Report
by the Comptroller
and Auditor General
Department for Transport and Network Rail
Modernising the
GreatWestern railway
HC 781 SESSION 2016-17 9 NOVEMBER 2016
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Report by the Comptroller and Auditor General
Ordered by the House of Commons
to be printed on 8 November 2016
This report has been prepared under Section 6 of the
National Audit Act 1983 for presentation to the House of
Commons in accordance with Section 9 of the Act
Sir Amyas Morse KCB
Comptroller and Auditor General
National Audit Office
4 November 2016
HC 781 | £10.00
Department for Transport and Network Rail
Modernising the
GreatWestern railway
This report examines planning and programme
management of the Great Western Route Modernisation
industry programme as a result of significant issues
arising on delivery of the programme.
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11314 11/16 NAO
The National Audit Office study team
consisted of:
Kemi Duroshola, William Francois,
JolaGroves, Rose Martin,
JackMoore, Michael Slater and
GraceWilliams, under the direction
ofRebeccaSheeran.
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Contents
Key facts 4
Summary 5
Part One
Introduction 11
Par t Two
The Department for Transport’s
management ofGreat Western
improvements 18
Part Three
Network Rail’s management
ofinfrastructureworks 31
Part Four
Impact of works and delays
toelectrification 43
Appendix One
Our audit approach 52
Appendix Two
Our evidence base 54
4 Key facts Modernising the Great Western railway
Key facts
18 to 36
months
minimum delaysto electrifi cation
to destinations along the Great
Western route compared to
Network Rail’s 2014 plan
£1.2bn
increase in the estimated
cost of electrifi cation since
2014. Thecost of the wider
infrastructure programme, which
includes electrifi cation, has risen
by £2.1 billion since 2013
Up to
£330m
the Department for Transport’s
current estimate of the increase
in its net costs caused by delays
to electrifi cation
£5.58 billion
current total estimated cost of the Great Western Route
Modernisation infrastructure programme including cost increases
since 2012-13 (2012-13 prices)
£4.1 billion
cost of new Intercity Express trains procured by the Department
for Transport (the Department) for the Great Western route over
27½years (2014 prices, present value)
21,200
the Department’s forecast, in 2012, of the increase in passengers
arriving at London Paddington per day during the peak period,
between 2013-14 and 2018-19 (an 81% increase)
2.4:1
benefi t–cost ratio expected by the Department in March 2015,
before the electrifi cation programme was reset
1.6:1
our estimate of the benefi t–cost ratio taking into account the
current forecast cost of the programme and additional costs
totheDepartment
Modernising the Great Western railway Summary 5
Summary
1 The Great Western Route Modernisation involves complex infrastructure works,
new trains and service changes. These aim to improve services along the rail route,
which connects London with west and south-west England and south Wales. Trains
travelling to London Paddington at peak times are consistently among the most crowded
in the country. The Department for Transport (the Department) forecasts that demand
along the route will continue to rise. Modernising both infrastructure and rolling stock is
intended to increase capacity and provide fast and reliable journeys for passengers.
2 The modernisation is made up of several important, interdependent elements,
which were only brought together as an integrated programme in 2015 and are known
as the Great Western Route Modernisation ‘industry programme’:
•
Network Rail is responsible for the infrastructure programme, including
electrification of the main line between London and Swansea. Electrification of a
major section of the route, between London and Cardiff, is due to be completed
by December 2018. Works on other sections are currently expected to continue
until later in the period 2019 to 2024. Other infrastructure works include upgrades
to signalling, tracks, stations, bridges and tunnels. Together, these will cost
£5.58 billion. Network Rail must also coordinate the works with other railway
improvements and keep the tracks available for train services to run.
•
The Department for Transport is responsible for setting high-level requirements for
rail infrastructure and for funding the work.
•
The Department is responsible for commissioning new Intercity Express trains
to replace ageing fleets on the main line by the end of 2018, at a cost of around
£4.1billion.
•
The Department is responsible for the award and management of the franchise to
run train services on the route, and for plans to re-deploy trains from Great Western
to other routes.
6 Summary Modernising the Great Western railway
3 In 2015, the Department and Network Rail identified that the nationwide rail investment
programme for 2014–2019 was costing more than planned and taking longer. The most
significant cost increases were on the project to electrify the line between Maidenhead and
Cardiff, a key part of the Great Western Route Modernisation programme. The Committee
of Public Accounts found that the nationwide programme was not deliverable. In large part
this was because over half of planned spending was on projects where cost and scope
were highly uncertain at the start of the period. Theregulator, the Office of Rail and Road,
had scrutinised parts of the programme, but the Committee of Public Accounts found that
its approach was not robust enough. Borrowing arrangements in place before 2014 meant
that Network Rail had only a weak incentive to get initial cost forecasts right.
4 In late 2015 and early 2016, as part of a broader review of its investment programme,
Network Rail set a new cost and schedule for electrification. The Department now expects
electrification of the route from London to Cardiff to be completed in December 2018,
18 months later than Network Rail planned in September 2014. This had consequences
for the plans to introduce new trains on the route and to provide benefits for passengers
across the network. The regulator has recently reduced its level of concern about the
electrification programme, as Network Rail is currently making progress as planned.
Scope of the report
5 This report looks at the causes of difficulties delivering the programme so far,
particularly the reasons for cost increases on electrification. We examine the extent
to which the Department and Network Rail are improving their management of the
programme and report on the remaining risks to delivery.
Key findings
The case for the Great Western Route Modernisation industry programme
6 There is a good case for increasing passenger capacity on the Great Western
route. In autumn 2013, three of the 10 most overcrowded train services in England and
Wales were Great Western services into London Paddington. The Department forecasts
that passenger demand on the route will grow by 81% between 2013-14 and2018-19
(paragraph 2.10).
7 Cost increases and recent changes to the new trains order mean that the
value for money of the programme needs to be reassessed, and the extent of
electrification reconsidered. In March 2015, the Department assessed the programme
benefit–cost ratio at 2.4:1, representing ‘high’ value for money in the Department’s
methodology. This did not include the cost increases which have become clear since.
We estimate this would reduce the benefit–cost ratio to around 1.6:1, which is within the
Department’s ‘medium’ value-for-money range. The Department’s decision in May 2016
to procure all the Intercity Express trains as ‘bi-modes’ (capable of either diesel or electric
operation) also calls into question whether the full extent of electrification under the
programme is still value for money, as all the new trains will now be able to run on non-
electrified route sections (paragraphs 2.11 to2.14).
Modernising the Great Western railway Summary 7
Programme management prior to 2015
8 Before 2015, the Department did not plan and manage all the projects which
now make up the Great Western Route Modernisation industry programme in a
sufficiently joined up way. In 2007 the Department decided to buy high-speed diesel
trains for the route under its Intercity Express Programme, to replace ageing trains and
increase capacity. This changed in 2009, when the Department announced that the line
would be electrified and that it would buy a combination of electric and bi-mode high-
speed trains. The Department’s objectives could only be met by working with Network
Rail and the train operator, to complete the electrification and other infrastructure works
and introduce new trains. The Department did not produce a business case bringing
together all the elements of what became the Great Western Route Modernisation
industry programme until March 2015. This was more than two years after ordering the
trains and over a year after Network Rail began work to electrify the route (paragraphs
2.2 to 2.4 and 2.9).
9 The 2012 schedule for the infrastructure programme was unrealistic.
NetworkRail has had to carry out a complex set of infrastructure works, on a working
railway that passes through heritage areas and areas of outstanding natural beauty.
When the Department entered into a contract to buy the Intercity Express trains, creating
fixed deadlines for electrification, Network Rail had only just identified that it would need
to develop a new type of electrification. The electrification timetable was not based on a
bottom-up understanding of what the works would involve (paragraphs 2.6 and 2.7).
10 In 2015 Network Rail replanned the infrastructure programme after it became
clear that costs were increasing and the schedule could not be met. Electrification
between Maidenhead and Cardiff is now expected to cost £2.8 billion. This is an
increase of £1.2 billion (70%) against the estimated cost of the programme in2014
(£1.7 billion against Network Rail’s 2013 estimate). The cost of other elements of the
programme has also increased. The estimated cost of other Great Western projects
that were in the programme’s scope in 2013 has increased by £446 million (28%),
to £2.0 billion. This in part reflects the fact that 2013 plans were at an early stage of
development, and the expected costs of work were therefore uncertain (paragraphs 1.5,
3.2 and 3.3).
11 The cost increases arose, in part, because assumptions in Network Rail’s
2014 cost estimate were unrealistic. Network Rail was too optimistic about the
productivity of new technology. It underestimated how many bridges it would need to
rebuild or modify. It also underestimated the time and therefore costs needed to obtain
planning permission and other consents for some works, for example those which
could affect protected species or listed buildings. It needed more than 1,800 separate
consents for such works (paragraphs 3.6 and 3.7).
8 Summary Modernising the Great Western railway
12 Failings in Network Rail’s approach to planning and delivering the
infrastructure programme further increased costs. Network Rail did not work out
a ‘critical path’ – the minimum feasible schedule for the work, including dependencies
between key stages – before starting to deliver electrification. It failed to manage the
technical challenges and risks of using new technology, specifically a new design for the
electrification equipment and a new ‘factory train’ for installing the equipment and its
supporting steel structures. Network Rail did not conduct sufficiently detailed surveys of
the locations for the structures, which meant that some design work had to be repeated
(paragraphs 3.7, 3.8 and 3.11).
The impact of delays
13 Delays to the electrification programme will cost the Department up to
£330million. The Department intends to vary its order of Intercity Express trains so that
they can operate under both diesel and electric power. The Department will also receive
less income from the Great Western franchise between September 2015 and March 2019.
This is because the train operator will bear the costs of providing extra trains and leasing
depots, as well as higher running costs from operating diesel trains for longer, while
receiving less revenue from passengers than expected (paragraphs 4.1, 4.8 and 4.11).
14 Some passengers in the north and west of England may have to wait
longer to see improvements in services. Passengers across Britain will benefit from
trains being reallocated once the new trains on Great Western are introduced, but the
Department has had to revise its plans for train reallocations because of the delays to
the Great Western Route Modernisation. The Department has worked hard to protect
existing passenger services in the Thames Valley (branches off the main line between
London and Newbury). But under the new plan passengers in the west may have to
wait up to two years longer than expected to see improvements such as increased
capacity. Passengers in the north may have to wait an additional nine months to see
improvements due to a combination of the revised plans and delays to infrastructure
works there. As at November 2016, the government had not yet confirmed the new plan
(paragraphs 4.6, 4.7 and 4.10).
Improving programme and project management
15 Network Rail is implementing a major ‘Enhancements Improvement
Programme’ to address systemic failings that it identified as contributing to the
cost increases on the electrification programme. In July 2016, the regulator reported
that Network Rail was making ‘good progress’ in delivering these improvements. These
include cost estimation, monitoring arrangements and governance. Network Rail is
also taking steps to strengthen its collaboration with contractors and the wider rail
construction industry (paragraphs 3.8 to 3.12).
Modernising the Great Western railway Summary 9
16 The programme management arrangements that the Department and
Network Rail began to put in place in 2015 provide a platform for better, more
efficient delivery. In February 2015, the Department and Network Rail established
a programme board, meaning key stakeholders in the infrastructure, new train and
franchising elements of the programme can be involved in decision-making. The
Department now has a clear senior responsible owner for the programme, who chairs
the programme board. The board is supported by a Network Rail programme office.
This has been in place since April 2014, and aims to provide an integrated view of the
programme. The effectiveness of the programme management arrangements depend
on transparency and collaboration between all parties (paragraphs 2.15, 2.17 and 3.10).
Future risks
17 Weak programme management information has undermined the programme
board’s effectiveness. Management information has not been of the standard we
have seen on other major programmes. The information that the programme board
has received about costs and schedule for the infrastructure programme has not
been based on an earned value management approach, in line with best practice
for managing major programmes. It has not fully informed the board about progress
with delivery and has made it difficult to monitor risks. Network Rail has told us that it
is developing earned value management measures, but it has not yet put these into
practice (paragraph 2.16).
