DOCSLIB.ORG

Identifying the Benefits of an Improved Understanding of Network Rail's Costs and Cost Drivers | Final Report

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Identifying the Benefits of an Improved Understanding of Network Rail's Costs and Cost Drivers | Final Report Identifying the benefits Office of Rail Regulation of an improved understanding of Network Rail's costs and cost drivers Final Report Our ref: P22781801 May 2015 Client ref: ORR/CT/14-58 Identifying the benefits Office of Rail Regulation of an improved understanding of Network Rail's costs and cost drivers Final Report Our ref: P22781801 May 2015 Client ref: ORR/CT/14-58 Prepared by: Prepared for: Steer Davies Gleave Office of Rail Regulation 28-32 Upper Ground One Kemble Street London SE1 9PD London WC2B 4AN +44 20 7910 5000 www.steerdaviesgleave.com Steer Davies Gleave has prepared this work for Office of Rail Regulation. This work may only be used within the context and scope of work for which Steer Davies Gleave was commissioned and may not be relied upon in part or whole by any third party or be used for any other purpose. Any person choosing to use any part of this work without the express and written permission of Steer Davies Gleave shall be deemed to confirm their agreement to indemnify Steer Davies Gleave for all loss or damage resulting therefrom. Steer Davies Gleave has prepared this work using professional practices and procedures using information available to it at the time and as such any new information could alter the validity of the results and conclusions made. Contents Executive Summary ....................................................................................................................... i Introduction ................................................................................................................................... i Decisions and decision-makers ...................................................................................................... i Transmission mechanisms .............................................................................................................ii Rail sector case studies ................................................................................................................. iii Experience in other sectors .......................................................................................................... vi Future scenarios ........................................................................................................................... ix 1 Introduction ....................................................................................................................... 1 Background ................................................................................................................................... 1 Our approach ................................................................................................................................ 1 2 Decision-making in the rail industry .................................................................................... 3 How costs inform decisions .......................................................................................................... 3 Transmission mechanisms ............................................................................................................ 7 3 Case studies of decision-making in the rail industry ........................................................... 12 Overview ..................................................................................................................................... 12 Network enhancement: electrification of Great Western Mainline branches ........................... 13 Network enhancement: Northern Hub and Northwest Electrification ...................................... 16 Capacity enhancement: Reading station .................................................................................... 18 Capacity enhancement: Oxford station ...................................................................................... 19 Rolling stock procurement: Class 444/450s on Wessex routes .................................................. 22 Rolling stock deployment, Mk III and Mk IV stock on ECML ...................................................... 26 Service enhancements: Knottingley to Wakefield Kirkgate ....................................................... 28 Summary ..................................................................................................................................... 31 4 Improving cost information in other sectors ...................................................................... 33 Introduction ................................................................................................................................ 33 Implications for ORR ................................................................................................................... 33 Case Study A: understanding demand-side in the water industry ............................................. 36 Case Study E: constructive engagement in the Australian rail industry ..................................... 37 Case Study F: unit costs in Healthcare ........................................................................................ 39 Case Study L: Long Run Avoidable Costs in ports ....................................................................... 45 May 2015 Implications for funders.............................................................................................................. 46 Implications for Network Rail ..................................................................................................... 