We're getting tired of closures

[Deleted]

May 26, 2009 19:22:51 GMT @cityboy said:

I am forced to use either Blackfrairs beofre it closed or Bank every day. The escalator renovations at Bank are overdue but I can see lots of progress at Blackfrairs! Some projects are run to time, others like recent DLR projects are finished ahead of schedule, others as you mention run behind.

But does the DLR fall under the PPP? Doesn't Serco handle everything? I mean, maybe it's an example of how things COULD be on the Tube....

[Colin]

I think it's safe to say that everyone bar Gordon Brown has always known that one single company responsible for the lot is the way to go - I can appreciate the intended spirit of PPP (having accountability), but it's now way past it's sell by date.

[Deleted]

Is it the 'one single company' that's the answer, or simply the Lorol/DLR type structure where Tfl determines services and fares but lets the operational side out to a management contract at a fixed cost? If that was done wouldn't it make more sense to split it into two or more contracts along the lines (but not with the mechanics) of the PPP groupings, rather than give the whole network to one company who would then IMO be too powerful?

[Deleted]

May 27, 2009 22:35:59 GMT @paul said:

Is it the 'one single company' that's the answer, or simply the Lorol/DLR type structure where Tfl determines services and fares but lets the operational side out to a management contract at a fixed cost? If that was done wouldn't it make more sense to split it into two or more contracts along the lines (but not with the mechanics) of the PPP groupings, rather than give the whole network to one company who would then IMO be too powerful?

A fine idea if I've ever heard one!

From a risk management perspective I would be inclined to impose a maximum of two lines to be managed by any one contractor. This way, if one of the contractors goes bust or you have to impose hefty penalties on them, it won't adversely effect the other lines. Also, it's always easier to micro than macro manage. So for the contractors, small projects are easier to control that vast networks. It also means there is less likely to be competition where a single contractor overbids for any franchise, leaving them with too little reserve capital to manage the project properly. Lastly, it means there can be a greater number of companies that can afford any one franchise, possibly avoiding a Metronet consortium type of contractor.

This throws big issues into the fold though. What do you do with the SSL, Bakerloo/Met, District/Pic? They share routes and even if they use different lines, there are serious issues of accountability that are likely to be levied from one contractor at another....

Another interesting factor that may happen is that each contractor bids for the lines that are most likely to be extended. So you may find the Bakerloo, with it's relatively low patronage, becomes a favourite in the tendering process.

It would be interesting to see how Tfl/Dft work the tender process to ensure that every line is attractive!

[Colin]

May 27, 2009 22:35:59 GMT @paul said:

Is it the 'one single company' that's the answer, or simply the Lorol/DLR type structure where Tfl determines services and fares but lets the operational side out to a management contract at a fixed cost?

LOROL (London Overground) and DLR do not work in the same way.

LOROL is the same as any other TOC (Train operating Company) in that it's a franchise operated for the DfT (Department for Transport). The infrastructure is maintained by Network Rail and has nothing to do with LOROL. LOROL have no say in when and how Network Rail do their work.

The DLR comes as one, and it's up to them whether the maintenance is done by themselves or whether they contract it out to a third party. It can also be more integrated as they (DLR) are in total control over what is done and when - they make the decisions unless they waive that right by letting a third party contractor get on with it. That choice can be made in relation to selected assets only, if they so desire.

It's the DLR way that I feel is the way to go.

So the last bit of the quote above, where you say:

May 27, 2009 22:35:59 GMT @paul said:

where Tfl determines services and fares but lets the operational side out to a management contract at a fixed cost?

Is essentially the current system - PPP!!!

[upfast]

Actually LOROL is a contract let by TfL who set the staffing levels and fares. LOROL collect the fares on behalf of TfL (like London Buses). They are paid a daily fee for this and I imagine have to chance to be rewarded for good performance and abated for poor.

The DLR is similar. The trains, stations and control are operated by Serco as a concession to TfL. The newer extensions were built by seperate companies who allow(ed) DLR to run trains over them.


What you say is the current PPP Colin would be applied to the OpsCo side though. At present it would be very complicated IMHO as to how things like stations would work - would it be like Clapham Junction where each contractor have their own staff on their own platforms. As for Control, the Bakerloo (well the LU bit) and Central are the only real self contained lines.

May 28, 2009 16:34:15 GMT Colin said:

May 27, 2009 22:35:59 GMT @paul said:

Is it the 'one single company' that's the answer, or simply the Lorol/DLR type structure where Tfl determines services and fares but lets the operational side out to a management contract at a fixed cost?

