INFORMED SOURCES e-Preview August 2013
This month’s column was written with an announcement on the future of the East Coast IC225 fleet imminent. Unfortunately, it didn’t arrive until the day after Modern Railways had gone to press. However, e-Preview was set up to handle just this sort of situation, so let’s start with the hot topic before the usual review of what’s in this month’s column.
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e-Preview Special report
IEP ousts IC225
On the evening of 17 July the Transport Secretary finally made the decision to implement Phase 2 of the Intercity Express Programme (IEP) and replace the East Coast IC225 fleet. Under the new deal, announced next morning,
According to Informed Sources it was a very close decision and a very difficult one to make. The impact of HS2 on East Coast services from 2033 is claimed to have been a key factor. DfT argues that residual value risk this introduces meant that the deal could, probably, only have been achieved with the state backed IEP. My initial reaction to this justification is ‘Hmmm’.
I’m still getting to grips with the numbers. The value of the IC225 replacement fleet is put at £1.2 billion over the 27.5 year contract. This is said to be part of the overall £5.8 billion cost of the Great Western and East Coast IEP contracts.
As regular readers know, experience has taught me not to trust any numbers coming out of DfT - and IEP in particular. But, I assume that the above figures are NPV. If so, they compare with £4.9 billion quoted for both fleets when the IEP deal was announced last year.
Since 4.9 plus 1.2 equals 6.1, the new official total of £5.8 billion for the deal suggests that some hard bargaining by DfT has knocked around £300 million NPV off
What will really annoy Alstom and Angel Trains, which had been promoting Class 390 tilting trains running at 140 mile/h to replace IC225, is that DfT is getting all excited about raising line speeds on Intercity routes – including a revival of 140 mile/h running on the ECML racing grounds. Not sure what Network Rail will think of that.
Anyway, those are the basics. Look for a full analysis in the September column.
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Crossing performance overshadows Modular Signalling schemes
ORR shows tough love in draft determination
Crossrail train fleet – Siemens withdraws
Network Rail R&D succumbs to innovationism
Well, did I get it in the neck from readers at the sharp end over one comment in last month’s article on the Ely to Norwich (
Signallers and drivers made it very clear that the views I had quoted were Too Optimistic and Second Hand. At least I assume that was the acronym being used by a driver who referred to ‘TOSH’.
Since I researched the article in April it has become clear that Obstacle Detection (OD) replacing CCTV at Manually Controlled Barrier (MCB) crossings is not as simple as it seems. And don’t forget that Network Rail is proposing to install MCB-OD across the network as a crossing ‘upgrade’ in its own right.
So this month I go into the safety analysis and technical background to MCB-OD in some detail, as well as reporting on the latest developments. And the news here is that service experience is generating second thoughts about the need for multiple OD.
As currently installed, an MCB-OD has Primary (POD) and Complementary (COD) detection. The POD uses the radar already in service on over 200 crossings in
Following risk analysis, Network Rail decided to add the COD in the form of Laser Imaging and Ranging (LIDAR) scanners to cover obstacles ‘under the radar’. There are two LIDARs – the bottom one, 150mm above road level is able to detect a prone child.
But this bottom LIDAR has proved to be vulnerable to mud splashes from passing vehicles and snow. This is not a safety issue, because if the lens is obscured the LIDAR thinks it is seeing something and fails safe – bringing trains and traffic to a halt.
Traffic delays caused by the new MCB-OD in an already heavily congested town caused a furore in
‘This component’ is, the low level LIDAR. Which brings us to the second Mod-Sig pilot –
On this scheme, too, the lower of the two LIDAR scanners will be removed from the MCB-OD crossings. Obviously getting rid of the lower or both LIDARs will need approval by the Office of Rail Regulation.
They told me that there is no ‘blanket removal’ of LIDAR ‘proposed or supported by ORR’. However, ORR will scrutinise Network Rail's risk assessments ‘and take immediate action if there is an imminent risk to either the users or trains at the crossing’.