46 Case Study R: transfer pricing in German firms .......................................................................... 47 Implications for investors and creditors ..................................................................................... 47 The costs of obtaining better information ................................................................................. 48 Conclusion .................................................................................................................................. 49 5 Opportunities for improving the understanding of Network Rail’s costs ............................. 52 Introduction ................................................................................................................................ 52 The benefits of a better understanding of costs ........................................................................ 53 Opportunities for improving cost information ........................................................................... 55 Future scenarios ......................................................................................................................... 62 Figures Figure 2.1: ORR’s Final Determinations for CP5 ........................................................................... 5 Figure 2.2: Network Rail’s forecast revenue from charges for 2014-15 (2013-14 prices) ........... 7 Figure 2.3: Passenger franchise welfare gains .............................................................................. 9 Figure 3.1: Great Western electrification plans ......................................................................... 13 Figure 3.2: Inefficient investment through poor attribution of costs and benefits ................... 14 Figure 3.3: Oxford station: Evergreen 3, Great Western IEP, East West Rail and Electric Spine 20 Figure 3.4: Mark I and replacement stock: comparative EC4T charges ..................................... 24 Figure 3.5: Mark I and replacement stock: comparative variable charges ................................ 24 Figure 3.6: The “Pontefract Line” from Knottingley to Wakefield Kirkgate ............................... 29 Figure 4.1: Approach to case study analysis ............................................................................... 33 Figure 4.2: Regulated companies’ views on regulators’ information requirements .................. 48 Tables Table 2.1: Principal opportunities to make use of an understanding of costs ............................. 4 Table 2.2: Examples of service reductions and their impact on Network Rail costs .................... 6 Table 2.3: Allocation of the costs of the Hitchin flyover ............................................................ 10 Table 3.1: Selection of rail case studies ...................................................................................... 12 Table 3.2: Enhancements planned, committed or under construction affecting Oxford .......... 21 Table 3.3: CP5 variable usage charges (VUC) for Mark III and Mark IV formations ................... 27 May 2015 Table 3.4: Impact of improved understanding of costs on rail industry activity ........................ 32 Table 4.1: Case studies of charges which vary with geography and/or time ............................. 43 Table 4.2: Case studies of charges using LRMC approaches ...................................................... 44 Table 4.3: Summary of key experience from other sectors ....................................................... 50 Table 5.1: Weaknesses in current understanding of costs ......................................................... 52 Table 5.2: Case studies: potential benefits of better understanding of Network Rail costs ...... 54 Table 5.3: Opportunities for improving cost information .......................................................... 56 Appendices A Experience of understanding costs in other sectors B Welfare analysis of fixed and variable access charges C Future scenarios D Information sources May 2015 Identifying the benefits of an improved understanding of Network Rail's costs
Load more

Recommended publications
  • High Speed Rail
    House of Commons Transport Committee High Speed Rail Tenth Report of Session 2010–12 Volume III Additional written evidence Ordered by the House of Commons to be published 24 May, 7, 14, 21 and 28 June, 12 July, 6, 7 and 13 September and 11 October 2011 Published on 8 November 2011 by authority of the House of Commons London: The Stationery Office Limited The Transport Committee The Transport Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department for Transport and its Associate Public Bodies. Current membership Mrs Louise Ellman (Labour/Co-operative, Liverpool Riverside) (Chair) Steve Baker (Conservative, Wycombe) Jim Dobbin (Labour/Co-operative, Heywood and Middleton) Mr Tom Harris (Labour, Glasgow South) Julie Hilling (Labour, Bolton West) Kwasi Kwarteng (Conservative, Spelthorne) Mr John Leech (Liberal Democrat, Manchester Withington) Paul Maynard (Conservative, Blackpool North and Cleveleys) Iain Stewart (Conservative, Milton Keynes South) Graham Stringer (Labour, Blackley and Broughton) Julian Sturdy (Conservative, York Outer) The following were also members of the committee during the Parliament. Angie Bray (Conservative, Ealing Central and Acton) Lilian Greenwood (Labour, Nottingham South) Kelvin Hopkins (Labour, Luton North) Gavin Shuker (Labour/Co-operative, Luton South) Angela Smith (Labour, Penistone and Stocksbridge) Powers The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the internet via www.parliament.uk. Publication The Reports and evidence of the Committee are published by The Stationery Office by Order of the House.
