March 2019 - Network Rail
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March 2019
Route Services Strategic Plan
Foreword Foreword
The Route Services Directorate exists to of the transformation work following our
We will become our customers’
supply route businesses with services they formation. By the end of CP6 we will have
decide are best provided from a national delivered savings of £369m across our and suppliers’ trusted partner of
team. In producing this strategic plan it was catalogue of services. choice:
important that we maintained our focus on
this overarching purpose and align our teams Our priorities continue to be: one team continuously
to achieve it.
Changing the customer perception
improving our delivery
In meeting our purpose, Route Services is
performance, quality and
Creating a culture of commerciality,
transforming. Our customers demand more cost-competitiveness
from us and we are developing our delivery performance and innovation
for a better railway.
organisation to deliver the outstanding
Taking our people on a journey
performance, cost competitiveness and
commercial approach that they expect. This Our plan is underpinned by our better every
journey began in 2016 and whilst significant day approach. In addition to this we have
progress has been made, we recognise our eight transformational themes which will
customers and stakeholders demand we do deliver greater efficiencies and higher levels
more, and we do it faster. We will meet these of service performance. We have a robust
expectations and continue to respond. plan to transform our business to meet the
changing needs of our customers through
Route Services now comprises c.3,000
Control Period 6 and into Control Period 7
people, has £1bn of direct spend and
whilst delivering the value for money services
manages a further £2bn of indirect spend on
that our customers demand.
behalf of the business. As we improve there
is a direct benefit to Network Rail which we
are committed to realising. Control Period 6
Susan Cooklin,
presents an opportunity to realise the benefits
Managing Director Route Services
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Route Services Strategic Plan Contents 1. The purpose, role and vision of Route Services ..................................................................................................................................... 5 1.1 Purpose ................................................................................................................................................................................................. 5 1.2 Role ....................................................................................................................................................................................................... 6 1.3 Vision ..................................................................................................................................................................................................... 8 2. Objectives and stakeholder priorities...................................................................................................................................................... 9 2.1 Stakeholders and priorities..................................................................................................................................................................... 9 2.2 Specific objectives ............................................................................................................................................................................... 12 3. What Route Services is ........................................................................................................................................................................ 14 3.1 Structure and services ......................................................................................................................................................................... 15 3.2 Operating model – present and future .................................................................................................................................................. 17 4. Risks, opportunities, constraints and assumptions ............................................................................................................................... 22 5. Expenditure and efficiency ................................................................................................................................................................... 27 5.1 Cost and volume summary .................................................................................................................................................................. 27 5.2 Route Business Scotland details .......................................................................................................................................................... 30 5.3 Cost drivers, head winds and efficiency ............................................................................................................................................... 31 5.4 Risk and uncertainty in the CP6 plan ................................................................................................................................................... 44 5.5 Uncertainty ranges for Control Period 6 ............................................................................................................................................... 44 5.6 Digital Railway strategy ....................................................................................................................................................................... 46 5.7 Telecoms strategy................................................................................................................................................................................ 47 Network Rail 3 Version 3, 28/01/19
Route Services Strategic Plan Appendix A Key assumptions....................................................................................................................................................................... 49 Appendix B Scenario planning ...................................................................................................................................................................... 51 Appendix C Glossary of terms ...................................................................................................................................................................... 53 Appendix D Stakeholders and engagement ................................................................................................................................................. 58 Appendix E Service Offerings example – Periodic Payroll ............................................................................................................................ 59 Appendix F Headcount glidepath ................................................................................................................................................................. 60 Appendix G Route Services: key message framework ................................................................................................................................. 61 Appendix H Route Services 2019/20 Scorecard ........................................................................................................................................... 62 Network Rail 4 Version 3, 28/01/19
Route Services Strategic Plan 1. The purpose, role and vision of Route Services 1.1 Purpose Our purpose is to supply routes with services they decide are best provided from a national team enabling Network Rail to deliver a better railway for a better Britain. The route businesses chose to bring these particular activities together into a single, service delivery directorate. This approach allows national coordination where the Routes deem appropriate, and for Network Rail to benefit from economies of scale and greater efficiency from specialised delivery. The world of our customer is changing rapidly. As a result, we face the challenge of fluctuating and evolving demand for our services. Our customers have increasing expectations of us, and we must demonstrate safety, performance and value in our delivery and behaviours every day. In this devolved, more competitive and commercial world, we have three priorities: changing the customer perception; creating a culture of commerciality, innovation and delivery performance; and taking our people on a journey. These priorities underpin everything we do. The business is currently in the midst of a strategic review (100-day plan). The outcomes of which may ultimately impact some elements Figure 1.1: Route Services Priorities of the business plan. At the present time, there remains a level of uncertainty around the outcomes of the review and the likely implementation of them. Therefore this Strategic Plan is not based on any 100-day plan outcomes. However, on the completion of the review and the associated action plans; any outcomes that will impact on the overall business plan will be reflected through the established corporate change control process. Network Rail 5 Version 3, 28/01/19
Route Services Strategic Plan
1.2 Role
There were two guiding principles in the creation of Route Services. Route Services consists of four primary functions:
Firstly, the services we provide must be competitive compared to the
Supply Chain Operations delivers the logistics, materials,
outside market. If they are not competitive the routes have the right to
components and rail and road fleet that enable the maintenance and
procure elsewhere and we need to work with our route customers to
renewal of the railway.
