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Everyone agrees BFS is a bad thing – but it seems to be endemic
Presentation matters, official. Back in the August 2001 Informed Sources I unveiled an analysis which showed that Railtrack's project costs, were two to three times those of British Rail in modern money. I called it Railtrack's ‘black hole' and dubbed the multiple the ‘Ford factor'.
Ho hum, was the general reaction. But this year I returned to the subject, analysed projects where the multiple was anything between five and ten and called the acceptance of this situation Boilng Frog Syndrome. Mr Miles mocked up a photo of poikilothermia in action and – what hit us?
‘Boiling Frogs' is now industry shorthand for out of control costs. It comes up, I am reliably assured, at most high level meetings in the industry.
So, big success for Informed Sources then? Well, not really. Because while those at the top levels in the Strategic Rail Authority and Railtrack/Network Rail pay lip service to costs, they cannot bring themselves to accept that once upon a time railway projects were much cheaper. Put bluntly, they are in denial over Br*t*sh R**l.
It is understandable. Privatisations was supposed to make the railways more efficient and less dependent on subsidy. In the early days of Railtrack one director reckoned that track maintenance costs could come down by 30% once the private sector took over.
But now we have schemes costing five to ten times historic costs of similar projects. And the fact that even the Bowkers and the Armitts try to justify this on the basis that I am not comparing apples with apples only shows that the industry is rife with institutionalised BFS.
Let me give you an example of what I mean – the Ashford-Hastings and Uckfield Line electrification infills. They were dropped from the Strategic Plan by SRA (Informed Sources September 2002) because at £154million, the costs outweigh the benefits by a factor of nine.
These projects were first mooted in the last days of Network SouthEast and were driven by the ‘vital' need to replace the ‘life expired' diesel electric multiple units. The Uckfield Line was seen as a solution to a problem, but, with the imminent opening of Ashford International, Ashford-Hasting was promoted as a possible opportunity, with a cost/benefit analysis of double tracking between Ashford and Rye to increase frequency proposed
This was, of course, at the depths of the last recession and only goes to show how negative BR was when it came to growing the business. Thank goodness that's all changed.
Anyway, Ashford-Hastings was estimated at £19-25million, say £1million a mile. All the costs in this piece are in 2002-03 money
In September 1993 the OJEC notice covering the two schemes was issued. Then it all went quiet until 1998 when Connex proposed electrifying the lines as part of its franchise extension bid. The price quoted was £30.5 million for the pair.
Balfour Beatty reckoned that, using steel faced aluminium conductor rail four substations would be required on each line at £1.1million each. Aluminium has lower resistance than steel rail reducing the voltage drop between sub-stations which can thus be spaced further apart.
There would also be feeds from existing lines. A ‘bonus' was the non-appearance of Class 92 haulage on the Redhill line after the power supplies had been beefed-up for these high power locos.
While the use of Brecknell Willis steel-faced aluminium conductor rails would have cost £11million compared with £9million for steel, It was calculated that the overall cost would be less.
One of the advantages of aluminium conductor rail is that it can be lifted manually and you don't need a rail train to deliver it to site or a crane to unload. Even so Railtrack was suggesting that it would take a six months line closure to carry out the work.
Brecknell Willis, coming off the back of the Chester Hooton electrification, looked at the timetable and reckoned there was a 10 hour possession between last and first services. Allowing an hour to take over and hand back, that meant eight hours work.
In eight hours a 10 man gang should be able to install 500m of conductor raila night so with two gangs the projects could be completed in six to nine months. On Chester-Hooton, conductor rail had been installed between trains. Since the off peak services were not exactly intensive this was an option on the two Southern schemes.
And then, electrification was dropped by the SRA because the cost had risen to £154million. Clearly, since this meant reneging on a Strategic Plan commitment, the SRA believed that this was what electrification cost in 2002.
A chum at Brecknell Willis wrote to SRA expressing surprise. What he found inexplicable was the dramatic increase from £27million at the end of 1999 to £154million in 2002. As he remarked ‘Prices of electrification equipment continue to fall and yet we have a five fold increase in project costs in three years.
An SRA Executive Director replied. And since he is a long standing chum and because taking a flakvierling to sitting canards is not my style, he will remain anonymous.
His letter began by agreeing that SRA is also concerned at the escalating costs of rail projects and are ‘challenging the costs provided by suppliers and contractors'.
Then came the BR hang-up bit. ‘I do not think that comparisons with BR are going to help'. Ehh? My chum had quoted 1999 costs – five years after BR had handed over the infrastructure to Railtrack.
