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Railtrack limps back to basics

Railtrack is slowly recognising the value of taking an engineering led approach to running the railways. Diarmaid Fleming reports.

Announcements from Railtrack usually seem to spell bad news nowadays, and its annual results last Thursday were no different. Financially, Railtrack is now a cripple without a walking stick, entirely reliant on a helping hand from the taxpayer to prevent it keeling over. Only the shareholders could have been happy, after receiving a £100M dividend from a company on its knees, one arm feeding the investor and the other outstretched with a multibillion pound begging bowl pointed towards the government.

While the reverberations of the Hatfield accident still pulsate through a company turned upside down by a single incident, the restructuring unveiled at its annual results announcement is the company's blueprint to pull itself out of the mire. Under the new structure announced last week, Railtrack is splitting into three operating divisions - operations and maintenance, enahancements and major projects, and property (see News).

Whether the company has any financial future without massive state handouts remains to be seen.

Despite all the financial gloom, the restructuring would seem at last to show some signs that the company is waking up to the need for change in the way it does its engineering. That it has taken seven years and the lives of passengers is no cause for celebration. But at least it provides some evidence of recognition within an organisation driven to disaster by non-engineers that engineering is more than just an operations matter along the journey to profit: it is the central element in running a safe railway.

'A humbling experience' was how chief executive Steve Marshall described the past six months last Thursday. 'A bumbling experience' might be a reasonable description of how Railtrack has carried out key track engineering responsibilities since it was established, as post-Hatfield evidence of a network in decay emerges.

Cynics might say that the restructuring is no more than shuffling deckchairs on a sinking ship. Railtrack says its aim is to help give clearer focus and accountabilty. But while financial performance can depend on a range of variables, many of which are outside the company's control, improving engineering performance is certainly within its reach.

Engineering featured prominently at a briefing with Marshall, chief operating officer Johnson Cox and technical director Peter Middleton last Thursday. A company-wide review was ordered in December after Hatfield, including a full examination, still under way, of the firm's approach to infrastructure engineering. Civil engineer Middleton has steered much of this review. He spoke candidly about the way forward.

'Both Railtrack and its contractors know there is a long way to go before we deliver the railway that Britain needs. But the best way of dealing with engineering is within Railtrack itself, ' said Middleton, who takes over responsibilty for maintenance under the company's restructuring.

Line inspection will now become firmly the responsibility of Railtrack under an increased engineering budget. Video inspection, ground probing radar and train based ultrasonics will be used for inspection. Contractors will no longer carry out inspections themselves or determine what work needs doing.

'Railtrack must have this responsibility, and it is for Railtrack to determine what work is to be done, ' said Middleton.

Contracts such as the RT1A form now look absurd. Under these, contractors inspected and maintained the track without Railtrack's involvement, all on a fixed price where the incentive for those driven by profit would be to minimise the work to be carried out. How such a system ever came about was a legacy of the structure of British Rail and a feature of privatisation, Middleton said. 'As part of privatisation, the Infrastructure Maintenance Units in British Rail were to be sold off. Under BR these had responsibility for inspection and maintenance.

This transferred to the contractors who bought them. This meant that we sometimes did not have access to inspection information.'

Around 74% by value of infrastructure maintenance contracts are now carried out under the IMC2000 forms, with all such work covered by this form of contract by April 2002. This allows for an open book approach where information is shared. However, they remain fixed price, with savings shared by the contractor and Railtrack, rather than the contractor alone, again providing a financial incentive to do less work. This requires an act of faith in Railtrack's new approach. A senior Railtrack engineer told NCE that on RT1A contracts remaining in force at present, contractors and Railtrack were working much more closely together.

The new approach could see some astonishing about-turns in practice. Railtrack is even considering carrying its own maintenance, almost an echo of the old British Rail days, and a heresy to the contracting out gospel of privatisation. 'We may do this, but it is 'may' underlined and not a definite, ' said Middleton.

'We may take some areas in house to control price and methods. We would transfer people over from contractors rather than setting up our own labour organisation and do the work ourselves. We haven't decided where we'll do this, but if we couldn't reach agreement with contractors on a price or a contract, then it is something we could do.'

This might be a gentle rattling of sabres to the select fraternity of only seven contractors which carry out renewal and maintenance work on the network.

The tightness of the maintenance market is also being addressed. 'We want to lower the barriers of entry into the industry. If you are not in, it is very hard to get in. It is better for everyone to have more competition, ' said Middleton. Part of the review has involved informal discussions with European contractors.

Changes in how track possessions are organised are on the way too, it would seem. 'We need to find a way of making possessions more productive. An East Coast Main Line possession of four hours twenty minutes during the summer allows for only around two to two and half hours actual work, ' said chief operating officer Cox.

'There needs to be a shorter lead time for planning possessions, and longer possessions to give more access to the railway for maintenance and renewal, allowing more work on the railway.'

Cox said the drive for harmonisation and consistency across the business is under way, including the establishment of a national control centre for the operation of rolling stock. This could spell the death knell for Railtrack's regionalised zones, also leading to a more centralised approach to its engineering.

While putting its house in order is proving more than enough of a challenge for the company, its position as a leading client in its cash rich recent past is likely to diminish dramatically. Projects such as the West Coast Main Line and Thameslink 2000 are now described by Railtrack as 'legacy projects - ones which were committed to on a basis that would not be acceptable today'.

The West Coast Main Line, due for completion in October 2002, is 59% complete, but spiralling in cost to £6.3bn from an initially budgeted £2.2bn. More cost overuns are expected, and completion could be delayed.

Thameslink 2000 costs have also rocketed. 'The project was announced in 1996, and it's five years on, so costs have changed considerably. The project is now subject to a joint procurement review with the Strategic Rail Authority, ' said Marshall, who would not be drawn on figures.

Other Railtrack sources say that the decision to review the £800M project came when it hit the £1bn mark.

Railtrack's involvement in new projects will depend on the outcome of project-by-project discussions with the Strategic Rail Authority. But its precarious position means that future work will depend on private sector involvement. Moves on this front are already ahead, with talks under way between Railtrack, GoVia and Bechtel about establishing a 'special purpose vehicle' for upgrading the London to Brighton line.

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