(c) our final determination making a smaller reduction to pre-efficient costs than applied in our draft determination; and
(d) our final determination assessing a slightly lower level of efficiency than applied in our draft determination.
Responses to our draft determination
8.15 Responses to our assessment of maintenance and renewals in the draft
determination are highlighted here. In addition, some detailed commentary on the draft determination text was received, has been considered and, where accepted, we have made amendments to our final determination.
Asset management capability
8.16 The majority of respondents were supportive of our proposed greater focus on asset management capability, including at route level, in CP5. Some stated a need for improved transparency of asset management data by route.
8.17 We agree on the need for greater transparency of asset management information by operating route and will continue to press for improvement. Network Rail‟s SBP
included improved disaggregation of plans by operating route compared to PR08. We have set out our requirements for Network Rail‟s delivery plan, including greater visibility by operating route, and our monitoring regime for CP5 requires more
disaggregated reporting of asset management information than was required in CP4. 8.18 Respondents, including Network Rail, were supportive of our approach to funding
improved civils asset management and to introducing a civils adjustment mechanism. RIA‟s response recognised our concerns driving the civils adjustment mechanism but considered that it introduced uncertainty which could lead to supply chain
inefficiencies.
8.19 We consider that the civils adjustment mechanism is appropriate to deal with the uncertainty of Network Rail‟s civils renewals plans as submitted in the SBP. We have included a provision for civils renewals expenditure in our final determination which reflects our best view of the likely, significantly increased levels of activity. Network Rail is expected to deliver the civils renewals volumes proposed in the SBP for the first two years of the control period and this gives the supply chain increased certainty for those years. We expect Network Rail to present its proposals for years three to five in good time to enable the supply chain to plan effectively.
8.20 ATOC and several TOCs responded that Network Rail should improve its asset management policies in relation to depots. They also said that Network Rail‟s
renewals policy should ensure that the modern equivalent replacement considers the needs of current and future operators, passengers and stakeholders. Stagecoach‟s and Virgin‟s responses questioned whether Network Rail was ensuring that whole
industry costs are minimised. They highlighted infrastructure asset management concerns on their routes.
8.21 We agree that asset management policy with respect to depots can be improved. We have set asset management capability outputs to ensure continuous improvement in CP5, including for depots. We have made no adjustment to Network Rail‟s proposed levels of renewal expenditure on depot plant. Network Rail has a licence requirement to manage its assets efficiently. This includes renewing and/or enhancing assets with a modern equivalent asset which is capable of meeting the needs of current and future stakeholders. It also includes ensuring that whole industry costs are minimised over the lifetime of assets.
8.22 Chiltern and Arriva considered that work volumes and asset condition should be monitored as outputs. Passenger Focus questioned whether asset condition should be improved over the period.
8.23 We consider that it is important to monitor volumes and asset condition as indicators of whether assets are being managed sustainably. We have made improvements to our monitoring framework for CP5. However, we believe that it is important that
Network Rail has the flexibility to manage its activity during the period to deliver in the most efficient way possible and to respond to new information. Where delivered volumes and/or condition fall materially short of its plans we will expect Network Rail to demonstrate that this is not at the expense of sustainable asset management. 8.24 GB Railfreight‟s response raised concern over a shortage of electrical engineering
expertise in the industry and therefore concern over deliverability of electrification works.
8.25 We agree that availability of electrical engineering expertise is a risk. Network Rail‟s SBP included its assessment of deliverability which considered resourcing of the electrification programme. We have carried out our own assessment of deliverability and agree with Network Rail‟s overall assessment. It has identified the key factors constraining delivery and has action plans in place to deal with them.
8.26 Network Rail‟s response to our draft determination set out its plans to improve its approach to asset management with respect to climate change and weather resilience. It provided an update to its Climate Change and Weather Resilience document. RIA expressed concern over the resilience of the network and welcomed our recognition of the scale of the issue. TSSA questioned why there was no
significant funding to achieve resilience.
8.27 We will monitor Network Rail‟s progress against its climate change and weather
resilience plans. We consider our assessed level of efficient maintenance and renewal expenditure to be sufficient for Network Rail to manage its assets at minimum whole life cost, and expect Network Rail to be able to demonstrate that its asset
management adequately includes consideration of climate change and weather resilience.