LOROL (London Overground) and DLR do not work in the same way.

LOROL is the same as any other TOC (Train operating Company) in that it's a franchise operated for the DfT (Department for Transport). The infrastructure is maintained by Network Rail and has nothing to do with LOROL. LOROL have no say in when and how Network Rail do their work.

The DLR comes as one, and it's up to them whether the maintenance is done by themselves or whether they contract it out to a third party. It can also be more integrated as they (DLR) are in total control over what is done and when - they make the decisions unless they waive that right by letting a third party contractor get on with it. That choice can be made in relation to selected assets only, if they so desire.

It's the DLR way that I feel is the way to go.

So the last bit of the quote above, where you say:

May 27, 2009 22:35:59 GMT @paul said:

where Tfl determines services and fares but lets the operational side out to a management contract at a fixed cost?

Is essentially the current system - PPP!!!

[Deleted]

Isn't the Underground ideal to have as one organisation as the operating and maintenance are both peculiar to the Underground - it's not like there are m/any other railways in the UK that have the same conditions. The fact that Metronet could only use Transplant for some maintenance is a good example of this. Giving other firms the chance to run it will lead to a loss of expertise and any long term plans being only as long as the franchise/contract period. (The PPP being expected to last 30 years was good in this respect).

The Underground if anything has become less centralised with individual lines having more say over what happens and each line being accountable. Sharing of resources has surely decreased with the scaling back of work at Acton and the 3-way division of PPP as well as the rolling stock being tailored for each line (2009ts for example).

Is there that much wrong with the DLR model but instead of Serco as contract holder, use LUL/TfL instead of handing over some of the government investment as profits to Serco? It worked well for LT for buses and UndergrounD since the 1930s.

[Dstock7080]

May 28, 2009 17:05:42 GMT @rob said:

Isn't the Underground ideal to have as one organisation as the operating and maintenance are both peculiar to the Underground . . .
It worked well for LT for buses and UndergrounD since the 1930s.

Yes, how about merging all of these 'private' companies into one larger Authority responsible for providing public transport in London- with the costs involved also being the responsibility of this new agency- and how about a snazzy name for this Organisation . . . . London Transport.

[johnb]

May 28, 2009 17:05:42 GMT @rob said:

Is there that much wrong with the DLR model but instead of Serco as contract holder, use LUL/TfL instead of handing over some of the government investment as profits to Serco? It worked well for LT for buses and UndergrounD since the 1930s.

The point is, it's almost invariably cheaper to fund the private sector firm's profits than to accept the inherent inefficiency - because nobody's paid to care about keeping costs down - of the public sector. That's why private sector firms empty the bins, take away sewage, provide water, etc.

(water in England and Scotland is the classic example: the private water companies in England are 30% cheaper than the state-owned Scottish water board, have better environmental records and fewer leaks)

It only goes horribly wrong when you 1) make the private company so big that it can't be allowed to fail, or 2) allow it to award subcontracts to its own shareholders, guaranteed by public money, that are worth more than their investment in the private company. Metronet was both, hence a terrible idea. LOROL and Serco/DLR are neither, hence working well.

[Deleted]

May 29, 2009 16:14:27 GMT @johnb said:

The point is, it's almost invariably cheaper to fund the private sector firm's profits than to accept the inherent inefficiency - because nobody's paid to care about keeping costs down - of the public sector. That's why private sector firms empty the bins, take away sewage, provide water, etc.

(water in England and Scotland is the classic example: the private water companies in England are 30% cheaper than the state-owned Scottish water board, have better environmental records and fewer leaks)

It only goes horribly wrong when you 1) make the private company so big that it can't be allowed to fail, or 2) allow it to award subcontracts to its own shareholders, guaranteed by public money, that are worth more than their investment in the private company. Metronet was both, hence a terrible idea. LOROL and Serco/DLR are neither, hence working well.

I quite agree. It's good sound economics. But the devil is in the detail as we have seenwith public performance targets from everything from The NHS to NR rail franchises. Set the goals and parameters of the projects correctly and in a manner that is both achievable, no likely to skew overall performance but gives sufficient incentive to push boundaries of innovation and you've got a winning model - Serco + DLR is a good example!

[Deleted]

Surely efficiency is created by effective competition, not private sector ownership per se?

