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Railtrack has frustrated the industry by changing the emphasis of its infrastructure spending programme, dashing hopes of a boom in civils work. Richard Thompson reports.

When Railtrack publishes its latest Network Management Statement in March, its contractors and consultants will scour it for signs of stability in its ongoing spending plans.

Last year's statement included plans to spend £990M on track renewal, £550M on structures renewal and a further £590M on signalling improvements by early next year. Since the last NMS was published Railtrack has disappointed its construction suppliers by failing to spend at the pace the industry had been led to expect.

By last July contractors and consultants started to report sudden cuts in track, structures and signalling renewal work. Some projects detailed in the NMS were stopped, including ones that had already gone to site. Railtrack's explanation was that pressure from contractors working in areas that were difficult to maintain had led to unnecessary renewal spending.

Track, signalling and structures renewal work was put on hold while American management consultant McKinsey examined how Railtrack could get better value for money from its investment.

Industry voices complained that Railtrack's unwillingness to keep them informed about its plans made planning impossible. This was frustrating for contractors who believed Railtrack had asked them to gear up for a boom in railway work and had spent significant sums on plant and training.

Managing asset maintenance and capital expenditure is one of Railtrack's biggest challenges. Driving its efforts to get better value for money is the Rail Regulator's review of its track access charges for the period 2001 to 2006, due to be published in July 2000.

Based on the idea that Railtrack will have had five years to reduce operating costs since privatisation in 1996, the regulator is expected to significantly lower the amount Railtrack charges for track access.

Its preliminary report into access charges published last month argues that the track operator was not reinvesting enough of its 'excessive' profits - £388M before tax last year on a turnover of £2.446bn - into the network.

Railtrack naturally disagrees. It argues that the £1.4bn it spent last year represents one of the largest capital investment programmes undertaken and that strong profits are required to sustain such funding. Shifts in spending represent attempts to ensure a greater return on this investment.

Given that the McKinsey report will have a major influence on the content of March's NMS, engineers can expect spending on capital-intensive renewal work to be pegged back as Railtrack tries to squeeze as much as it can from its existing network.

A consequence of this is likely to be that renewal and maintenance work will increasingly be combined. Keeping these two strands of work separate has been criticised as inefficient and a reflection of the way the old British Rail did things.

Railtrack has already submitted a report to the regulator outlining plans to bring its maintenance and renewal programmes closer together (NCE 7 January). The changes will see small-scale renewal work carried out by maintenance contractors rather than specialist renewal units. They are part of a plan to eliminate poor track by April 2001.

Meanwhile, Railtrack has flagged up a shift away from structures spending and towards station refurbishment. Structures spending fell by £50M to £170M last year and is expected to fall further. In its place Railtrack is carrying out the high profile £1bn programme to regenerate 2,500 stations by 2001.

Some stations are getting major overhauls - Glasgow central is due for a £35M facelift - but much of the programme appears to involve little more than a new lick of paint.

Some would argue this low cost work gives passengers the superficial impression that Railtrack is improving its service (especially if they have to spend more time in waiting rooms), as more expensive and arguably more important work such as bridge refurbishment is less visible.

But Railtrack faces mounting criticism about train delays caused by track problems. A public notice put out by Virgin over Christmas blamed 62% of its delays on the West Coast Main Line on track and signal failures.

There is also concern about Railtrack's ability to deliver its side of the agreement with Virgin to upgrade the WCML to handle high speed tilting trains. For this, Railtrack has locked itself into an agreement with Virgin to finance the £2.2bn modernisation of the route by 2005.

Contracts should have gone out to tender last year and ought to have been awarded by now. Instead, it looks as though the first tranche of work will not be awarded until Easter.

Many believe that Railtrack grossly over specified and under costed the route upgrade. It is thought that it was caught out by the size of early estimates and scaled down its plans. 'Railtrack wanted a Rolls Royce for the price of a mini,' is a comment often made by contractors.

Questions are being asked about Railtrack's ability to meet the 2002 deadline for the first part of the upgrade. The WCML is being compared to the ill-fated Jubilee Line extension because it proposes to use new moving block signalling technology, so far untried on such a large scale.

Railtrack hopes to speed up its WCML programme by setting up alliance groups linking Railtrack , a civils contractor and a signalling contractor.

This closer co-operation is expected to reduce project time scales. The track operator is expected to announce the first of these soon, when it confirms arrangements with Balfour Beatty and Westinghouse for track remodelling work at London's Euston station. This will be a model for subsequent WCML zones.

Freight is another area where Railtrack appears to be back pedd-ling. It had originally hoped to create a freight super highway up the WCML by carrying whole lorries on railway wagons. This could remove some 400,000 lorries from Britain's congested roads but involves extensive tunnel and bridge reguaging.

But under pressure from the Transport Select Committee in November, Railtrack chief executive Gerald Corbett was forced to admit that he preferred a less expensive Big Box scheme (NCE 26 November 1998). This allows smaller European standard freight containers - but not whole lorries - to be carried around the wider national rail network on special sunken rail wagons. The Big Box solution requires much less reguaging work.

The key issue for WCML is capacity. The Big Box plan removes the threat of disruption to services on the WCML because the freight units carried are smaller so trains will be able to travel on the rest of the network as well.

Railtrack has guaranteed a certain number of train paths to Virgin as part of its WCML upgrade commitment. It is also bound by the terms of its operating licence to provide more paths to freight traffic. The piggy back option would have been expensive and would have carried the risk of extra costs in the event of possession work overruns. Railtrack also faces heavy penalties from the train operators if it fails to reopen track as agreed after possession work is finished.

Freight lobby organisation Rail Freight Group says that Railtrack has backed itself into a corner on WCML by basing the project on a commitment to the train operator before assessing the feasibility of the upgrade. It says the modernisation programme should have been planned in the same way as the successful recent upgrade of the East Coast Main Line. This established what was feasible before giving commitments to train operators.

Railtrack has a difficult task balancing its investment programme against the need to make a profit. Its new NMS will be scrutinised thoroughly by the Rail Regulator and construction firms before they draw conclusions about its future spending plans. In the short term the outlook for rail expenditure looks less rosy than might have been expected.

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