make this practical and effective. Secondly, the routes collectively
decide what should be in Route Services. This ensures that the cost Contracts and Procurement (C&P) strategically sources and
of services is minimised for the network as a whole. If the formulation manages contracts of scale in order to optimise value for money
and market competitiveness of Route Services is right, its services across the network.
should be the most efficient way in which the network can operate for
the benefit of customers and taxpayers. Information Technology (IT) shapes, builds and runs the information
technology services needed to support the railway, now and into the
In the formation of Route Services, becoming ‘one team’ is about more future.
than bringing different business functions under one banner. It’s about And Business Services, an integral part of Route Services, manages
a shared commitment to excellence and customer service and a the support systems needed to keep Network Rail working effectively,
common way of thinking and acting. We will not work in silos and will including Human Resources services, Training, our National Records
take collective responsibility for the services we offer. Group and financial systems and processes.
This is all supported by Finance & Business Support, Route Services
We are uniquely placed to provide Network Rail with the best service Transformation and Human Resources.
by working as one focused, extended team. Through our subject
matter expertise and our supply chain we are able to offer our Delivered through a team of over 3,000 employees, the Route
customers the best whole life solutions to their business needs. We Services portfolio currently consists of 63 defined services. These are
engage our supply chain and use our strong delivery partnerships with provided to the route businesses either directly or via other service
suppliers to get the best value and quality possible. providers such as Infrastructure Projects, Asset Information Services
or the System Operator. Route Services controls and influences a
considerable amount of money on behalf of Network Rail. We have a
critical role in ensuring value for money.
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1.2 Role continued
We directly manage £1bn of these services for the Route Businesses
and other customers, and procure a further £2bn of spend per annum
on behalf of the business. Around 85% of our direct spend is delivered
through the supply chain and subject to competitive tender. Since the
creation of Route Services, route customers now have clarity on how
to engage with us, and service levels are defined and reported on
across all our services.
We are establishing the same level of accountability that a supplier
would have to its customers in a commercial environment. For some
of these services the remit is wider, encompassing the whole of
Network Rail or the Rail Industry. This provides Route Services with
an integral role in the running of the railway and a diverse group of
stakeholders.
As our customers’ operating model changes through
greater devolution, route based determinations and other
transformational change; our operating model will continue
to develop in partnership with our customers to best meet
their needs.
Figure 1.2: Route Services annual direct spend, 2017/18
Notes: Coloured sections are outsourced;
Grey hatched sections are undertaken in-house.
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1.3 Vision
The vision for Route Services is simple. We want to be our customers’
and suppliers’ trusted partner of choice: one team continuously
improving our delivery performance, quality and cost-competitiveness
for a better railway. This means that we all play a vital role in the future
of Britain’s railway, whatever our job involves and wherever we do it.
What we do for our customers is defined in our service offerings, which
provide clear line of sight for all our people and suppliers to the
requirements of their customers. An example can be found in
Appendix E.
1.3.1 Route Services Safety Vision
Aligned to the Network Rail Safety Vision – Everyone Home Safe Figure 1.3: The location and roles of Route Services employees
Every Day – safety is integral to everything that Route Services does, Route Services has a large, geographically dispersed workforce, all of
and we are uncompromising in our commitment to the health, safety whom face many different safety hazards every day. 42% of our people
and wellbeing of our people, our customers, and our supply chain. are based in Route offices and depots, with 58% in central offices and
In CP5 Route Services achieved one of the lowest lost time injury training centres. As an example, 52 Route Services employees are
frequency rates (LTIFR) in Network Rail. However, we do not take this embedded within Scotland Route. Front line employees make up 25%
for granted and we recognise that this is just one dimension of safety of our overall workforce. With such a high proportion of our teams
performance. Furthermore, since the formation of Route Services we located with our customers, our alignment with them is an opportunity
have seen a very varied focus on safety performance from our people, to improve safety performance across the network. Route Services
with some pockets of excellence, but other teams who are not truly also faces some unique safety challenges for example in the operation
thinking and acting safely. We are now focused on the greater of an apprentice training centre. Through active participation within the
challenge of embedding a consistent safety culture across a diverse Network Rail safety community we can share best practice in making
Route Services workforce, aligned with delivering our safety vision our people safer. We will commence the rollout of our new safety
commitment. strategy during the final year of CP5 and aim for an LTIFR target of
less than 0.1 by the end of CP6. This target will be reviewed and set
annually to drive continuous year on year improvements.