18 Network Rail has a challenging task to deliver the main benefits from the
infrastructure programme, within the current schedule and budget. The schedule
for electrification contains some ambitious assumptions, for example that piling and
mast construction rates will increase significantly between August and November2016.
The budget for the electrification programme between London and Cardiff currently
has less funding available to manage risk than Network Rail believes it needs
(paragraphs3.15 to 3.17).
19 Some passengers will have to wait longer to see the full benefits of
modernisation because of budget constraints. The Department has decided to
further delay electrification on some stretches of the route as the costs cannot be met
within the current funding package. The Department currently intends to electrify these
sections but not until the next rail investment period, which runs from April 2019 to
March 2024 (paragraphs 1.7 and 2.18).
10 Summary Modernising the Great Western railway
Conclusion on value for money
20 The Department’s failure to plan and manage all the projects which now make up
the Great Western Route Modernisation industry programme in a sufficiently joined up
way, combined with weaknesses in Network Rail’s management of the infrastructure
programme, has led to additional costs for the taxpayer. The way in which the programme
was delivered before 2015 cannot be said to have best protected value for money.
21 The modernisation of the route has potential to deliver significant benefits for
passengers, but the Department’s assessment of value for money does not reflect
recent developments, particularly changes to the train specification, and needs to be
revisited. The Department and Network Rail have begun to improve the management
ofthe programme. They have more to do to protect value for money in the future.
Recommendations
22 To continue to improve delivery of the Great Western Route Modernisation
industryprogramme:
a The Department should assess whether the full extent of electrification, as currently
planned, is still value for money. We understand the Department is updating its March
2015 business case to support this assessment. It should complete this process as
soon as possible, and use the business case to inform other important decisions such
as the start of the competition for the Great Western franchise in 2018.
b The Department for Transport and Network Rail together should improve the
quality of programme management information presented to the programme
board, drawing on best practice on other major programmes such as Crossrail.
To support this, Network Rail should accelerate its plans to introduce an earned
value management approach across the business, and use this to monitor the
infrastructure programme.
23 To improve the delivery of future major programmes:
c The Department should be clear about the benefits it wants to provide for
passengers before beginning any future major modernisation projects.
d Network Rail should capture all of the learning from its experience of introducing
both new technology and new ways of working on the Great Western infrastructure
programme. It should use this to create more realistic plans for future projects,
including the Midland Main Line and Trans Pennine Express electrification schemes.
Modernising the Great Western railway Part One 11
Part One
Introduction
1.1 The Great Western Route Modernisation industry programme is sponsored by
the Department for Transport (the Department). It aims to provide faster, greener trains,
improved services and more seats for passengers throughout the Great Western rail
network. The network extends from London to the south-west and Wales and covers
London suburbs, Oxford, the Cotswolds and the south coast. Figure 1 overleaf shows
the type of infrastructure works required for the programme, on different routes within
thenetwork.
1.2 Figure 2 on page 13 sets out the main components of what is now known as the
Great Western Route Modernisation. The Department is responsible for procuring the
new Intercity Express trains, setting high-level requirements for rail infrastructure, funding
the work and awarding the franchise to operate services on the route. These elements
are together known as the ‘industry programme’. Network Rail is responsible for
delivering the ‘infrastructure programme’, that is, the works on the railway infrastructure.
1.3 Since the first parts of the programme began, the relationship between the
Department and Network Rail has changed. The Department funds Network Rail in
five-year cycles to deliver its requirements for the railway. Before 2014, Network Rail
was a private company, able to borrow from the financial markets to cover increases
in the costs of its work. In 2014, Network Rail was reclassified as a public sector body
and since then it has only been able to borrow from government, with a loan cap
of £30.3 billion. The Report of the Bowe Review into the planning of Network Rail’s
Enhancements Programme 2014–2019 also found that before reclassification Network
Rail had only a weak incentive to get initial forecast costs right.
1
Part Three of this
report discusses how this has affected the management of cost increases on the Great
Western Route Modernisation infrastructure programme.
1 Report of the Bowe Review into the planning of Network Rail’s Enhancements Programme 2014–2019, Department
for Transport, Cm 9147, November 2015, available at: www.gov.uk/government/uploads/system/uploads/attachment_
data/file/479560/bowe-review.pdf
12 Part One Modernising the Great Western railway
Figure 1
The Great Western Route Modernisation
Note
1
Capacity and capability works include work to bridges, tunnels, cuttings etc, to ensure that the new trains can run safely and effi ciently.
Source: Network Rail’s Enhancements Delivery Plan update (March 2016), available at: www.networkrail.co.uk/Enhancements-Delivery-Plan-March-2016.pdf
Swansea
Cardiff Central
Penzance
Exeter Central
Weymouth
Portsmouth Harbour
Brighton
Hereford
Cheltenham Spa
Swindon
London
Paddington
Slough
Maidenhead
Newbury
Basingstoke
Reading
Worcester
Shrub Hill
Oxford
Bristol
Temple
Meads
Electrification, capacity and capability works
Other capacity and capability works
Station works
Stations
Modernising the Great Western railway Part One 13
Core industry programme elements Interdependent elements outside the
industry programme
Figure 2
Key elements of the Great Western Route Modernisation industry programme
New Intercity Express trains
£4.1 billion (costs are over 27½ years)
Notes
1
Work on part of the Great Western route, between London Paddington and Maidenhead is funded separately by the Crossrail programme. Network Rail
iscarrying out works on this route section in support of the Crossrail programme.
2
Infrastructure costs are in 2012-13 prices. The cost of the Intercity Express Programme trains is the net present cost, in 2014 prices. The cost of the
AT300trains is in 2015-16 prices. The size of rectangles is not proportionate to spend.
Source: National Audit Offi ce collation of Department for Transport and Network Rail fi gures
New trains for commuter routes
Great Western Electrification Programme
£2.8 billion (includes Maidenhead
to: Cardiff, Oxford, Newbury, Bristol
TempleMeads)
Other electrification £0.7 billion
(includes Cardiff to Swansea £433million)
Trains
Infrastructure
programme
Other Great Western Route Modernisation
infrastructure £2.1 billion (includes
Reading Station (£763 million), capability
and capacity works for new trains
(£258million), Bristol area signalling
(£228million), track widening at
FiltonBank (£91 million))
New AT300 trains to run between
London and Penzance £359 million
Crossrail works between London
Paddington and Maidenhead
1
£1.4 billion
14 Part One Modernising the Great Western railway
1.4 The Department anticipates that the projects making up the Great Western Route
Modernisation industry programme will provide a range of benefits for passengers,
including faster, more frequent services (Figure 3). Achieving these benefits relies on
allthe elements of the programme being implemented.
Figure 3
Expected benefi ts of the industry programme
Infrastructure works
Source: National Audit Offi ce summary of the Department for Transport’s Great Western Route Modernisation business case (March 2015)
Programme elements
Objectives Benefits
Station upgrades
New and newly deployed trains
Lines have greater capacity to support more trains
Trains and stations have greater capacity
Faster, more reliable trains
Passenger trains equipped better
Reduce costs and realise savings
Enhance environmental sustainability
More journeys for passengers
and freight customers leading
to economic growth
Improved journey experience
for passengers
Lower spending on trains
with savings mainly for
the Department
Environmental benefits
Modernising the Great Western railway Part One 15
1.5 The Department brought together the projects making up the Great Western Route
Modernisation industry programme in 2015, several years after it began the first projects
tomodernise the route. By then, it had become clear that elements of the programme
were costing more and taking longer than expected. This meant that the electrification
work had to be replanned, with significant effects on the Department’s plans to introduce
new trains onto the network, and on the operation of franchised services on the route.
1.6 The replan of the Great Western work was part of the government’s response
towider concerns about Network Rail’s 2014–2019 spending programme. In June2015,
theSecretary of State for Transport announced that other planned electrification
schemes, on the Midland Main Line and TransPennine routes, would be paused.
The government commissioned three reviews, to look at lessons to be learned from
the planning of the investment programme, Network Rail’s delivery of the investment
programme, and the future shape and financing of Network Rail.
1.7 In publications in November 2015
2
and January 2016,
3
Sir Peter Hendy, chair of
Network Rail, proposed a revised timetable to deliver the Great Western electrification
at a cost of £2.8 billion.
4
This was £1.2 billion more than Network Rail’s 2014 estimate.
Network Rail now expects electrification of the route from London to Cardiff to be
completed in December 2018, 18 months later than it expected in September 2014.
Under the January 2016 version of the revised timetable, other sections of the route
were to be electrified up to 36 months later than planned in September 2014. In
October2016, the Department decided to further delay electrification on some sections
of the route, although it and Network Rail have not yet set precise target dates to
complete this work (Figure 4 overleaf; see also paragraph 2.18).
2 Network Rail, Report from Sir Peter Hendy to the Secretary of State for Transport on the replanning of Network Rail’s
Investment Programme, November 2015, available at: www.networkrail.co.uk/Hendy-review/
3 Network Rail, Report from Sir Peter Hendy to the Secretary of State for Transport on the replanning of Network Rail’s
Investment Programme: Enhancements Delivery Plan Update, January 2016, available at: www.networkrail.co.uk/
enhancements-delivery-plan-update.pdf
4 In 2012-13 prices, as measured by the Retail Prices Index.
16 Part One Modernising the Great Western railway
Figure 4
Current timetable for electrifi cation between London and Swansea, and delays compared with plans in September 2014
Notes
1 Darker shading shows longer delays.
2
Grey indicates that an exact date for completion is not yet decided. In the cases of the route sections between Didcot and Oxford and between Bath and Bristol Parkway,
this is because, in October2016, the Department for Transport instructed Network Rail to delay some route sections, for affordability reasons (see paragraph 2.18).
Before this decision, Network Rail’s January 2016 plan anticipated a three-year delay to the section between Didcot and Oxford, compared to its September 2014 plans.
3
The section between Reading and Didcot has been open for testing of new Intercity Express trains since September 2016, and the Department plans for electric trains carrying
passengers to run from December 2017 as shown above.
Source: National Audit Offi ce analysis of Network Rail and Department for Transport data
Network Rail expects to electrify the section of the main line between Cardiff and London by December 2018; the branch to Oxford has
been delayed by at least three years
Crossrail section –
due for completion
June2017
Oxford
DidcotSwindon
Chippenham
BathBristol
Temple
Meads
Bristol
Parkway
Cardiff
Swansea
Reading
Newbury
Maidenhead London
Paddington
Completion
date to be
determined;
expected by
March 2024
Now due for
completion
December2018
– delayed by
oneyear and
sixmonths
Now due for completion
December2017 –
delayed by oneyear
and sixmonths
Completion date to be
determined; expected
by March 2024
Now due for completion
December 2018 –
delayed by two years
and six months
Delays of one to two years Delays of two+ years Completion date not yet decided
One year nine months
(Chippenham to Bath)
Due for completion
February 2019 to April2020:
delayed by at least
twoyears and eightmonths
(Swindon to Chippenham)
Completion date
to be determined;
expected by
March2024
Completion
date to be
determined;
expected by
March 2024
Now due for
completion
December2018
– delayed by
twoyears and
sixmonths
Modernising the Great Western railway Part One 17
1.8 The remainder of this report examines:
•
the Department for Transport’s role in initiating the Great Western Route
Modernisation industry programme (Part Two);
•
the reasons for the increases in the cost of the electrification programme and
Network Rail’s plans to improve delivery of the wider infrastructure programme
(Part Three); and
•
the impact on passengers and taxpayers of the failure to manage the
modernisation work as an integrated programme from the beginning (Part Four).
18 Part Two Modernising the Great Western railway
Part Two
The Department for Transport’s management
ofGreat Western improvements
2.1 The Department for Transport is responsible for the ‘industry programme’ on the
Great Western Route Modernisation – the integration of the trains, the infrastructure
programme and the operator franchise – to provide benefits for passengers. This part
examines the Department’s role in improving trains and infrastructure on the Great
Western route and how this has affected Network Rail’s delivery of the infrastructure
work. We assess:
•
how, what is now known, the Great Western Route Modernisation industry
programme was developed;
•
the Department’s business case for the modernisation programme; and
•
the programme management arrangements that the Department put in place
inearly 2015.
