3.152 The quality of Network Rail‟s asset management capability is key to performance and efficiency in CP5 and beyond. The independent reporter (AMCL) has carried out regular assessments of Network Rail‟s maturity against its Asset Management
Excellence Model (AMEM, see Table 3.7 below). This model currently has 23 activities that are aligned with PAS55, with each activity given a score from 0% to 100%. A score of over 70% is needed to be in the excellent category.
3.153 For CP4, the 23 activities were aggregated into 6 groups, and improvement trajectories for those groups were agreed with Network Rail. AMCL‟s latest
assessment113 has shown that while Network Rail has improved recently, it only met
two of the six targets as at January 2013.
113 2013 SBP AMEM Assessment, AMCL, May 2013, is available at
Table 3.7: Asset Management Excellence Model – Network Rail’s capability progress in CP4
Core Groups Network Rail as
assessed 2009
AMCL Roadmap Target for SBP
Network Rail as assessed at SBP
1 - Asset Management Strategy & Planning
56.3% 64.7% 65.8%
2 - Asset Management Decision- Making
47.3% 59.7% 58.7%
3 - Lifecycle Delivery Activities 64.8% 70.5% 69.2%
4 - Asset Knowledge Enablers 51.7% 63.5% 60.7%
5 - Organisation & People Enablers
63.0% 71.1% 67.3%
6 - Risk & Review 49.5% 58.1% 60.8%
3.154 During CP5 we expect Network Rail to make sufficient progress in asset management maturity such that the renewals and maintenance parts of its SBP for CP6 will be based on a bottom-up workbank for the whole of CP6. This will be created by applying its asset policies to all assets in all asset groups, in accordance with good asset
management practice, and condition 1.19 of its network licence.
3.155 To help ensure Network Rail‟s SBP for CP6 meets our expectations, in our draft
determination we proposed outputs for the asset management excellence scores, one for each of the six groups, which should be achieved by the time of the CP6 SBP submission, in January 2018. We said we expect Network Rail to continue to improve its asset management capability after its CP6 SBP submission, so we also proposed outputs for the end of CP5.
3.156 The output levels in the draft determination for the six groups ranged from 70% to 75% in January 2018 and 72% to 77% by the end of CP5.
3.157 In its response to our draft determination consultation, Network Rail said that asset management measures should be indicators, rather than outputs, as they are “inputs to the achievement of performance outputs and improved efficiency”. Network Rail believes that if AMEM is to be an output, the target should be 70%, as this is the threshold AMCL define as excellent. Network Rail also questioned the
appropriateness of outputs for each of the 6 groups. A number of other respondents, including several TOCs, ATOC, Railway Industry Association and Rail Freight Group supported the establishment of asset management outputs, saying this will improve asset management capability and quality.
3.158 Network Rail has a general duty under the terms of its network licence to achieve best practice in asset management to the greatest extent reasonably practicable. AMCL‟s AMEM definition of excellence (70%) is somewhat less than best practice: according
to AMCL‟s benchmarking analysis114, the highest AMEM score in their rail sector
sample is currently 75% (the highest across all sectors is 80%). However, we accept that progress towards best practice becomes more challenging beyond 70%.
Ultimately we expect Network Rail to develop its own view of how far to go beyond excellence, and to articulate the supporting business case. We expect Network Rail to do this in its SBP for CP6. For CP5 we have concluded that using AMEM scores as outputs will help ensure Network Rail meets its licence obligations, and the
expectations of stakeholders.
3.159 The AMEM model will be re-baselined when the forthcoming ISO55000 standard for asset management is published. This will replace the current 23 activities with 39. It is important that Network Rail continues to make progress towards best practice in all 39 activities, however we recognise that some activities are more important than others for a rail infrastructure asset manager. In our draft determination we proposed outputs based on combining the 39 activities into 6 groups. This approach gives Network Rail some flexibility to direct effort towards the activities it believes are most important, while ensuring good progress overall. We have concluded that this remains the best approach for CP5. Each group score will be computed according to the average of the question scores for all activities in that group.
3.160 In its response to our consultation, Network Rail referred to recent work by AMCL on the confidence limits associated with its AMEM scores. For the SBP assessment, the 80% confidence interval for the overall score is ±1.5%. The confidence interval for individual groups varies between ±1.8% and ±5.9%. The range of tolerance reflects where we asked AMCL to focus effort during the SBP assessment. AMCL has
confirmed that the assessment protocol can be adapted to make the tolerance more consistent across the groups.
3.161 We have therefore decided to set a score of 72% for each group as a regulated output. If Network Rail achieves a group score of 72%, the probability it exceeded the 70% excellence threshold for that group will be around 90%. We have decided that these outputs will apply at the time of Network Rail‟s CP6 SBP submission (January 2018). For the remainder of CP5, we expect Network Rail to demonstrate continuous improvement towards best practice, consistent with achieving its aims for CP6. 3.162 While this means the company will no longer be required to meet the core group
scores of up to 77% by 2019 proposed in the draft determination, this approach will ensure Network Rail reaches excellence, while avoiding what could be perverse incentives to chase scores beyond excellent in some groups, regardless of whether this is delivering clear benefits. It also makes the required level for the „asset
management and decision making‟ group (which includes the critical area of
114 AMCL end of CP4 and CP5 trajectories report, AMCL, July 2013, is available at http://www.rail-
maintenance planning) more challenging than in our draft determination (72% is required rather than 70%, giving a stronger assurance that excellence will have been reached), while giving the company flexibility over which groups to target for further improvements post January 2018.
3.163 During CP5 we will also monitor Network Rail‟s asset management capability at route level (where asset management decisions will increasingly be taken), as well as at network-wide level. This will provide assurance that corporate asset management strategies and policies are being applied by the routes consistently and effectively. We are working with Network Rail to develop an AMEM-lite indicator, to monitor progress at route level, based on the elements of the AMEM assessment that are applicable at route level. The AMEM-lite methodology will be piloted on two routes, and then
applied to all routes before the end of CP4, to provide a baseline for monitoring progress at route level during CP5. We expect AMEM-lite to be applied annually and can be used to inform the full AMEM capability model. The results will provide
evidence of whether Network Rail is on course to achieve the AMEM outputs in time for its SBP submission for CP6.