Andy Milne talks to Iain Coucher

Andy Milne talks to Iain Coucher

18 Jan 2006

Andy Milne talks to Iain Coucher, deputy chief executive of Network Rail

Iain Coucher‘I’m a secretive person,’ says Iain Coucher, drumming his fingers on the table - not in rhythm, still less a railway clackety-clack, but altogether, at the same time, hammering the points he makes down into the table top. ‘No, I’m not Scottish, my mother chose the spelling - Iain - because she liked it.’

In fact Iain Coucher is a Yorkshireman of London pedigree. A sharp sense of humour tempers an otherwise direct pragmatism. Iain Coucher has a fine eye for detail, unnerving those who speak of railways with less intellectual rigour.

On the face of it Coucher has an unenviable task. Re-plumb Britain’s rail network with inadequate resources. Answer to a government that, under Byers and Prescott, has so far proved hostile to private railways. Motivate staff, increase capacity, reduce costs and improve performance.

Perhaps a degree in Aeronautical Engineering from Imperial College London helps him rise above this for Coucher believes in long term, strategic thinking. No clackety-clack fire fighting for him, but the continuous welded rail of steely-eyed logic.

The luxury of long term strategic direction
Iain Coucher was part of the original team that set up Network Rail after Railtrack was taken into administration. ‘The luxury we had was that for six months, in an office with 120 other people, we could think about nothing other than long-term strategic direction. What are the plans we should be doing? What are the things we need to change? We could think through how it would all work.’

Iain Coucher was brought in from Tube Lines and with city financier Adrian Montague set about constructing a new ‘Company Limited by Guarantee,’ which could deliver an effective and affordable railway. How? In three phases.

Phase One: Production. Put bluntly, making trains run on time and controlling project costs.
Phase Two: Efficiency, standardising processes, internalising maintenance, reducing reporting requirements and streamlining systems.

Phase Three: Something of a new year’s resolution, and starting now, is to move the organisation up a gear and be more effective. This includes better communications, better ways of working. Coucher uses the term ‘world class’ drumming on the table as he does so.
Coucher’s background certainly helps. After university he worked in the defence industry and moved into computational modelling. Spells with IT software houses followed and he developed a speciality in business process outsourcing and change process management. ‘The early part of my career was dominated by doing systems integration.’

Working for EDS in mergers and acquisitions he was approached by a consortium comprising AMEY, Bechtel and Jarvis and asked to head up Tube Lines. It was in this role that he, ‘came across many of the officials at the Department for Transport.’ Happily this in no way put him off railways. His espousal of the cause must date from these days.

A new sense of purpose and communication
Taking on Railtrack was a culture shock, surely? Coucher shakes his head and demonstrates that strange loyalty which has taken over so many rail chiefs who have found and obviously enjoyed the rail industry. Legend has it the pipe smokers went to Railtrack from BR while the chavs and cheeky girls tried their luck with the franchises. Coucher doesn’t flinch from the past, but equally won’t use it as an excuse for failure.

‘Like many, many organisations, we need to move forward. We spend too long looking backwards, navel gazing. The people who we got were largely very good. Some of them were not good enough and we released a lot of people quite early on.

We had a clear out of people that we simply felt were preventing corporate change. It was a brutal exercise, we worked hard at doing it and it wasn’t popular; but it was necessary. What we got left was a large number of people who were technically good, but lacked direction and leadership.’

The Coucher- Armitt pas de deux aimed to offer a clear sense of purpose. ‘Staff were poorly organised in terms of roles and responsibilities, which is also what we tidied up.’ Managers and supervisors are now being better trained for what they do. Coucher believes in making better use of staff potential.

‘British Rail was particularly good at developing its people, it spent time and effort; a very public sector ethos. At privatisation, the industry lost that investment-in-people commitment. This was a generation of people that for a decade had had little structured investment.

echnically brilliant, but poor managers. Many people, who had been promoted inside the organisation, were never given formal development or told what was expected of them as a manager, as a developer, as a communicator. Whilst they were very good at designing bridges, they were pretty poor at working with people.’ This curse afflicted all grades of managers and supervisors.