The Department’s strategy for the route
2.2 The Department’s aims changed several times between 2007 and 2014. In 2007,
the Department required Network Rail to deliver the infrastructure improvements needed
for the new trains that it had decided to commission for the Great Western route.
In 2009 the Department announced that the route would be electrified, significantly
increasing the scope of Network Rail’s work. Network Rail did some preparatory work,
but the Department changed the extent of electrification on the route several times
between 2009 and 2012:
•
In 2009, the Department announced its plan to electrify the line between London
and Swansea, which meant that the planned new diesel trains would be a mixture
of electric trains and ‘bi-modes’ (capable of either diesel or electric operation).
Earlier in 2009, the Department had appointed Agility Trains as the preferred bidder
for theIntercity Express Programme procurement.
Modernising the Great Western railway Part Two 19
•
Following the November 2010 Comprehensive Spending Review, the Department
confirmed that electrification would be carried out between London and Didcot,
Newbury and Oxford.
•
In March 2011, the Department confirmed electrification between Didcot and
Cardiff, at the same time as it confirmed that it would continue with Agility Trains
asthe preferred bidder to supply the Intercity Express trains for the route.
•
In July 2012, the Department reinstated the original plan to electrify the route from
London to Swansea. It also added electrification of the Thames Valley lines
5
and
local lines in the south wales valleys.
2.3 The industry programme relies on successfully delivering new trains, operated by
the train operator holding the franchise, and completing infrastructure works, including
track electrification (Figure 5 overleaf). This has made it crucial that the Department
works with Network Rail and other stakeholders, such as the train operator, to sequence
improvements carefully, and to manage interdependencies between different parts
oftheprogramme.
2.4 The Department’s approach to managing such interdependencies has varied
between different rail investment programmes. For the Thameslink rail programme,
infrastructure improvements also needed to be coordinated with the introduction of
new trains and with changes to the franchise. In that case, the Department agreed
governance arrangements from the outset which were intended to help it and other
interested organisations to manage the dependencies between infrastructure, trains and
franchising.
6
However, in the case of the Great Western Route Modernisation industry
programme, there was no integrated governance until early 2015.
2.5 The Department used reviews by the regulator, the Office of Rail and Road,
to inform its view of Network Rail’s work, but this work was not sufficient to ensure
a complex programme could be managed efficiently. The Office of Rail and Road
determined the ‘efficient cost’ of the Great Western Electrification Programme,
7
but the
Committee of Public Accounts found in 2015 that its approach was unconvincing and
itwas not robust enough in scrutinising Network Rail’s plans.
8
5 Acton – Willesden; Slough – Windsor; Maidenhead – Marlow; Twyford – Henley-on-Thames.
6 Comptroller and Auditor General, Progress in the Thameslink Programme, Session 2013-14, HC 227,
NationalAuditOffice, June 2013. Available at: www.nao.org.uk/report/progress-in-delivering-the-thameslink-
programme/
7 National Audit Office, Planning and delivery of the 2014–2019 rail investment programme, September 2015,
Memorandum to the Committee of Public Accounts, available at: www.nao.org.uk/time/pac-memorandum-planning-
and-delivery-of-the-2014-2019-rail-investment-programme/
8 HC Committee of Public Accounts, Network Rail’s 2014–2019 investment programme, Ninth Report of Session 2015-16,
HC 473, November 2015.
20 Part Two Modernising the Great Western railway
Figure 5
The Department’s, and Network Rail’s, responsibilities relating to the modernisation programme
Department’s responsibilities
Network Rail’s responsibilities
Source: National Audit Offi ce
The Department’s priorities – such as successfully running new trains, and fulfilling its contract with the franchise holder – rely on programme outputs
The Department contracts
with franchisees on the
basis that trains with
stated capabilities (such
as speed and capacity)
will be available
Trains can only
be displaced and
redeployed on other
lines if new trains are
introduced on time
Re-signalling is
required before
electrification
can be switched
on, to prevent
damage to
signals
Trains can only
be displaced and
redeployed on other
lines if new trains are
introduced on time
Other programmes
share station and
track space with the
Great Western route.
New Intercity Express trains
Ensure stations and
tracks are compatible
with new trains
Intercity Express enabling works
New tracks to increase capacity
(Filton, near Bristol)
New Intercity Express
trains, and other new
trains, need electrified
lines to run
Electrification
Signalling
renewal
Other train enabling works
All new and displaced
trains need depots
for storage and
maintenance
Depots and stabling
Franchise award
Oversight and funding of
major interfacing rail projects
Other major rail projects,
for example Crossrail, HS2
Other new trains
Oversight and funding of Network Rail’s infrastructure works:
•
specifies high-level outputs
•
agrees rail budget with Office of Rail and Road andNetwork Rail
Ensure that full
benefits of new
trains can be
realised
Ensure stations and
tracks are compatible
with displaced trains
Arrows show dependency
Cascade of trains within the
Great Western route and
specifying which trains will
become available for use
elsewhere on the network
Modernising the Great Western railway Part Two 21
2.6 When the Department entered into a contract to buy the Intercity Express trains in
July2012, creating fixed deadlines for electrification, Network Rail had only just identified that it
would need to develop a new type of electrification equipment (Figure6onpages22and23).
Itis unlikely that either Network Rail or the Department had a good enough understanding
ofthe work involved in developing and installing this new design, to be confident in the time it
would take when the Department let the contract for the new trains. Under the Department’s
contract with Agility Trains the Department would pay a penalty to Agility if these deadlines
were missed. Between 2009 and 2012, there was a dialogue between the Department and
Network Rail around the electrification specification, delivery arrangements and the timescales
needed to meet these deadlines. In April 2012 Network Rail started design work on a new
type of electrification, which was needed to meet European Union regulations, and because of
performance concerns about equipment used on other routes. In its January 2013 Strategic
Business Plan, Network Rail confirmed that it expected to complete electrification as the
Department required. Paragraphs 3.5 to 3.10 of this report discuss the main reasons for
subsequent cost increases and changes to the electrification schedule.
2.7 The Department and Network Rail did not agree a clear set of requirements for
Network Rail until nearly two years after the Department had formally instructed Network
Rail to electrify the route. This made it more difficult to deliver the programme to the
planned timetable (Figure 7 on page 24). In December 2012, the Department issued
anearly outline of its requirements for the works on the Great Western Main Line, and
in Wales. However, it was August 2014 before the Department and Network Rail agreed
moredetailed requirements for the infrastructure on the main line.
The creation of the Great Western Route Modernisation
industryprogramme
2.8 From late 2013, the Department began to realise, from discussions with Network Rail
and reports from the regulator (the Office of Rail and Road) that there were risks to Network
Rail’s schedule for the electrification work and that costs were rising. This had implications for
the rest of the industry programme.
9
In early 2015, the Department introduced changes aimed
at strengthening control over the wider industry programme and providing greater assurance
on its schedule and costs. The Department developed a combined business case for the
entire programme and put integrated governance structures in place.
A business case for the programme
2.9 In March 2015, the Department produced the first business case for the industry
programme,
10
more than two years after ordering the trains and over a year after Network
Rail began work to electrify the route. This summarised and communicated what the
electrification and new trains should achieve. It was also intended to inform the terms of
thefranchise agreement let to FirstGroup to continue to operate services on the route,
fromSeptember 2015.
9 National Audit Office, Planning and delivery of the 2014–2019 rail investment programme, September 2015, Memorandum
to the Committee of Public Accounts, available at www.nao.org.uk/time/pac-memorandum-planning-and-delivery-of-the-
2014-2019-rail-investment-programme/
10 There had been earlier business cases for aspects of the programme. Network Rail produced a business case in 2009
examining electrification on many major rail routes in the British network. The Department produced a business case for
the Intercity Express Programme in 2009, and updated it in 2012, which made reference to the associated electrification
and infrastructure modifications.
22 Par t Two Modernising the Great Western railway
Source: National Audit Offi ce
Dec 2006 to Oct 2013: First Great Western franchise – competitive award
Nov 2007: DfT begins procurement
of new diesel Intercity Express
Programme trains
Oct 2013 to Sep 2015:
Direct Award 1
Sep 2015 to Mar 2019:
Direct Award 2
Apr 2019 to Mar 2020 – Option to extend
Direct Award by one year
Introduced deadline forelectrification
Franchise
Trains
Trains
Electrification
requirements
Causal relationship
Electrification design
and delivery
Electrification
Early requirements and Network Rail’s delivery
Department for Transport
(DfT)
Department for Transport
Expectations after replanning in late 2015 and early 2016
Network Rail (NR)
Network Rail
Early development
Key
decisions
Delivery Passenger benefits
2007
2007
2012
2012
2008
2008
2013
2013
2017
2017
2009
2009
2014
2014
2018
2018
2010
2010
2015
2015
2019
2019
2011
2011
2016
2016
2020
2020
Jan 2014: Option to increase the
number of electric trains exercised
DfT instructs NR to electrify
the line between London
and Swansea in its High
Level OutputSpecification
Jun 2016 to Dec 2017: Completion to Cardiff
instages (plan as at September 2014)
Jan 2014: Construction starts
Jan 2013: NR commits to electrification in
its Strategic Business Plan
Oct 2011: NR commits to
purchasing a factory train
toinstall electrification equipment
May 2009: NR’s development of
electrification programme starts
Jul 2014: Factory train completed
Apr 2012: Development of the
‘Series1’ electrification system starts
May 2015: Full Series 1
catalogue available
Jul 2012: London to Swansea
electrification reinstated
Jul 2012: Intercity Express Programme order
placed for bi-mode and electric trains, including
an option to procure moreelectric trains
Feb 2018 – Delivery date for first
Intercity Express electric trains
2007:
Electrification
initially rejected
May 2016: Ministerial decision toprocure
all Intercity Express trains as bi-modes
Dec 2018: Electrification
between London and
Cardiff tobecompleted
Electrification between Cardiff and
Swansea to be completed at a date to
beconfirmed, during2019–2024
Figure 6
The Department’s requirements for electrifi cation, and Network Rail’s delivery
The Department’s requirements imposed a challenging deadline for electrifying the route, which Network Rail
accepted. The Department changed its requirements while Network Rail was developing electrification designs
Nov 2015:
Hendy
replan
Changes in the extent
of electrification
Jul 2009:
London to
Swansea
electrification
announced
Introduced
need for
some
bi-modes
Expected construction timetable
(September 2014 plan)
Modernising the Great Western railway Part Two 23
Source: National Audit Offi ce
Dec 2006 to Oct 2013: First Great Western franchise – competitive award
Nov 2007: DfT begins procurement
of new diesel Intercity Express
Programme trains
Oct 2013 to Sep 2015:
Direct Award 1
Sep 2015 to Mar 2019:
Direct Award 2
Apr 2019 to Mar 2020 – Option to extend
Direct Award by one year
Introduced deadline forelectrification
Franchise
Trains
Trains
Electrification
requirements
Causal relationship
Electrification design
and delivery
Electrification
Early requirements and Network Rail’s delivery
Department for Transport
(DfT)
Department for Transport
Expectations after replanning in late 2015 and early 2016
Network Rail (NR)
Network Rail
Early development
Key
decisions
Delivery Passenger benefits
2007
2007
2012
2012
2008
2008
2013
2013
2017
2017
2009
2009
2014
2014
2018
2018
2010
2010
2015
2015
2019
2019
2011
2011
2016
2016
2020
2020
Jan 2014: Option to increase the
number of electric trains exercised
DfT instructs NR to electrify
the line between London
and Swansea in its High
Level OutputSpecification
Jun 2016 to Dec 2017: Completion to Cardiff
instages (plan as at September 2014)
Jan 2014: Construction starts
Jan 2013: NR commits to electrification in
its Strategic Business Plan
Oct 2011: NR commits to
purchasing a factory train
toinstall electrification equipment
May 2009: NR’s development of
electrification programme starts
Jul 2014: Factory train completed
Apr 2012: Development of the
‘Series1’ electrification system starts
May 2015: Full Series 1
catalogue available
Jul 2012: London to Swansea
electrification reinstated
Jul 2012: Intercity Express Programme order
placed for bi-mode and electric trains, including
an option to procure moreelectric trains
Feb 2018 – Delivery date for first
Intercity Express electric trains
2007:
Electrification
initially rejected
May 2016: Ministerial decision toprocure
all Intercity Express trains as bi-modes
Dec 2018: Electrification
between London and
Cardiff tobecompleted
Electrification between Cardiff and
Swansea to be completed at a date to
beconfirmed, during2019–2024
Figure 6
The Department’s requirements for electrifi cation, and Network Rail’s delivery
The Department’s requirements imposed a challenging deadline for electrifying the route, which Network Rail
accepted. The Department changed its requirements while Network Rail was developing electrification designs
Nov 2015:
Hendy
replan
Changes in the extent
of electrification
Jul 2009:
London to
Swansea
electrification
announced
Introduced
need for
some
bi-modes
Expected construction timetable
(September 2014 plan)
24 Part Two Modernising the Great Western railway
2.10 There is a clear strategic argument for investing in the route:
•
There is a need for greater capacity on the route. The Department forecasts that
passenger demand on the route will grow by 81% between 2013-14 and 2018-19.
