Use of Computers in Planning and Execution of Infrastructure Investment

Use of computers in planning and execution of infrastructure investment.

M G Reynolds Railtrack pic, Rail track House, Euston Square,

Abstract

Railtrack is the principal United Kingdom provider of access to rail infrastructure for passenger and freight train operating companies. The company was vested in April 1994 and privatised by flotation in May 1996. Expenditure on the British Rail infrastructure which passed to Railtrack in April 1994 had been cash-limited in the public sector, leading to accumulated investment requirements over and above the level needed to meet steady state conditions. This paper describes the computer applications used to assess the scale of, and subsequently manage and report upon, the resulting investment programme.

1 Introduction

In the year 1996/7, Railtrack pic turnover was £2,437m, of which £2,278m was earned through sales to train operating companies of access to its rail

infrastructure, including depots and stations. These access charges were determined by the Rail Regulator, taking into account Railtrack's operating, maintenance and renewal investment requirements. The access charges apply for a period of 6 years, and are about to be reviewed by the Regulator, for the

period commencing in 2001. The Regulatory framework to 2001 also took cognisance of the investment backlog in operational property assets (stations and depots) which had previously accumulated due to cash constraints when the railway was in the public sector.

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This investment workload relates principally to Railtrack's infrastructure assets. Over a route network of 16000 km, these include 2492 stations, 32000 km of track, 12000 km of electrification systems, 1010 signalling systems, and 40000 bridges, viaducts and tunnels. Annual investment in these assets ran at £733m in 1994/5, rising to over f 1200m in 1997/8, with peaks in excess of jB 1500m planned in the next five years. Railtrack recognised two important needs when it took responsibility for the network. The first was to establish effective systems for the management of investment from initial proposals through design and construction and into operational use. The second was to ensure value for money in investment projects. This paper describes the organisational structure created to handle investment, and the computing systems adopted and developed to ensure consistent and effective management of the process throughout the Company.

2 Investment Organisation

2.1 Investment and project management in British Rail

British Rail (BR) was created in 1948, and operated as a fully integrated publicly owned railway corporation until 1994. For almost all of this period it was organised in three tiers : a central headquarters, five or six regional offices, and a larger number of divisional/area offices. The regional offices bore some relationship to the privately owned railway companies which had existed between 1924 and 1948, and often followed practices which were as much influenced by former organisations as they were by BR. Within all three tiers there was a strongly departmental culture, with operations, civil engineering, mechanical and electrical engineering and signals and telecommunications engineering as its dominant elements. The general effect of this was to create large numbers of investment projects, often individually assembled and managed. A small number of major projects were exceptions to this general position. Whilst introduction of the High Speed Diesel Train and general 125mph running in the 1970's, electrification of the East Coast Main Line in the 1980's, and system upgrading to prepare for Channel Tunnel opening in the 1990's are each examples of large projects effectively delivered, the general picture in 1994 was one of a large number of small and diverse projects throughout the network. Throughout 1993 and early 1994, Railtrack worked to address two key investment issues. The first was to understand the scale and nature of the investment programme which it would inherit, and then determine its criteria for future investment proposals. The second was to create an organisation, and supporting systems, to deliver the resulting investment portfolio.

2.2 Determining the Investment Programme

The scale and nature of determining the inherited investment programme is simply described : list all the investment projects, determine where they should be allocated in a privatised railway, then list all those which fall to Railtrack.

The reality was that, with five principal businesses and more than twenty five profit centres in BR, simply creating a master list required patience and a painstaking eye for detail. However, even at this early stage, computers played an invaluable role. BR's Investment Monitoring and Planning System (IMPS) was used to collate details of all the projects. Once these details were to hand, assembling Railtrack's initial investment portfolio was a relatively straight forward process. The IMPS system and its successor are described in part three of this paper. Having understood the inherited investment plan, the company had to assess the likely future investment requirements and to establish criteria for reviewing investment proposals and prioritising the workload. At that time forward plans to develop the rail business were fairly limited, as most of the attention of Railtrack and its customers was on making substantial organisational and ownership changes, whilst continuing to deliver safe and effective services to users. Therefore, much of the initial effort went into understanding likely future investment volumes in three key areas, signalling, structures, and stations and depots. For signalling, future investment workloads were sized by reviewing the physical condition and the operational reliability of approximately 100 modern signalling centres installed since 1964, and using these to generate forecasts of future serviceable lives. For structures, where there are many more discrete assets to be considered, a statistical approach, supported by sampling, was used to determine the likely future investment needs. For stations and depots, over 2500 individual surveys were undertaken, and for each site a schedule was prepared of work required to meet safety and commercial requirements. For any investment programme, criteria are needed which identify priorities for action. For Railtrack this burden was heavier between vesting in 1994 and flotation in 1996, since the overall level of investment was constrained by the Government's external financing contribution targets. Among a range of available criteria, the ratio of net present value to investment cost proved to be a simple and effective ranking tool.

2.3 Creating the investment project organisation

Section 2.1 described the variety of investment regimes which existed in BR.