Coucher goes on to assert, ‘Now, if we are going to be a world-class company and deliver a world-class railway, then we need to really invest in our people, giving them the skills to be able to do that. We live in a complicated world. The railway, because of its structure, has got lots of interfaces, lots of boundaries, so we need to have exceptionally good managers. So one of the things we have been investing very heavily in, is people and people development.’

World class? Wishful thinking? Not really, hard cash backs it up and Network Rail has in fact bought a school. Training takes place at Westwood College near Coventry, allowing staff to get away from the daily buffeting of the industry and train in peace. Sending them to Coventry? Ho, ho! Far from it.

‘Communication inside this organisation is awful. I keep insisting e-mail is the third form of communication. First is face-to-face, then pick up the phone, as a last resort, e-mail. It is such a problem we are sending every single manager, I kid you not, 4,000 people, next year (2006), on a communications skills course. Two or three days at Westwood studying communications skills. We are particularly bad at communications. I had never been to an organisation where my phone rang so little. We have a generation of managers who have not got management skills. Technically brilliant but poor at communicating.’

Managers are particularly bad at communicating bad news. He cites the case of breaking some bad news to four customers. ‘We sent them an e-mail! Where is the customer service in that? Pick up the phone. Talk to them. Explain. It’ll go down better.’

Can such a disparate organisation become standardised and up its game?
‘When we got here, there was an organisation of 15,000 people and yet there wasn’t a single HR system. Here is an organisation which has spent nearly £3 billion a year on capital investment projects, and yet there was no standard, modern project management toolkit.
It was a company that paid out £550 million the year before in compensation for poor performance and yet we had no way of modelling what performance would be - they had no idea of what they would spend in compensation. So I said, how much have you got provided for poor performance this year - is it enough? Well, we think so.’

Clearly shocked Coucher goes on, ‘I come from a background of very focused, very tough challenges and detailed management. I spoke to one person, I said, ‘How many people have you got working for you?’ He said, ‘Oh, about 1400 - give or take about 200.’ He did not know how many people he had working for him. I came from an organisation where you would say ‘It’s 1417, but three people are going next week, two people are arriving next week,’ and you knew precisely. This type of discipline was not there.

Yet an organisation that delivers such a vital service to the travelling public, spending such phenomenal sums of passengers’ and taxpayers’ money; to not know that was a shock to me. It still is.’

Coucher and his team have set about establishing common working practices and a certain centralised uniformity. The object is to increase the quality of production and ramp down cost.

Why is the railway so expensive?
‘Is it expensive? There are a number of cost drivers that we don’t help ourselves with. The primary cost driver we face is a lack of access that we get from the railways.’

Total blockades would be cheaper with massive economies of scale. ‘We are always under pressure from TOCs to make it (a possession) as small as possible. We seldom get a blockade.

We do lots of things in eight hour bursts which is very inefficient.’
However, it is in the standardisation of procurement that the greatest savings can be made. Sitting in an office high in the Black Tower Coucher spells out his Calder Valley arithmetic.
‘When we did Cross Country modernisation we had lots of footbridges put in using a standard design. Brilliant. Average cost £436K per bridge - still too much. When we started to look around the rest of the country and the West Coast the average price was £500K, with no standard bridge design. Every consultant would design his own bridge from scratch. How can that be right?’

Coucher’s response is by now familiarly forthright. ‘What I want is a swathe of six or ten bridges which are single track, double, four track spans... a product suite of flat pack bridges. We can get those unit costs down to £300K per bridge. So we’ve taken 30% out of the cost of doing bridges. We are looking at level crossing designs. We’ve centralised so much we get real efficiencies and identify best practices... we used too many consultants.’

He goes on, ‘We’ve taken 40% out of the cost of buying PPE equipment. We’ve re-tendered all of our vehicles and saved £15 million a year. We have saved millions on our tamper contracts. So we’re saving money without compromising quality - in fact all the indicators are that the quality of our work is going up.’

