Network Rail to boost procurement efficiency

8 January 2013

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8 January 2013 | Anna Reynolds

Network Rail plans to improve efficiency within its contracts and procurement function by 28 per cent by 2019.

The details come in the rail operator's business plan for 2014 to 2019 (known as control period five (CP5), published in response to government plans for the railways and its £37 billion investment programme.

As part of a transformation of its central functions, the rail infrastructure operator plans to reduce the amount it spends on the procurement function from £10.8 million between April 2009 to March 2014 (known as control period four (CP4) to £7.8 million in CP5. This will be achieved by improving processes, technology and boosting skills.

Ian Sexton, director of contracts and procurement at Network Rail, told SM: “Buying more effectively means making more informed purchases and looking at whole-life costs, not just first-purchase cost.

“In terms of track renewals and enhancements we are looking to engage with the supply chain much earlier in the design process. If suppliers add their innovation we can get more buildable designs, which lowers costs. Having a more collaborative style of contract with suppliers means there is a greater incentive on all parties to mitigate cost and time.”

The company is on track to deliver cost reductions of £1.1 billion, around 20 per cent, in CP4, through faster payments to suppliers leading to discounts, reductions in overhead costs by restructuring its infrastructure projects delivery organisation and introducing new technology, such as a high-output plant for track replacement.

Network Rail has set an overall savings target of 18 per cent by 2019. The HR, finance and legal functions will also be transformed to improve transparency and drive value for money. The organisation will also reduce its headcount by 16 per cent over the period.

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