When you consider that that MCB-OD conversions include six secondary road crossings on the ECML between
Draft determination published
Yes I know it will put off readers by the score, if not by the 100, but if we are going to understand what’s happening in the modern railway we need to have a basic knowledge of how it is financed. So this month’s column has a sizeable chunk of analysis of the Office of Rail Regulation’s draft determination of Network Rail’s income for the five years of Control Period 5 (CP5) starting next April.
It is very important stuff and to lure you in I have produced two scary charts you won’t see anywhere else. And to try and keep your interest as I attempt to make 812 pages of draft Determination fit for human consumption, I have introduced the odd rudery and snarky aside.
Overall, it is quite a sympathetic Determination which recognises the problems Network Rail faces, both of its own making and dumped on it by government. Efficiency gains are focused on operations and renewals with the latter providing the majority of the savings. Enhancements are dominated by major projects already under way, notably Thameslink and the Great Western Route Modernisation.
A characteristic of this latest Determination is ORR’s pragmatic approach. For example, within Network Rail’s £12 billion enhancement programme, schemes with a combined valued of £7billion are still at an early stage of Network Rail’s GRIP evaluation process.
Since it is not Network Rail’s fault that the Government has brought forward several immature enhancement schemes for CP5, ORR is going make its final Determination in October on the basis of the cost assessments currently available. It would then finalise the total efficient cost in March 2015 when detailed costings should have emerged.
Similarly on maintenance. ORR recognises that Network Rail has not achieved the savings expected from the introduction of new technology during CP4. As a result the CP5 maintenance budget has been protected, particularly in the first three years. This will provide a second chance for Network Rail to plan the effective use of the new technology.
Performance
When it comes to performance ORR seems to have taken on board some of Network Rail’s ‘triangulation’ argument. In the current Control Period we have individual targets for each of the three business sectors. For CP5 there will be a single overall requirement for a 92.5% PPM by 2019. But each franchised operator in
Every silver lining has its cloud and on finance proper there are signs of Cu-Nim staring to form. First, the gap between industry expenditure and DfT’s Statement of Funds Available – the so-calmed ‘headroom’ - is much smaller than in the current Control Period.
And, as ever, Network Rail’s debt continues to soar as the Government uses the Regulatory Asset Base to ‘buy now and pay later’. This, I suspect, is the next big issue, since government, Regulator and Network Rail itself all realise that enhancing infrastructure on what my mother used to call the ‘never-never’ is not sustainable.
Crossrail – rolling stock market gets messier
On 5 July Siemens announced that it was pulling out from bidding for the Crossrail rolling stock fleet. The company described it as a ‘strategic decision … based on current business activity levels’.
This was a prudent decision for two reasons, First, when the Thameslink Invitation to Tender was issued in December 2008, the initial requirement was to have sufficient trains delivered to cover 10 diagrammed services by the later of July 2013 or 40 months from contract signature. The full fleet was due to be in service by the later of December 2015 or 69 months from contract award.
With the contract not awarded until June this year, the 69 months now equates to March 2019. But to meet the current Thameslink programme the fleet must be available for the December 2018 timetable.
This will mean Siemens shortening the expected delivery schedule by around 9 months. That is doable, but delivering 600 vehicles for Crossrail at the same time is probably not.
In any case, since Siemens made its initial assessment of capacity and deliverability within the Crossrail timescale, the company has won ‘multiple additional orders’. ‘To pursue another project of this scale could impact our ability to deliver our current customer commitments - something we believe would not be a responsible course of action’, the company concludes.
Survival
So now we have Bombardier, CAF of Spain and
Hitachi, is spending £82 million on a new assembly plant at Newton Aycliffe. The extra 30 nine car sets to replace IC225 represent a year’s work at most and will be delivered by 2020. Factories are hungry fixed assets and despite optimistic noises about European orders, Crossrail is the only live show in town.
So expect more special pleading from the Canadians and the Japanese at the level of ‘give us the Crossrail order or we’ll drown the kitten’. And while DfT has given Bombardier another 116 Electrostar vehicles to build for Thameslink – the announcement timed to defuse protests over the IC225 replacement extension to the IEP contract - I suspect Bombardier currently has the edge in the kitten drowning stakes.