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Route Services Strategic Plan 2. Objectives and stakeholder priorities Figure 2.1.1: Route Services Route customers 2.1 Stakeholders and priorities 2.1.1 Customer requirements Route Services has a wide and diverse group of customers and other stakeholders within Network Rail and in the wider industry. Ultimately however, everything that we do must serve the interests of the route businesses as our ultimate beneficiaries, in line with our priority of changing the customer perception. At an operational level, we engage with our route customers on a near continuous basis, both formally and informally. For each of the route businesses, we have a “route lead” drawn from our senior management team along with Regional Delivery Directors and Heads of Route IT. These roles lead our customer focused approach, in which all members of Route Services participate. At least three times per year, we issue a customer advocacy survey to 100 senior members of our stakeholder groups, plus follow up discussions, to understand whether they would recommend us, and how we can improve. This close relationship with our customers enables us to understand their priorities, which may differ across our portfolio. Network Rail 9 Version 3, 28/01/19
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2.1.2 Customer priorities
The route businesses hold Route Services to account via appropriate Our engagement tells us that our customers demand that we;
strategic and operational means. Route Services’ performance is
• Deliver reliable services to support their objectives
reviewed at Route-level with Route Services senior route leads • Provide services which are demonstrably cost competitive
actively participating in Route managing director periodic business • Become part of their extended teams, communicating
review meetings. regularly in an open and transparent way
• Understand their businesses in order to provide greater
Route Services host regular sessions between Route manging value from our service delivery
director’s to review strategic content and direction. As the route • Offer flexibility and choice
structures and roles change, Route Services is adapting in the way • Compete for their business (as appropriate)
they engage. • Enable Network Rail to be an intelligent client in the supply
market
In addition to these ongoing interactions, we have engaged with
However, for Route Services to deliver best value from our supply
customers at all levels within Network Rail to develop our Strategic
chain we ask that our route businesses provide us with:
Business Plan. We have also helped to shape our customers’ strategic
plans and in turn aligned our plan to be an enabler for them. Our plan • clarity and predictability of demand
reflects the complex stakeholder environment we operate within, and • firm expenditure commitments with contracts and
includes information specific to Scotland, as required by The Scottish frameworks
• regular communication and engagement
Ministers’ High Level Output Specification for Control Period 6.
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2.1.2 Customer priorities continued
Service performance Market testing and benchmarking
We have worked with our customers to build our catalogue of services Our customers have told us that we need to demonstrate that we offer
and we are proud of this. It sets out clearly what we offer, representing value-for-money and are competitive. In response to this
everything our customers want and are paying for. The service challenge, in 2016/17 we benchmarked 80% of our business focusing
offerings define SLAs and KPIs for all our services, and these have on both efficiency and effectiveness. This exercise told us that some
been agreed with our customers. The measures and targets allow the of our services are already operating at world class levels of efficiency,
customers to drive accountability and where there are gaps in the whilst others are in need of improvement.
required levels of performance, this will drive both tactical and strategic
improvements. Even in areas of benchmarked high performance, we acknowledge
that our customers might not always recognise this and so we need to
We review our service offerings with our customers on an ongoing provide better evidence and improve the customer experience.
basis, to ensure that we are providing the services they need and are Efficiency tends to be strongest for our core traditional service offers
accountable for delivery value-for-money. See an example service such as procurement, IT operations, payroll, engineering train
offering in Appendix E. The list of services covered by catalogue will planning, etc. This is a firm foundation for us to build on.
not stand still. There will be opportunities for expansion, and we are
constantly examining the potential for more services to be devolved to External reviews
the route businesses. A number of services have already been Network Rail has also been the subject of two independent reports
devolved from Route Services, and throughout CP6 Route Services during the latter years of CP5. The Shaw Report and the Hansford
will review its activities with customers and stakeholders to ensure they Review made a number of recommendations which have shaped the
align with customer need, and are delivered through the most cost vision for Route Services, reflected in this document. In particular, both
efficient and effective means. reports anticipated a more competitive environment, in which Route
Services might have multiple customers with a choice as to whether to
To illustrate the extent to which critical services are managed at local use our services.
level, 10 on track machines, 8 snow clearing vehicles and 434 wagons
are specifically dedicated to Scotland Route. During CP5 we have evaluated the scope of services provided by
central functions within Network Rail, to clarify the economies of scale
and other national benefits provided. In response, Route Services has
devolved services which the route businesses have chosen to manage
themselves, and we will keep this mix under review with them.
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2.2 Specific objectives
The Route Services scorecard is and will be focused on our five In 2018/19, the route businesses helped co-design the Route Services
principles: scorecard measures and targets, to ensure an even closer aligned to
1. We think and act “safety” our customers. We have built on this collaboratively for our 2019/20
2. Our customers are our priority scorecard that is shown in Appendix H.
3. We spend money efficiently
4. We focus on delivery We have identified opportunities to further reduce the cost of our
5. We improve what we do services by a total of at least £369m by the end of CP6. Our objectives
will be to realise these savings whilst also addressing the other
In collaboration with our customers and our people, we continue to priorities of our stakeholders, examples of which are shown in the table
evolve our annual scorecard measures to reflect the ways in which we below. In turn, this will facilitate the creation of a culture of
deliver for, and add value to them. commerciality, delivery performance and innovation.
Figure 2.2: Route Services’ customer commitments
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Safety, Health, Environment & Quality (SHEQ)
Summary
To support the delivery of Route Services’ five principles, the team will services to high levels of service excellence by aiming to exceed
deliver a strategy that underpins an evolving culture of continual customer expectations.
