Top 5 Considerations When Procuring a New Signalling Supplier

Network Rail Consulting (NRC) brings extensive global expertise in the successful implementation of modern signalling systems, such as the European Train Control System (ETCS) Level 2, in collaboration with clients across the world. While local markets, regulatory environments, and operational conditions may differ, there are common critical factors that must be considered when selecting and procuring a new signalling supplier. Based on our experience, NRC has identified 5 key points to guide this procurement process.

Understanding the Contract Implications

Contracts can lead to varying supplier and client behaviours. If you want the supplier to develop a system with you, or you want full visibility of the real construction costs, a lump sum design and build contract might not be the right type of contract to choose. Similarly, an alliance contract might seem lower risk, but if you have a relatively simple network with standard operating procedures, does it warrant having larger preliminaries and an increased project setup cost? Ultimately, it is critical to understand that the contract type chosen will drive a specific behaviour, from your client team and the supplier(s).

Establishing a Clear Concept of Operations

It is vital to know how you intend to operate your new signalling system. Subtle differences in operating procedure can require major product alterations for signalling suppliers.

Modern signalling systems tend to be developed in global software cycles, which can take between 6-12 months or more. What may seem like a small change to match the network operating conditions post contract award, can drive significant extensions in timelines. Ensure the supplier understands how you want to operate your network, so they can plan what that means for their products in advance. This is even more critical if you are asking your supply chain to provide standard products or interfaces.

If you have not considered how you will operate with your new system, it will be difficult to determine if the supplier’s solution will meet your operational requirements in a procurement process. The system may appear to give the same output but require the operators to follow a new process or procedure. Changing how people work can be the biggest challenge for many railways. By investing in your concept of operations before the procurement process begins, you can potentially avoid costly variations and time extensions later.

Defining Requirements for Project Success

Do you have scope gaps? Are there areas of functionality you don’t know how to define? Do you know the requirements that are non-negotiable vs the nice to haves?

Having a good knowledge of your requirements is critical to be able to negotiate a commercial outcome. There is a possibility that the suppliers return a price that is above your budget. Knowing which areas you can trim or defer – and which you can’t – could be the difference between delivering the project under budget or exceeding it.

The Importance of Scope Strategy

In most modern signalling systems, such as ETCS L2, there are likely to be several suppliers that require to be engaged such as separate trackside, onboard and radio suppliers. Having a clear packaging strategy to delineate the scope boundaries and interfaces is essential. The aim is to ensure there are no scope gaps between contract packages that are created through the procurement process.

Equally important is considering the staging strategy. On some railways, track access is a top priority, so the work must be divided into shorter timeframes. Conversely the more access (or visibility of access) you can give a signalling supplier, the easier it will be for them to plan their resources effectively. Packaging and staging are therefore critical considerations when engaging a signalling supplier.

Why Skilled Negotiation is Essential

Modern signalling systems comprise complex systems and interfaces, making the procurement process particularly challenging. Negotiating after the initial tender return will be an important part of the procurement process and can be time-consuming. Short circuiting this phase could result in an increasing risk of variation in the delivery phase, or if the process overruns, risks eating up all the contingency time in the delivery schedule.

The supplier will provide a highly skilled technical and commercial team to negotiate with you. Whilst they will know their products inside out, they may not know how you operate your railway or how you intend to use them. Client’s need to have highly skilled technical, operational and commercial staff to be part of the negotiation.

Translating the supplier’s tender response into confidence that your concept of operations can be achieved, will be difficult without skilled staff or with only commercial staff. Uncertainty will lead to commercial implications and program extensions during the delivery phase. Building enough time into the procurement process with highly skilled staff is therefore an essential consideration when procuring a new signalling supplier.

A final point to consider is how realistic is your delivery schedule? This is not wholly a procurement issue, but the procurement outcomes will likely drive the critical path for the delivery program. In a competitive environment, all suppliers will likely claim they can meet the delivery dates you supply them. However, this may come with a list of caveats that re-assign the risk of meeting dates to the client or other interfacing parties.

Taking the time to understand the implications of this is critical to determining whether your delivery schedule is realistic. Invest in skilled people with delivery experience of modern signalling systems and their interfaces. Use them pre-procurement to plan and re-plan different scenarios. This will make your schedule robust and ready for the outcome of the procurement process.

How We Can Help

Network Rail Consulting has navigated these procurement challenges with multiple global clients and all major signalling suppliers. We have a highly skilled team of local and international resources that can help you achieve the right outcomes from your signalling procurement process. For details on how we can help you, visit www.networkrailconsulting.com.

Cameron Downey
Director Project and Program Management
Network Rail Consulting