The government is set to axe or delay a number of rail projects that formed part of Network Rail’s £38.5bn five-year investment programme following a string of work overruns and escalating costs
Transport secretary Patrick McLoughlin also announced today that Network Rail chairman Richard Parry-Jones will leave the organisation to be replaced by Transport for London commissioner Peter Hendy (see AJ 19.06.15).
According to theAJ’s sister titleConstruction News, the group’s executive directors will not be paid a bonus this year
Among those projects that will no longer form part of the CP5 investment programme are the electrification of the Midland mainline service and of the Leeds-Manchester Transpennine route.
The news comes after the rail regulator issued a damning report outlining a series of missed targets and overspends since the programme was launched last year.
Earlier this month, Construction News reported that contractors were seeking urgent talks with Network Rail over fears that projects would be scrapped following the Office of Rail Regulation report.
On major works such as electrification and capital projects, Network Rail said it was always part of the regulatory process that the costs and programme would be revisited as projects became properly defined.
‘We were overly optimistic about the capacity of our company and our supplier base to achieve the plan’
Mark Carne, Network Rail
But it added: ‘Unfortunately when these reviews have occurred, the more detailed project costs have been higher than assumed at the earliest stages of definition.
‘As a result, the total enhancement programme cost now exceeds the available five-year budget. Some projects are also delayed beyond the original dates.’
Network Rail said it had faced ‘stretching targets’ in CP5 (2014-19),, with the pace of improvement “behind expectations”.
It admitted that ‘several’ regulatory targets were missed and there had been ‘slippages’ in the major projects portfolio, which led to chief executive Mark Carne giving ‘a frank’ assessment to the Department for Transport of what would be achievable in the remaining four years.
Speaking today (25 June), Carne admitted the company had been ‘overly optimistic’ about the company’s ability to achieve the targets set for CP5.
He said: ‘During my first year in the job I have looked closely at every aspect of our business and it has become clear that Network Rail signed up to highly ambitious five-year targets set by the regulator.
‘Where performance has fallen below the standards expected, I want that sorted out’
Patrick McLoughlin, transport secretary
‘Based on historic improvements from a low base, we were overly optimistic about the capacity of our company and our supplier base to step up several gears in order to achieve the plan, especially given the complexities of a network that is at full capacity much of the time.”
Carne, who had previously announced that he would forego his bonus this year, said he welcomed the decision to appoint Hedny as chairman of the organisation.
In his statement to parliament today, McLoughlin said: ‘Where performance has fallen below the standards expected, I want that sorted out.
‘What we saw at King’s Cross at Christmas and at London Bridge earlier this year was unacceptable. I said so at the time.
‘Since then, Network Rail has demonstrated that they have learned these lessons.
‘And I pay tribute to the significant programmes of work they delivered over Easter and the May bank holidays.
‘But to improve performance we need to invest and we need good management.
‘The truth is that much of the work should have been done decades ago.”.’