This means an extra 21,200 passengers arriving at London Paddington during the
peak period, each day. The modernisation programme will allow two additional
peak-time services per hour between Bristol and London, from December 2018.
•
The franchise had a history of unreliable service. For example, in 2013-14 and
2014-15, the proportion of trains arriving on time was below the target for the
funding period.
•
Passengers’ experiences have been poor. In autumn 2013, three of the 10 most
overcrowded train services in England and Wales were Great Western services
into Paddington. National Rail Passenger Survey results for Great Western Railway,
quoted in the business case, indicated that passenger satisfaction has been
generally below the average for train operators.
11
•
The works were needed to provide the full benefits of investments that the
Department had already made on the Great Western route, such as the Intercity
Express Programme and the redevelopment of the Reading station area. The
works also complement other investments such as upgrades to signalling (the
European Rail Traffic Management System) and Crossrail.
11 Since late 2014, the National Rail Passenger Survey has found that Great Western Railway passenger satisfaction has
improved, and is now slightly above average compared to other train operators.
Figure 7
Examples of the implications of unclear specifi cations
The Department’s original plans did not include ‘stabling’ (storage for trains when they are not being used,
for example overnight) for the Class 387 electric trains coming into the Thames Valley section of the route
and significant depot shortages were expected, particularly around May 2017. Since the problems arose,
theDepartment has worked intensively with Network Rail to resolve the shortages, largely through changes
tothe deployment of trains. The Department now has a plan in place that it believes will resolve the shortages,
although as at November 2016 there was still a small storage shortfall of 17 cars. In January 2016, Network Rail
and the Department established a long-term strategy for providing depots and stabling.
Network Rail did not initially understand whether the Department wanted trains to run at a maximum speed of
125 or 140 miles per hour. This has implications for the strength of the steelwork supporting the electric wires.
In January 2014 the Department instructed Network Rail that the maximum speed should be 125 miles per
hour. By this point, design work was well underway and Network Rail expected to complete it in March 2014.
InSeptember 2014, the main design contractor was still working to a specification of 140 miles per hour.
Source: National Audit Offi ce analysis of Great Western Route Modernisation programme documentation
Modernising the Great Western railway Part Two 25
2.11 The Department’s May 2016 decision to procure all the new Intercity Express trains
for Great Western as bi-modes, rather than a combination of bi-modes and electric trains,
affects the assumptions underpinning the March 2015 business case. This recent change
calls into question whether the full extent of electrification under the programme is still
justified, as the new trains will now all be able to run on non-electrified route sections.
2.12 The business case assessed the value-for-money case for investing in the route
through the infrastructure programme and new trains, in the context of changes to the
franchise. The Department assessed the programme as ‘high value for money’ with a
benefit–cost ratio of 2.4:1 (Figure 8).
Figure 8
The March 2015 economic case for the Great Western Route
Modernisation industry programme
Type of benefit/cost
Value
(£m, 2010 prices)
Faster journey times
3,416
Reduced crowding
510
Enhanced journey quality
149
Non-user benefits (reduced carbon emissions and
roaddecongestion)
2,003
Indirect tax
-942
Present value of benefits
5,136
Operating costs
-4,221
Capital costs (1)
-2,636
Revenue
4,684
Present value of costs
-2,173
Benefit/cost ratio
2.4:1
Notes
1
This business case was produced in March 2015. Capital costs do not include the subsequent £1.2 billion increase
inthe estimated cost.
2
These costs and benefi ts do not include the full costs of maintaining the infrastructure.
3
All costs and benefi ts are discounted to a 2010 base, and are in 2010 prices (as measured by the Gross Domestic
Product defl ator).
Source: 2015 business case for the Great Western Route Modernisation programme
26 Part Two Modernising the Great Western railway
2.13 We estimate that the benefit–cost ratio for the programme is likely to be around
1.6:1, due to changes that the Department and Network Rail have confirmed since
March 2015. This represents ‘medium’ value for money in the Department’s appraisal
methodology. This reflects a number of changes, including an increase in the cost of
improving infrastructure (paragraph 3.5), the added costs and performance differences
ofthe bi-mode Intercity Express trains, and a reduction in the income that the Department
receives from the train operator (paragraph 4.9). We have not been able to assess
the impact of changing the scope of electrification, as a result of the decision that all
the Intercity Express trains will be bi-modes, on the benefit–cost ratio. Neither the
Department’s nor our estimate of the benefit–cost ratio takes into account the full cost
ofroutine maintenance on the route. When more trains are running on the route, Network
Rail will need to carry out maintenance within shorter timescales; the Department and
Network Rail are developing maintenance plans. Our estimate also does not take into
account the impact of delays on passenger benefits.
2.14 If costs increased by a further 3-4% we estimate that the benefit–cost ratio
would fall below 1.5:1. The Department defines this as ‘low’ value for money. However,
there are some factors which would be likely to increase the estimated benefits of
electrification, such as a higher value now placed on reducing air pollution. These
sensitivities highlight the importance of the Department using a revised business case
toinform decisions about which elements of the programme’s scope are likely to achieve
greatest value for money.
Improved programme governance
2.15 In February 2015, the Department established integrated governance structures
for the Great Western Route Modernisation industry programme. These arrangements
are similar to those it had in place from the start of a similar programme, Thameslink.
12
Compared with prior arrangements for the Great Western Route Modernisation industry
programme, they provide a better platform for managing the interdependent elements
of the programme. They also provide a forum for assurance about the programme’s
progress. The major features of the new arrangements are as follows:
•
A programme board, which includes representatives from the Department and
Network Rail; the passenger and freight train operators; key contractors; and
representatives of other rail programmes which interface with Great Western, such
as Crossrail and High Speed 2. Representatives from the Department include the
teams responsible for the Intercity Express Programme trains, oversight of Network
Rail and the franchise. The board is supported by a programme delivery group
which works out detailed issues and submits them to the board for decisions.
12 Comptroller and Auditor General, Progress in delivering the Thameslink programme, Session 2013-14, HC 227, National
Audit Office, June 2013. Available at: www.nao.org.uk/report/progress-in-delivering-the-thameslink-programme/
Modernising the Great Western railway Part Two 27
•
A senior responsible owner for the programme, a Department official, was formally
appointed in January 2016 and chairs the programme board.
•
The Department and Network Rail have recently introduced new arrangements to
work together when they need to make trade-offs between different enhancement
programmes, including the Great Western Route Modernisation.
13
The new Rail
Portfolio Board first met in February 2016.
Remaining risks for managing the industry programme
2.16 The programme board’s ability to manage the programme is limited by the quality
of the information it receives (Figure 9 overleaf). As the Department did not manage
what it now calls the Great Western Route Modernisation as an integrated industry
programme from the start, it did not set up management information systems of the
type we have seen on other major programmes. The Department has improved the
management information during 2014 and 2015 and there is an established system
ofreporting. But the board still does not have:
•
a ‘critical path’ for the industry or infrastructure programme showing the minimum
feasible schedule and how different projects within the programme interact with
each other and affect the final delivery dates;
•
clear high-level indicators of cost and schedule performance, based on an earned
value management approach in line with best practice for major programme
management.
14
Network Rail told us that it is developing better schedule
performance indicators, but it has not yet put them into practice; and
•
independent challenge to Network Rail, through a mechanism such as a ‘project
representative’. The ‘P-Rep’ is an engineering expert who reviews and interrogates
the progress of work on behalf of the programme sponsors. This approach is used
on Crossrail and on High Speed 2. In August 2016, the Department was given
funding to appoint such experts to scrutinise Network Rail’s progress.
2.17 The governance arrangements rely on effective joint working between the different
teams in the Department that are responsible for the various elements of the industry
programme. There are many interfaces between the Great Western Route Modernisation
programme and other rail programmes including Crossrail and High Speed 2
(Figure10 on page 29). This requires close working across all of the teams in the
Department’s rail and high speed rail groups. The programme board must manage
these complex interfaces.
13 Department for Transport and Network Rail, Memorandum of Understanding between the Department for Transport
and Network Rail on rail enhancements. Available at: www.gov.uk/government/uploads/system/uploads/attachment_
data/file/509545/mou-dft-network-rail-rail-enhancements.pdf
14 Earned value management is a technique for measuring project performance and progress, based at its simplest
on quantified measures of work planned (planned value) and work completed (earned value) (National Audit Office
definition from project management sources).
28 Part Two Modernising the Great Western railway
Figure 9
Our assessment of performance information currently provided to the programme board
Programme-level performance measures fall short of our good practice criteria, limiting board scrutiny
Reporting area
Best practice Great Western Route Modernisation industry programme
Overall progress reporting
Progress reporting is aligned
with overall programme
objectives, as set out for
example in the business case.
Systematic reporting that
reduces reliance on individual
judgement.
There is reporting on significant risks to the service changes that
underpin some benefits in the business case. However, these
benefits are not systematically tracked and updated.
Performance information does not explicitly link to the business
case. Some expected benefits set out in the business case (such as
environmental benefits) are not tracked by the programme board at
all, despite changes in plans – such as the reintroduction of diesel
capacity for the Intercity Express trains – that will affect these.
Regular progress reporting focuses on infrastructure works.
A consistent set of information is reported, but it does not provide a
complete overview of progress. The programme board relies in large
part on the judgement of senior Network Rail staff about whether
progress is on track.
Cost and delivery indicators
Cost and delivery indicators
are integrated, or at least
aligned, to provide an overall
value measure. For example,
progress reporting reflects the
difficulty of work done (earned
value management).
Cost and delivery measures are reported separately. Network Rail
provides updates at the programme board’s monthly meetings on
progress with electrification on individual sections of the route. In the
information provided to the board on these occasions, Network Rail
reported on how the number of items to be built compared with the
number of items actually constructed. This does not reflect the cost
and difficulty of remaining work. Cost is reported as ‘cost of work
done’ which does not provide a check against the expected costs
incurred to date.
Monitoring of forthcoming risks
Horizon scanning (a systematic
approach to anticipating risks)
is carried out.
There is an overall measure of
confidence in delivery to cost
and schedule.
Systematic criteria for
escalation.
The programme uses a RAG (red/amber/green) rating system to
highlight forthcoming risks identified and rated by senior managers.
There is no overall measure of confidence, although RAG ratings
refer to delivery to schedule and cost.
There are varying criteria for selecting risks at different programme
board meetings; often the top three risks are selected for
consideration by the board.
Source: National Audit Offi ce assessment of programme management information
Modernising the Great Western railway Part Two 29
Figure 10
Interfaces with other programmes
Crossrail
The Crossrail programme involves
the electrification of part of the
Great Western route, from London
to Maidenhead. The Great Western
Route Modernisation infrastructure
programme and Crossrail may have
conflicting needs for track access.