[Deleted]

This whole subject,the convoluted answers,and labyrinthine structures of maintainence,admin,and funding are the result of the strange attitude we have to public services and personal tax.
We want first class services but are not prepared to pay for them through tax and high levels of government or city subsidies.
Compare the excellent transport systems and low fares in Paris,Madrid,Rome,Lisbon,Moscow etc They are seen as public services ,not profit making enterprises, and assets for their cities attracting business and tourists.Even New York in the centre of capitalism the subway is highly subsidised.
Years of neglect on LU are now having to be corrected and thus the resulting disruption.
Looking at overground services , SNCF in France started their railway modernisation back in 1976.The results are obvious,as are the services in Germany and Spain.Our years of dithering over the UK high speed bit of Eurostar were an embarrasment.
We can see the urgent need for these upgrades and disruption but it could have been so different if a different attitude to public services had been in place instead of the political dogma of the late 70's and 80's and 90's-public bad,private good,which does not apply to public transport systems.

[Deleted]

May 29, 2009 22:25:57 GMT @landau1945 said:

This whole subject,the convoluted answers,and labyrinthine structures of maintainence,admin,and funding are the result of the strange attitude we have to public services and personal tax.
We want first class services but are not prepared to pay for them through tax and high levels of government or city subsidies.
Compare the excellent transport systems and low fares in Paris,Madrid,Rome,Lisbon,Moscow etc They are seen as public services ,not profit making enterprises, and assets for their cities attracting business and tourists.Even New York in the centre of capitalism the subway is highly subsidised.
Years of neglect on LU are now having to be corrected and thus the resulting disruption.
Looking at overground services , SNCF in France started their railway modernisation back in 1976.The results are obvious,as are the services in Germany and Spain.Our years of dithering over the UK high speed bit of Eurostar were an embarrasment.
We can see the urgent need for these upgrades and disruption but it could have been so different if a different attitude to public services had been in place instead of the political dogma of the late 70's and 80's and 90's-public bad,private good,which does not apply to public transport systems.

While I don't debate your point that long term investment is required to make a good quality transport infrastructure. I would like to point out one thing. Berlin, both U and S bahn are run by Deutsche Bahn. DB have openly admitted that they cannot continue to run services at curent levels without price increses.

SCNF- you will find that when not on the TGV, RER or Paris metro the service offered by SCNF is quite often worse than shoddy. Regional and local services have suffered from lack of funding while Paris and High speed rail have been seen a priorities. Choices have been made in France that differ to those in most other European countries.

The city example: NYC - fares are subsidised. However, driving is subsidised to a greater degree. You get more money for using your private car than you do for using the subway. If you need to use the Train too, god help you cos it costs a lot more! Additionally, MTA recently put up prices for season tickets so that they are quite comparable with that in London and that with the subsidy.

The one exemplary exception to this, and it is one that you didn't mention, is Japan. However, the price of transport in Japan is not subsidised but it does work very, very well! They have managed to cobmine city metro, local and inter-city services that beats anything else in terms of quality and availability. This in spite of the crowded nature of their country. But they have paid for it with high fairs!

So yes, investment is needed and it's good that it is finally happening in London. However, this is the beginning of the tale and not the end. The methods of applying that financing and the best methods of creating a world class infrastructure should be debated. Public/PPP/Private in each of the various forms may all get the job done. It's just that people on here care and think enough about the subject that they choose to throw their ideas, knowledge and sometimes personalities into the melting-pot for debate.

After all of that, I am in agreement with you that the UK has a strange relationship with tax and service. Everyone wants a low rate of tax, but high quality services from our public organisations. Always perplexed me!

[Deleted]

The other problem is that some politicians cannot see further than the end of their term in office. PPP was good in this respect as the contract meant that the government couldn't withdraw funding suddenly to be diverted elsewhere - this happened with LT with funding for the next year not being determined until a late stage. The PFI system as a whole does leave the bill to future governments which is a another advantage for the governments.

I agree with Cityboy about UK and tax - you only need to look at Scandinavia with their high standard of living and public services that are delivered through high tax rates - no politician in the UK would have the balls to make a similar move.

[Tomcakes]

May 29, 2009 23:24:50 GMT @cityboy said:

SCNF- you will find that when not on the TGV, RER or Paris metro the service offered by SCNF is quite often worse than shoddy. Regional and local services have suffered from lack of funding while Paris and High speed rail have been seen a priorities. Choices have been made in France that differ to those in most other European countries.

