EFRTC General meeting Barcelona, 30.11.2007

1. Appendix 6 INNOTRACK Innovative Track Systems EFRTC General meeting Barcelona, 30.11.2007 Dipl.-Ing. Dieter SCHRECK Managing Partner SCHRECK-MIEVES & Dr Ing Imrich KORPANEC EFRTC Secretary General with support of INNOTRACK Core Group EFRTC General meeting Barcelona, 30.11.2007

2. The Strategic Context • High cost of railway infrastructure • RIMARE • EFRTC General Meeting, Berlin - BSL • Joint EFRTC/EIM seminar, Brussels • Joint proposal to European Commission • INNOTRACK • EFRTC General Meeting, London - volunteers' EFRTC General meeting Barcelona, 30.11.2007

3. INNOTRACK - Innovative Track Systems • A 6th Framework Integrated Project with Financial Support from EU • Project Budget: €18.6 m • Project Grant: from EU €10.0 m • First EU project with comprehensive cooperation between IMs & Industry • Opportunity for a step change in infrastructure products & processes essential to make substantial improvements in costs & performances: Current and Future • INNOTRACK is focusing on mixed traffic EFRTC General meeting Barcelona, 30.11.2007

4. INNOTRACK - Innovative Track Systems • The INNOTRACK Cooperation • Total Partners: 35 • RU/IM: 9 • Supply Industry: 10 • Contractors: 3 • Academics: 8 • Associations: 5 • From 11 countries EFRTC General meeting Barcelona, 30.11.2007

5. Vehicle & track Characteristics General model of failure/degradation SP1 - Duty NR LCC methodology RAMS technology LCC models SP6 - LCC DB Best logistics practices New logistics processes Cost effective methodologies SP5 - Logserv ALSTOM INNOTRACK - project organisation SP0InnoTrack Coordination UIC SP2 Track Support Structure SNCF Track subgrade monitoring & assessment Evaluation and test of superstructure innovations SP3 Switches and Crossings DB Predictive Models for S&C Switch designs Standards & LCC analysis SP4 Rails & Welding VAS/ CORUS Methodology for Duty conditions Supported track Form Rail steel Material Grinding methodology SP7Dissemination and Training UIC EFRTC General meeting Barcelona, 30.11.2007

6. SP 5: Logistics • WP 5.1 Review of existing methods, benchmarking and ways for the improvements • WP 5.2 Design of validation procedures • WP 5.3 Logistics and Support • WP 5.4 Logistics and S&C • WP 5.5 Logistics and Rail SP Partners • Railways: DB, NR, • Supply Industry: Alstom, Carillon, Corus, VAS, • Academia: UoB • Association: EFRTC, UIC, UNIFE EFRTC General meeting Barcelona, 30.11.2007

7. WP 5.1 Review of the existing methods and ways for the improvements Objectives • Global assessment of logistics needs and constraints for new projects and subsequent maintenance & renewals activities • Correlation with the output of parallel sub-projects (support, switch & crossing, rail) • Benchmarking EFRTC General meeting Barcelona, 30.11.2007

8. WP 5.1 Review of the existing methods and ways for the improvements Expected deliverables • reports on existing states of art for construction, maintenance and renewal activities and assessment of logistic constraints • Definition document on logistics needs and constraints and definition of constraints • report on conduct of interfaces between contractors and IM's and means of improvement • Recommendations for best practices EFRTC General meeting Barcelona, 30.11.2007

9. WP 5.1 Review of the existing methods and ways for the improvements Approach • structured web-site questionnaire for building up the database on best practices/knowledge management platform • set of questions focused on quantitative evaluation of the Infrastructure Managers/Contractors interface as basis for structured interviews • interviews to be conducted with Infrastructure Managers (UoB) and with contractors (EFRTC consultant - BSL) with support of SP5 team dedicated for interviews • analyse and processing of the interviews • presentation and discussion of the results at the contractors’ workshops and then jointly with Infrastructure Managers EFRTC General meeting Barcelona, 30.11.2007

10. EFRTC actions & progress • 10 contractors expressed interest to be involved in INNOTRACK at the GM meeting in London • Core group was set up for steering the EFRTC input into INNOTRACK with responsibility for all deliverables/reports to be completed in time and within the budget • At he Board meeting - INNOTRACK Task Force was formalised from those contractors expressed interest to participate • First series of interviews were carried out with 6 contractors • Preliminary report on the interfaces between Infrastructure managers and contractors based on the first series of interviews is now available • First contractors meeting to discuss preliminary findings was held at EFRTC in Paris on 06.11.2007 • the progress achieved so far and output of the contractors meeting is subject of the presentation EFRTC General meeting Barcelona, 30.11.2007

