4. Potential for Improvement
4.1 Aligned Objectives
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4.1.1 Clarity and Alignment of Whole-system Objectives
4:6 This would require:a. A single set of clear and consistent requirements that the GB rail system should deliver. The requirements need to clearly address performance, safety, environmental and cost requirements both today and over reasonable period, perhaps 15-30 years into the future to allow sensible strategic planning to occur.
Note - ‘Performance’ (above) relates to achieving objectives (which may be expressed
in terms of operational, safety, environmental, reputational and financial/revenue considerations).
b. Government and/or industry leadership to set the agenda and apply it consistently across the industry in its investment and spending decisions.
c. An aggressive timescale to establish and roll out the objectives enabling momentum to be generated and sustained during the change programme.
4:7 The expected benefits would include:
a. Commonality of purpose from all sections of the industry (from Government down to front line delivery at a local level and throughout the supply chain) ensuring that the industry is pulling in the same direction.
b. Understanding that major spend decisions are in the right place to best facilitate delivery of GB rail objectives.
c. The ability to target expenditure on those areas that will best facilitate delivery of objectives. d. The ability to accommodate a range of strategic approaches for different railway types. e. Clarity in regulatory regime as there is a single
set of objectives understood by all.
4:8 The key barriers are:
a. The lack of a mechanism to set and agree GB rail objectives.
b. Inconsistency and poor alignment of the current standards, assurance and regulatory regimes with GB rail objectives.
c. A perception from many areas of the industry that “we are different and therefore require a different approach”.
d. DfT’s and industry’s ability to effectively set a long term strategy that is robust in the face of political policy changes.
4.1.2 Clear Performance, Risk and Cost Trade-off Criteria
4:9 This would require:a. Agreement, definition and communication of clear criteria for carrying out performance, cost and risk trade-offs across the industry.
Note - ‘Performance’ (above) relates to achieving objectives (which may be expressed
in terms of operational, safety, environmental, reputational and financial/revenue considerations). ‘Risk’ relates to uncertainty around achievement of any of the objectives, each requiring tolerability
criteria.
b. Aligning these criteria with the objectives set on the various industry participants.
c. Provision of accurate and joined up industry information.
ScottishPower Energy Wholesale
Experienced a 10% reduction in CapEx simply through applying consistent criteria for optimisation.
Scottish Power Energy Wholesale
Moved over a 3 year period from every generating site operating their own assets with local processes and procedures to a situation where the whole company is aligned on a single set of objectives, single investment budget and single set of decision making criteria.
Reported a 20% reduction in Operations and Maintenance costs over a 3 year period.
ProRail, The Netherlands
Evolved towards ‘Output Steering’ through four key strategic pre-conditions (objectives) set by Government which are developed into 6 SMART organisational objectives for the infrastructure, robust enough to support largely outsourced delivery.
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4:10 The expected benefits would include:
a. Consistency of decision making.
b. Reduced bureaucracy (everyone agrees on decision making criteria so less debate and simpler approval processes).
c. Better prioritisation of investments and work. d. Greater transparency of decision making and
visibility of change impact.
4:11 The key barriers are:
a. A perception in GB rail that risk relates solely to safety and not wider industry risks.
b. Acceptance and joined-up application of common decision making criteria (breaking down the “we are different” argument).
c. Ensuring that the regulatory regime is applying the same criteria as other organisations in GB rail.
4.1.3 Long Term, Whole-system Planning and Budgeting
4:12 This would require:
a. Objective setting on a longer time horizon (using common industry strategic planning arrangements).
b. Long term costing profiles aligned with asset lifecycles.
c. A common mechanism for appraising (valuing) investment (and possibly for sharing benefits).
d. Realistic plan review arrangements.
e. A single point of accountability at each level to ensure these are delivered.
4:13 The expected benefits would include:
a. A budgeting environment that will facilitate and encourage long term risk management. b. An environment where whole-life decision
making can facilitate better performance, cost and risk trade-off’s over the asset lifecycle. c. Greater transparency of the impact of near-
term budget decision making on longer term performance, cost and risk.
d. More effective long term strategic planning based on sound economics to allow proper trade-offs to be measured.
4:14 The key barriers are:
a. Industry recognition and acceptance that the focus should be less on the regulatory review cycle and more on those long term assumptions that will require change over the life-cycle.
b. Lack of honesty in budgeting.
c. Misalignment in contractual and regulatory cycles.
d. Inertia to change (including procurement alignment with whole-life cost approaches).
RSSB
Expressed a view of the GB rail industry having:
• Very good systems for making safety related decisions. • A reasonable system for performance related decisions,
e.g. PPM.
• Little or no approach for systematically approaching wider system decisions at an industry level.
ProRail, The Netherlands
Track assets are given an estimated theoretical renewal life to enable a long term (20 year) financial plan that includes volumes and costs and is classified by asset type.
Track infrastructure is reviewed using a ‘yardstick’ tool as it approaches the theoretical life and engineers determine if it can continue to be maintained, be life extended to optimise the lifecycle or renewed. This changes the section of track from ‘Theoretical Life’ to ‘Technical Life’. A life cycle costing model is used to ascertain if life extension or a complete renewal is the best financial option, enabling consistent prioritisation for life extension / renewal and budget planning.
NS, The Netherlands
NS (train operator) is collaborating with ProRail (infrastructure manager) on whole-system planning of improved route capacity, radically revising the timetables to increase service frequency with the same number of vehicles. The aim is to seek an operational solution rather than costly, disruptive and lengthy infrastructure enhancements.
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Figure 4.1 Representation of Idealised GB Rail Objectives Flow
Overall value of aligned objectives to benefit realisation
4:15 The asset management enablers identified in section 4.1 above are key to facilitating potential
benefits in each of the other identified opportunity areas. In considering the flow of objectives, decision responsibilities and influencing factors through GB rail, we have produced a representation, shown in figure 4.1, to illustrate the extent of impact.
4:16 We have included some practical, illustrative case studies to indicate how asset management
approaches can be used to derive benefits. © Atkins 2011
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