High Speed 2 (HS2)
Both HS2 and the Great Western
Route Modernisation need to
complete works at Old Oak
Common, due to be a major
interchange station for HS2, Great
Western Main Line and Crossrail
trains. The existing Great Western
Railway and Heathrow Express
depot will also need tobe relocated.
Passenger and freight train operating companies
There are other passenger train operating companies,
besides Great Western Railway, operating on the
Great Western Main Line where infrastructure works
are taking place. Great Western Route Modernisation
works may affect services.
The modernisation works may also affect freight
companies’ services.
Other Network Rail works
Network Rail must manage interfaces between
theGreat Western Route Modernisation and:
•
Other national electrification programmes
– suchas the Midland Main Line and
TransPennineprogrammes.
•
National programmes to improve signalling
(Supervisory Control and Data Acquisition
system to integrate electrical controls) and
communication systems (European Train
ControlSystem programme).
•
Renewal works taking place on Great
Westernroutes.
•
Projects to be delivered in the next rail
control period (2019–2024) such as the
Western Rail Link to Heathrow and works
at Bristol Temple Meadsstation.
There are a limited number of resources available
to Network Rail both in terms of the equipment
and humanresources needed to deliver these
programmes and projects.
Reallocation of trains as a result of new Intercity
Express trains
ScotRail will receive High Speed Trains from the Great
Western Main Line once the new Intercity Express trains
are introduced.
The East Coast franchise is also due to receive trains
from the Intercity Express Programme and depends on
delivery of trains to Great Western as Intercity Express
trains are built in succession.
Other train reallocations
Franchises in the north will
receive better trains from
the Great Western routes
following the introduction
of new electric trains onto
the Thames Valley lines.
Source: National Audit Offi ce adaptation of a Great Western Route Modernisation industry systems integration offi ce diagram
Great Western Route
Modernisation industry
programme
30 Part Two Modernising the Great Western railway
2.18 Although the Department and Network Rail have made progress in defining
the scope of the programme, there is still some uncertainty because of affordability.
TheDepartment has instructed Network Rail to defer electrification on some stretches
of the route for longer, reflecting between £146 million and £165 million of spending,
because it cannot meet the costs within the current funding package. It still intends to
electrify these sections, during the next rail investment period, which runs from April2019
to March 2024. As a result, passengers in affected areas may have to wait longer to
see the full benefits of modernisation. These deferrals are intended to fund projects that
are considered critical, but were not allocated funding in the 2015 replan. Such critical
projects account for £72 million of the funding shortfall. The largest of these are:
•
A new depot in Exeter (£36 million). The Department agreed to make funding
available for this in March 2015, as part of the second franchise extension, known
as a ‘direct award’.
•
Work at Bristol East Junction (£15 million). Network Rail now expect that it will
need to spend more on this project in the current rail investment period in order
tocomplete it before this section of line is electrified.
•
Platform extensions on the Cotswold Line, which are needed to allow the new
Intercity Express Programme trains to stop at smaller stations (£13 million).
TheDepartment instructed Network Rail to carry out this work in August 2014.
Modernising the Great Western railway Part Three 31
Part Three
Network Rail’s management of
infrastructureworks
3.1 The infrastructure elements of the Great Western Route Modernisation programme
form a programme of works in their own right, with complicated interdependencies
between them (Figure 11 overleaf). These projects are all essential because:
•
electrified overhead lines provide the power for electric trains;
•
signal systems must be upgraded before the electrified lines can be used,
toprevent interference between the high-voltage power cables and sensitive
signalcables;
•
‘enabling works’ such as lengthening platforms, are needed to make use of new,
larger trains, and bridges need to be raised to make space for overhead lines;
•
the train operator needs places to store trains overnight and carry out maintenance
work. Adequate depot and stabling facilities must be available before trains can be
introduced; and
•
two extra tracks between Bristol Parkway and Bristol Temple Meads stations
(‘Filton Bank’) need to be built to allow more trains to run between Bristol and
London from December 2018.
32 Part Three Modernising the Great Western railway
Figure 11
Network Rail must complete several complicated projects by 2018
Notes
1
Network Rail need to construct new tracks between Bristol Temple Meads and Bristol Parkway by December 2018 to allow more trains to run. Electrifi cation of this section will take place after 2019.
2
Cardiff area re-signalling and electrifi cation between London Paddington and Maidenhead are delivered by Network Rail, but do not form part of the Great Western Route Modernisation programme.
3
The section between Reading and Didcot has been open for testing of new Intercity Express trains since September 2016, and the Department plans for electric trains carrying passengers to run
fromDecember 2017.
Source: National Audit Offi ce analysis of Network Rail and Department for Transport documentation
Electrification to be completed
By June 2017
By December 2017
By December 2018
2019–2024
Completed
Oxford
DidcotSwindon
BathBristol
Temple
Meads
Bristol
Parkway
CardiffSwansea Reading
Newbury
Maidenhead London
Paddington
Filton Bank
Introduction of new electric trains between Maidenhead and Paddington: September2017
First use of new bi-mode Intercity Express trains: October 2017
New electric train services between Didcot and London: December 2017
Additional Intercity Express train services between Bristol and London: December 2018
Introduction of electric trains between Newbury and London: December 2018
Electrification, including
related works along the
route to support new
train services
Plus
Other major infrastructure schemes
Introduction of new,
higher capacity
passenger services
requires the following
infrastructure to be
completed
Cardiff area
re-signalling
Bristol area re-signalling
Track widening, Filton Bank
Scheduled May 2018. Will
delay Filton Bank work if it
takes place any later
Scheduled December 2018
Modernising the Great Western railway Part Three 33
3.2 In 2015, The Committee of Public Accounts found that Network Rail’s 2014–2019
nationwide rail investment programme was not deliverable. In large part this was
because over half of planned spending was on projects where cost and scope were
highly uncertain at the start of the period. Prior to July 2014, Network Rail was able to
finance cost increases through increasing the amount it borrowed from the financial
markets, and so did not have strong incentives to get initial cost forecasts right. As noted
in Part One of this report, in 2014 Network Rail was reclassified as a public sector body
by the Office for National Statistics, and lost this flexibility.
3.3 Since 2013, the cost of the Great Western infrastructure programme has risen
by£2.1 billion (Figure 12). The largest project, to electrify the line between Maidenhead
and Cardiff, accounts for £1.7 billion (79%) of the increase. The estimated cost of
other projects that were in the programme’s scope in 2013 increased by £446 million
to £2.0billion, a 28% increase. The increased cost of the electrification programme is
partly the consequence of Network Rail improving its understanding of costs and scope.
However, £1.2 billion of the cost increase came after Network Rail believed that it could
reliably estimate the cost. We explore the reasons for the increased cost of electrification
in the rest of this part.
Figure 12
Costs have increased since 2013 on most Great Western Route Modernisation
infrastructureprojects
Scheme
October
2013
November 2015
(Hendy Replan)
August
2016
Increase since
October 2013
(£m) (£m) (£m) (£m) (%)
Great Western electrification programme
1,130 2,810 2,808 1,678 148
Electrification between Cardiff and Swansea
1
295 381 433 138 47
Reading Station
2
766 775 763 -3 0
Other planned enhancements
389 597 609 220 57
Bristol area signalling renewal
137 230 228 91 67
Subtotal-works planned in 2013
2,716 4,792 4,840 2,124 78
Enhancements planned since 2013
– 448 553
3
– –
Other renewals
– 166 183 – –
Total
2,716 5,406 5,576 – –
Notes
1
Network Rail did not have a comparable cost estimate for Cardiff-Swansea electrifi cation in October 2013. The cost was estimated at
£295 million in March 2014.
2
The Reading Station project was at a lower risk of cost increases, as most of the work had already been carried out in 2013. For the other
projects,almostall of the spending was forecast.
3
The overall cost of these schemes has not increased since December 2015. The Hendy Review excluded two projects from its analysis
whichaccountforthe difference in costs, since these were not expected to affect the funding Network Rail required between 2014 and 2019.
4
All costs are in 2012-13 prices (as measured by the Retail Prices Index). Numbers may not sum due to rounding.
Source: National Audit Offi ce analysis of Network Rail data
34 Part Three Modernising the Great Western railway
3.4 This part examines:
•
why the Great Western electrification programme increased in cost;
•
how Network Rail is improving programme and project management to help
control costs; and
•
the remaining risks to the infrastructure programme.
Cost increases in the Great Western electrification programme
3.5 Network Rail’s plans were not well developed in October 2013 as it was still
determining the most appropriate way of meeting the Department for Transport’s
(theDepartment’s) requirements. Since the plan was at an early stage of development, the
expected cost of the work was highly uncertain. It rose over the next year from £1.1billion
to £1.8 billion. Network Rail believed the plan was more mature in September2014, when
it presented its £1.8 billion estimate for review by the Office of Rail and Road. The Office
of Rail and Road concluded that if the planned works were carried out as efficiently as
possible, they would cost £1.6 billion (Figure 13). Network Rail accepted that it would be
able to achieve around £100 million of the £185 million savings the regulator identified,
but it felt the remaining £85 million was ‘at risk’. However by June 2015, ninemonths
later, Network Rail had identified that it needed to fundamentally replan the programme.
Itsubsequently revised its cost estimate to £2.8 billion (Figure 13).
3.6 Network Rail’s failure to install electrification equipment as quickly as planned
was the main reason why the programme had to be replanned. However, even if
electrification equipment had been installed as efficiently as planned, Network Rail
would not have been able to complete the programme in time to deliver the expected
passenger benefits. This was because of delays to other elements of the infrastructure
work that had already occurred by June 2015, when the programme was replanned:
•
The planned date for essential re-signalling work between Swindon and Bristol
Parkway had slipped to February 2017, two months after electric trains were
supposed to run to Bristol. This was caused by another signalling project on the
route taking longer than planned, combined with a nationwide shortage of people
with the skills to design and commission signal systems.
•
Network Rail had not obtained planning permission in time to start major
construction work at Oxford Station and on several historic bridges in Oxfordshire.
This delay meant that electric trains would not be able to operate between Oxford
and London from December 2016 as planned.
Modernising the Great Western railway Part Three 35
3.7 The costs increased partly because Network Rail’s 2014 estimate for the cost and
schedule was still too optimistic. The plan included some key assumptions that proved
to be unrealistic as the programme progressed, including:
•
The original plan relied on a new ‘factory train’, carrying out much more work each
night than could be accomplished using traditional construction techniques, at
lower cost. Figure 14 overleaf describes the construction process. The original
plan assumed that the train would complete 18 piles (for foundations) per shift
and complete 80% of the work. While Network Rail has demonstrated that the
train is capable of installing up to 24 piles per shift, it has not been able to do this
routinely, and Network Rail now plans for it to complete eight piles per shift on
average. Onaverage, the train completed five piles per shift between April and
September2016 (35% of the work completed during this time). It installed seven
piles or fewer on 68% of nights it was used.
•
Between 2014 and 2015, Network Rail continued to identify additional work that
needed to be done on bridges to allow the electric lines to be fitted, increasing
thecost of this part of the work.
Figure 13
Cost increases on the Great Western electrifi cation programme
Element
Estimated cost
in 2014
1
(£m)
Estimated cost
in 2016
(£m)
Increase
since 2014
(£m)
Percentage
Increase
(%)
Installation of electrification equipment
736 1,165 429 58
Route clearance
2
239 385 146 61
Programme management
186 311 125 67
Signals and communications equipment
106 142 36 34
Lead design organisation
3
69 110 41 59
Risk and opportunity
196 442 246 126
Other
117 248 131 112
Total
1,649 2,803 1,154 70
Notes
1
These are the costs that the Offi ce of Rail and Road determined were the ‘effi cient’ costs of electrifi cation in its September 2014 review. Network Rail’s
original estimate before this review was £1.8 billion. All costs are in 2012-13 prices (as measured by the Retail Prices Index).
2
Route clearance covers projects needed to enable electrifi cation equipment to be installed, such as raising bridges or lowering track where there is not
enough clearance for overhead lines to be installed.
