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2323 Tfl PPP FIN ART V9.Qxd London Underground and the PPP: the third year 2005/06 Report for financial year ending 31 March 2006 MAYOR OF LONDON Transport for London London Underground and the PPP: the third year 2005/06 1. Contents 1. Foreword 3 2. Background 6 3. PPP contractual performance 8 4. Maintenance and asset performance 27 5. Renewals and upgrades 38 6. Asset management 49 7. Financial outcomes 51 8. Safety and environmental performance 56 9. Managing the investment programme 59 10. Overall performance 62 Copyright London Underground Limited 2006 All Rights Reserved. No part of this publication may be reproduced or transmitted in any form (including photocopying or recording) without the express prior written permission of London Underground Limited. Nothing in this report shall create any legal relations between London Underground and any other party nor shall be deemed to interpret, amend, waive or otherwise affect any provision of any contract or agreement identified herein. The report is issued without prejudice to the exercise by Transport for London or London Underground of their rights under any contract or agreement identified herein. London Underground and the PPP: the third year 2005/06 3. 1.0 this is gratifying, it does not alter the fact that customers judge us on their last journey. Failures Foreword continue to undermine the steady improvements being made, and rising expectations make it harder to credit improvements when failures make performance inconsistent. Sustaining performance improvement requires consistency from Infracos in their maintenance activities, and consistency from London Underground in our operating activities. The latter overwhelmingly depends on the performance of our 13,000 employees. Every member of the company was personally invited to one of a series of face to face meetings in November last year. These provided Without question, 2005/06 was an extraordinary the opportunity for me to explain the priorities for year for London and for London Underground. the company, and for staff to raise their questions At the start of the year we recognised our best directly with the top level of management. It is year of performance for some considerable time encouraging that so many of our staff refused to and were looking forward to the trend continuing. let down customers on New Year’s Eve, despite the We celebrated with London the IOC’s award of calls of certain unions. Overall, the two-year pay the 2012 Olympics to this great city – a decision deal agreed in 2004 has provided stability and the that partly reflects our role in demonstrating the level of industrial action over this period has been bid rested on a credible transport plan. low. We are seeking a further multi-year deal with These events were overshadowed by the terrorist our staff to provide a continued period of certainty. atrocities of 7 July 2005, which were an outrage However, the overall performance of London not only against London and the people of London, Underground continues to be hampered by the but on its transport system and those who keep it performance of old assets that should have been running. I have praised the magnificent response renewed and maintained to a higher standard long of London Underground staff, and I shall continue before now. The PPP is now in its fourth year, which to do so. I have also paid tribute to the excellent means we are already 10% of the way through these response of the Infracos, Tube Lines and Metronet, 30-year contracts. There are indications that with the to these events. Their support was immediate and right focus from the Infracos, the contracts can deliver absolute, and once the police returned control of the step change in asset condition that they set out the incident sites, they worked quickly to restore to. The last year has seen some notable achievements, services for customers. London’s recovery in the but the Infracos have failed to deliver on the two months since July has been impressive, and by challenges highlighted in this report a year ago. the autumn, passenger numbers on the tube were already growing again. The notable achievements include the completion of the Wembley Park station rebuild on time and The overall trend of improving performance over below budget, and the lengthening of all Jubilee the last three years has been recognised by our line trains through a seventh car that delivered customers in high customer satisfaction scores, 17% more capacity. Both of these projects sit and our peers in the rail industry. In addition to outside the core PPP contracts, but were delivered a special award for the rapid recovery from the with Tube Lines to time and to budget. Tube Lines events of 7 July 2005, London Underground was are on course to deliver a third of their entire named ‘Train Operator of the Year’ at the HSBC station enhancement programme this year. Tube Rail Business Awards in February this year. While Lines have proved they can deliver projects. 4. Metronet are not without accomplishments as well. High profile failures since the year end only serve After initial problems, Metronet are now delivering to emphasise the level of turnaround required by the refurbishment of the District line fleet on Metronet, particularly on track maintenance. The schedule. This is encouraging because the work is failure of Metronet during the third year to properly being done by Bombardier at their facility in Derby prepare sections of the District line track for that will be asked to deliver new trains for the summer temperatures led to a series of disruptive Victoria line and the sub-surface lines. speed restrictions in May, while just a month earlier, LU issued an Emergency Direction to Nonetheless the Infracos continue to disappoint Metronet in response to concerns over the quality in many respects, and failed to meet the two key of track maintenance and renewal on the District challenges set out last year. The challenge to line, which had been growing over a number of Tube Lines was to turn around performance on months.2 More recently still, disruptive incidents the Northern line, at least to the standard of the on the Central and Victoria lines, and overruns and Jubilee and Piccadilly. While performance showed asset failures associated with engineering work, some improvement in the third year, it remained highlight the continuing need to focus on delivering significantly worse than benchmark. In December a serviceable railway every morning. last year London Underground issued a Corrective Action Notice (CAN) to Tube Lines for persistent Such incidents completely undermine the progress poor performance on the line over at least a two Metronet is making and our confidence in the year period, which was manifest in repeated track, capability of Metronet’s management. The current signal and rolling stock failures. The CAN is a closure of the Waterloo & City line for works serious contractual measure, the terms of which connected with the upgrade is an acid test of require Tube Lines to restore performance back Metronet’s capability to manage major projects. to at least the contract benchmark in the fourth In the coming months the PPP Arbiter will deliver year. On past form, this will require a significant a report on Metronet’s performance over the past turnaround. The Northern line also suffered a three years. This is a judgement on the extent to disruptive three day service suspension in October which Metronet has acted in an overall economic 2005. This was necessary to undertake full checks and efficient manner, and in line with Good and remedial works, because there was a loss of Industry Practice. It is the first time Metronet has confidence in the trains’ tripcock system itself and triggered a reference to the Arbiter on this question Tube Lines’ ability to ensure adequate maintenance.1 although the contract envisages an annual process.3 The Northern line performance is in sharp contrast Metronet’s accumulated failures on projects raise to the Piccadilly line, where Tube Lines has the spectre of claims, making these proceedings produced significant improvement. critical for all stakeholders. Metronet’s key challenge was to show they are in A material factor in assessing performance, year over control of their renewal programme. We are in the year, is service disruption caused by communications fourth year of the PPP, and still they are behind in a failures. The service suffered from a number of radio number of areas. The station programme is behind, failures in the third year, and there have been further with only 14 stations delivered (all late) out of 35 due examples in the last few months. LU’s various train by March 2006. Financial penalties are being levied, radio systems are maintained with minor exceptions and we have issued Corrective Action Notices to under a Private Finance Initiative (PFI) that lies outside Metronet BCV and Metronet SSL for their repeated of the PPP. That PFI, Connect, existed before TfL failures in delivering the station programme. 1. The ‘tripcock’ is a train borne failsafe designed to stop the train in the event that it passes a signal set to danger. The Northern line events are covered in chapters 3 and 8. At the time of writing, attribution of the tripcocks incident has not been resolved. 2. Emergency Direction is a contractual step whereby for safety reasons, LU oversee and direct the activities of an Infraco with regard to a set of specific circumstances. 3. Chapter 7 describes the role of the Arbiter and the Metronet annual report process in more detail. The review is a provision unique to the Metronet contracts that enables Metronet to ask for guidance in every contract year.
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