    [Show full text]
  • ED142 : NHDC Final Response to Inspector's Actions Arising out of The
    ED142 : NHDC Final response to Inspector’s Actions arising out of the Hearing Sessions Matter 6 – Deliverability Action Date on which Examination Doc Action Completed Reference No. • NHDC to provide updated version of Table A of Matter Enclosed as ED142 Appendix M6-1 6 Hearing Statement (to include infrastructure for other allocated sites (i.e. not housing sites)) and the Housing Trajectory • NHDC to provide updated Infrastructure Delivery Plan 23/01/ 2018 ED73 • Infrastructure Delivery Plan Appendix A 23/02/2018 ED73a Enclosed As Appendix M6-2 • Hertfordshire County Council to provide suggested 21/02/2018 ED105 Enclosed as additional/amended wording in the Plan regarding Appendix M6-3 transport issues for consideration by NHDC MM028, MM031, MM032 and MM033. • NHDC to liaise with Stevenage Borough Council with Enclosed as ED142 Appendix M6-4 regard to additional/amended wording • NHDC to provide note clarifying transport position 08/02/2018 ED86 Enclosed as with regard to B656 between Codicote and Appendix M6-5 Knebworth as raised by Mr Bamber of Save Rural Codicote • NHDC to provide note clarifying whether or not 08/02/2018 ED85 Enclosed as transport modelling shows that there is a need for a Appendix M6-6 southern bypass for Hitchin during the Plan period Appendix M6 – 1 ED142 : Note on Matter 6 / Table A – Infrastructure provision NORTH HERTFORDSHIRE DISTRICT COUNCIL LOCAL PLAN EXAMINATION ED142: MATTER 6 Note to Inspector Matter 6 / Table A – Infrastructure provision 1. Following the hearing sessions for Matter 6 (Deliverability), the following action has been specified: • NHDC to provide updated version of Table A of Matter 6 Hearing Statement (to included infrastructure for other allocated sites (i.e.
    [Show full text]
  • (Hitchin (Cambridge Junction)) Order
    NETWORK RAIL INFRASTRUCTURE LIMITED TRANSPORT AND WORKS ACT 1992 THE NETWORK RAIL (HITCHIN (CAMBRIDGE JUNCTION)) ORDER TOWN AND COUNTRY PLANNING ACT 1990: REQUEST FOR DEEMED PLANNING PERMISSION TRANSPORT AND WORKS (INQUIRIES PROCEDURE) RULES 2004 DfT Ref: TWA/09/APP/05 CLOSING SUBMISSIONS ON BEHALF OF THE APPLICANT, NETWORK RAIL INFRASTRUCTURE LIMITED INTRODUCTION 1. These closing submissions follow the format of the SS Statement of Matters. Before embarking on the exercise, however, it is worth reviewing the position now reached with respect to the objections which made the inquiry necessary. 2. All the landowners (freeholders and those with rights in land) whose interests would be compulsorily acquired under the Order have either withdrawn their objections or are imminently expected to (NHDC, EDF, AWA, NG, Prime Estates, the farm interests etc.); or have not appeared to pursue them (SITA) content, presumably, to rely on their rights under the Compensation Code. AWA are now satisfied that their interests can be secured by the Schedule 12 protective provisions; as are the other statutory utility providers EDF and NG. 3. The objections of the statutory authorities have also been withdrawn. Natural England (who did not object) are content that ecological interests affected by the Order Works, particularly in the Burymead Springs area, can be adequately conserved and protected by conditions (DM Appendix th 7: Minutes of the 11 March 2010 Area Planning Officer’s advice to Committee). The Environment Agency have withdrawn their objection having reached common ground with NR on the protective provisions in Schedule 13 (EA email th 6 May and ‘Statement of Common Ground’).