Our focus through the SHEQ Strategic Key Themes will be on safety
improvement.
and reliability via risk-based quality assurance, prioritising safety
This will be structured around five strategic themes: critical products and underpinning design for reliability.
To enable continuous improvement, we will adopt the ‘Better Every
• Leadership & Culture Day concept’ for Supplier Quality Assurance.
• Health & Wellbeing
• Hazard and Risk Management Environment and Sustainability
• Monitoring & Measuring Performance It is essential that our supply chain decisions and activities that affect
• Engagement & Communication the environment locally as well as globally minimize environmental risk
and maximise associated business opportunities through sustainable
Health and Safety development.
Route Services Health and Safety strategy has been created to
provide the vision and framework from which we will drive continuous Sustainable Development is the balance of the three pillars:
improvement to deliver health and safety of our supply chain and staff.
We aim to create a culture whereby safety is a behaviour that is 1. Economic growth,
embraced and demonstrated by everyone. 2. Environmental protection, and
3. Social development.
Supplier Quality Assurance (SQA)
Route Services is committed to providing our customers with quality For CP6, Network Rail has committed itself to be a 'green' organisation
products and services. We will add value for our customers by that plays a major role in delivering sustainable travel. Therefore,
delivering a robust risk-based quality assurance framework to assure
Route Services’ vision is to be a market leader in sustainable
products are delivered within engineering specification, and provide
supply chain delivery for our customers.
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3. What Route Services is
“Route Services exists to supply the route businesses with the services they decide are best provided by a national team. Our CP6
Business Plan and underpinning transformation will deliver efficient and highly performing services which are market competitive and
meet the needs of our customers” Susan Cooklin, Managing Director, Route Services
Vision: Our customers’ and suppliers’ trusted partner of choice: one team continuously improving our
delivery performance, quality and cost-competitiveness for a better railway.
Service Portfolio Scale
Supply Chain Operations Services : 24
Infrastructure Construction & Engineering Headcount : c1,540
Fleet & Track Treatment Cost: c£840m per annum
Delivered Materials
Contracts & Procurement Services : 8
Headcount : c130
Cost: c£10m per annum
IT Services Services : 7
Headcount : c500
Cost: c£215m per annum
Business Services Services : 24
Headcount : c750
Cost: c£25m per annum
net of recharges to Routes
Our customers will experience How our business will operate How our people will feel
Excellent delivery and total confidence With agility, pace, innovation Passionate, confident, valued
in a trusted, connected (line of sight), and commerciality, delivering and invested in their contribution
expert and responsive partner. excellence and high performance. to achieving our vision.
Figure 3.0: Route Services Outcomes
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3.1 Structure and services
Mark Tarry, Business Services Director Neil Clark, Chief Information Officer Rob Morton, SCO Director Clive Berrington, C&P Director
Managing the support systems needed Delivering IT services for the railway today and designing The management, supply, operation and Managing our wide range of contracts
to keep Network Rail working effectively. and delivering investments in strategic, innovative and maintenance of our rail and road fleet; through innovative
hihi fit-for-purpose IT for a better railway in the future. procurement and delivery of railway materials. strategies and solutions.
and components.
Business Services Information Technology Services Supply Chain Operations Services Contracts & Procurement Services
Benefits Management Building Infrastructure IT (BIIT) Projects High Output Track Renewals Buildings & Civils
COOM IT Delivery Projects Delivery of Materials by Rail FMUSS
Energy Bureau IT Strategy & Planning Services Infrastructure Monitoring Frontline Services
Expenses Information Security Mobile Maintenance Train Operations
Organisational Data Maintenance Local IT Delivery Management Profile Treatment - Rail Grinding Materials
Shared Services Employee Records IT Helpdesk Profile Treatment - Rail Milling Technology
Shared Services Medicals Technology Infrastructure Services Seasonal - Autumn Corporate Services
Shared Services Recruitment Seasonal - Summer Process & Governance
Accounts Payable Seasonal - Winter
Billing and Income Collection Stoneblowing
Periodic Payroll Tamping
Schedule 4 Compensation Breakdown Recovery
Shared Services Reporting Road Fleet
Taxation and Accounting Aerial Survey
TOC Billing & Income Collection Lifts & Escalators
PPE Helpdesk Mechanical & Electrical Locking Fitters
Competence Assurance OHL Condition Renewals & Incident Response
Sentinel Delivery Operational Property Helpdesk (OPHD)
Delivery of Skills Training Project Engineering Team (National)
Leadership & Professional Development Project Management Services
Abnormal Loads Signal Works (National)
Content Management Delivery of Materials by Road
Isolation Diagrams iStore
Records Management Recycling Services
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3.1 Structure and services continued
Louise Kavanagh Mark Enright Liz Zukowski
Finance Director Transformation Director Human Resources Director
Enabling Route Services to operate in Co-ordinating all of our transformation Supporting great people
an effective, efficient and compliant and efficiency work as a single management, creating a great place
manner. Undertaking all financial portfolio, providing assurance of to work and enabling high
management, accounting, capital delivery and a consistent approach to performance.
investment assurance, risk engagement with our people, our
management and reporting activities, customers and our suppliers. Driving
and supporting managers to deliver internal and external communications,
high quality services to our in support of both our change
customers. activities and business as usual
service delivery.
