

Advertise employment and training opportunities to give local communities an equal opportunity to work

on Network Rail sites.

Diverse and Inclusive Supply Chain:

Provide local suppliers and sub-contractors an equal opportunity to compete for appropriate contracts.

Ethics and Labour Standards:

Provide a safe, respectful and positive culture throughout the supply chain.

Access:

Encourage design in refurbishment and construction that provides good access and inclusion for all

members of the public.

Communities:

Contribute positively to the social and economic wellbeing of our communities. Minimise disruption,

nuisance and environmental damage on our sites.

Heritage:

Work with us in creative ways to preserve or re-use railway heritage assets.

Energy and Carbon:

Reduce operational CO2 emissions, improve the energy efficiency of products and services. Promote

energy-efficient transportation.

Network Resilience and Adaptation to Climate Change:

Design and supply solutions that function reliably within projected changes in climate and weather

conditions.

Waste:

Support our aims of zero waste to landfill and increased use of sustainable and recycled materials.

Water:

Reduce consumption and reliance upon potable supplies in production and operations.

Bio-diversity and Ecology:

Protect ecology and promote a railway environment rich in flora and fauna.

Pollution:

Minimise noise and harmful emissions to land, air and water.

Appendix 1 - Sustainable Procurement Principles

Network Rail Infrastructure Projects Milton Keynes The Quadrant: MK Elder Gate, Milton Keynes, MK9 1EN T +44(0)1908 781000 www.networkrail.co.uk

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