    [Show full text]
  • Hitchin Urban Transport Plan
    Hitchin Urban Transport Plan May 2011 Volume 1 Hitchin Urban Transport Plan 0300 1234 047 www.hertsdirect.org Table of Contents Glossary of Terms ............................................................................................ 0 1 Introduction ............................................................................................ 2 1.1 Introduction .................................................................................... 2 1.2 Structure of the Document ............................................................. 2 2 Background to the UTP Area ................................................................ 4 2.1 Background to the UTP Area ......................................................... 4 2.1.1 Population ...................................................................................... 4 2.1.2 Mode Share ................................................................................... 5 2.1.3 Road Network ................................................................................ 5 2.1.4 Public Transport ............................................................................. 6 2.1.5 Walking .........................................................................................10 2.1.6 Cycling ..........................................................................................10 2.2 Road Side Interviews ....................................................................10 2.3 Development Growth ....................................................................13 2.3.1 Existing
    [Show full text]
  • Volkerview Page 3 MPT Install Two 580 Tonne Bridges
    Autumn 2013 Contents Page 2 VolkerWessels awarded solent submarine cabling contract VolkerView Page 3 MPT install two 580 tonne bridges Proud together Page 4 VolkerFitzpatrick awarded BREEAM ‘Excellent’ for Velocity Brooklands Page 5 VolkerInfra completes Western Power Distribution contract Page 6 VolkerLaser gains external wall insulation standard: PAS 2030 Page 7 VolkerRail completes rail system work at Hitchin Page 8 VolkerStevin protects Tay Road Bridge Page 9 Innovative new alliance starts VolkerFitzpatrick win Project work of the Year at the National Rail Page 10 VolkerFitzpatrick Colas JV Awards 2013 successfully diverts the A45 VolkerFitzpatrick has been awarded the 650 operatives and staff on site every coveted Project of the Year Award at the 24 hours. It was the first blockade of its Page 11 2013 National Rail Awards. kind in 20 years and involved 100,000 VolkerStevin brings new life to man hours and significant liaison with VolkerFitzpatrick received the award for other contractors, the train operator, the Port of Southampton work completed on the Balham Blockade the local council and local residents, as Project, which is part of the Multi Asset well as with client Network Rail. Framework Agreement Package 3 works Page 12 for Network Rail. The main focus of this project was on VolkerGroundEngineering invest extending platforms 1 and 2 at Balham in new Movax impact hammers This challenging project, which was Station, by approximately 42 metres carried out within a ten day blockade eastwards towards an existing bridge during the Christmas period in 2012, saw that crosses Bedford Hill. >cont. page 2 >cont. from page 1 To create sufficient space for this Richard Offord, managing director of environment and I am delighted they new island platform extension, VolkerFitzpatrick commented on the have received this recognition.” VolkerFitzpatrick had to re-align the award: “I’d like to congratulate the existing track through platform 1 onto team.
    [Show full text]
  • Liberal Democrats Pledgebiggest Rail Expansion Since the Victorians
    Liberal Democrats pledge biggest rail expansion since the Victorians The Liberal Democrats have set out radical plans to revitalise the railways by improving and reopening rail lines and stations. The party will set up a Rail Expansion Fund of nearly £3bn from which councils and transport authorities can bid for money to pay for rail improvement and expansion projects. This fund will come from cuts to the major roads budget. Commenting, Liberal Democrat Shadow Transport Secretary, Norman Baker said: “The Liberal Democrats will transform the railways with the biggest expansion since the Victorian age. “Labour has allowed the railways to wither on the vine and punished passengers with huge fare hikes while more polluting forms of transport have got cheaper. All the while, the Tories have been sharpening the axe they will take to the transport budget. “High speed rail is hugely important, but it is only part of the 21st century rail network Britain needs. Our plans will reopen thousands of miles of track across the country and make our railway great again.” ENDS Notes to Editors The policy in brief Liberal Democrats will set up a £2.94bn Rail Expansion Fund from which councils and transport authorities can bid for money to pay for rail improvement and expansion projects. This is paid for by cutting part of the Major Roads budget. Why it is necessary Despite often stating that it is impossible to build your way out of congestion, Labour continues to pour billions of pounds into overspent major road schemes. Government analysis shows that new road schemes can increase traffic by 8-10% in a year.
