The universities centre for railway systems researchProjectB7:RAILINDUSTRYSYSTEMCOSTANALYSISNamedinvestigators: Prof Chris Nash, Leeds; Prof Rod Smith, Imperial, Clive Roberts, BirminghamResearchers: Chris Bouch, BirminghamKat Lovell, Imperial, Pedro Abrantes, Andrew Smith, and Phill Wheat, Leeds, Objectives to develop a methodology to test the whole system cost impact of selected proposed technological developments in the industry; to investigate the institutional arrangements in the fragmented rail industry, assess the extent to which these arrangements provide appropriate incentives for whole system cost minimisation, and develop alternative options for improving the current arrangements; to examine the efficiency of Britains rail industry and constituent parts using national and/or international benchmarks Technology-costModelling: Technology-costModelling:Technology-costModelling:Technology-costModelling:Approaches to innovationInnovation processes in the industry can be categorised into two types.Proportionally there has been a noticeable move towards collective approaches to innovationCompetitiveCollectiveProfit and competitionWhole system improvementIndividual organisations interestsPre-competitive/ collaborativeCompanies need control over relevant technical elements to develop them accordinglyVehicle and infrastructure provided centrallyResults from industry interviews show overlap in the fields of interest and a complex web of organisational drivers. Why do these elements appear together?Competitive EnvironmentTOCPassenger environmentReliabilityCosts(Capacity/demand)ROSCOReliabilityCostsDfTVehicle ManufacturerManufacture/development costsReliabilityCostsMass (& track damage)SuppliersReliabilityMassNetwork RailReliabilityInfrastructure costsCapacityPassengerBenchmarking InfrastructureInternational Benchmarking of Network Rail against other infrastructure managersData from UIC and also from a bespoke datasetState-of-the-art econometric frontier methods usedAnalysis found Network Rail approximately 35-45% away from best practice frontierImpact:High pro for the Office of Rail Regulation 2008 Periodic Review ORR undertook supplementary analysis to understand the reason for the gap between Network Rail and the FrontierNetwork Rail set a target of 21% efficiency saving between 2009-2014Benchmarking Passenger Train OperationsKey Research Question: Why did franchising fail to bring down costs in passenger rail sector in Britain?Train operating company (TOC) own costs (excluding Access Charges) 35% growth since 2000 = 1.5bn annual costWe explored the reasons behind TOC cost trends in Britain since privatisationWhat has been happening to TOC productivity and efficiencyImpact of the governments policy towards failing operatorsKey findingsTFP gains of 18% in first 4 years and some convergenceBUT Post-2000 TFP deteriorates sharply ends up in 2006 where it was at privatisation Unit cost of a given set of services 12% higher in real terms than at privatisation and 29% higher than in 2000Failing TOCs on management contracts fared much worse on average costs 19% higher after 2001. Suggests management contracts bad for efficiency, particularly if allowed to persist for long time periodsConclusions Have developed a methodology to examine the changes in processes required and resulting costs when new technology is introduced to test further in the context of lightweighting of trains ( and specifically bogies)Have examined the key drivers behind rolling stock innovations to consider further the adequacy of current incentives and alternative optionsHave identified areas of inefficiency in the current rail network to update results and consider further policy implications