At the outset Railtrack determined that it would require to create a unified and professional project management team, with consistent processes and systems everywhere in the company. A major projects directorate was established, led from the centre but delivering investment needs through regional offices which were co-located with those of Railtrack's zonal directors. Most of the leaders

within the major projects team were drawn from outside the rail industry, introducing a breadth and depth of knowledge which had not previously been available on a system-wide basis. With the team in place, work proceeded to define the pre-feasibility, feasibility, design development and implementation phases of investment projects. Key project milestones, including authorisation, contractual commitment and commissioning were also defined. The roles of sponsor and of deliverer, and the importance of clear remits, were emphasised. The assessment and mitigation of risk, and the allocation of contingency between the sponsor and deliverer were defined, and work was put in hand to create an estimating database, feeding from current contract experiences. All these definitions, and the processes to support them, were incorporated within a single company project control manual. Finally, work commenced on establishing a project management control system (PMCS) which mirrored the definitions and processes described above. PMCS is at the heart of Railtrack's successful delivery of investment projects, and is described in full in section 3 of the paper. Throughout the first five years of the company, investment project management has been developed to meet company needs. At the end of March

1998, responsibility for delivery of investment passed from the centre to the seven zonal directors. Investment policy and processes are still led from the centre, and PMCS is a key tool for ensuring continuing investment consistency throughout the company.

3 Investment Systems

3.1 PMCS System Description

3.1.1 System Configuration The Project Management Control System (PMCS) was conceived as a database application to support and mirror Railtrack project management processes and procedures. Specifically, its development has been driven by the need to:

• Provide a systematic and documented framework for the management of investment projects within Railtrack. • Enable Railtrack project staff to manage investment projects consistently and effectively.

The application is written in Omnis: a fourth generation language (4GL) cross-platform development tool which can be used on most computer systems. It was the intention that as PMCS expanded and the IT strategy of the newly formed Railtrack clarified, PMCS could be readily developed into a client server environment using higher performance file servers and database engines. PMCS is set up as a number of multi-user zonal databases and is accessed through PCs connected by Ethernet Network LANs and WANs to Compaq Prolient file servers. Zonal databases are accessed principally by local users but

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have masterfiles which can be updated centrally from Railtrack headquarters. A facility for consolidated reporting across all zonal databases has been introduced and is available to selected users.

The PMCS database application was developed by Railtrack and first introduced into the organisation in April 1994. Projects can be managed at high level within the database application itself and an electronic interface has been developed with Primavera P3, a proprietary project planning package, so that lower levels of project detail can be introduced if required. Interface routines transfer information between P3 and the PMCS database at a number of key stages during the project life cycle.

System Components

RMS PMCS (Rbk Management) A

Key

PMCS Applications

Associated Applications

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The version of PMCS introduced in 1994 consisted of the PMCS database application, the electronic interface to P3 and a cost allocation module CAMS

(also written in Omnis). Over the last four years the functionality of PMCS and its associated applications has been expanded and improved and new modules have been added for supplier selection, estimating (MultiEst) and risk management (RMS). The diagram on the previous page shows the current configuration of PMCS and related systems. In the future it is likely that PMCS will be migrated to an alternative database engine such as Oracle so that full compatibility is achieved with Railtrack's finance and procurement systems.

3.1.2 Project Management Process Railtrack project managers control a portfolio of capital investment projects on behalf of sponsors with an aggregate value in excess of £1 billion per annum. At present there are over two thousand projects in PMCS in sizes ranging from station improvements to complete route infrastructure developments.

The project management process provides a standardised framework for the organisations which are responsible for delivery of projects within time, cost, safety, quality and environmental requirements. PMCS is designed to provide the relevant controls, standard proformas and reports for time and cost elements of the process. Projects are normally managed in two phases, feasibility followed by design development and implementation. The process for managing these phases includes the following elements:

• Project remit and project manager's proposal • Authority and budget • Procurement • Change control

• Work in progress • Management control and reporting • Close out These elements are described in the following sections.

3.1.3 The project remit and project manager's proposal The project sponsor prepares a project remit detailing objectives, scope, criteria, programme, funding, deliverables and responsibilities . The project manager responds to the project remit by producing a proposal for execution of the work. The proposal represents the project manager's commitment to the sponsor in terms of time and cost and is the baseline against which performance is measured. The proposal is used by the sponsor as the basis for the submission to the appropriate Investment Panel for project authority.

3.1.4 Authority and project budget Once the sponsor has reviewed and accepted the proposal it is the sponsor's responsibility to obtain the necessary investment authority. The authority value

is the total sum authorised by the Investment Panel and equals project budget plus contingency. Once the project budget has been agreed between the sponsor and project manager it cannot be modified except through the change control process.

3.1.5 Procurement The line item breakdown which was established in the proposal is built into the model form of tender so that contractors must bid, plan and report in line with the specified line items. The Tender Event Schedule is generated for a contract in PMCS and tracks the procurement process from requisition to award. The project manager is responsible for preparing the tender documents and endorsing contract award. The procurement manager is responsible for issuing tenders, responding to queries, tender evaluation and contract award. PMCS prohibits the project manager from proceeding with this procurement stage until the project has been authorised by the sponsor.