BR prices, he explained compare ‘different activities, carried out in different environments with different constraints'. He then flagged up ‘just four' significant changes.
Oh all right then, let's have that 20mm ammunition.
Change 1 - compensation for disruption to train services caused by engineering possessions. ‘BR never accounted for this even though it is a real cost and has a real impact on the passenger business.'.
First of all, schemes like the Great Western 125mile/h upgrade with curves slewed to raise linespeed were almost all done within planned possessions and planned possessions come free. But in the case of the two infills you shouldn't need any additional possessions.
Compensation costs? Virtually nil other than, perhaps, some additional possessions for signalling immunisation
Change 2 - raised safety standards and the greater use of green zone working. True enough in general, but on the two infills the worst this could do was prevent installation while trains were running. Effect on cost virtually nil.
Change 3 - technical standards. The BR price was based on Mk 1 rolling stock ‘and as we know traction current supply for modern trains is higher and more expensive'.
Oh dear, why do people have to break my heart? One of my missions in life is explaining techie things to non-techie readers. Back in the January 2002 Informed Sources I did my best to explain the Southern Region's power supply crisis brought on by the new generation of power hungry heavyweight EMUs.
There were diagrams, pellucid (I thought) text. And then we get this. Pardon me while I weep the bitter tears of abject failure.
It is not the power demand of a passing DesiroStar that causes the problem. That just heats up the sub-station, which then cools down. The problem is that the new train heats up the substation a bit more than a set of camshaft controlled EE 507 traction motors, so it takes longer to cool down.
So if another new EMU comes by while cooling is still going on, the substation will heat up again when already warm and will thus reach a higher temperature than the first time. And if you have a steady stream of trains coming by you get progressively higher peak temperatures, until the protection system cuts off the power. This is called thermal runaway.
Since you are not going to get 12 car new generation EMUs running down either line at 12min headways, this argument is totally irrelevant in this case.
Change 3 - ‘risk is now priced in'. This is very true. Risk, says my old-BR chum, was largely ignored by BR ‘which was able to “lose” cost increases under other budget headings'.
Well, I'm sure BR had to fork out for risk on some of its disastrous traction and rolling stock procurement exercises, but I'd need chapter and verse on infrastructure. The Department of Transport ‘back-checked' on investment schemes after they were commissioned and I'm not sure how much could be lost. Certainly not a five fold over-run.
Now I know I am going to get in the neck from Richard Bowker and John Armitt for harping on about costs. But, if you think railways ought to have a bright future it is desperately important.
The past is a different country Transaction and Project costs are too high. They already risk outweighing the efficiency costs that private sector management has brought. Why have they happened? Perhaps we should look to the increasingly frequent comparisons between the cost of projects under BR and the cost now that have appeared in the press recently. I would say not. They compare two totally different sets of activities carried out in two totally different environments with two totally different sets of constraints. Personally I couldn't care less what it cost BR. All that matters is what it costs now and what we have to do to get it under control. Richard Bowker 11 September 2002 |
Just why it is so important was cogently expressed by Philip O'Donnell, SRA's Director for Regulation & Network Strategy in a presentation to the Rail Freight Group AGM on 18 September. The ‘enormous escalation in cost', he said, will make it difficult to make ‘value-for-money cases for development of the network'.
O'Donnell also pointed out that the return of the Department for Transport had made rail's cost escalation more visible. ‘In essence, if you look at its (DfT's) spending commitments, there is the SRA and there is the Highways Agency, and virtually the rest is small change.'
‘That' he continued, ‘will lead to SRA and the railway coming under a much sharper spotlight. From the Government's perspective, a lot of money has gone into the railway over the last three or four years. Where are the outputs to match all that additional money? That is the key question on the department's agenda.'
‘If you're sitting there as politicians seeing the railway's budget rise and rise and rise, and saying “where are the outputs?”, you would realise that we are coming under a lot of pressure to see results from all this. I could well imagine a conversation between Tony Blair and Richard Bowker when eyes glaze over on the benefits of a high speed line, and he says “Oh well, why don't you go and talk to Leo (the Blairs' infant son) about that?”'
Beautifully expressed, Philip. You could build a hospital for the alleged cost of the two Southern electrification infills. I know which I would rather have.
Bechtel costed the Rugby remodelling and resignalling under the West Coast Route Modernisation at £354million. That's a couple of hospitals or, if health is not your thing, half the cost of the extensive motorway widening proposed in the Yorkshire and Humberside multi-modal study.
When rail projects cost five to ten times what commonsense says they should, even old BR commonsense, then railways don't have a future. That's why I'm going to keep on with these analyses until the boiling frogs come out of denial on historic costs.