    [Show full text]
  • North Herts District Council Infrastructure Delivery Plan to Support the North Hertfordshire Local Plan 2011
    North Herts District Council Infrastructure Delivery Plan to support the North Hertfordshire Local Plan 2011 - 2031 September 2016 Prepared by Rob Shipway. RS Regeneration, on behalf of North Herts District Council 2 Table of Contents Foreword ................................................................................................................. 4 1. Introduction ....................................................................................................... 5 2. Profile of North Hertfordshire .......................................................................... 9 3. Context and approach .................................................................................... 12 4. The Local Plan Growth Strategy .................................................................... 21 5. Transport ......................................................................................................... 28 6. Education including extended schools ........................................................ 56 7. Healthcare ....................................................................................................... 72 8. Social Infrastructure ....................................................................................... 86 9. Emergency Services ....................................................................................... 99 10. Green Infrastructure ..................................................................................... 103 11. Waste and Recycling ...................................................................................
    [Show full text]
  • Intercity East Coast Prospectus October 2013 Intercity East Coast Prospectus
    Next generation InterCity East Coast Prospectus October 2013 InterCity East Coast Prospectus October 2013 Contents Foreword Department for Transport 1. Introduction 06 Great Minster House 1.1 Purpose of this document 07 33 Horseferry Road 1.2 Important notice 08 London SW1P 4DR Telephone 0300 330 3000 Part A 10 Website www.gov.uk/dft 2. Executive Summary 10 General email enquiries [email protected] 3. Background and context 18 3.1 The UK rail industry 18 © Crown copyright 2013 3.2 The UK market 20 Copyright in the typographical arrangement rests with the Crown. Part B 22 You may re-use this information (not including logos or third-party material) free of 4. The Existing Business 22 charge in any format or medium, under the terms of the Open Government Licence. 4.1 Overview 23 4.2 Routes and services 25 To view this licence, visit 4.3 Key achievements in last 3 years 25 http://www.nationalarchives.gov.uk/doc/open-government-licence/version/2 4.4 The East Coast market 26 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or e-mail: [email protected]. 4.5 Current employees 27 Where we have identified any third-party copyright information you will need to obtain 4.6 Service delivery 30 permission from the copyright holders concerned. 4.7 Fleet and engineering 34 4.8 Stations 35 Photo credits: 4.9 Timetabling 36 Front cover: © Graeme Peacock/Alamy 4.10 Safety and environment 36 Page 6: © Tim Cordell/Alamy 4.11 Operations 36 4.12 Marketing and communications 38 We would like thank East Coast for the permission to reproduce certain 4.13 Financial information 39 materials and photos in this document.
    [Show full text]
  • Rail Strategy July 2016
    Rail Strategy July 2016 Rail Strategy 1 Rail Strategy July 2016 2 Rail Strategy July 2016 Hertfordshire County Council Rail Strategy July 2016 Spatial Planning & Economy Environment Department Tel: 01992 556117 3 Hertfordshire County Council Rail Strategy 4 Rail Strategy July 2016 1. Introduction Transport, including rail, continues to play a key role in maintaining Hertfordshire as a place where people want to live and work. Recent and emerging national and local strategies point to the continuation of growth in Hertfordshire and neighbouring areas, with ever increasing pressures on the county’s existing transport system. Central government projections indicate that the strategic road and rail networks will become increasingly congested if nothing, or even a minimum, is done. The Rail Strategy is therefore required to ensure that the railway in Hertfordshire can support economic growth and development by agreeing investment priorities for the next fifteen years and beyond. It sets the strategic framework against which decisions regarding future franchises and investment in key elements of infrastructure can be identified and prioritised. Specifically, the strategy will be used to influence the rail industry’s strategy development process, such as Network Rail’s Long Term Planning Process (LTPP), and ensure that conditional outputs feed through into key documents such as the Government’s Initial Industry Plans (2016, 2021, 2026) and High Level Output Specifications (HLOS). It will also inform the specifications for the local rail franchises when they are retendered. This document replaces the 2011 Rail Strategy, and recognises the considerable advance in national rail proposals over the last five years. The Strategy is evidence-based and has therefore been informed by extensive baseline analysis and engagement with key rail industry and local stakeholders.