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3.2 Operating model – present and future
3.2.1 Transforming Route Services for Control Period 6
Our CP6 plan revolves around this approach to developing our Route Services will continue to evolve throughout CP6, and our
business strategy, from responding to customer and commercial transformation plan articulates how we will achieve this.
drivers, through identifying opportunities, to creating a plan to deliver
business benefits to our customers.
Opportunities
Structured Benefits
Stakeholders and continuous
improvement
Priorities Improved
safety
Customer
Improved
Requirements operating Our Transformation
models Programme £60-100m pa
direct cost
reduction
Service 4 Phases
Offerings &
Better supply
performance chain value
Lower whole
life cost for
customers
Market testing Innovation
and and
benchmarking
automation
Better choice
Shaw and
Hansford Competition
Reviews Embedded
quality and
reliability
People
development
Figure 3.2.1: Route Services Transformation Journey
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3.2 Operating model – present and future continued
3.2.2 Route Services Transformation Programme To deliver on this vision we created the Route Services
transformation programme which has the mandate to improve the
Our customers’ and suppliers’ trusted partner of choice way Route Services operates and increase our efficiency. The
programme consists of four phases leading up and into CP6 as we
transform the way we operate in line with our customers’ changing
businesses:
Figure 3.2.2: Route Services Transformation Programme Phases
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3.2 Operating model – present and future continued
3.2.3 Route Services transformation workstreams
Within these four phases we have a number of transformational themes which the programme is delivering.
1. Route Services Operating 2. Transformation of Supply Chain 3. Information Technology 4. Contracts & Procurement
Framework Operations Transformation Transformation
An overall framework to provide Improving control, availability, Delivering efficiency targets and Establishing strategic category
consistency, reliability and distribution and inventory increasing the overall capability and management as the core of activity
transparency in how we deliver the management of materials; flexibility of the department to move whilst collaborating strongly with
services that our customers need manufacturer innovation; new into top quartile performance; routes to manage execution of
from us, and how they hold us to planning and contracting model for customer technologies, service contracts placed for these aggregated
account for performance rail logistics; implementing ISO55001 transformation, service continuity spend categories. Supplying
improvement. for critical wheeled plant; market management, business aligned IT knowledge based, forensic insight to
testing activities with a different mix of strategy, IT delivery transformation cost management thus providing
make and buy; devolving or scaling and Lean training. maximum value for money to our
back any services for which there is internal customers.
not an ongoing national requirement.
5. Training Modernisation 6. Shared Services Transformation 7. Organisational Effectiveness 8. External Trading
Exploring options for a more Operating at world class levels of Targeted improvements to our A new business development and
commercial and technologically efficiency and effectiveness across structure to reflect good principles of governance model for the trading of
innovative business operating model the board; a new operating model organisation design, achieve services to non-Network Rail
for Network Rail training, in line with with better functional alignment to efficiencies, and provide clear and customers. Focusing on services with
our customers’ desired business service delivery, make versus buy effective accountabilities. the potential to earn a commercial
outcomes. assessments, and opportunities for return, in a way which is consistent
process automation. with our legal and regulatory
obligations.
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3.2 Operating model – present and future continued
3.2.4 CP6 transformation commitments: £369m in CP6
The journey towards competitiveness will involve many transformational changes across the service portfolio, and is already underway.
The plan has been informed by market testing and customer feedback, with key steps before and during CP6 including:
End to end
New Category strategy Windows 10 Planning & Admin Crown hosting New New maintenance
rail logistics for contingent device rollout System to support data centre concrete sleeper facilities for
contracts labour completed complete training migration factory high output plant
April 2019 Dec 2019 August 2020 March 2021 April 2021 August 2021 April 2022
Implementation of New Industry Phase 1 of
Shared Services C&P Customer choice
flexible workforce rail milling collaboration new
process transformation in mobile devices
framework for train platform enabled seasonal fleet
automation completed
implemented training April 2021 June 2021 Sept 2021 April 2024
March 2020
July 2019 March 2021
Windows 10
devices rollout
complete
As these improvements land, and as
our customers request them, we will provide more competition and choice across the portfolio.
Aug 2020
Our commitments to people development and diversity will also support a sustainable, inclusive and innovative culture.
The planned changes will unlock outcomes such as the following:
Our Safety Vision Our cost to serve Our commerciality Our service levels
Reduced Lost Time Injury Frequency Over the course of CP6, we will save Our cost to serve is transparent to our We will continually endeavour to
Rate to below 0.1, through the Route Businesses at least £369m. Route customers and is competitive exceed the performance expectations
improvements to workplaces, welfare, with external market providers. of our customers.
wellbeing, reporting, and leadership.
