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Network Rail embraces its suppliers

The efficiency programme at Network Rail is beginning to yield results but the work is also highlighting what is left to be done.

Network Rail is becoming a better client – that’s no longer a pledge but more of a fact according to the findings of a recent Ipsos Mori survey of suppliers carried out on behalf of the railway infrastructure owner and operator.

Interviews with 70 managing directors, chief executives, account directors and the like at its main suppliers have generated positive feedback, boosting efforts to make dramatic changes to the way the organisation behaves.

One of the key pieces of good news is that 57% of respondents were happy to have their comments attributed – a figure that’s up from 49% last year and one that has fairly consistently risen from 39% in 2007. Network Rail believes this should not be underestimated as it signals how much it has been able to garner the trust of its supply chain in just a year.

It’s an issue that is critical in part because the concept ofcollaboration is increasingly being used as a barometer for successful infrastructure delivery, and also because of the oft-cited criticisms previously levelled at the client, including a failure to have a fully visible pipeline of works and a failure to encourage innovation.

The results are especially signifi cant because the organisation spends 68% of its budget externally. They show that, for the first time, more suppliers say Network Rail is easier to work with than say it is difficult to work with. And those responsible are keen to celebrate.

So what has triggered the change in supplier perceptions? According to those responsible for leading the changes – whether internally or in terms of the company’s external dealings – it is the result of new leadership, hard work and a number of initiatives.

Much credit for the change is being given to the arrival of chief executive David Higgins, who took over from Iain Coucher in February last year. He brought in an enthusiasm to pre-empt the impending recommendations from the rail industry review carried out by Sir Roy McNulty. This was published in May last year and called for, among other things, 30% effi ciency savings by 2019.

“It doesn’t worry me that people are saying that the catalyst [for change] was when David Higgins started,” says Network Rail Infrastructure Projects finance and commercial director David McLoughlin. One of the fundamental enablers, he adds, is the feeling that a devolution of power enables changes to be made, without extensive consultation with those at the top.

Civil Engineering Contractors Association UK rail director Mike Cocks says that the change was noted by industry too. “There had been some listening [before Higgins], but not a lot,” says Cocks. “That is a big change that has been signified by Higgins starting.”

“When you’ve had nine years pre-David, changing thinking takes a big effort,” adds McLoughlin. One of the most promising moves that the organisation has made has been the setting up of the Commercial Directors Forum to create a more collaborative relationship with industry.

First to be tackled by the forum was the creation of a new Fair Payment Charter, established in November last year. This was signed by 30 of the biggest onstruction and engineering companies operating in Britain today and commits, though not legally, firms to shorten the time it takes them to pay suppliers from 56 days to 21 days.

However, real change is a multi-way process and, by signing the charter, the firms are also committing to making payment to their first-tier subcontractors within seven days of receiving payment.

At present there’s no auditing of firms to ensure the pledge is being honoured, says McLoughlin. This is in part because the issue of increased trust is more important. “Your word is your bond,” he says. “I accept that some of that may take some time to do. And if in a year’s time that’s not working then we’ll look at that again.”

The charter currently applies to suppliers for the Infrastructure Projects business, which is understandable when it is considered that this has a forecast spend of £7bn over the next two years. But beyond this, there is hope that the fair payment philosophy will trickle through the whole business. “It definitely isn’t a Network Rail thing,” says McLoughlin. “It’s genuine discussion decisions from the floor about how we move forward.”

The relationship with those lower down the supply chain is one which is gaining in importance for Network Rail. “One thing we have done is reach past Tier 1 suppliers and start talking to Tier 2,” says McLoughlin, before adding that there has been a gradual softening of the suspicions from Tier 1 suppliers about the motives for doing so.

A growing wonder at the early achievements is palpable. But there is no doubt more work to be done, which could be helped by the new office in Milton Keynes, which is designed to bring more people together to ensure the organisation is up there as one of the best clients to engage with, not just at a local level, but as Network Rail hopes, on an international level too.

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