3
The lead design organisation does most, but not all, of the design work along the route.
Source: National Audit Offi ce analysis of Network Rail information
36 Part Three Modernising the Great Western railway
3.8 Failings in Network Rail’s approach to planning and delivering the infrastructure
programme are likely to have contributed to increased costs. It is not possible to
determine how much of the £1.2 billion increase since 2014 could have been avoided,
and how much was the result of unrealistic assumptions being corrected. There are
signs that Network Rail consistently prioritised completing electrification works as soon
as possible over completing them in the most efficient way:
•
Figure 15 on page 38 shows that critical activities overlapped to a greater extent
than Network Rail planned, preventing some key activities from being carried
out in a logical sequence. For example, designers started deciding what type of
masts should be installed at each location two years before the complete list of
components was available, which resulted in many designs having to be revised.
The factory train was purchased before it became clear that the new electrification
system would require deeper foundations and had to be modified. If Network Rail
had adhered to the original plan, these activities would have followed each other
in a sensible sequence. However the electrification system took much longer
to design than expected, while Network Rail continued to try to complete the
programme by the date it had originally planned, resulting in these overlaps.
Figure 14
The construction of overhead line electrifi cation equipment
Electrification work generally takes place overnight to avoid disrupting passenger services, since some
or allof the tracks must be closed to do the work. The factory train was designed to greatly increase the
amount ofwork that could be done each night, reducing the cost of electrification and the time it would take.
When the train is operating as intended, a section of it moves along the track, carrying the equipment and
materials needed to carry out one of the stages of electrification at several adjacent locations. Another
train section follows on a subsequent night to carry out the next stage. If the factory train cannot be used,
trackside crews carry out the work using conventional equipment such as cranes.
Work stage
Foundations (piles) are either dug or driven (‘piled’) into the ground alongside the track, at regular intervals.
A steel mast is lifted onto each foundation and secured in place.
Horizontal booms are installed spanning the tracks, supported by either one or two masts. Smaller steel
parts are then suspended from the booms, over each track.
Wires are strung between the booms.
Once construction has finished on a section of track, Network Rail carries out tests and then ‘commissions’
the section. Trains can then use the newly electrified line.
Tunnels are typically electrified by fitting an overhead bar to carry electricity. This work is particularly
challenging, and is carried out by closing the line entirely. Work on the Severn Tunnel took sixweeks,
inautumn 2016.
Source: National Audit Offi ce
Modernising the Great Western railway Part Three 37
•
Network Rail responded to the low output of the factory train by increasing the
amount of work done using more expensive conventional techniques, such as
trackside crews constructing individual mast foundations at different locations.
Thisreduced the gap between the amount of work planned and the amount
completed, but also made it harder to achieve consistently high productivity
from the factory train. The factory train is most productive when it is used to
install similar equipment at a number of adjacent sites, and using ‘conventional’
construction techniques has reduced the number of opportunities for this.
•
Network Rail’s failure to put in place an adequate plan to obtain all the consents
it needed from local authorities in good time has led to higher costs. It needed
to obtain more than 1,800 separate consents, such as permission for works that
could affect protected species or listed buildings. Network Rail now believes that it
might have been more efficient to ask the Secretary of State for Transport to grant
planning permission for the whole scheme. This would have required Network
Rail to fully develop the scheme before starting construction works and may have
resulted in a longer schedule for the programme.
3.9 Network Rail did not recognise that making best use of the new technology
required significant changes in its management systems and culture, including its
relationships with suppliers and contractors. To operate efficiently and be as productive
as expected, the factory train needed to be treated as part of a broader construction
system from the beginning. This meant Network Rail had to align the capabilities of the
factory train, the equipment installed and the way the factory train was used, with its
management of other contractors (such as those producing site designs) and of the
component supply chain. For example, delays in completing designs (see Figure15)
prevent Network Rail from using the factory train effectively, since the cost of filling
ingaps in a sequence of masts is high. An integrated ‘design and build’ contract might
have helped, since this would have eliminated the interface between the contractor
carrying out the design and the contractor responsible for construction.
3.10 Over the last year, Network Rail has made a number of changes in how it delivers
the electrification programme which it hopes will improve efficiency. Some of the cost
increases could have been avoided if these changes had been implemented earlier.
These changes include:
•
Locating design managers alongside the teams planning works to ease the
bottleneck caused by delays in completing designs.
•
Reducing the number of different electrification components used. This makes
iteasier to ensure that the right components are available when needed.
•
Establishing a new ‘Collaboration Board’, to share knowledge between suppliers
and Network Rail and identify improvements.
Network Rail is considering introducing contractual mechanisms to reward suppliers
if the electrification programme as a whole is delivered to the revised schedule and
budget. However, the need to keep making progress in order to hit programme
milestones and the rigidity of contracts already entered into, limit Network Rail’s ability
tomake this improvement.
38 Part Three Modernising the Great Western railway
Figure 15
Sequence of system development and programme delivery
Network Rail’s earliest cost estimates assumed that it would be able to use the ‘Mark 3’ electrification system, which is used on the West Coast Main Line. In 2011, Network Rail realised that new
European regulations meant that it would not be able to use the existing system for trains that travel at 125 miles per hour. It decided to develop a new system, ‘Series 1’. Although developing new
technologyintroduced a significant new risk to the electrification work, the deadline for completing construction did not change.
Procurement of the factory train should have taken place after the Series 1 electrification system was well developed. Series 1 masts frequently require much deeper foundations, which the factory
train was not designed for. There are also two different widths of pile and the factory train is less efficient when it needs to switch between types.
Network Rail was simultaneously delivering the programme and designing the electrification system. Detailed design, the process of determining exactly which equipment should be installed where, startedtwo
years before the catalogue of components, specifying all the individual parts which are assembled into the electrification system, was complete. Construction started 16 months before the catalogue was
finished in May 2015.
Network Rail did not carry out sufficiently detailed surveys of the route before the ‘detailed design’ took place. This is critical, since if ground conditions at one site are not as expected, designs for a number
ofnearby locations could need to be changed. This delays piling and installation of masts. In November 2015, Network Rail estimated that 78% of designs completed so far had needed to be revised. The
failure to properly survey the route meant that contractors accidentally cut through two signal cables in October 2014 causing significant passenger disruption. Network Rail now requirestrial holes to be dug
before piles can be driven.
Source: National Audit Offi ce
Oct 2011
Network Rail
commits to
purchasing the
factory train
Dec 2013
Date Network Rail
expected to complete
all design work in its
2012 plan
Oct 2013
Date Network Rail
expected the factory
train to be delivered
in its 2012 plan
Jul 2014
Actual delivery of
the final parts of
the factory train
to Network Rail
May 2015
Full catalogue
of Series 1
components
available
Factory train procurement
Series 1 system development
Design of masts (detailed design)
Installation of masts
Sep 2012
Network Rail
starts delivering
the electrification
programme
20152011 2012 2013 2014 2016
Jun 2013
Design of
individual masts
commences
Jan 2014
Construction
commenced
Apr 2012
Development of
the electrification
system started
Modernising the Great Western railway Part Three 39
Network Rail’s improvement plans
3.11 Since 2014, Network Rail has begun to take a more integrated approach to
delivering the Great Western infrastructure programme. Between 2013 and 2015,
Network Rail identified a number of weaknesses in its coordination and management
of the Great Western infrastructure programme. For example, there was no ‘controlling
mind’ with the information and authority needed to make critical decisions. This made
it difficult to manage the interdependencies between the projects effectively. These
weaknesses are likely to have contributed to the cost increases across the programme.
Figure 16 sets out the weaknesses identified and Network Rail’s response.
Figure 16
Weaknesses in the management of the infrastructure programme
andNetwork Rail’s responses
Identified weakness
Network Rail’s response
Unclear responsibility for the programme with
nosingle programme sponsor.
Single sponsor and programme director from early 2014.
No integrated schedule with a ‘critical path’
(aplan showing the minimum possible delivery
schedule and interdependencies within the
programme) for works and no overall budget.
Since April 2014, Network Rail has had a programme
office, largely staffed by a contractor, which is
responsible for maintaining an integrated management
plan and programme schedule.
Lack of independent challenge of delivery team.
Extension, in January 2016, of internal programme
sponsors’ responsibilities, making them accountable
for programme delivery throughout the programme
lifecycle.
Plans, since early 2016, for ‘peer reviews’ by Network
Rail staff without direct programme involvement.
In2015, Network Rail carried out apeer review of the
Great Western infrastructureprogramme.
No consolidated view of the track access that
Network Rail needed to do the work which is
likely to have led to delays due to equipment
and construction vehicles not being able to
access the track when expected.
Establishment of working groups to coordinate
NetworkRail’s requirements for access to the track,
with train operators.
Source: National Audit Offi ce assessment, drawing on Network Rail internal reviews
40 Part Three Modernising the Great Western railway
3.12 In 2015 Network Rail, in conjunction with the regulator, identified a number of
systemic failings in the planning, delivery and governance of enhancement projects.
These failings were contributing to rising costs and inefficient delivery. Network Rail
has since put in place a major, organisation-wide change programme known as the
Enhancements Improvement Plan to improve its capabilities in areas including:
•
Cost estimation – good quality information about the likely cost of a project
ensures that investment decisions are well informed and programme management
is effective. Network Rail plans to increase its internal capacity for estimating
costs, make better use of information from previous projects and produce more
consistent estimates.
•
Project delivery – organisational and workforce development changes aimed at
developing the skills of Network Rail staff.
•
Project and portfolio monitoring – Network Rail is introducing earned value
management techniques. These link spending with an assessment of the value of
work completed, to provide useful information on whether a project is likely to be
finished on time and budget. Some projects and programmes within Network Rail use
these techniques, but this has not yet been rolled out to all projects that would benefit.
•
Project governance – Network Rail has introduced a new system of ‘peer
reviews’, to provide assurance that projects are on course to deliver their
requirements on time and within budget.
3.13 This change programme has the potential to improve Network Rail’s control of the
Great Western infrastructure programme as well as its planning and delivery of future
enhancement programmes. In July 2016, the regulator reported that Network Rail was
making ‘good progress’ in delivering these improvements.
Remaining risks on the infrastructure work
3.14 Network Rail has made progress in delivering the electrification work, in recentmonths:
•
the Office of Rail and Road (ORR) has reduced its rating of the electrification
programme from ‘5’, which is the highest level of concern on the ORR’s five-point
scale, to ‘2’ between June and October 2016. The ORR had rated the programme
at ‘5’ since March 2015, and had regarded Network Rail’s performance as
concerning since August 2013; and
•
Network Rail has delivered the section of track near Didcot which is used for
testing the Intercity Express Programme trains, on schedule by September 2016.
This is the first major milestone under the 2015 replan of the programme.
Modernising the Great Western railway Part Three 41
3.15 There are risks to the current schedule for delivering the infrastructure programme:
•
Electrifying the line from Maidenhead to Cardiff by December 2018 relies on the
assumption that Network Rail can significantly increase mast installation and piling
rates, compared with the rates it has achieved so far. Network Rail’s current target
is to increase the number of piles installed each week from 62 in August 2016 to
195 piles by November 2016. The rate of mast installation is expected to increase
from 55 per week to 191 per week over the same period. However, Network Rail
is currently developing a new plan which it expects will mean it will install around
150 piles per week between November 2016 and March 2017, without delaying
the completion of electrification any further. In early September 2016 Network
Rail had completed 6,804 foundations, 44% of the total required. It had installed
3,438masts (23% of the total) and 1,352 booms (15%).
•
Network Rail has not yet completed a quantified schedule risk analysis on
the current schedule for the electrification programme. Without this, neither
Network Rail nor the programme board can have confidence that the schedule
isachievable. Network Rail has completed its risk assessment of individual sections
of the route. For each of these sections, it is at least 80% confident that it can
complete work on time, assuming that delays on the other sections do not have a
knock-on effect. This is encouraging, but does not necessarily indicate confidence
in the schedule for the electrification programme as a whole. This would require a
route-wide analysis, taking into account the fact that delays on one section of the
route can affect other sections and that Network Rail may be able to take steps to
reduce the impact of risks.