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3.2 Operating model – present and future continued
3.2.5 Further potential opportunities
The portfolio of activity in the Route Services transformation • Further asset productivity and process efficiency in logistics
programme has been developed with reference to our market testing and materials management.
and benchmarking, as well as customer feedback, past service Risks and/or dependencies: Workbank stability and
performance, and our business context. The work has been prioritised smoothing. Technology development (e.g. demand planning
to reflect both scale of benefit potential and ease of implementation, systems).
and we have also considered how the changes are most sensibly • Broader service outsourcing/commercialisation.
sequenced. Therefore the plan reflects opportunities which can be Risks and/or dependencies: Supply market development to
progressed now by Route Services i.e. without large dependencies on provide competitive alternatives to in-house options. Stability
other changes driven by others (such as customers, or the supply of customer requirements.
market). We have also considered risks to industrial relations and • Further process automation.
ongoing service continuity in our prioritisation. Risks and/or dependencies: Technology development, and
proof of value. Standardisation of processes with customers
The scope for additional benefits from such opportunities is highly and suppliers.
uncertain at this stage, and may not be significant. However, the • Service expansion/consolidation (e.g. to realise synergies
potential availability of additional opportunities provides confidence with services currently provided by other service functions).
that the benefits targets in the Strategic Business Plan can be Risks and/or dependencies: Management distraction if Route
achieved. Potential opportunities which have not been baked into the Services portfolio grows too big too quickly.
plan in detail, but which should be kept under review for potential
development if and when the time is right, include: There are also some recommendations from our market testing
which are being addressed as part of ongoing, non-
transformational activity, such as improvements to cyber security
and IT disaster recovery.
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4. Risks, opportunities, constraints and assumptions
Deliver all CP6 commitments within the constraints of our agreed cash envelope whilst being able to demonstrate
Finance
value for money.
Key constraints (C),
Timescale
No. risks (R), assumptions What we plan to do Owner
(end date)
(A), opportunities (O)
IT strategy is based on the early adoption of IT innovation services and
IT – Chief
1 O: IT innovation disruptive technologies which offer the potential to transform IT operations Ongoing
Information Officer
and proactivity address the needs of Network Rail and GB Rail.
Explicitly excludes business change costs related to the implementation of
IT – Chief
2 A: IT scope new technology (other than IT training costs or business change which is Ongoing
Information Officer
introduced solely due to a Route Services IT led change initiative).
Due to restrictions in movement of funds between Opex and Capex,
decisions could be skewed towards buying assets rather than service based Route Services -
3 R: Funding categories Ongoing
delivery. This may create a conflict between the best value for money Finance Director
solution and most effective use of available funds.
Prior to any new or renewal of wheeled plant fleet, a comprehensive review Supply Chain
4 O: Make versus buy of market capability and investment payback will be undertaken to ascertain Operations – March 2020
the best funding vehicle (i.e. purchase or lease) and investment level. Managing Director
Business outputs will be materially in line with our strategic business plan Route Services –
5 A: Business volumes Ongoing
submission, both in total volume delivery and annual phasing. Managing Director
Development of the Route Services capital costs associated with Digital
R: Digital Railway Railway (predominantly cab fitment and investment in information Route Services –
6 Ongoing
funding technology) is at a very early stage with high uncertainty. There is a risk Managing Director
that funding will not be sufficient to cover those costs as they are incurred.
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Performance Support the wider business and railway system to achieve improved overall performance. Understandably customer expectation
is increasingly demanding and therefore we must collaborate to implement changes necessary to meet this in a cost effective,
structured and transparent manner.
No. Key constraints (C), risks What we plan to do Owner Timescale
(R), assumptions (A), (end date)
opportunities (O)
Continuous improvement approach to reducing delays per incident by
O: Delay Per Incident Supply Chain Operations
1 reduction of fleet service delivery failure and improved ability to affect Ongoing
(DPI) – Managing Director
service recovery following failure.
R: Asset condition
Improved information capture and condition monitoring with regular
deterioration with
assurance programme. Leading to more effective decisions about Supply Chain Operations
2 challenging age profile of Ongoing
maintenance, enhancement, life extension and replacement. Flexibility – Managing Director
many assets and
in intervention through re-prioritisation of funding.
associated obsolescence.
Embed a consistent culture and process of designing to optimise asset
reliability. Supply Chain Operations
3 O: Design for reliability Ongoing
Improved quality of management information for the provision of service – Managing Director
with agreed targets (KPI's) aligned with customer needs.
O: Reliability centred Optimising maintenance so that it is centred on reliability through a Supply Chain Operations
4 Ongoing
maintenance systematic approach to inspection, data, analysis and decision making. – Managing Director
Increased planning integration with customers and suppliers (e.g.
aligning NRT and RSIT planning processes) to deliver robust and timely
Route Services –
5 O: Planning plans which can be confidently executed. Ongoing
Managing Director
Develop a relationship where parties work as a single team with one
focus.
Identify and develop innovation that can deliver value for money
Supply Chain Operations
6 O: Innovation performance improvement through exploration of alternative Ongoing
– Managing Director
approaches.
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Version 3, 28/01/19Route Services Strategic Plan
Support the wider business and railway system to achieve improved overall performance. Understandably customer expectation
Performance cont. is increasingly demanding and therefore we must collaborate to implement the changes on the fleets necessary to meet this in a
cost effective, structured and transparent manner.
