PLANS TO cut rail maintenance costs by £300M by taking work back in-house will fail, contractors said this week.
Network Rail believes costs can be reduced to £1bn in three years.
But many contractors disagree. One told NCE: 'The biggest way of cutting costs is by reducing the labour force, but rail maintenance is a labour intensive industry.'
He added that eliminating the contractors' profit margin could make immediate savings of up to £60M, but there was little else which could account for the remainder.
Another industry source said that they didn't believe that Network rail was organised enough to deal with the task of 18,500 new employees and over 31,000 km of track.
Other contractors believe that British Rail style 'low productivity' will return to the industry.
Network Rail this week claimed that central bulk purchasing of items such as ballast and reviewing maintenance cost variations across contract areas will account for some of the savings.
'There is about 60% variation in unit costs for maintenance between adjacent contract areas, ' said a Network Rail spokesman.
Other savings will come from standardised processes and better use of possessions. Contractors warned of hidden costs in transferring staff and plant back to Network Rail.
Armitt would not comment on the costs to carry from the reorganisation: 'I know how much but I'm not prepared to talk about it.
'But we will see the savings coming through very soon, ' he said.