2017 Report details for project: Rail Franchising Programme

Project name Rail Franchising Programme - there are 6 reports for this project: 2015, 2016, 2017, 2018, 2019, 2020
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Organisation DFT (D9) - see all reports for this organisation
Report year 2017 (data is from September 2016)
Category Infrastructure - see all reports for this category
Description: To secure the provision of passenger rail services as set out under the Railways Act 1993 (as amended) by letting Rail Franchises. This is an ongoing programme of replacement and renewal of franchises, and the continual performance management of contracts, once signed.
DCA (RAG) Amber
DCA text: Since Q2 the IPA have recognised the external challenges that the Programme faces, many of which are out of its control (including adverse developments in national PPM trends, market interest in bidding declines and the downward shift in revenue growth, counter to the trend over the last two decades). Despite the rating Passenger Services was praised for the significant progress that has been made over a period in the face of great scrutiny and a very significant workload. There are 11 recommendations that will now be taken forward including 2 critical recommendations around contingency planning and recruitment. Initial plans to respond to the recommendations are now being developed with the intention of holding an Assurance of Action Plan in summer 2017. All recommendations from the previous Gateway 0 in October 2014 were responded to and implemented in 2015. This includes the appointment of Directors accountable to the SRO, improvements to our Risk Process and developing our Programme Outcomes. The Rail Franchising Programme continues to deliver in line with the published schedule. Since Q2 we have made 1 franchise award following competition (East Anglia). This award will deliver significant benefits for passengers and higher returns to the exchequer. The East Anglia franchise was awarded in June, mobilised and begun in Oct 16. Key benefits of the new franchise include: • £1.4 billion investment to local rail services • 1,043 new, state of the art carriages between January 2019 and September 2020 to support the faster timetable, with a full programme of refurbishment for the current fleet in the meantime • at least 4 90-minute services (2 in each direction) between London and Norwich each weekday and 2 60-minute services per day between London and Ipswich • free Wi-Fi for all passengers on trains and at stations • automatic ‘delay repay’ for season and advance purchase tickets • tough new targets for operational performance levels at 93% - up from 89.7% currently • a host of new ticketing initiatives, starting in October 2017, including new offers for part time users and those who don’t travel every day We have developed commercial plans to make better use of the information we receive from a variety of sources so that we can: • Better anticipate and plan for changes in market conditions and more robustly plan for future franchise specifications • Be more informed and provide a better response to the annual business plans we receive from TOCS The Commercial Plans will provide • Strategic objectives planned for each franchise post-contract award, which will provide the basis for in-life management team’s performance objectives; • An overview and most importantly a critical analysis of core MI; • Planned policy activities requiring in-life Changes; • A focus for value add contract management activities, e.g. assessing benefits realisation following delivery of committed obligations; and The basis for future franchise specifications forming the basis of the Project Mandate
Start date 2013-03-26
End date 2029-11-29
Schedule text Proactive management of rail franchise schedule led to the most recent issue (Dec 16) with several competitions being retimed. The retiming serves to reduce the contract award congestion in 2018, de-conflict the franchise competitions to maximise commercial interest, optimising market capacity , maintaining market confidence and ensuring Passenger Services are resourced to undertake multiple procurements. The retiming of the InterCity West Coast competition (ICWC) (now the West Coast Partnership (WCP)), which will incorporate the procurement of a shadow operator for HS2 into the franchise competition and was announced in Nov 16. This retiming will allow us to continue to engage with the market on the best options for the franchise to do this. A West Coast Continuation project is now underway to ensure there is no gap in service between the ICWC expiry date (Apr 18) and the start of the new WCP franchise (Apr 19) Also retimed were the South Western, South Eastern franchise and Great Western Franchise competitions. We currently have teams working on 5 live franchise competitions at various stages of completion.
Baseline £-74.90m
Forecast £-53.20m
Variance -29.00%
Variance text: The figures above represent the revenue line from the Long Term Forecast (LTF) for the 3 franchise competition which was beyond the OBC stage (which coincides with the invitation to tender (ITT) and thus have financial figures). The baseline figures are based on an earlier version of LTF. Since the baseline figures were produced, the actuals were contracted, with lower than forecast premium in 16/17 and 17/18, but higher than forecast premium in the later years of the franchises. This has led to lower forecast figures in 16/17 than previously assumed in the LTF. This will be the last time that the costs will be represented this way. The department is reviewing how the franchise programme reports its financial data on the GMPP
Whole Life Cost £-7,169.20m
WLCost text: Budget values are derived from v15.51 of the rail LTF amended for subsequent CP5 and other changes. Economic factors as most recent OBR projections. Forecast from rail LTF v June 2015. A significant policy change since the Q1 forecast is the change in fares policy for the years of 2015/16 to 2019/20 where the fare increase has been reduced from RPI+1% to RPI+0%. This change increasingly reduces farebox across all years. Lower inflation forecasts will have also reduced farebox although this will be partially offset by lower costs.
Sourcefile IPA_2017.csv

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Acknowledgement: GMPP data has been re-used under the Open Government Licence.