No. Key constraints (C), risks What we plan to do Owner Timescale
(R), assumptions (A), (end date)
opportunities (O)
Further devolution where appropriate will enhance our ability to react and Route Services –
7 O: Devolution Ongoing
promote local accountability. In turn this will drive delivery performance. Managing Director
Loss of line of sight from risk to control as a result of devolution where
accountability is poorly defined and not mandated. As part of the process Route Services –
8 R: Devolution Ongoing
of devolution it must be made clear where accountability and Managing Director
responsibility lie.
The current model of delivering services the routes collectively decide
A: National framework of they want, at the best value for Network Rail will continue to apply. A shift Route Services –
9 Ongoing
delivery to making decisions on a route by route basis across all Route Services Managing Director
products and services will erode the national value for money picture.
R: Sleeper supply
Construction of a new
Contract was awarded in autumn 2017. Contingency has been factored
sleeper factory was due to
in to the construction schedule. However planning permission remains a Route Services -
commence in 17/18, with
risk - milestone due Sept 2019. A sleeper stockpiling strategy is Supply Chain
production expected in
10 underway to cover the period where we lose Washwood Heath, which Operations - March 2021
20/21. We will lose
also carries contingency to cover small delays in project delivery. A more Materials & Logistics
production at Washwood
robust approach to forecasting sleeper demand is required to support Director
Heath (the facility this is
this.
intended to replace) in
18/19 to a PCO.
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Version 3, 28/01/19Route Services Strategic Plan
Safety Improvement across Route Services of the safety, health and environment of the workforce, passengers and public to increase
safety maturity and deliver our vision of everyone home safe every day. Advance our environmental performance and leave a
sustainable legacy.
Key constraints
(C), risks (R), Timescale
No. What we plan to do Owner
assumptions (A), (end date)
opportunities (O)
Hierarchy of control measures for design, maintenance, inspection and operation for
risks such as working at height, protection of staff from moving equipment and
Route Services
R: Workforce electrical risks. Embedding an inclusive and mature safety culture (safety hour, safety
1 – Managing Ongoing
safety campaigns linked to key safety risks and the Home Safe Plan, and robust safety
Director
leadership). Effective application of managing occupational road risk policy and
support the role out of Vehicle Tracking Systems.
Reducing occupationally induced ill-health through initiatives for HAVs, WBVs,
R: Workforce manual handling, noise, fatigue, respiratory hazards and poor ergonomics. Effective
Route Services
occupational application of managing occupational road risk policy and support the role out of
2 – Managing Ongoing
health and Vehicle Tracking Systems. The provision of adequate and appropriate welfare
Director
wellbeing facilities for staff. The embedding of an inclusive working environment, that delivers
positive mental health and wellbeing of individuals.
Predict and prevent accelerated and/or unexpected asset degradation or failure
R: Workforce, through information capture and condition monitoring leading to effective asset plans. Route Services
3 passenger Regular assurance programme to confirm asset condition. Flexibility in intervention – Managing Ongoing
and public through re-prioritisation of funding. Safety and reliability by design. Lead on risk- Director
based supplier quality assurance to assure and deliver a high-quality supply chain.
Challenge barriers of legacy equipment, regulations, cost effective technological
Route Services
C: Barriers to limitations, culture and funding through a behaviour of structured continuous
4 – Managing Ongoing
improvement improvement and innovation that can deliver incremental changes that can create
Director
transformation.
R: Environment Initiatives to reduce our supply chains carbon footprint and sustainably manage the
Route Services
and fleets (engine emissions, release of harmful substances to the environment, disposal
5 – Managing Ongoing
sustainable of life expired assets). Wider integration of our corporate social responsibility
Director
development obligations in to our contracting strategies by building in sustainability by design.
O: Workforce, Enhanced health and safety across all products and services through sustainability by Route Services
6 passenger design in our supply chain management and creating innovative solutions to – Managing Ongoing
and public eliminating and mitigating health and safety risks. Director
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Reputation Achieving our targets and aspirations in the realms of safety, performance and finance will enable Route Services to support the
wider business to run a safe, reliable, efficient and growing railway, and contribute significantly to achieving Network Rail’s over-
arching strategic objective of delivering a better railway for a better Britain. This will support and enhance Network Rail’s
reputation, increasing confidence in us from our suppliers, customers and the regulator.
Key constraints (C),
Timescale
No. risks (R), assumptions What we plan to do Owner
(end date)
(A), opportunities (O)
Should a failure on the part of Route Services contribute to a major safety
R: Workforce, Route Services –
incident resulting in injury or death to our workforce, passengers or the public,
1 passenger Managing Ongoing
ongoing negative media coverage will impact our stakeholders, customers and
and public Director
create a negative perception of Network Rail among public and passengers.
O: Workforce, Route Services –
By sharing the positive ways in which Route Services works to protect people
2 passenger Managing Ongoing
in terms of safety the overall perception of Network Rail improves.
and public Director
The risks presented by ballast dust/particulate inhalation and other workforce
R: Workforce Route Services –
safety hazards could leave the business vulnerable to legal challenges such
3 occupational health and Managing Ongoing
as a class action or prosecution, with negative accompanying media
wellbeing Director
coverage.
By meeting our delivery targets and contributing to handing the railway back in
O: Supporting Route Services –
a safe state Route Services contributes to the smooth running of the timetable
4 timetable, trains on time Managing Ongoing
and service provision, creating more opportunities for positive media
- reliability Director
coverage.
