Higgins reveals Network Rail overhaul plan

Network Rail chief executive David Higgins has laid out detailed plans for an overhaul of the organisation, a week after a government-commissioned
report demanded efficiency savings of up to £1bn a year from the rail sector.

Higgins confirmed restructuring plans at the organisation’s £6bn major projects division, which mean it will have to fight to win work internally and compete overseas.

He also revealed the division could bid to build parts of the planned £17bn High Speed 2 line from London to Birmingham, which is being managed by the Department for Transport, under a plan to work for external clients.

The plan is part of Higgins’ response to the challenge laid down by last week’s McNulty report on making rail more efficient, calling for savings of up to £1bn a year, or 30% of current rail spend.

Higgins said he has asked Simon Kirby, director of investment projects, to run the major projects division as if it was a separate business within Network Rail, opening up much of the early work on projects to competition from private sector consultants and contractors. This is part of a plan to benchmark the division against the private sector, to ensure efficiency.

Higgins said: “We didn’t build HS1, and we’re not doing HS2 [at the moment]. But in future, when parts of HS2 come out, I’d like the industry to say ’we’d like Network Rail as a partner as we bid, because they’re seen as a highly respected organisation, [who are] easy to work with and have some unique skills that the rest of the world values.’

“If all we are is a monopolistic supplier to ourselves, then how will anyone ever be able to judge whether we can be competitive? We need some external clients.”
Higgins also confirmed that Network Rail will this week appoint consultants to run a process of change management, as it hopes to move to a partnering approach with the supply chain. Network Rail will aim to bring in the construction industry much earlier on major projects, and has eight different templates for ways to engage with suppliers and share risk.

Network Rail will also rewrite its standard contract forms to make them more collaborative.

Higgins said he was attempting to turn the organisation into a partner that the industry respected. Asked if that was the case currently he said: “No. Of course not. We’ve got a long way to go. There are a lot of skills in the organisation, but I think we’re still seen as very defensive.”