Similar to the UK then!

Many local railway lines outwith London are very run down. If you're lucky, you have an hourly service. Most stations have no ticketing facilities, and at best a shelter and a board with timetable and a phone number. Trains are likely to be comprised of buses glued to wagon chassis. The location of stations leaves much to be desired although, to some considerable extent, this is governed by history - but nobody seems too bothered since the moment you step off the station premises, it's Somebody Else's Problem - heaven forbid we dare to think of an integrated system!

For this reason, I'm in future cycling instead of taking the laborious round trip by train. Ironically, it takes about the same time. Albeit not a full time passenger, but that's one they've lost through shoddy service.

[Deleted]

I just want to make absolutely clear that -

May 28, 2009 16:34:15 GMT Colin said:

LOROL is the same as any other TOC (Train operating Company)

This is absolutely 100% not the case.

May 28, 2009 16:34:15 GMT Colin said:

in that it's a franchise operated for the DfT (Department for Transport).

Again, you are 100% wrong on this. It is a management contract let by TFL.

The structure and role of LOROL has much more in common with the Serco on the DLR than it does with, say, Virgin Trains. OK, so infrastructure isn't involved, but that doesn't change the nature of the contract.

[cetacean]

May 29, 2009 22:25:57 GMT @landau1945 said:

We want first class services but are not prepared to pay for them through tax and high levels of government or city subsidies.

51% of the cost of the average NR journey is paid for by the taxpayer. I've not seen figures for LU, but I can't imagine it's lower.

So they do receive massive subsidies, and (in PPP/franchise setups) it's the job of the private companies to spend that money in the most efficient way to maximize ticket revenue and/or performance rewards.

In other words, the question of subsidy is quite separate from the question of how services are managed.

[cetacean]

May 30, 2009 7:39:16 GMT @paul said:

This is absolutely 100% not the case.

It *is* a Train Operating Company

May 30, 2009 7:39:16 GMT @paul said:

May 28, 2009 16:34:15 GMT Colin said:

in that it's a franchise operated for the DfT (Department for Transport).

Again, you are 100% wrong on this. It is a management contract let by TFL.

While you're correct in saying it's let by the TfL, the actual substance is not all that different to a DfT franchise, especially given how tightly specified recent DfT franchises have been. The only real difference is financial - LOROL are directly paid for running the service (and TfL gets most of the farebox revenue - which is probably smaller than the payment going the other way), whereas franchisees use the farebox revenue (and DfT subsidies) to pay their operating costs and get to keep anything left over. But if you think about, the net effect is the same.

May 30, 2009 7:39:16 GMT @paul said:

The structure and role of LOROL has much more in common with the Serco on the DLR than it does with, say, Virgin Trains. OK, so infrastructure isn't involved, but that doesn't change the nature of the contract.

They're still fundamentally private contractors being paid* to run a train service on a government body's behalf to that body's tight specifications. The differences are much smaller than you make out.

(* due to the screwy financials of the WCML upgrade, Virgin are technically subsidised, although they make very large payments to Network Rail for track access)

[Deleted]

AIUI, DfT has given the franchise for certain services (the former Silverlink Metro, now known as Overground, ones) to TfL's London Rail division: which has established a sub division 'London Overground' to do so. (Strictly, I believe London Rail (and hence London Overground) is Rail for London Ltd, a wholly owned subsidiary of Transport Trading Ltd (whose other subsidiaries include London Underground Ltd and Docklands Light Rail Ltd), which is wholly owned by TfL)

London Rail/London Overground/RfL Ltd have in turn contracted LOROL to actually operate the services for them.

So, to summarise, and again AIUI, there are three bodies involved in running the Overground: LOROL are responsible for operating the services as specified by part of TfL (who take the revenue risk), within the terms of their (TfL's) franchise agreement with the DfT.

[Colin]

I was indeed wrong to say that the LOROL was let by the DfT - as we have now established, it is in fact let by TfL; that was a misunderstanding on my part.

However, as put very well by cetacean, the end result is the same and the differences between the way LOROL is set up and how the DLR is set up are sufficient enough to state that the two ways of running a railway are not the same.