Running the railway includes some activities which pose a real threat to the
O: Environment and environment, such as disposal of waste, fuel storage, increased emissions. Route Services –
5 sustainable The work being undertaken across Route Services in recycling, sustainable Managing Ongoing
development sourcing of materials, environmental impact studies and mitigations, provide Director
opportunities for positive reporting.
Should demand outstrip supply, running out of sleepers could result in service
Route Services –
delays & a fall in passenger and freight customer satisfaction. During
6 R: Sleeper Supply Managing Ongoing
development of the facility care needs to be taken in managing relationships
Director
with lineside neighbours as this also could result in negative press.
The part Route Services plays in supporting the apprenticeship scheme,
Route Services –
building a diverse and inclusive workforce, care for our lineside neighbours,
7 O: Social Responsibility Managing Ongoing
and in safety initiatives, such as improving driver safety, all positively
Director
contributes to our reputation as a good corporate citizen.
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Version 3, 28/01/19Route Services Strategic Plan
5. Expenditure and efficiency
5.1 Cost and volume summary
Expenditure
CP5 CP6 CP7
Unit of measure
18/19 19/20 20/21 21/22 22/23 23/24 CP6 24/25 25/26
Renewals £m 220 203 238 234 284 273 1,232 265 272
Controllable
£m 106 141 142 131 135 138 687 141 145
Opex
Total £m 326 344 380 365 419 411 1,919 406 417
Permanent
3,157 3,330 3,370 3,366 3,331 3,329 3,327 3,325
Headcount
Agency 201 133 99 99 93 93 93 92
Total
3,358 3,463 3,469 3,465 3,424 3,422 3,420 3,417
headcount
Renewals volumes include both IT renewals, wheeled plant and Digital We have made significant steps towards becoming more efficient
Railway investment. Controllable Opex increases in CP6 due to a during CP5. We have removed circa 20% (£80m) out of the Route
switch in how IT support contracts and licence agreements are funded Services operating overhead cost base and taken circa 5% (£150m)
(Opex in CP6). out of the cost base of our customers. We have also reduced our
capital spend by c.10% (£110m) by reprioritising our project portfolio
and looking for innovative delivery solutions. We are always looking to
do more.
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Version 3, 28/01/19Route Services Strategic Plan
5.1 Cost and volume summary continued.
CP6
Activity / team total Comments
(£m)
Supply Chain The majority of supply chain operations opex is charged directly to the Routes. A small amount of
6
Operations – Opex funding is retained for central business change programmes.
Impact of continued investment in the IT estate results in an increase in run cost, c.6% of total
investment compared with CP5, plus the re-alignment of IT support contracts/licence agreements to be
IT – Opex 495
funded out of Opex (Capex in CP5). Additionally, there will be a transition to project delivery on a ‘as-
a-service’ model.
Business Services The Business Services cost base is expected to reduce over the course of CP6 through efficiency
74
– Opex programmes.
C&P has grown over CP5 to accommodate the growth in procured spend. The C&P operating model
C&P – Opex 54
will be refined to best support this growth within CP6.
Other – Opex 59 Includes all Route Services support functions.
Decrease in CP6 compared with CP5 due to re-alignment of how IT support contracts and licence
IT Renewals –
474 agreements are funded and transition to project delivery on a ‘as-a-service’ model. Similar level of IT
Capex
investment as CP5, focused towards renewal activity to improve the technical currency of the IT estate.
Business Services The increased capital requirement in CP6 recognises transfer of renewals requirements for national
11
- Capex training centres into Route Services
Wheeled plant investment cycles do not align to control periods, certain fleets having been in operation
Wheeled Plant -
607 for 20+ years. CP6 will see a spike in asset renewals for stone blowers infrastructure maintenance,
Capex
seasonal and rail delivery, plus the introduction of our first owned milling fleet.
Digital Railway - Investment in wheeled plant for compatibility with digital signalling, training facilities and simulators and
140
Capex associated IT enhancements
Total 1,919
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5.1 Cost and volume summary continued.
Route Services commits expenditure in three ways on behalf of our
customers:
1) Directly on behalf of our customers for services we manage
centrally, i.e. IT services, Shared Services, IT capital
investment and wheeled plant capital investment. In CP6 this
amounts to £1,919m (£687m opex and £1,232m capex).
2) Directly on behalf of our customers for services that we
procure on their behalf and then charge them accordingly. In
CP6 this amounts to £4,274m (£4,274m is charged to opex
and capex depending on whether we are providing the
service to maintenance and operations or renewals and
enhancements, the split is determined by the customers’
orders).
3) Indirectly through contractual commitment entered into by
C&P, usually taking the form of framework agreements. Our
customers use these framework agreements to get value for
money rates for commonly used products and services i.e.
buildings & civils services, Civils Examination Framework
Agreement (CEFA) services and contingent labour services.
Our customers pay for these services directly as they use
them. In CP6 this amounts to c. £12bn.
[Expenditure outlined in points 2 and 3 is not included within
the tables above; c. £12bn is split between Opex and Capex
depending on customer usage of the contracts].
Network Rail 29
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