Network Rail to Cut Contractors

December 20th 2006

Network Rail to Cut Contractors

The number of track renewals contractors is to be reduced from six to four, Network Rail has announced. It’s part of a plan to streamline processes and deliver cost savings of around £150 million over three years. By focussing on four suppliers, Network Rail believes it can accelerate the rate of efficiency improvement. Over the past two years, 12% efficiency savings have been achieved.

Says Peter Henderson, Director of Projects & Engineering, ‘Progress has been made in delivering efficiencies in track renewals and these new arrangements will accelerate progress towards delivering our targets. These changes will enable earlier definition and planning of the work further into the future. We are keen to create an environment that enables both Network Rail and our contractors to plan work with confidence, and that promotes innovation and investment in equipment and people. Starting in the New Year, we will begin a six-month review of our contractors, measuring their performance across a number of key areas. These include: safety records, volumes achieved, finishing jobs on time, unit costs and business behaviours. Using these measures, the top four performers from the present six suppliers will be selected to continue under the framework of existing contracts.’

A decision to select the four successful contractors will be made in mid 2007.

High-output methods, already a key part of delivery of plain-line renewals accounting for some 15% of track renewals, will increase significantly over the next three years. In addition Network Rail is investing in an innovative programme to deliver switch and crossings using a modular approach that is expected to dramatically increase productivity, efficiency and reduce the time needed to install key track components. A contract is expected to be let in the New Year.

This approach is one part of the improvements Network Rail is making in its end-to-end track renewals processes. The company will also be working to raise the quality of the planning process for renewals work, reducing the numbers of late cancellations and making sure each job is completed in the most efficient and cost effective way.

Peter Henderson concluded, ‘We are confident that retaining a reduced number of track renewals contractors is the best way forward for renewals activity. As well as the core renewals work awarded under the existing contracts the opportunities to win elements of competitively awarded work remains, which will drive further efficiencies by offering growth in turnover for the highest performers.’

Network Rail’s decision follows a six-month review of the way it undertakes track renewals. It has concluded that although track renewal volumes remain constant, with the increased use of high output methods, the current supply market will become too large for future needs.

Network Rail’s currentrenewals contractors (in alphabetical order) are:
• Amey SECO (JV)
• Balfour Beatty Rail
• Carillion Rail
• Jarvis PLC
• First Engineering Ltd
• Grant Rail Group Ltd

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