Opening the April 2013 Railtex exhibition, the UK government’s Minister for Transport hailed ‘a time of historic opportunity for the railway.’ Simon Burns MP called for investment and reform, highlighting modernisation of the current network and the importance of the HS2 high speed rail line. He spoke of the increasingly global nature of the rail industry, and the importance of UK-based companies competing internationally. The Minister also emphasised the need to reduce industry costs to make the railway more affordable for taxpayers, passengers and freight customers.
Building good infrastructure certainly needs investment and also offers a valuable rate of return for UK plc. After decades of under-funding, however, the investment needs to be substantial. The Office of Rail Regulation (ORR) reports the cost of Britain’s railways in 2011-12 as £11.61 billion, up 2.9 per cent from the previous year. ORR’s analysis also examines the effects of inflation, and on this basis costs decreased by 2.1 per cent. ORR also revealed significant regional variations in funding. Public subsidy in 2011-12 was £2.27 per passenger journey in England, £7.67 in Scotland, and £9.15 in Wales.
In July 2012 the Department for Transport indicated encouraging levels of future investment via its High Level Output Specification (HLOS) plan for 2014 to 2019.
However it is unclear how this money will be raised, prompting concerns about further increased fares.
Whatever the funding streams, rail infrastructure owners will be expected to demonstrate stringent cost efficiencies in the decade ahead.
Whatever the funding streams, rail infrastructure owners will be expected to demonstrate stringent cost efficiencies in the decade ahead. Understanding and forecasting capital expenditure is especially challenging in this multi-disciplinary industry, and schemes have frequently been criticised for their escalating final costs. Certainty of capital and operational cost is therefore vital in establishing business cases and analysing scheme feasibility.
Rail infrastructure owners typically face a dilemma when exploring initial options for rail schemes. How much should they invest in the early estimating process, in order to have confidence in their budgets? Accurate estimates inevitably require considerable design and cost information, which has rarely been available, reliable or consistent. Unreliable estimates are the result – and a scheme literally off track from day one.
In response, Faithful+Gould has developed an innovative rail cost modelling process, providing faster and more accurate results than traditional estimates. Our cost models enable more informed early evaluation of project options and design impacts. Although tailored to suit the client’s individual needs, the model is typically used in one of two ways: project specific or at corporate strategic level.
Faithful+Gould has developed an innovative rail cost modelling process, providing faster and more accurate results than traditional estimates.
For new-build projects, our models generate detailed information from high level design outputs that can be as simple as a line on a map linking two cities. We utilise our proactively gathered benchmarking data to provide statistical based quantities and unit rates, giving clients an early indication of costs. When sufficient information is available, rates can be produced from first principles considering methodologies and productivities. The results are benchmarked against similar projects to give a credible and robust view.
At corporate level the model can be used in many different ways. For example, we have developed models to review the strategic decision making on supply chain management. This informs our clients on the impact of procurement strategies and enables effective long-term planning. Recently we have worked with London Underground in this way, drawing on our experience of procurement, contracts, estimating and, importantly, our knowledge of the way the client works.
We can also work in tandem with clients’ own cost modelling teams to help improve operating practices.
We can also work in tandem with clients’ own cost modelling teams to help improve operating practices. We have been asked, for instance, to help clients further develop their internal cost models. A recent complex commission supported Network Rail with improving their data capture structure and maximising performance of their own models.
Global experience, often alongside our parent company Atkins, gives us a broader overview of the rail industry, informing our modelling scope and detail. Research into international markets, escalation rates and purchasing power parities are used to ensure the models are relevant globally, and we demonstrate some of our Middle East experience in Solutions Magazine - Issue 33.
The industry has been very receptive to our cost models and we predict an exciting journey ahead as we develop the methodology further. Embodied carbon assessments can already be included and we anticipate further sustainability output in the future.
Our rail expertise spans the entire infrastructure development process across multiple types of projects and programmes. The cost modelling service has recently been provided to Network Rail, London Underground, Norway High Speed Rail, Danish High Speed Link, Kuwait Metro Rapid Transit System, and the Kosice to Vienna Broad Gauge Freight Line.