Last December, Network Rail announced that it had chosen four contractors to carry out enhancements, buildings and civils work in the south of England in deals worth up to £1.2bn in total. This sum represents almost half Network Rail’s total spending allocation for the Anglia, Kent, Sussex and Wessex routes for the next five years. It also represents a significant commitment to the selected contractors.
The framework contracts are now the responsibility of VolkerFitzpatrick on the Anglia route, BAM Nuttall on the Sussex route, Osborne on the Wessex route and Costain on the Kent route. Each contractor has agreed terms for the four frameworks as well as an agreed minimum contract value.
The contracts and associated agreements went live on 1 April 2014 and they will be in place until March 2019, the financial period known as CP5. The form of agreement in place, known as the New Engineering Contract 3 or NEC3, is new to both Network Rail and the contractors. The aims of the frameworks are to encourage and facilitate suppliers to work closely with Network Rail, undertaking projects of all sizes spanning from initial development through to final delivery while incorporating jointly agreed objectives that are aligned with Network Rail’s outputs for CP5.
This approach to collaboration formed 25 per cent of the tender evaluation criteria, thus ensuring that Network Rail will be able to fulfil its commitment to work more closely and transparently with its supply chain. Also, for the first time, Network Rail has decided that safety issues will make up 15 per cent of the evaluation criteria used to select its partners. In total 85 per cent of the criteria is quality-related, leaving just 15 per cent associated with cost which represents a significant and exciting shift in Network Rail’s approach to procurement.
High profile routes
These contracts have now been running for more than six months and The Rail Engineer thought that readers would be interested to know how the engineering work itself and the associated relationships are performing under the controls and agreements of the new NEC3 arrangements. This prompted a visit to London to meet Andy Clarke, senior project manager for Costain, who is responsible for the framework contract on the Kent route which includes Charing Cross and Cannon Street stations in the centre of London and fans out through the commuter belt to coastal destinations such as Margate, Dover and Hastings and Folkestone.
The Costain team is co-located with the Network Rail project and client teams in modern offices which overlook the Thames on one side and London Bridge station on the other with the imposing Shard building in the background. The location itself is a timely reminder of how important the Kent route is for everyone involved with this contract.
Andy explained that the framework involves projects across a wide variety of multidisciplinary works covering civil engineering, track construction, signalling, and mechanical and electrical works. The projects will include underbridge repair and replacement, footbridge construction, major earthworks and works to tunnels and station platforms and buildings.
Fully integrated teams
For Andy and everyone involved, this contract is quite different from anything that they have worked on before. The customer is clearly defined as Network Rail’s South eastern route director of asset management (DRAM) and route enhancement manager (REM). Andy reports to a framework board of directors which includes representatives from Network Rail, Costain and DRAM. The delivery team supporting Andy is a fully integrated team consisting of Costain, Network Rail and supply chain members, all chosen because of their knowledge, skills and suitability rather than for whom they work.
The development of the team is still in its early stages and although Network Rail and Costain are BS11000 accredited, it has been decided that the integrated team should undergo an external audit to ensure that the framework team itself is fully compliant. Both parties have produced and agreed a relationship management plan for the framework.
Over the five years, the framework team will fluctuate in size from about 70 to 120 engineers and designers, depending on the workload. Already, there are more than 160 schemes that the fully-integrated team must deliver and this number is increasing. The RAM has produced a business plan which includes the anticipated cost for carrying out each item of work and the challenge for the framework team is to work collectively, injecting innovation and efficiency into the process while ensuring that the cost of the work sits within the client’s business plan budget.
This means that Network Rail will no longer seek the services of a designer to develop a scheme and then go out to tender to find a suitable contractor to execute the work. Instead, Network Rail will go straight to the integrated framework team who will be expected to provide a complete service in that they must understand the problem that the RAM wants to resolve, they must find a solution and it must be cost effective.
This radical approach has the potential to dramatically reduce the time taken to identify the problem and complete the work. In addition, it removes bidding costs, the cost of managing different interfaces and, most importantly, the cost often incurred when the scheme has to be reengineered as the different levels of expertise are introduced in order to complete the work satisfactorily. The incentive for innovative thinking is clear since the benefits of finding an acceptable solution are shared.
There are 26 key suppliers which Andy anticipates will cover all the activities required, including CH2M Hill which is providing much of the design skills. There is no tendering for work, which the suppliers initially found confusing. Instead, Andy invites the appropriate suppliers to a meeting, his team explains what is required and then invites them to work together to come up with the most appropriate value-for-money solution. When this has been agreed, the cost of the job is determined and, if it is outside the RAM’s business plan, they have to either review the specification, drive further innovation or reduce the volume of work to be completed. Everyone involved has to think as one team so that everything is geared up to encourage innovation and smarter thinking, offering quick and cost effective solutions.
Within the integrated framework team there are currently eight graduate trainees and, as Andy highlighted, if it is diversification they are looking for then they could not be in a better place. For example, in the Maidstone area, Network Rail experienced a slip in a cutting that covered the third rail enforcing a 20mph speed restriction. A temporary fix was designed which involved removing substantial amounts of soil and vegetation, installing a temporary gabion structure and a wireless sensor grid so that any further movement can be monitored over the next six months and a design solution drafted. Meanwhile, the temporary speed restriction has been removed and the train service is back to normal.