[slugabed]

May 30, 2009 11:09:13 GMT etr220 said:

AIUI, DfT has given the franchise for certain services (the former Silverlink Metro, now known as Overground, ones) to TfL's London Rail division: which has established a sub division 'London Overground' to do so. (Strictly, I believe London Rail (and hence London Overground) is Rail for London Ltd, a wholly owned subsidiary of Transport Trading Ltd (whose other subsidiaries include London Underground Ltd and Docklands Light Rail Ltd), which is wholly owned by TfL)

London Rail/London Overground/RfL Ltd have in turn contracted LOROL to actually operate the services for them.

So, to summarise, and again AIUI, there are three bodies involved in running the Overground: LOROL are responsible for operating the services as specified by part of TfL (who take the revenue risk), within the terms of their (TfL's) franchise agreement with the DfT.

All of the above may be,and probably is,absolutely true.But it seems to me to highlight the extent to which the railways in this country have lost their way (or,rather,have forced to by Whitehall)
Twenty years ago,the system was:British Rail.Owned everything,ran and maintained it,and collected revenue,while answering to the Dept. of Transport.
Couldn't be simpler,lines of responsibility are crystal clear,and everyone knew where the buck stopped.
Today's system is a field-day for contract lawyers;litigation and legal wrangling seem to accompany any decision.
And it hasn't saved any money.Far more money is given to the railways in the form of state support today than under BR,but it leaks away from the railways in the form of "profits",dividends,legal fees etc. and it isn't even as if the fares are cheaper or simpler to understand.
In my personal opinion,unless railways can be GENUINELY profitable (ie NO state subsidy) it is a nonsense to pretend that they can be run as private concerns.Any "profits" are simply state money going into the hands of a few individuals and corporations,rather than being invested in the infrastructure etc.I believe that the current "franchises" should be called back into state control as they expire.
The state can always borrow money more cheaply than any private concern,and Whitehall needs to grasp the nettle of reforming the PSBR rules to enable the railways (and the GPO for that matter) to raise their own capital under government aegis,and,where necessary,to have subsidies arranged on a long-term basis to minimise political intererence.
Rant over.

[Ben]

Youre spot on there. It seems that the only progress that has been made by the government or the management is suceeding in bluring the lines of responsibility. The more complex a set up, the easier it is to shift blame. People don't like blame because it eventually costs money.

[Tomcakes]

May 30, 2009 17:43:54 GMT Ben said:

Youre spot on there. It seems that the only progress that has been made by the government or the management is suceeding in bluring the lines of responsibility. The more complex a set up, the easier it is to shift blame. People don't like blame because it eventually costs money.

Indeed. If something goes wrong, the company can blame it on their contractors. If they don't like it, they can blame their sub-contractors, suppliers, or even blame the original company - and so it goes on.

[Deleted]

May 30, 2009 9:04:53 GMT @cetacean said:

It *is* a Train Operating Company

If you like.... but it doesn't describe itself as one -
www.google.co.uk/search?hl=en&q=site%3Awww.lorol.co.uk+%22train+operating+company%22&btnG=Search&meta=

And neither does TFL -
www.google.co.uk/search?q=site:www.tfl.gov.uk+%22train+operating+company%22+%22LOROL%22&hl=en&filter=0

May 30, 2009 9:04:53 GMT @cetacean said:

While you're correct in saying it's let by the TfL, the actual substance is not all that different to a DfT franchise,

en.wikipedia.org/wiki/London_overground
www.tfl.gov.uk/corporate/media/newscentre/archive/3489.aspx
London Overground is operated by a private company, London Overground Rail Operations Ltd (LOROL). Following a model similar to that already used for the Docklands Light Railway, TfL invited tenders for operation of the London Overground. Unlike National Rail franchisees, TfL would set fares, procure rolling stock and decide service levels. The operator would take an element of revenue risk: TfL take 90% of the revenue risk, 10% of revenue is retained by the operator, and the operator is responsible for revenue collection.

I guess what you call 'substance' is different from what I call substance?

especially given how tightly specified recent DfT franchises have been.

But operators are still free to set the majority of fares, choose their own branding, take a substantial revenue risk, and determine timetables and service levels within the parameters set.

The only real difference is financial

Nothing important then (!)

LOROL are directly paid for running the service (and TfL gets most of the farebox revenue - which is probably smaller than the payment going the other way), whereas franchisees use the farebox revenue (and DfT subsidies) to pay their operating costs and get to keep anything left over. But if you think about, the net effect is the same.

What, so one party takes all the risk and sets their own fares and services, and the other party has them precisely specified and paid for. Sorry but if I think about it, the only similarity is that they run a railway without controlling the infrastructure, which is what you seem to be getting at, but even if they did control the infrastructure, I don't think that would have a substantial difference on the legal/contractual structure.

