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Network Rail to introduce pain share/gain share alliances

Network Rail is set to form long term alliances with contractors and designers to deliver major projects.

The track operators plans to share cost savings with contractors when projects come in under budget.

Under the new contracting arrangements, Network Rail will seek partners at early stages in projects. These will include the redevelopment of London Bridge station as part of the Thameslink upgrade programme.

The alliances could involve more than one partner. They will have responsibility for project delivery and cost.
The deals are designed to drive out inefficiencies, by giving contractors a financial stake in improved performance.

Network Rail infrastructure projects director Simon Kirby has outlined the new procurement model track operator’s biggest contractors. He told NCE that this would lead to the joint development of target costs and risks for an initial seven projects.

Target costs will be set so that all involved know the price − and what “extraordinary performance” will be rewarded.

“Gain share will be unlimited on delivering the project below the target cost,” Kirby said. The so-called “pain share” where contractors absorb overspend costs will be capped.

The move won approval from the man who brought early contractor involvement to the UK, former Highways Agency procurement director Steve Rowsell.

He said the move could “raise Network Rail’s reputation as a client”. The Agency introduced early contractor involvement in 2001, and had increased efficiency through similar pain and gain sharing mechanisms, he said.

The seven trial projects are designed to represent the full range of work that Network Rail carries out (see box).
The contracts for the schemes will be tendered in the next few months.

Pilot projects

Work covered by the new proposals is:

  • Edinburgh-Glasgow Improvements Programme to electrify the main line between the two cities
  • London Bridge redevelopment in the Thameslink programme
  • Electrification of the Great Western mainline
  • Birmingham Gateway development
  • National major resignalling projects
  • Hitchin flyover
  • Civil engineering renewals




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