Coucher applies a mathematical logic to railway procurement, combined with a haggler’s instinct that would not be out of place in the souks of Damascus and Cairo.
With new signalling at Port Talbot, Network Rail pushed the price down from over £100 million to £56 million, ‘just by challenging scope and rethinking it. That’s what we can do, if we start to think laterally.’

Coucher goes on, ‘At Basingstoke we were told they (the consultants) were going to evaluate seven options! Do three! Multiple evaluations take too long.’
No one should underestimate the struggle that lies ahead. ‘There is a huge amount to do. Costs are coming down all over. We still have work to do to achieve the Regulator’s targets, but we know how we’re going to do it and we’re on track to achieve it.’

Will the former outsourcing expert be bringing renewals in house?
‘I have been very clear about when you should outsource and when you shouldn’t. The policy we have adopted is that you should never outsource a broken problem. Make it as efficient as you possibly can and then say to your outsourcing partners - go on then make that better. Deliver something that we can’t do ourselves. You’ve got to have either better economies of scale, access to technology that we haven’t.

We did not want to internalise maintenance but we did want to change the contracts. We wanted a greater say in what was done, when it was done and how it was done. Our intention was to change the contracts to enable Network Rail to have the decision-making power to say, ‘don’t do that - do that.’

We had 20 contracts to renegotiate and we did our very best to try and renegotiate those contracts to a new form but we had to deal with multiple parties who had different ways of doing it. Again we had no commonality of systems... a lot of the contracts were cost plus, there was no incentive on them to reduce costs, there was no performance regime either, so we had a situation where we weren’t in control of what was done, when it was done and how much it was going to cost. We simply paid the bill and we took the performance hit when they got it wrong.

We did try to renegotiate. In the end we simply said if we are serious about improving performance and reducing cost and addressing issues of work force safety, we are going to have to bring it back. From our perspective, it has been an overwhelming success.’

How did you cope?
Quite simply it was, ‘The most efficient TUPE (Transfer of Undertakings and Protection of Employment) transaction I’ve ever seen. We took 15,000 people from seven companies in less than nine months and the worst we got was three people didn’t get their fuel cards.

It was text book stuff but it took a huge amount of planning. And a large dedicated team. It saves us £200 million a year, performance has improved, so we’re very pleased about that. And we said exactly the same thing to our renewals contractors. Slightly different thinking because we did renew our contracts.

We put out new contracts 18 months ago. So we’ve got brand new contracts in and they are delivering. We have been quite clear - if you don’t give us what we want - and we think we can do it better - we’ll have to think about doing it ourselves.

There’s no reason to suggest that’s the case. They are performing very well and the volume of rail renewal that we are doing and the volume of S & C renewal that we are doing is higher than at any time anybody can ever remember. The unit rate is coming tumbling down and we’re doing it much more efficiently and we’re doing it because we have better forms of contract.

Network Rail has decision-making clarity about what is done and when it’s done. We have integrated management teams around the country and we bang out these renewals like clockwork...’ Unit costs of renewals are down to £255 per metre from £315. ‘So if the contractors are doing it well, great, good luck to them. All we want is a quality product at a sensible price. And we’ve been open and straightforward with our people and partners. Give us quality and we’d never ever need to take it in house.’

How does he feel about the constant bad press, about politicians and civil servants? Coucher admits that so much bad press is simply anecdotal and does not stand up under analysis. ‘We try to be open and honest, we’ve got nothing to hide. The beauty of Network Rail is that we can be objective and independent. We’ve got no share price to protect on the stock market. We can say this is the way it is and we can be honest. That’s what we’ve tried to be ever since we got here: straightforward, honest and analytical.’

Coucher seems to have welcomed such freedom and is surprisingly upbeat about the lamplighters at Marsham Street. ‘We have a lot to do with the department, which is going through a reformation. They are getting to grips with their new world and inevitably we have a huge amount to do with them. In terms of responsibility for route utilisations we’re in the process of thinking about future funding requirements and there’s a lot going on. In terms of micro management the DfT are brilliant; they allow us to get on and do our job. The chairman sees the Secretary of State once every six weeks. They are very professional and there’s no micro management at all.’