They're still fundamentally private contractors being paid* to run a train service on a government body's behalf to that body's tight specifications. The differences are much smaller than you make out.

Of course they're all getting paid to run a railway, if you like**. I'm really sorry but these differences are much more important than you make out; though I doubt I'll convince you of that. Ultimately from a legal/contractual/financial point of view, LOROL running LO has much more in common with Serco running the DLR than any TOC. The semantics of whether they control the track or not is simply a matter of scope.

**except of course all the TOCs who have to pay for the privilege

[Deleted]

I'll also add that, as far as I can tell, no final decision has yet been made on who will maintain the TFL-owned railway from Dalston to New Cross when it opens. If I was TfL, I'd think LOROL would make a good choice, but we'll see.

[Colin]

Are we not shifting away from the focus of the thread, which was purely the engineering angle?

In that respect LOROL has no say whereas DLR do - isn't that the point we were trying to make? I'm sure I was

[Deleted]

May 30, 2009 17:43:54 GMT Ben said:

Youre spot on there. It seems that the only progress that has been made by the government or the management is suceeding in bluring the lines of responsibility. The more complex a set up, the easier it is to shift blame. People don't like blame because it eventually costs money.

Hot the anil on the head. This and the former government who began BR privatisation, did so with the aim of no one being able to blame them for bad service! Now we point the finder at franchises, Network Rail (or Rail track as it was) irany other number of going concerns.

However, the reason we spend more now, is probably in part because we are investing in new infrastructure. Anyone used the nice trains on Southern, C2C, the (promised but as yet virtually undelivered) new FCC trains Virgin Pendalinios? They're much much more comfy than shoddy old slam door trains. And that is just the superficials.

While WCML has suffered in the last few years, things have to get better before they get worse, a point well made by Colin on this very form in relation to LU services on several occasions! Had BR still been in operation, the WCML would still have needed to have been upgraded. We will never know if it would hvae done a better jib than we have seen, but we do know we now have a better service than before the upgrade...As an example, let's take a look at Virgin's punctuality figures a year after NR's official upgrade completion date. Even if you think those figures are a bit warped, then look at the number of general complaints about Virgin's service and see if that's good or bad.

I would apply those same metrics to The Jub, Vic, Northern, DLR or Overground too.

[cetacean]

May 30, 2009 22:40:17 GMT @paul said:

May 30, 2009 22:40:17 GMT @paul said:

London Overground is operated by a private company, London Overground Rail Operations Ltd (LOROL). Following a model similar to that already used for the Docklands Light Railway, TfL invited tenders for operation of the London Overground. Unlike National Rail franchisees, TfL would set fares, procure rolling stock and decide service levels. The operator would take an element of revenue risk: TfL take 90% of the revenue risk, 10% of revenue is retained by the operator, and the operator is responsible for revenue collection.

Who determines fares for rail services within the zones? The Department for Transport.

Who procures rolling stock these days? The Department for Transport - IEP, NGDMU, Thameslink NGEMU are all being developed and purchased/leased by the DfT with very little TOC involvement.

Who decides service levels? The Department for Transport. You'll find every recent franchise has one or more "Service Level Commitments" to run a minimum number of trains at certain times of day, usually coinciding with the maximum capacity on the line. In other words, the DfT might as well have written the timetable itself.

Who takes the revenue risk? Due to cap-and-collar arrangements, if TOC revenue is above or below a narrow band, the DfT pays a proportion of the difference (or receives a payment from the TOC). Thus the revenue risk shared.

But operators are still free to set the majority of fares, choose their own branding, take a substantial revenue risk, and determine timetables and service levels within the parameters set.

1) The majority of tickets sold are regulated fares. In London, as mentioned above all fares are determined by the DfT
2) Ooooh! They get to choose their own branding. Daddy, can I paint my trains purple? Oh please oh please oh please.
3) The revenue risk is much smaller than you think
4) LOROL also write their own timetables within the parameters set. And the DfT's parameters are no less specific than TfL's.

Of course they're all getting paid to run a railway, if you like. I'm really sorry but these differences are much more important than you make out;

No they're not. There are differences in the balance of control and the balance of revenue risk between the operator and the controlling authority, but the model is fundamentally the same for all three examples (DfT TOCs, LOROL, Serco Docklands).