    [Show full text]
  • September 2016 (Updated January 2018)
    North Herts District Council Infrastructure Delivery Plan to support the North Hertfordshire Local Plan 2011 - 2031 September 2016 (Updated January 2018) Prepared by Rob Shipway. RS Regeneration, on behalf of North Herts District Council 2 Explanation on the January 2018 IDP Update This document was originally prepared in September 2016. In the 16 months since publication a number of things have changed, and in the summer of 2017, in the lead up to the Local Plan examination, the decision was made to undertake a partial refresh to enable a number of new points of evidence to be considered, in particuar: The reduction in housing growth figures (as they now appear in the submission version of the Local Plan and the subject of examination) compared to those assessed in the original IDP (which are some 4.4% higher) New evidence (including the October 2017 Transport Strategy and the 2016 Open Space Review and Standards) New funding opportunities that have emerged since 2016 (including annoucements nthe 2017 Spring and Autumn budgets) A clearer assessment of how the infrastructure that is required could be funded Specific evidence (including viability work) on the infrastructure needs associated with the 6 largest strategic sites Other minor textual changes to provide a clearer explanation or correct factual errors Text boxes at the start of each chapter provide a summary of the changes within that chapter The Update does not alter the conclusions of the original document, but provides further evidence to support those conclusions 3 Table of Contents Foreword ................................................................................................................. 5 1. Introduction ....................................................................................................... 6 2. Profile of North Hertfordshire .......................................................................
    [Show full text]
  • Once in a Generation – a Rail Prospectus for East Anglia
    CHAPTER ONE Image: Antony Guppy Once in a generation – A rail prospectus for East Anglia Once in a generation – A rail prospectus for East Anglia Page 1 Table of contents 1. Foreword ................................................................................................................................................................................................ Page 3 2. Executive summary .......................................................................................................................................................................... Page 5 3. Our priorities for investment ....................................................................................................................................................... Page 7 4. East Anglia – the case for investment ....................................................................................................................................... Page 10 5. East Anglia – the growth region .................................................................................................................................................. Page 12 6. A four county alliance ..................................................................................................................................................................... Page 14 7. Priorities in detail ............................................................................................................................................................................... Page 20 – Great
    [Show full text]
  • Hertfordshire Infrastructure and Investment Strategy Update
    FOREWORD In early 2012 I was commissioned by Hertfordshire County Council on behalf of the Hertfordshire Infrastructure & Investment Partnership (HIPP) and the Hertfordshire Local Enterprise Partnership (Herts LEP) to undertake a refresh of the 2009 Hertfordshire Infrastructure and Investment Strategy (HIIS - a study in which I had acted as project manager for the 11 Hertfordshire authorities who had collectively commissioned it. The need for the refresh of the 2009 study was felt to be self evident. Since the date of publication, whilst the need for new infrastructure for the county had not diminished, much of the context in which it was being promoted had changed. HIPP and the Herts LEP wanted to understand these changes and the impact they were having, particularly insofar as they were likely to affect the likelihood of delivery. Equally however they also wanted to consider ways in which the drive to deliver new infrastructure could be ramped up. The document is partly a statement of where we are now and what that means for infrastructure planning in Hertfordshire, but partly also an attempt to point the way forward for the key Hertfordshire agencies - what they need to do deliver more infrastructure projects in the county. This calls for both new ways of thinking and new alliances of agencies working constructively together. Much is made in this report of the changes to the infrastructure planning landscape since 2009 and now. What is perhaps quite striking is the change of emphasis that has come about in the last few months, after the report's contents had been finalised following the October 2012 Hertfordshire Infrastructure Planning Conference.
    [Show full text]