3.1.6 Change control The change control process comes into effect as soon as the project budget is agreed and is ongoing up to the project close out. All changes to scope, standards, specifications or conditions are identified as changes on PMCS. The impact of all significant changes is evaluated in terms of time, cost and safety prior to a decision to proceed by the sponsor and project manager. The project manager instructs contractors to carry out contract changes by means of a

Project Manager's Instruction (PMI) which is one of many standard proformas output from PMCS.

3.1.7 Work in progress The project manager is responsible for the management of consultants and contractors so that a project is executed within the time and cost agreed with the sponsor and as set down in the agreed programme. There are also quality, safety

and environmental standards to be met. A contract moves into work in progress status after contract award. The time and cost elements of project control are handled through PMCS. Project performance is assessed in terms of time and cost every 4 weeks and entails recalculation of cost of work done, cost forecast,

anticipated final cost and forecast completion dates. Changes, invoices and certificates are processed through PMCS on an ongoing basis.

3.1.8 Management control and reporting The management control and reporting cycle is driven by 4 weekly periodic cut off dates. The cost and programme information for all contracts is updated at

the appropriate level in PMCS/P3 during the week prior to the period end cut off. During week one of the next period, project reports are produced from PMCS and are signed off by the project manager or senior project manager and

reviewed by the finance team and the head of projects. The PMCS period close out routine is run after all information has been agreed and signed off at the appropriate level. Consolidated reports are generated from PMCS after each period close out and are used as the basis for the executive report. This hierarchical review of project information is the key to effective project control and accurate management information.

3.1.9 Close out PMCS incorporates routines for closing out contracts, phases and projects.

These check that the steps in the project management process have been carried out and that there is no inconsistency in the project data. After close out, project data is usable on a read only basis.

3.2 Associated Systems

PMCS, MultiEst, RMS, CAMS and P3 combine to create a substantial project control system. This in turn relies for completeness upon interaction with two other Railtrack systems. One of these provides the investment inventory (IMPS/PIPS), whilst the other is used to support all the payment, invoicing and billing routines which flow from the investment project workload (SCALA). As mentioned in section 2.2, IMPS was a BR system for managing the investment inventory. It consisted of a simple database managed at profit centre level on local area network linked personal computers. Each business was able to aggregate investment information on a partially automated basis, and BR could make system wide aggregations on a similar basis. In 1996/7, shortcomings in IMPS led to development of a successor, the Packaging and Investment Planning System (PIPS). This Access database made it possible to aggregate and disaggregate the investment portfolio using a significantly wider range of descriptors than IMPS had done, including value, work type, location, business unit and accounting category. SCALA is a proprietary financial accounting package, introduced into

Railtrack in 1995. In relation to the investment workload and PMCS, it meets two key needs :- • Payment of contractors and billing to clients; • Generation of financial reports to required timescales.

Outputs are received from eleven reporting units and are aggregated to present a full company position using SCALA. Whilst SCALA has served Railtrack's needs since its introduction in 1995, steps are presently in hand to introduce a successor system whose functionality more completely meets the developing needs of the Company.

3.3 Extension of PMCS to Suppliers

Reference was made in 2.2 to investment in stations and depots. Railtrack is currently spending over £lb on station regeneration to deliver around 2500

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stations to users in benchmark condition. The station regeneration programme (SRP) is delivered through six "extended arm" contracts. For each extended arm contract (EAC), the contractor acts on behalf of Railtrack, placing individual projects upon works package contractors. To ensure that SRP reporting is consistent with that for all other Railtrack investments, each of the EACs has direct access to PMCS. This is the first example of a supplier having direct access to an on-line, nationwide Railtrack system, and is being used as a test bed for other systems where supplier, and in turn customer, access is granted to the Company's systems. One effect of the extension of PMCS to suppliers was to highlight that some of the company's processes, whilst optimal for medium to large values of work, are too complex for simple, low value work. At the time of writing, many processes for low value work are being amended in the light of this experience.

3.4 PMCS Future Developments

Development, and indeed replacement, of PMCS will be driven by two key factors, system obsolescence and changes in functionality. PMCS has been structured to work in its current form until October 2000, at which time a replacement system is due to be implemented. Until this time only defensive developments to the system will be made. Since Railtrack has many older ("heritage") computer systems, some going back to the 1960's, it is devoting much effort to ensure that those will be fit for purpose in 2000. Accordingly, no major developments or replacements of PMCS are envisaged within the next 18 months. During this period, Railtrack will take the opportunity to review PMCS functionality to reflect the developing nature of the Company's investment programme and its relationship

with its suppliers.

4 Conclusion

The United Kingdom rail industry has experienced - and continues to

experience - significant structural and commercial change. A key element for Railtrack, the company at the heart of the railway, has been to develop an investment programme which is driven by the needs of stakeholders, especially customers and shareholders. That investment programme has grown

substantially, and its effective and consistent project management has been made possible by the development of appropriate computer support systems. The investment programme will continue to develop and evolve, and it is vital that the supporting computer systems continue to meet programme needs.