Simon KirbyDirector, Infrastructure Investment

Our inheritance

• Network Rail took over the railway Network Rail took over the railway infrastructure in 2002infrastructure in 2002

• A maintenance contract structure with little A maintenance contract structure with little incentive for efficiency incentive for efficiency

• 4,000 mile backlog in renewals4,000 mile backlog in renewals

• Regional structure, no central controlRegional structure, no central control

• An explosion in costs from £3.3bn per year in An explosion in costs from £3.3bn per year in 1999 to £6bn a year in 20021999 to £6bn a year in 2002

Track replacement volumesTrack replacement volumes (miles) (miles)

Key challenges

• SafetySafety– Reduce incidents of broken rails, SPADs, Accidents, etc…Reduce incidents of broken rails, SPADs, Accidents, etc…

• Performance Performance – Reduce delays by around 33% over next 5 yearsReduce delays by around 33% over next 5 years

• CostCost– Improve efficiency by around 31% over next 5 yearsImprove efficiency by around 31% over next 5 years

• Work volumesWork volumes– Massively increase volume of work being deliveredMassively increase volume of work being delivered

And on a growing railway…

2000/01 2001/02 2002/03 2003/04 2004/05 2005/06

Pas

sen

ger

Jo

urn

eys

(m)

940

980

1020

1060

1100

1140

Passenger Journeys

Growth in Renewals – 07/08Growth in Renewals – 07/08

£m

0

500

1,000

1,500

2,000

2,500

04/05 actual 05/06 actual 06/07 actual

+23%

+22%

0

100

200

300

400

500

600

700

800

Track Civils Signalling Estates E&P Telecoms

£m

05/06 actual

06/07 actual

+5%

+17%

+54%+30%

+59% +55%

Increased spend by asset in 06/07Increased spend by asset in 06/07

Growth in Renewals – 07/08Growth in Renewals – 07/08

£m

0

500

1,000

1,500

2,000

2,500

04/05 actual 05/06 actual 06/07 actual

+23%

+22%

07/08 budget

+10%

Enhancement spend

202 170 182280

388

642

806748 770 821

473567

1031

1411

100

300

500

700

900

1100

1300

1500

95/6 96/7 97/8 98/9 99/0 00/1 01/2 02/3 03/4 04/5 05/6 06/7 07/8 08/9

Mil

lio

ns

(£)

past spend future spend

Track renewals

Improvement in efficiencies

26%24%

10%

20%

0%

5%

10%

15%

20%

25%

30%

Controllable Opex Maintenance Plain Line S&C

22%

Projects

Our response

• National functional structureNational functional structure

• Maintenance in-houseMaintenance in-house

• GRIP GRIP

• Reorganising Track Renewals internally Reorganising Track Renewals internally

• Focus on costs, quality and timelinessFocus on costs, quality and timeliness

• Improving programme managementImproving programme management

Track renewals: current position

• Consistent improvement Track Quality Consistent improvement Track Quality

• Delay minutes reduced year on yearDelay minutes reduced year on year

• Good S&C performanceGood S&C performance

• Improving Plain Line DeliveryImproving Plain Line Delivery

• Plain Line costs improving but still not fast Plain Line costs improving but still not fast enoughenough

Track renewals: 2007 activities

• Fundamentally overhaul the whole renewals Fundamentally overhaul the whole renewals end to end process end to end process

• Reward best 4 of 6 performing contractors Reward best 4 of 6 performing contractors through competitionthrough competition

• Create efficient delivery methods for short Create efficient delivery methods for short duration possessionsduration possessions

Supplier rationalisation

• By the autumn we plan to down select the best 4 contractors (from 6)

• 4 Territory based renewals Contractors and 1 National high output contractor

• We will review the allocation of work to optimise delivery method and agent

• We will manage against key indicators and drive for collaborative and integrated working

End-to-end process improvement

• Accelerating engineering specifications

• Plan is to create a 3 year rolling renewal programme

• Whole process from maintenance through track engineering, planning and track renewals is being mapped & optimised

• Behavioural change and training programme being developed

Target Improvement

5%

10%

15%

20%

25%

30%

35%

2004/ 05 2005/ 06 2006/ 07 2007/ 08 2008/ 09

Circa 22% to 25%

31%

TargetCurrent positionPost-changes

Conventional Renewals

Conventional renewals

• Structured reviews of:– engineering specifications to deliver optimised

worksite packaging

– resource planning to increase efficiency

– mapping resource availability to demand

• Greater involvement in contractor management using performance indicators

• Higher-level cross industry cooperation

High Output MachineryHigh Output Machinery

High Output MachineryHigh Output Machinery

• Continued development of High Output systems (e.g. SLW)

• Potential acquisitions of additional plant

• Deployment of medium output solutions being progressed (e.g. MOBCs and Slinger)

Modular turnoutsModular turnouts

Modular turnouts

• Developing a systems solution to delivering S&C

• Standard products, factory built and modular delivered on bespoke wagons

• Lean manufacturing techniques in manufacturing and installation

• Through life benefits – quality, reduced maintenance, installed monitoring

• Will progressively replace conventional techniques – up to 75%

Modular turnouts

Controlled build

Delivered in-gauge

Modular installation

(on flat bed)

Conventional Renewals

54 hours Today!

37 hours Basic process changes & disciplines: incentivised, templated, site presence

27 hoursBearer Splice – road delivery / out of gauge

21 hours, or 2 x 12 hours Modular assembly, tilting wagon delivery,

improved excavation, ballast laying

8 hoursConsistent mid-week possessions

7 Day Railway

6 Day Railway

Conventional Renewals

Money / time

27 hrs

54hrs

12 hrs

8 hrs

37 hrs

Core possession time

Pro

cess

Spl

ice

Wag

ons

& A

ssem

bly

Man

ufac

ture

+?

£477k/ point end

£443k

£406k

Sub £350k

Best ‘UK’ Class

Equivalent Best European Class (today)

World Leader

GB (today)

8 hour plain line

8 hour plain line

• Concept study completed to explore principles and prove and clarify the remit

• Key objectives include:– Standard unit of delivery– Installation less than 8 hrs– Single line working– High line speed opening (85mph+)

• Full programme by mid-2007• Progressive introduction from 2009 anticipated• Will moderate, or reverse, efficiency aspirations

Simon KirbyDirector, Infrastructure Investment