CPA Bulletin

www.cpa.uk.net CPA Bulletin > February 2024 49 RAIL PLANT ASSOCIATION: 2 holidays. An increased interest from the Police and Highways department. • Visibility of workbanks, imperative for security of supply chain. November/ December 2023 • Slips, trips and falls roadshow. • Message from Jordan Skey regarding RIS 1530-PLT Issue 7 coming into force. • One Big Circle was invited to RPA Management Committee meeting. • Steve Diksa, Bridgeway Consulting, delivered a presentation on the COSS Enhancement Programme. • Steve Featherstone update - Discusses other concerns such as: the amount of work for the supply chain being lower in CP7 than 5 and 6, high inflation and interest rates and the average asset age of the track system being allowed to deteriorate. Moving Forward With all that is going on behind the scenes with the RPA, throughout 2024 we will continue to focus on work-bank visibility, industry adoption of the terms and conditions that fairly reflect late cancellation, staff demand, and the upskilling process. The challenges ahead will test us all, but now more than ever we must pull together, rather than pull apart. Steve Featherstone Update In response to the financial constraints set by the government, the average asset age of the track system is being allowed to deteriorate during CP7. You have to go back decades to find a similar strategy of managed decline on the British railway. I am surprised that the ORR endorsed plans which allow the average asset age to decline over a five year control period. Hopefully there are plans in place to recover this during CP8 and CP9 rather than establish a new baseline at the deteriorated level. The last year of a control period has traditionally been a bumper year for the supply chain with the so called hockey stick spend profile. CP6 is proving to be very different as Network Rail is cutting back on significant volumes of work which is putting the supply chain into considerable distress. The supply chain has got used to managing with boom and bust cycles but what we are seeing now is more akin to a famine. It is to be hoped that the supply chain remains intact ready for when we get to the new funding that will come with CP7. The ORR recently announced their final determination for Network Rail spending in CP7. The Network Rail regulatory settlement is a cash settlement with inflation risk sitting with Network Rail. Continued higher than normal inflation will eat into the actual volume of work which can be delivered with the cash funds in CP7. As asset managers try to make the best of the funds available, CP7 will likely see an increase in heavy maintenance, life extension and refurbishment rather than the full renewal of assets. A new generation of railway engineers are going to discover how to make do and mend and as a plant community we will have to support them in that.  On an inflation adjusted basis, funding in CP7 for maintenance and renewals will be slightly less than in CP6 which will ultimately mean less work for the supply chain, albeit the reduction in High Output work will compensate to some extent. My rule of thumb for plant workload volumes is one third maintenance, one third renewals and one third enhancements. Whilst the first two thirds for maintenance and renewals are there or thereabouts for CP7, we still have no news from the government on the enhancements pipeline which typically makes up the final third of the plant volume of work. This will be critical to the success or otherwise of the supply chain during CP7. The cancellation of HS2 from Birmingham to Manchester will see more work on the classic network but this is for CP8 and CP9. Unless enhancement volumes pick up quickly to more normal levels, it is likely that CP7 total volumes of work for the supply chain will be around 80% of that seen in CP5 and CP6. On behalf of all Rail Plant Association members, a delegation met with representatives from the Department for Transport on 8 December to explain what life is like for the supply chain dealing with an uncertain forward order book, high inflation, high interest rates and cash flow challenges. We stressed that with around £1billion of plant and around 5,000 employees, it is important that the rail plant industry has the confidence to invest in the next generation of plant and the next generation of resources to operate and maintain them. In many rail industry publications, we have read reports about the construction and operation of the Network Rail High Output fleet of track renewal and ballast cleaning machines. As the latter part of Control Period 6 (CP6) and the whole of Control Period 7 (CP7) are focusing far more on tactical solutions the need for the High Output systems has reduced significantly and the team is being considerably downsized. I find this disappointing as the High Output systems played a key role in maintaining the average asset age.