Can you explain the thinking behind Network Rail’s finances? The numbers involved seem mind boggling.
‘Network Rail is an unusual company; in fact it is probably unique. The very simplistic message is: we are doing very well. We are ahead of all of our targets, about where we said we would be in terms of borrowing, performance and income and in terms of delivering the renewals with one exception - we are running slightly behind on the renewals of our signalling.
What that means is you get some very large numbers. That’s OK. It sometimes manifests itself in what appears to be large amounts of under-spend. Under-spend is good. Why are we not spending as much money as we said we would? Three reasons:

First we are actually getting more efficiencies than we thought we would. So we are getting the same outputs for less money. Secondly, we made some estimates about when enhancement projects would come through - enhancements are normally third party funded. So we are seeing a phasing issue where we thought money would come in and it hasn’t; which is OK because it’s normally driven by third parties and it’s at their desire.

The third area of under-spend is that we are challenging people a lot more and we are simply saying to people: we will not do work just for the sake of doing work. We will go out and make sure that we get a good price and renegotiate it and look at the scope to make sure it represents real value for money.

OK. So how does Network Rail work? We get money in from government and train operating companies and that covers our expenditure. We can borrow to fund renewals or any shortfall in our income. We have an arrangement where we can borrow at very low rates - probably the most efficient private sector borrowing you can get.

This year we will make a slight loss because we are not getting our full income stream from government, next year that will correct itself. We’ll make a profit. Network Rail is unique because of its funding structure but it is all subject to a huge amount of scrutiny by the regulator and the department and we are performing very well and we’re very pleased with it.
I can understand the raised eyebrows but everything is under control and we can account for every single penny that we spend and explain every single piece of under-spend.

Would you like to build the next new fast rail link? Is that something you are interested in?
Personally I would like to be involved in a new railway. What a great thing a high speed 21st century railway linking the major cities would be. Journey times less than two hours? I think we are some way off.

The West Coast is now a model project. It went through horrible teething problems; it has been a cause celebre in terms of major projects. When we got here we were facing estimates of £13 billion pounds. We took a firm control with the SRA which was much better at specifying public service requirements.

We have delivered that project meticulously and the costs have remained under control very precisely so we opened the first phase in September 2004, bang on time and on budget. We opened the June upgrades bang on time and the new timetable, 12 December, bang on time.’

All this is delivered with a firm finger tattoo on the desk. ‘We are delivering. We have mechanised our delivery.’ (tap tap) ‘Every weekend there are probably 10,000 people out on the railway at 100 work sites. Digging the railway up and putting it back together for Monday morning. We seldom get any over runs on the West Coast and now having thought about it and learnt best practice we repeat that week in week out.

It is a great lesson that we’ve learned, about how to undertake very large enhancement upgrades around an operational railway. Look at things like Crossrail; we say if you’re going to do a huge amount of interface work around an operational railway - having got huge scars on our backs learning how to do it on West Coast - it would be foolhardy to use any other model, than what we have developed on West Coast. I think that argument has been largely accepted, I hope it has because building railways in and around operational railways is a skill which is seldom seen.’

Can I turn to the man behind the...’ ‘Darth Vader mask?’ supplies Coucher helpfully.
He’s a family man, works a five day week. At weekends he keeps fit mountain and road biking. ‘I have a young family in Banbury and I’m a semi-weekly commuter. I go back one night a week. I’ve two children aged 7 and 10.’ Does he ever switch off the light sabre? ‘Yes, I read - everything - Ben Elton at the moment, but I read voraciously.’

Coucher put himself through a Modern Art degree in the 1980s at the Open University. ‘I’d done things like Maths, Physics and Chemistry and the degree in engineering. I felt culturally devoid. So I thought, let’s get a broader remit.’

It remains Coucher’s view that the new rail industry is maturing. Network Rail is three, Railtrack was in trouble aged five and the whole thing has only been going ten years. ‘The whole industry has settled down. We are many years from where we want to be, so we will have these tensions. There are few organisations where senior officials would not feel happy picking the phone up and talking to me.’

Hardly the mark of a secretive man. Lines are open now....!
Many thanks to Kevin Groves and Jo Elliott for their help with this article.

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