Office of
Rail and Road

Nichols has acted as a trusted Independent Reporter for the Office of Rail and Road (ORR) since 2009. Our rail reviews have enabled Network Rail to deliver its projects and programmes more effectively and efficiently and allowed ORR to assure Network Rail’s performance. Our Highways England reviews have delivered a clear path for improvements and provided the ORR Highways Monitor with an independent, objective challenge of Highways England’s performance.

Challenge

The Office of Rail and Road (ORR) is the economic rail regulator, setting output targets and ensuring that access charges reflect an efficient cost for Network Rail to operate, maintain and renew the UK rail network. ORR has a public responsibility to monitor and hold Network Rail to account for their performance, delivering output targets and operating in line with licence conditions. To support ORR in its role, it engages Independent Reporters to undertake informed and objective reviews of various aspects of Network Rail’s performance. ORR considers the outputs of Reporter reviews to determine whether enforcement action is required.

In response to the Infrastructure Act of 2015, the ‘Office of Rail Regulation’ was renamed the ‘Office of Rail and Road’ to reflect their new broader role incorporating England’s Strategic Road Network. ORR’s challenge as Highways monitor is to hold Highways England to account on its commitments to improve the performance and efficiency of England’s Strategic Road Network, and to advise the Government on funding levels and performance requirements. This role was established to place a greater level of scrutiny on Highways England than has been the case in the past and to protect the needs of the ever increasing number of road users in Britain.

Experience – Rail

Nichols has been an ORR Independent Reporter since 2009 and has undertaken over 35 separate reviews of operational performance, infrastructure capex projects, asset management and capability improvement programmes. We bring a unique combination of change management expertise and rail industry experience, enabling us to quickly focus in on the root causes of performance issues and to provide informed pragmatic recommendations for improvement. Highlights of some of our landmark reviews are described below.

Capabilities
Our reviews of Network Rail’s capabilities in Project and Programme Management helped to guide the setting of regulatory targets for Control Period 4 (2009-2014) and Control Period 5 (2014-2019).

In 2018 we developed a prototype to provide ORR with an objective, repeatable, route-focused mechanism for assessing Network Rail’s capability to undertake its role as ‘Specifier’ of Capital Investments in the rail network in Control Period 6 (2019-2024). Capital Investment means both enhancements and renewals, funded and financed from a variety of sources.

The resulting Capital Investment Capability Framework was used to assess the capability of Network Rail’s five regions in 2020.

Systems Integration
In 2017 Nichols carried out a review of the improvements made by Network Rail in its management of complex programmes involving major timetable change. Our report was published on the ORR website, it identified that improvements have been made by Network Rail since 2015, and highlighted areas that can be developed further. Our review and advice was well received by the Department for Transport, Transport Scotland, ORR and Network Rail.

Capex programmes
In 2015, Sir Peter Hendy, Network Rail Chairman, published a report on the re-planning of Control Period 5 Enhancement Projects. The purpose of the Sir Peter Hendy review was to develop a more comprehensive and secure plan for the remainder of Control Period 5, which runs to 2019. As a trusted advisor, Nichols was commissioned jointly by ORR and Network Rail to provide an independent assurance report on the Sir Peter Hendy review.

Cost Efficiency
In 2013, we reviewed Network Rail’s progress and on-going improvement plans for Control Period 4, providing a provisional efficiency assessment of Network Rail’s submission to ORR covering the £7.2bn cost of their enhancement programmes. Since 2016 our review and challenge of efficiency proposals has helped to guide the setting of Operation, Maintenance and Renewal (OMR) regulatory targets relating to Control Period 6 (2019-2024). Network Rail’s OMR funding for Control Period 6 is estimated to be approximately £49bn.

Experience – Roads

Since ORR became Highways Monitor in 2015, Nichols has provided an independent assessment capability for their monitoring of Highways England’s portfolio, programme and project management performance. This has been delivered through a combination of specific reviews and expert interim support to ORR’s Highways Directorate.

Capabilities
In 2020 Nichols was jointly commissioned by ORR and Highways England to review Highways England’s capability to plan and deliver its enhancement capital programme Road Investment Strategy (RIS2) for Roads Period 2 that will run from 2020 to 2025.

The review focussed on Highways England’s capability within the options and development phases of capital projects, including translation of client requirements into technical requirements. Nichols approached this through the development of a capability model that enabled Highways England to engage in self-assessment.

Capex programmes
Our review and challenge of Highways England’s delivery of the £15bn Road Investment Strategy (RIS1) for England’s Strategic Road Network between 2015 and 2020 drew upon our considerable experience of major programme delivery. We identified a range of development and delivery management challenges that necessitated change, this led, in part, to Highways England restructuring its RIS1 portfolio.

Cost estimating
In 2019 Nichols completed a review on behalf of ORR to assess Highways England’s processes for estimating its major project costs; both historically and as proposed to be applied in Road Investment Strategy (RIS2) for Roads Period 2 that will run from 2020 to 2025.

Benefits

Through application of the efficiency framework, we have ensured that value for money continues to be obtained. In the Control Period 5 review, we identified £600m of cost savings; these were included in the draft Determination provided by ORR to Network Rail in 2013.

Our rail reviews have been delivered under the principle of a joint duty of care to both ORR and Network Rail. Our careful investigation and high quality of communication has ensured that our reviews have been clear, and well received by ORR, Network Rail and the wider industry.

We pride ourselves on being an independent guiding mind, recognising and promoting good performance, innovation and learning in our reviews. Our advice to ORR’s Highways Monitor has challenged Highways England in a collaborative and constructive manner, encouraging positive change and facilitating improved performance and efficiency.