If we'd been having this discussion five or ten years ago, you might have been right - in the past, the DfT (or rather, its predecessors) gave the TOCs much more freedom, but the way they do things now is getting ever more like what TfL is doing with LOROL.

[North End]

May 31, 2009 5:52:10 GMT @cityboy said:

May 30, 2009 17:43:54 GMT Ben said:

Youre spot on there. It seems that the only progress that has been made by the government or the management is suceeding in bluring the lines of responsibility. The more complex a set up, the easier it is to shift blame. People don't like blame because it eventually costs money.

However, the reason we spend more now, is probably in part because we are investing in new infrastructure. Anyone used the nice trains on Southern, C2C, the (promised but as yet virtually undelivered) new FCC trains Virgin Pendalinios? They're much much more comfy than shoddy old slam door trains. And that is just the superficials.
I would apply those same metrics to The Jub, Vic, Northern, DLR or Overground too.

I wish we could get away from this idea that all spending is somehow "investment".

The new trains on Southern and C2C and the Pendolinos (Pendolini?!) replaced assets which were either life-expired or approaching.

This is something which has happened throughout the history of railways - old trains get replaced when their time comes, some last longer than others because they were a better design, or just because of circumstances (e.g. the 1972 MkI stock). Spending money on new trains is nothing new.

No doubt the Government would like to spin that all these new trains are as a result of their policies. In reality it would have happened anyway.

The reasons things cost more nowadays is because under the current structure, both BR and LUL, there are always more people & companies involved in anything - all of whom need to take their share of profit. Then you can add on top of that a layer of people to argue over who owes what to who.

If you take the Northern Line as an example, a delay can be caused by the operator (LUL), the infraco (Tube Lines), the rolling stock maintainer (Alstom), the power supply people (EDF), and probably plenty more on top of that. All the contracts are based on penalties and abatements, so every last item has to get investigated to ensure the right amounts of money change hands.

[stanmorek]

May 28, 2009 14:40:26 GMT @cityboy said:

From a risk management perspective I would be inclined to impose a maximum of two lines to be managed by any one contractor. This way, if one of the contractors goes bust or you have to impose hefty penalties on them, it won't adversely effect the other lines. Also, it's always easier to micro than macro manage. So for the contractors, small projects are easier to control that vast networks. It also means there is less likely to be competition where a single contractor overbids for any franchise, leaving them with too little reserve capital to manage the project properly. Lastly, it means there can be a greater number of companies that can afford any one franchise, possibly avoiding a Metronet consortium type of contractor.

This sounds pretty much like how a single London Underground organisation would manage its own maintenance and upgrade work. Why pay someone a premium to do a job when you are forced to micro-manage it yourself? Splitting up the system would require someone else to manage the fragmentation of resources and coordinating the interfaces between different contracts. I say forced because whoever that someone else is needs to have an intimate knowledge and experience of working in an LU environment with all its rules and standards and has a long term interest in the wider multi-disciplinary system. The PPP attempted to address this by setting up the 30 year infrastructure companies to enable long term planning and staffed with experienced ex-LU people that were large enough to be self-contained units leaving LU to macro-manage. And large and long enough to be an attractive proposition to the private sector’s big hitters… As borne out from the Metronet experience the liabilities ultimately fell on TFL due to the formers failure to deliver its part of the contract.

But it is comforting to know that the City’s finest minds are working to provide the answer. However, I will try to give a pointer to some of the issues and problems I perceive to have affected LU and Metronet though I can only throw in my thoughts based on experience.

The PPP is an attempt to carry out a wholesale upgrading of the system on a scale that LU has not done before. Done while the network is running. I’ve heard it likened to carrying out open-heart surgery to someone running a marathon. It wouldn’t be possible without the funding arrangement LU had prior to PPP and 7-year plans were unheard of.

Firstly, LU are a victim of their own unique environment and in other ways have created a rod for their own backs. Contractors have compared working on LU to being in the nuclear industry and have said it is far more complicated than working on Network Rail. Due to the many onerous rules and standards that have evolved over the years, often added with good intentions e.g. post Kings Cross Fire 1987, work on LU is not as straight forward as a road repair contract for the council. Not only is the actual work difficult for the contractor it is paperwork intensive and their staff need to hold the appropriate licenses. As a result there is only a small pool of specialist contractors to choose from thereby reducing competition. Contractors consider LU to be a difficult client to work with and will charge a premium for it. Sometimes LU are stuck with awarding contracts to small or medium sized contractors who may not be adequately resourced for the small and difficult but critical work. The larger contractors won’t consider these jobs as they aren’t worth the trouble and not profitable enough.