Not another Technical Strategy
Surely, I thought, after all the airy-fairy stuff in the Rail Technical Strategy Network Rail could be relied on to come up with some practical Research & Development proposals? But no, the Network Rail Technical Strategy (NRTS) turned out to be the same mix of naïve aspirations, ignorance of what’s happening and a belief in magic bullets, especially imported technology.
And it sprawls over 92 pages of which eight are devoted to traction and rolling stock which is none of Network Rail’s business. Or rather, Network Rail has so many immediate R&D issues that however much the wonks who produce this sort of stuff like to get in touch with their inner Gresley, they should resist the urge.
Anyway, in an attempt to be positive, in the column I contrast the railway’s incoherent approach to R&D (not the same as ‘innovation’), with the European aircraft industry’s Clean Sky programme. Clean Sky 1 runs to 2016 and is based on producing demonstration hardware.
Network Rail had asked ORR for a £300 million Research & Development fund in Control Period 5. ORR rejected the request on the grounds that it was ‘not well justified’. Well, if ORR was shown an advanced copy of the NRTS I can’t blame them.
ORR’s counter offer, subject to Network Rail making ‘acceptable proposals’, is a commitment to strengthen the financial incentives for the company to invest in R&D in a ‘commercially-led’ way. Which sounds a bit like the Clean Sky approach.
‘Subject to a well justified proposal’ a ‘matched-funding financial incentive’ will be introduced for CP5. This would match every additional pound spent by Network Rail on R&D and innovation.
But then it gets silly. Among other pettifogging issues ORR is concerned about the associated risks of such investment and how they might be shared and also whether the scale of the risks ‘can be viewed as a reasonable part of Network Rail’s overall balanced portfolio of risks’.
For heaven’s sake, R&D is all about risk! You win some and you lose some. But try explaining that to ORR’s self described pointy-headed bean counters.
Any here’s some hot news on the innovation front. The Informed Sources Research Department has come up with something even better than Unobtainium. At a recent IMechE conference, my old chum Phil Hinde, Rolling Stock & Depots Manager for Crossrail, took a side-swipe at the technical strategy industry when he urged: ‘We have to make energy efficiency the day job’ adding ‘don’t wait for catapults and magic bullets and universal material as light as balsa wood, stronger than steel and fully fire resistant’. In future columns Hindeum (Hd) will be the standard wonder material.
Roger’s blog.
Well, it’s been all wining and dining, with a break for dancing, since the last blog. First of all, we had the June Fourth Friday Club which incorporated the ever popular innovation awards after a cracking speech by Interim Franchising Direct Peter Wilkinson. I couldn’t be sure that I would be available for the afternoon so my colleague Ian Walmsley did the honours. But a free afternoon after all meant that I could relax and enjoy the event fort once.
I was chatting with Southern MD Chris Burchell over-lunch and a week later used his excellent service to go to
Back in day-job mode it was off the East Coast media dinner – with power-point presentations from MD Karen Boswell and Network Rail Route Director Phil Verster between courses. I think that’s called ‘singing for your supper’. Then last week, Siemens and Railcare joined with Heathrow Express for a celebration lunch at Paddington to mark the completion of the fleet refurbishment. Plenty to talk about with some old chums.
August for Modern Railways used to be the holiday season when I would write a nostalgic piece for poolside reading and we had a seaside theme for the cover. Not any more. In the first week of the month I’ve got a meeting with the newly appointed MD of my local service First Capital Connect and the week after that an in-depth session with East Coast on their five year plan.
Must fit in some holiday somewhere
In September the IMechE Railway Division Young Members have a three day seminar on ‘Integrating delivery across the rail industry’. As it’s down the road at Hertford Uni’s de Havilland Campus I’ve got no excuse for not popping over to hear some interesting speakers. And at the end of the month the new session of the Fourth Friday Club starts.
Now to update my IEP NPV calculations. Perhaps it is the silly season after all.
Roger