As it happened
“Network Rail is planning for earlier
engagement with its supply chain” Ian Balentine
Future of Network Rail Rail
Network Rail’s supply chain must effectively engage with the proposed market models, ACE’s Annual Conference has heard
Ian Ballentine, Network Rail’s programme director for efficient infrastructure delivery, outlined changes underway in the operations and processes in the rail sector. These have significant implications for suppliers. Network Rail has had a central
role in delivering rail infrastructure improvements since it was founded in 2002. In keeping with the public sector agenda it is now working to deliver a reduced cost base, improved efficiency, and on-going improvements in the network as a key part of efforts to spur economic growth. To achieve these aims Network Rail is planning for earlier
engagement with its supply chain as it delivers investment. Mr Ballentine explained that this would help to ensure the most effective solutions
and approach are considered before costs are incurred.
He suggested that a number of supplier engagement models will be utilised. These will aim to optimise the supply chain’s input and resources, reduce the delivery time of infrastructure projects, establish risk management tools and provide the best value output for a given level of capital expenditure. The following engagement models have been proposed by Network Rail.
• Alliance • Delivery partner • Engaging • Traditional • Limited partnership • DBOM limited partnership • Outsourcing
Within their engagement models
Network Rail will still manage the financing of rail investment. It will also remain the ultimate fixed asset owner for the rail network. However, Mr Ballentine said there was also potential for train operating companies to be integrated partners with Network Rail along with Network Rail’s suppliers. The model chosen for any given engagement will reflect the nature of the work and the capability of the parties in developing and delivering the work; this will be reflected in the contract and the potential risks undertaken and owned by the parties best able to manage and mitigate them.
He said the traditional model will only be utilised where there is little risk, identified scope and low contract value. The outsourcing model has been proposed for projects with low risk but a higher contract value than those for which the traditional model is appropriate. The DBOM limited partnership,
Engaging, Delivery partner, and Alliance models might all be utilised where the contract value, risk profiling and scope uncertainty is considered high enough that the supply chain is willing and able to manage the risk effectively in some form of partnership with Network Rail. Mr Ballentine also noted that, whilst limited partnerships and outsourcing were viable, Network Rail at this point in time was not mature enough to employ these models. However, it is an aspiration to be able to employ the use of all seven models based on whichever one most suites the project/programme profiling and desired outputs.
Mr Ballentine also noted that no model was proposed for projects of low value and high risk. It is felt that these would not be commercially viable and so should be re-evaluated and/or specified in a manner in which the supply chain is able to deliver the outcomes effectively.
Rail SIG www.acenet.co.uk/Railways
10 ACE Annual Conference 2011
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