•
It is it not clear whether there is sufficient float (time contingency) in the
electrification schedule to allow Network Rail to complete work before the
deadlines agreed with the Department if it misses its ‘stretch’ targets. For example,
Network Rail did not meet its ‘stretch’ delivery date of June 2016 for opening
the test track for the Intercity Express trains. It used up all of its float, but it did
complete work by the date it committed to as part of the 2015 replan.
42 Part Three Modernising the Great Western railway
3.16 There are also risks related to other aspects of the infrastructure work:
•
Further delays in the Bristol area re-signalling programme would affect the rest
of the infrastructure programme, as there is no remaining float in the schedule.
Network Rail needs to finish installing new signals in the Bristol area in a short
window over Easter 2018, so that more trains can run between Bristol and London
from the end of that year. This work has already been rescheduled once in 2015,
due partly to the limited capacity of its suppliers. There is a continuing shortage
ofskilled signalling engineers.
•
The programme team is showing signs of the pressure it is under – stress and
depression caused on average 2.2 days of absence per member of staff last
year. This is much higher than the national average of 0.5 days for people in
professionaloccupations.
3.17 The project for electrification between London and Cardiff currently has
£109million less contingency than the amount Network Rail believes it needs to be
prudent. This puts the project at greater risk of further cost increases. There is currently
a £256million provision for risks, 19.2% of the estimated cost of remaining work. This is
less than when Network Rail’s board re-approved the project in April 2016 (when there
was 26.3% contingency available). This is because some issues that were identified as
risks have now occurred and more risks have been identified since then.
Modernising the Great Western railway Part Four 43
Part Four
Impact of works and delays to electrification
4.1 The delay to electrification has had a knock-on effect on other elements of the
programme including those crucial to realising the programme’s objectives. Passengers
will have to wait longer to see the benefits of the programme, such as increased
capacity, and the taxpayer will face additional costs. These costs are still uncertain, but
the Department’s current estimate is that they are likely to be between £280 million and
£330 million. Thisincludes the cost of changing the order for Intercity Express trains so
they can operate using diesel power and the Department’s best estimate of the impact
of delays on the income it will receive from the franchisee, Great Western Railway.
4.2 In this part of the report we assess how the Department for Transport
(theDepartment) and Network Rail have managed:
•
the impact of the infrastructure works on passengers travelling on the route;
•
the impact of delays to electrification on other parts of the programme, specifically;
•
the introduction of new electric high-speed trains on the route, under the
Intercity Express Programme (IEP); and
•
plans to introduce new trains onto the Great Western network, allowing
existing trains to be reallocated to other routes within the franchise and across
the widernetwork.
Disruption to passengers
4.3 Considering the scale of the infrastructure works that Network Rail must complete
to deliver benefits to passengers, a certain amount of disruption to services is inevitable.
To date passengers have faced disruption in the form of delays and the reorganisation
ofservices.
4.4 Overall Network Rail has kept unplanned disruption to passengers relatively low,
considering the complexity of the works. On average long-distance trains on Great
Western routes have been delayed by five to six minutes between 2011 and 2016.
15
Thisis a considerable improvement on delays to trains during the modernisation of the
West Coast Main Line, another long-distance route, which we reported on in 2006.
16
In2004, Virgin West Coast trains were delayed by 17 minutes on average, and nine
andahalf minutes on average when things had improved in 2006.
15 Total delays (Network Rail and train operating company) per planned train.
16 Comptroller and Auditor General, The Modernisation of the West Coast Mainline, Session 2006-07, HC 22,
NationalAudit Office, November 2006. Available at: www.nao.org.uk/report/the-modernisation-of-the-west-coast-
main-line/
44 Part Four Modernising the Great Western railway
4.5 Network Rail has made efforts to improve the planning of infrastructure works,
with a focus on the impact on passengers. In March 2016, Network Rail and Great
Western Railway signed an alliance agreement detailing closer working practices aimed
at reducing disruption to passengers. They collaboratively plan when and where track
closures will take place, a practice that may further reduce the impact on passengers.
Delays in introducing more modern trains
4.6 To increase capacity and improve services on Great Western routes and across the
rail network, the Department had identified a complex series of train reallocations known
as a ‘cascade’. Its original expectation involved introducing electric trains on newly
electrified routes (see Figure 1, page 12), displacing older diesel trains (Figure 17 on
pages 46 and 47). This therefore depended on electrification being completed on time.
The Department expected that:
•
electric trains from Thameslink would replace diesel trains in the Thames Valley
providing more capacity to reduce overcrowding;
•
Thames Valley could then release Class 165 and Class 166 diesel trains to
the west, providing more capacity for passengers on the Bristol, Exeter and
Cornishnetworks; and
•
West Devon and Cornwall routes would then release Class 153 and 150 diesel
trains to support service improvements on Northern franchise routes allowing
further onward cascades.
Additionally:
•
new Super Express Trains from the Department’s Intercity Express Programme
would replace ageing diesel High Speed Trains (also known as IC125 trains) on the
London to Swansea line cutting journey times from London to Cardiff; and
•
the London to Swansea route could then release the diesel High Speed Trains
toaddress capacity issues on intercity routes in Scotland.
Finally:
•
An additional fleet of diesel and electric capable trains recently ordered by the
train company, Great Western Railway, (AT300 bi-modes) would be introduced
inthe south-west, providing more capacity and faster journey times on London
toPlymouth and Penzance routes.
Modernising the Great Western railway Part Four 45
4.7 In April 2016, the Department began reviewing its original cascade expectations
toprotect existing services. Delays in electrification mean that trains cannot be
introduced into the Thames Valley from the dates originally envisaged. To avoid
cancelling services for passengers in the Thames Valley, diesel trains due to go to the
west in 2017 will be retained until 2019 as electrification is completed and new electric
trains are phased in. Revising the cascade expectations (Figure 18 on pages 48 and49)
was a complex exercise. It involved input from the operator, Great Western Railway,
and was a significant achievement for the industry. As a result of Great Western Railway
and the Department’s intervention, passengers will not see a reduction in services and
the programme will still provide benefits, although these will be delayed in some areas.
Passengers in the west (Bristol, Exeter and Cornwall routes) will now have to wait almost
two years later than scheduled to see benefits such as more capacity.
17
In the wider rail
network, passengers on Northern franchise routes may have to wait an additional nine
months as trains are retained in the west to protect services. At the time of the revision
the Department was aware of potential delays to infrastructure works in the north which
would have meant that Northern would not have required the trains as early as planned.
Great Western Railway has also had to make additional orders of new bi-mode trains to
prevent the cancellation of services on busy Oxford to London routes.
4.8 Because of the delays to electrification, the train operating company, Great Western
Railway, will have to incur additional costs to cover:
•
Converting old trains that need to be used for longer, to comply with stricter
regulations about access for persons of reduced mobility.
•
Renting five more bi-mode trains to operate services between Oxford and London,
since it will not be able to use electric trains from May 2017 as planned. Without
these trains, it would only be possible to operate one direct train service between
London and Oxford per hour. These trains are in addition to the trains procured by
the Department under the Intercity Express Programme, which are discussed in
paragraphs 4.11 and 4.12.
•
Higher running costs, as fuel and maintenance costs for diesel trains are
moreexpensive.
•
Lower passenger revenue, since higher capacity trains will be introduced later
thanplanned.
17 Trains were originally due to be released to the west in May 2017 but under revised plans will remain in Thames Valley
until the end of March 2019.
46 Part Four Modernising the Great Western railway
Figure 17
Train reallocations (cascades) – original plan
2016 2017
2018 2019
Original Cascade
Notes
1
London to Swansea includes the Great Western branches via Hereford and Cheltenham (see Figure 1 of this report) as well as the main line route to
Bristol and Swansea.
2
HST stands for High Speed Trains.
Source: National Audit Offi ce analysis of the Department’s documents
Bombardier
8 new Class
387 electric trains
Hitachi
New AT300 bi-mode
(diesel/electric) trains
Exeter
Class 143 Pacers
Scotland
Northern franchises
Decommissioned
31 Mar 2016 to 4 Mar 2017: Class 387s and 365s from Thameslink
are contracted to be delivered for the May2017 timetablechange
Oct 2016 to Nov2016:
New trains from
Bombardier factory are
contracted to bedelivered
Jun 2017 to Aug 2018:
Class 800/801 trains replace
Class 180 and HSTs in place
for the Dec 2018 timetable
change. These trains are
part of the Intercity Express
Programme
Existing trains
New trains
Aug 2017: Class 153s
and 150s cascaded
tothe north
May 2018: Bi-mode trains to provide additional
capacity and reduce journey times in the south west
May 2017: Class 165s and 166s
cascade to the west to provide
additional capacity inBristol area
2017:
HSTs and
Class 180s
leave the route
during 2017
Dec 2017: Pacers
due to be retired
fromGWR
South west
Thames Valley
Class 165 and 166
diesel trains
London to Swansea
HSTs and Class 180
diesel trains
Rolling Stock
Operating
Companies
West
Class 153 and 150 diesel trains
Hitachi
New Class 800/801 electric
and bi-mode trains
Thameslink
29 Class 387 and 21
365 electric trains
Routes/Suppliers
providing trains to
Great Western
Great Western routes
Routes receiving
trains from
GreatWestern
Flow of trains
Modernising the Great Western railway Part Four 47
Figure 17
Train reallocations (cascades) – original plan
2016 2017
2018 2019
Original Cascade
Notes
1 London to Swansea includes the Great Western branches via Hereford and Cheltenham (see Figure 1 of this report) as well as the main line route to
Bristol and Swansea.
2 HST stands for High Speed Trains.
Source: National Audit Offi ce analysis of the Department’s documents
Bombardier
8 new Class
387 electric trains
Hitachi
New AT300 bi-mode
(diesel/electric) trains
Exeter
Class 143 Pacers
Scotland
Northern franchises
Decommissioned
31 Mar 2016 to 4 Mar 2017: Class 387s and 365s from Thameslink
are contracted to be delivered for the May2017 timetablechange
Oct 2016 to Nov2016:
New trains from
Bombardier factory are
contracted to bedelivered
Jun 2017 to Aug 2018:
Class 800/801 trains replace
Class 180 and HSTs in place
for the Dec 2018 timetable
change. These trains are
part of the Intercity Express
Programme
Existing trains
New trains
Aug 2017: Class 153s
and 150s cascaded
tothe north
May 2018: Bi-mode trains to provide additional
capacity and reduce journey times in the south west
May 2017: Class 165s and 166s
cascade to the west to provide
additional capacity inBristol area
2017:
HSTs and
Class 180s
leave the route
during 2017
Dec 2017: Pacers
due to be retired
fromGWR
South west
Thames Valley
Class 165 and 166
diesel trains
London to Swansea
HSTs and Class 180
diesel trains
Rolling Stock
Operating
Companies
West
Class 153 and 150 diesel trains
Hitachi
New Class 800/801 electric
and bi-mode trains
Thameslink
29 Class 387 and 21
365 electric trains
Routes/Suppliers
providing trains to
Great Western
Great Western routes
Routes receiving
trains from
GreatWestern
Flow of trains
48 Part Four Modernising the Great Western railway
Routes/Suppliers
providing trains to
Great Western
Figure 18
Train reallocations (cascades) – revised plan
2016 2017
2018 2019
Revised Cascade
Notes
1
London to Swansea includes the Great Western branches via Hereford and Cheltenham (see Figure 1 of this report) as well as
the main line route to Bristol and Swansea.
2
HST stands for High Speed Trains.
Source: National Audit Offi ce analysis of the Department’s documents
Great Western routes
Routes receiving trains
from GreatWestern
Thames Valley
Class 165 and
166 diesel trains
West
Class 153 and
150 diesel trains
Exeter
Class 143 Pacers
Scotland
Northern
franchises
Decommissioned
Rolling Stock
Operating
Companies
Jul 2016 to Sep 2016: Delivery of
8 new trains from Bombardier to
be accelerated. Additional 29 387s
ordered to mitigate those retained
by Thameslink. Service and
capacity benefits due in May can
now be implemented in September
Jun 2017 to Aug 2018:
Bi-mode trains replace Class
180 and HSTs in place for the
Dec 2018 timetable change
Reallocation cancelled
Existing trains
New trains
Red text = additional train
orders (not in original plan).