Projects can take a long time in planning and design, sometimes years, due to the strict assurance process and the stakeholder consultation process LU imposes. LU has to enforce this regime on its contractors as agreed in the terms of its statutory Safety License, formerly Safety Case, as infrastructure operator. Large numbers of staff, engineers and management are allocated to writing, reviewing and processing assurance documentation and have to be paid for. A common complaint, whether justified or not, from contractors is there are powerful individuals in the LU hierarchy who can reject proposals or impose overly onerous restrictions but themselves have no financial or programme delivery accountability.

Secondly, it was the organisational structure and the way in which Metronet procured its contractors and the shareholders’ imposed “supply chain” model of procurement. Usually this is a successful and common form of ‘framework’ procurement in the civil engineering industry. What is unusual here was the close relationship between shareholders and the sub-contractors taking on the work. This caused costs to spiral out of control and regardless of the ability of any management team, this was beyond their control. Metronet’s contracting arm for civils and stations work was Trans4m Alliance a management organisation made up of shareholder companies which was further tied to using only shareholder owned subcontractors. This incestuous relationship ensured that the Metronet shareholders were keeping most of the PPP money in their own pockets with little going out to external companies.

Thirdly, Metronet’s dealings with LUL. Not many of you need reminding what PPP stands for but unlike Tubelines, Metronet had seem to forgotten that the final P stood for partnership and instead treated LUL as an all powerful client. There were often differences in interpretations with the complex PPP contract requirements having had no legal precedent.

A fixed price contract is not ‘fixed’ as some may believe. It is right that the contractor will insist on clauses that allows for payment for additional work due to unforeseen conditions or changes in scope by the client. Failing that there are legal means of recovering costs, e.g. Wembley stadium. Fixed cost contract would largely be unsuitable for the nature of a lot of the work undertaken in PPP. Due to the age of the infrastructure on LU work cannot always be properly scoped or estimated and often underestimated. No company in their right mind would sign up to a contract where they would be taking on undetermined liabilities without assurances there would be a limit. Often LU does not possess adequate records of its assets such as structural details, asbestos, drainage runs or buried services to name a few. What hasn’t been mentioned was the Metronet shareholders were given a letter of assurance from the Secretary of Transport that their liabilities would be capped thus making the premise of the private sector taking on 100% of the risk a mockery. Also, from my understanding of contract law a contract is unenforceable when one party penalises another party with unreasonable fines not in keeping with actual losses incurred.

Lastly, there are also the cultural and historical issues. LU is a collection of empires within an empire. You’d be surprised on how policy and decisions have been dictated by personality clashes and office politics with a few individuals with ‘grandee’ status. The infraco split meant there was many more roles to be filled and empires to be made. Leaving out Operations, there are the maintenance groups on one side and the upgrades and engineering on the other. Having worked in both, they don’t have much love for each other. For example, P-Way had built up a ‘Railway tradition’ over many years with some parts ran under a quasi-feudal system. Throw in the trade unions and you have a tricky situation.

One of the reasons I’ve read as to the why PPP was structured in the way it was, is that existing LU engineers and expertise had to be retained with the infrastructure companies. The lessons from Railtrack were not to farm out all their ex-BR engineers and rely entirely on their contractors. In this case they were unlikely to retain or recruit if you a de-motivated work force knowing that they’d be dispensed with at the end of shadow running. PPP had to be ‘sold’ to the engineering staff in this way.

Metronet was an organisation with a public sector structure ran as a private sector business. It would be interesting to compare how other privatised utilities operate. However, it would be difficult for me to say whether Metronet tried to change too much or that the pace of change wasn’t quick enough. From what I gather Tube Lines on taking over JNP swept away the old structure and imposed their own system in short space of time. Speaking to Tube Lines employees in the early days of PPP, the shareholder companies were embedding their own management team into JNP instead of creating a separate contracting arm and supply chain as Metronet had done. At the time “alliance partnerships” were popular in industry practice. They had been proven to work outside but I think the key is that everyone needs to understand each other’s contractual responsibilities well. Here you had a compromise between a public sector mentality and a profit making orientated business trying to work as an integrated team.

This is only a brief summary of personal observations and many others will have different experiences. Given time I’m sure someone will write a book on this subject and give a more definitive account.