The railway signalling market in the United Kingdom has too few suppliers, high costs, and Network Rail does not have he procurement practices in place to benefit from its considerable buyer power. That says the Office of Rail and Road (ORR), the UK’s independent railway regulator.
The UK is working on the Digital Rail programme, a cross-industry plan to accelerate the transition to digitally run railways in order to increase rail capacity and improve network performance. Currently, the signalling market in Great Britain is valued at 800-900 million pounds per year. By increasingly adopting digital technology, the signalling market is expected to expand significantly.
Two main players
“Essentially there are only two main players in the GB market for major signalling projects, namely Siemens and Alstom, who account for over 90 per cent of Network Rail’s major signalling spend”, says John Larkinson, Chief Executive of the ORR. This while there are more than 40,000 signals on the mainline network, with 65 per cent of these needing to be renewed within the next 15 years.
The combined share of Siemens and Alstom has increased from 70 per cent in 1999-2004 to a projected 90 per cent in 2019-2024. An analysis of Network Rail’s spend on signalling consistently found that average prices were lower when projects were competitively tendered as opposed to directly awarded to framework holders. Alternative suppliers told the ORR that it is difficult to establish a business case to compete for frameworks or to develop technology without a long term or certain pipeline of work in which to recoup the investment.
One lovely statement clearly lifted from the ORR document is this:
“Ensuring Network Rail’s procurement processes are run on genuinely competitive terms and do not unduly favour existing suppliers or penalise ‘first movers’ in new technology”.
this feels like “damned if you do and damned if you don’t. You get plaudits from one half of ORR for choosing ‘”first movers” in new technology’ and brickbats from another arm of ORR for not choosing ‘existing suppliers’ when the new technology is found wanting.
It has often been said that railways demand “cutting edge technology with 20 years operating experience”. It is apocryphal, but most railway folk want ot buy equipment that does the job but only after some other organisation has felt the pain of ‘first in class’.
End of second paragraph:-
“By increasingly adopting digital technology, the signalling market is expected to expand significantly.”
This implies that the expansion of the market is caused by the adoption of digital. This is erroneous. The reason for the expansion is stated at the end of the next paragraph.
“there are more than 40,000 signals on the mainline network, with 65 per cent of these needing to be renewed within the next 15 years.”
This, as Network Rail have pointed out, is a significant increase on the current rate of replacement.