Class 165s and 166s to stay in Thames Valley
until electrification complete in CP6, allowing
phased intro of 387s as they arrive
11 HSTs due
to go off lease
from 2017 are
retained and
modified
Sep 2017 to Oct 2017: Additional
8 Class 387s ordered to mitigate
retention of Class 365s by GTR
South West Oxford Bedwyn
5 new AT300s for
Oxford to maintain
services to London
2 new AT300s for
Bedwyn to maintain
hourly through service
Bombardier
8+29 new Class
387 electric trains
Hitachi
New Class 800
bi-mode trains
Thameslink
29 Class 387 and
21 365 electric trains
Bombardier
Additional 8 new Class
387 electric rains
Hitachi
New AT300 bi-mode (diesel/
electric) trains + additional 7 AT300s
Class 387s and 365s no
longer going to Thames
Valley and are to remain on
Thameslink. Interim services
for May cannot be delivered
London to Swansea
HSTs and Class 180
diesel trains
Class 153s and 150s were
due to be cascaded from
August2017 but will be
kept until 2018 to provide
services in West Devon and
Cornwall – there will be an
impact on the north
Dec 2018: Pacers are
retired one year later
than planned
Flow of trains
Modernising the Great Western railway Part Four 49
Routes/Suppliers
providing trains to
Great Western
Figure 18
Train reallocations (cascades) – revised plan
2016 2017
2018 2019
Revised Cascade
Notes
1 London to Swansea includes the Great Western branches via Hereford and Cheltenham (see Figure 1 of this report) as well as
the main line route to Bristol and Swansea.
2 HST stands for High Speed Trains.
Source: National Audit Offi ce analysis of the Department’s documents
Great Western routes
Routes receiving trains
from GreatWestern
Thames Valley
Class 165 and
166 diesel trains
West
Class 153 and
150 diesel trains
Exeter
Class 143 Pacers
Scotland
Northern
franchises
Decommissioned
Rolling Stock
Operating
Companies
Jul 2016 to Sep 2016: Delivery of
8 new trains from Bombardier to
be accelerated. Additional 29 387s
ordered to mitigate those retained
by Thameslink. Service and
capacity benefits due in May can
now be implemented in September
Jun 2017 to Aug 2018:
Bi-mode trains replace Class
180 and HSTs in place for the
Dec 2018 timetable change
Reallocation cancelled
Existing trains
New trains
Red text = additional train
orders (not in original plan).
Class 165s and 166s to stay in Thames Valley
until electrification complete in CP6, allowing
phased intro of 387s as they arrive
11 HSTs due
to go off lease
from 2017 are
retained and
modified
Sep 2017 to Oct 2017: Additional
8 Class 387s ordered to mitigate
retention of Class 365s by GTR
South West Oxford Bedwyn
5 new AT300s for
Oxford to maintain
services to London
2 new AT300s for
Bedwyn to maintain
hourly through service
Bombardier
8+29 new Class
387 electric trains
Hitachi
New Class 800
bi-mode trains
Thameslink
29 Class 387 and
21 365 electric trains
Bombardier
Additional 8 new Class
387 electric rains
Hitachi
New AT300 bi-mode (diesel/
electric) trains + additional 7 AT300s
Class 387s and 365s no
longer going to Thames
Valley and are to remain on
Thameslink. Interim services
for May cannot be delivered
London to Swansea
HSTs and Class 180
diesel trains
Class 153s and 150s were
due to be cascaded from
August2017 but will be
kept until 2018 to provide
services in West Devon and
Cornwall – there will be an
impact on the north
Dec 2018: Pacers are
retired one year later
than planned
Flow of trains
50 Part Four Modernising the Great Western railway
4.9 Under the terms of its contract with the train operating company, Great Western
Railway, the Department is responsible for any costs caused by delays to electrification.
These costs will be reflected in the ‘premia’ payments that Great Western Railway pays
to the Department. This is because the Department agreed, in its March 2015 franchise
award to Great Western Railway, that electrification and new trains would result in
electrification being ready in December 2016 (London to Newbury), June 2017 (London
to Bristol Parkway) and May 2018 (London to Cardiff). Network Rail will now not meet
these dates (Figure 4).
4.10 Any further delays to the cascade will affect the wider rail network and have an
adverse impact on the Department’s rail franchising programme. As part of the franchise
competition process, the Department requires bidders to demonstrate how they will
meet set objectives for improving passenger experience. This requires bidders to specify
the train fleet they propose to use and how trains will be configured to meet demand.
18
Impact on the Intercity Express Programme
4.11 As a result of delays to electrification, the Department has negotiated a variation
to its contract with Agility Trains for the new Intercity Express Programme trains, so
that all the trains are capable of running on either diesel or electric power (bi-modes).
Under the original contract Agility was due to deliver 36 bi-modes and 21 electric
trains. In May2016, HM Treasury approved the Department’s request for the 21 trains
previously specified as electric to now be procured as bi-modes. If it had not done
this, old trains would have continued to operate services. The Department would have
had to pay £400,000 per day to Agility Trains to lease new trains that could not be
used until the overhead electrification was complete. We estimate that this would have
cost the Department about £400 million over the three years that it took to complete
electrification. The Department has not yet decided whether to pay the costs of
converting the trains up front or ask the owner of the trains to pay the costs in exchange
for higher lease payments. The second approach would save money in the short term,
but would cost more overall since the Department would have to pay the train owner’s
finance costs.
18 Comptroller and Auditor General, Reform of the rail franchising programme, Session 2015-16, HC 604,
NationalAuditOffice, November 2015. Available at: www.nao.org.uk/report/reform-of-the-rail-franchising-programme/
Modernising the Great Western railway Part Four 51
4.12 The decision to procure all the trains as bi-modes means that the Great Western
Route Modernisation industry programme will not achieve all the benefits that the
Department expected in the short term. Bi-modes allow greater flexibility in service
patterns since they can run on electrified and non-electrified routes, but when using
electric power, bi-modes cause more damage to the track and incur higher energy costs
than electric trains as they weigh more. The top speeds of the new bi-modes when
operating under diesel power are probably lower than the existing high-speed diesel
trains and the Department is exploring the overall effect of using these trains on journey
times. There is a risk that it will not be possible to introduce the services the Department
expects from December 2017, since the trains will only be able to use electric power
on the route between London and Didcot. The trains will run under diesel power on the
main line between Didcot and Cardiff until December 2018. Bi-modes used in diesel
mode are also noisier and emit more pollution than electric trains. For the Department
to deliver the benefits originally expected from electrification, some of the bi-mode trains
would need to be modified to remove diesel engines once the line has been electrified.
52 Appendix One Modernising the Great Western railway
Appendix One
Our audit approach
1 This study examined planning and programme management of the Great Western
Route Modernisation industry programme as a result of significant issues arising on
delivery of the programme.
2 Our key areas for review were:
•
whether the Department for Transport (the Department) and Network Rail
managed the programme in accordance with good project and programme
managementprinciples;
•
whether the Department and Network Rail have responded to the previous issues
in the programme; and
•
the extent to which the Department has managed the impact of delays to the
programme on the passenger and the taxpayer.
3 Our audit approach is summarised in Figure 19. Our evidence base isdescribed
inAppendix Two.
Modernising the Great Western railway Appendix One 53
Figure 19
Our audit approach
The
government’s
objective
How this will
beachieved
Our evaluative
criteria
Our evidence
(see Appendix Two
for details)
Was the Great Western Route
Modernisation (GWRM)
industry programme planned in
accordance with good project
portfolio management practice
from the outset?
Has the Department managed
the impact of delays to the
programme on the passenger
and the taxpayer?
Have previous deficiencies
in programme management
now been addressed by the
Department and Network Rail?
Our conclusion
The Department’s failure to plan and manage all the projects which now make up the Great Western Route
Modernisation industry programme in a sufficiently joined up way, combined with weaknesses in Network Rail’s
management of the infrastructure programme, has led to additional costs for the taxpayer. The way in which the
programme was delivered before 2015 cannot be said to have best protected value for money.
The modernisation of the route has potential to deliver significant benefits for passengers, but the Department’s
assessment of value for money does not reflect recent developments, particularly changes to the train specification,
and needs to be revisited. The Department and Network Rail have begun to improve the management of the
programme. They have more to do to protect value for money in the future.
We assessed whether GWRM
industry programme was
planned in accordance with good
management practices by:
•
conducting interviews with
the Department, Network
Rail and key stakeholders;
•
reviewing and analysing
industry programme level
documents and findings
from previous reviews of the
programme, including major
government reviews; and
•
using NAO good-practice
frameworks.
We evaluated the Department’s
response to problems caused by
delays by:
•
holding interviews with the
franchise operator, Great
Western Railway, and
Departmental staff involved
with passenger services;
•
analysing train operator
performance data; and
•
examining Departmental
documents, franchise
agreements and new train
procurement agreements.
We evaluated the response to
previous issues by:
•
conducting interviews with
the Department and Network
Rail and key stakeholders;
•
reviewing and analysing
documents relevant to
GWRM; and
•
reviewing the Department’s
and Network Rail’s lessons
learned programmes.
Objectives of the programme:
•
Deliver consistently high standards for the passenger experience.
•
Support economic growth through the provision of train services of appropriate frequency, journey time
andcapacity.
•
Make best use of available route capacity to improve passenger and freight capacity.
•
Deliver a consistently high level of train service performance for reliability and punctuality.
•
Achieve whole industry benefits, including delivering value for money for taxpayers and fare payers through
reduced costs and increased demand.
•
Deliver an environmentally sustainable railway.
Network Rail and the Department for Transport will electrify the Great Western Main Line and procure new Intercity
Express trains to operate on the route.
54 Appendix Two Modernising the Great Western railway
Appendix Two
Our evidence base
1 Our conclusion as to whether the programme has been effectively managed by
the Department for Transport (the Department) and Network Rail, and whether the
programme will achieve value for money, has been reached following our analysis of
evidence collected between April and August 2016.
2 Our audit approach is outlined in Appendix One.
3 We examined whether the programme was planned in accordance with good
project and programme management:
•
We assessed key programme documents against our programme management
assessment framework.
•
We reviewed strategic documents and the Department’s March 2015 business
case to understand the basis for the Department’s decisions on electrification
andthe train specifications for the Intercity Express Programme.
•
We conducted interviews with key staff from the infrastructure projects team in
Network Rail to obtain further information about how Network Rail manages related
infrastructure works, and how it worked with the Department.
•
We reviewed programme-level documents and the process and timing of key
decisions made on the programme.
•
We analysed external and internal reviews of the programme.
•
We drew on our past work on similar large infrastructure projects, such as Crossrail
and High Speed 2.
Modernising the Great Western railway Appendix Two 55
4 We examined how the Department and Network Rail have responded to the
issues in the programme:
•
We held interviews with key staff at the Department to obtain further information
about how governance and risk management of the programme is evolving.
•
We reviewed minutes from, and submissions to, the programme board.
Wereviewed the management information provided to the board and also
observed board meetings.
•
We reviewed the Department’s and Network Rail’s risk assessment documents
toassess what challenges remain for the programme.
•
We reviewed ministerial correspondence to understand how the Department
responded to the financial impact of the delays to electrification, and the impact
onthe planned cascading of trains.
•
We reviewed cost estimates provided by Network Rail.
5 We examined how the Department managed the impact of delays to the
programme on the taxpayer and the passenger:
•
We reviewed the Department’s revised train cascade expectations to assess how
the Department is minimising the impact on passengers.
•
We reviewed agreements with the train operator and spoke with the Department
to understand the Department’s rationale behind amending the Intercity Express
Programme trains contract with Agility Trains.
•
We reviewed franchise arrangements between the Department and the franchise
operator, Great Western Railway.
•
We analysed data on train delays.
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