11. Objectives of the workshop • Provide an overview of the achievements so far • Give the contactors (especially those who haven't been interviewed so far) the opportunity to contribute their views • Discuss and prioritise lessons learned so far • Agree on an outline for the next steps • Any other issues on interface/cooperation with Infrastructure Managers EFRTC General meeting Barcelona, 30.11.2007

12. Interviews – scope and first output • The interviews were conducted between August and November 2007 • three contractors were interviewed prior workshop and three afterwards, but only one IM • In addition to that one infrastructure manager was interviewed, some more interviews with infrastructure managers are currently organised • It was not the intention to discuss the quantitative questionnaire during the interviews – that is subject to a separate discussion • The discussions focused on the relationship between contractors and infrastructure managers, things that could be improved and the good practices already in place • The following slides give an overview of the statements made during the interviews EFRTC General meeting Barcelona, 30.11.2007

13. Major aspects/questions for interviews • What is the main product/services spectrum of your company? • In which countries and with which type of contracts are you typically working? • What are the typical volumes or durations and the risks of your contracts? • In real life, what are the key discriminations between profitable and loss-making projects for your perspective? • What are the main issues in the entire cooperation process with infrastructure managers • that make it unnecessarily difficult to deliver good value-for-money ("could be improved") • that are very helpful in optimising the process ("lesson to learn from", "good-practice") EFRTC General meeting Barcelona, 30.11.2007

14. Six generic areas for improvement were identified at the workshop A B C Long-term funding, planning and contracting Treatment of innovations Cross-acceptance of rules and regulations E D F Industrial engineering and process optimisation Fragmentation of work and interfaces between parties involved Cost of plant and heavy machinery EFRTC General meeting Barcelona, 30.11.2007

15. A – Long-term funding, planning and contracting (I) • Key issues identified • Due to a lack of funding commitment from most governments, infrastructure managers are not able set-up long-term maintenance and renewal plans, which has an adverse impact on the IMs' and contractors' efficiency • Due to the lack of long term planning contractors can not dimension their capacities according to the upcoming market needs, which leads to often over-dimensioned fleets to cover capacity peak demand and significantly varying shifts per year for heavy machinery • Current contracting mechanisms (such as "cost-plus", "ad-hoc") often do not include incentives to increase efficiencies • Longer-term, output-oriented contracts would enable contractors to dimension their capacities accordingly and to increase efficiency as a result of a steeper learning curve EFRTC General meeting Barcelona, 30.11.2007

16. A – Long-term funding, planning and contracting (2) • Projects today are often very prescriptive, whereas the scope and the risk allocation leave sometimes room for interpretation. This leaves little room for optimisation • Current phasing and programming of work which needs to be based on the currently typical weekend track possession leads to inefficiencies as most of the contractor's staff is required only for the more expensive weekend work. Regular 'daily' possessions would allow repetitive work programmes and would lead to a steeper learning curve (also "E"?) • Current formal and complex tender procedures are another market entry barrier for contractors – communication between the contracting parties is very restricted so that clarification of the scope of work and the risk allocation is difficult EFRTC General meeting Barcelona, 30.11.2007

17. B – Cross-acceptance of rules and regulations • Key issues identified • The differing rules and regulations across Europe are one of the key entry barriers for contractors to market their services across Europe • A cross-acceptance of certifications for machinery and (technical and process) innovations would increase the competition amongst contractors and would ensure that efficiency gains made in one country could be more easily transferred to others • The current sometimes very rigid (outdated?) worksite protection rules and rules for worksite logistics can have a (sometimes very substantial) negative impact on productivity. An harmonisation of rules and standards based on 'good practice' in terms of safety records and impact on productivity would lead to a simplification. Although different safety cultures need to be taken into account when considering a harmonisation EFRTC General meeting Barcelona, 30.11.2007

18. C – Treatment of innovations • Key issues identified • Long certification process often hinder technical innovations • The current efficiency gains triggered by technical and process innovations are to the benefit of the infrastructure managers only, as they often result in lower prices • Therefore contractors are not incentivised enough to foster research and development • An equal treatment of the benefits of innovations would lead to lower prices and a better competitive situation of the innovator EFRTC General meeting Barcelona, 30.11.2007

19. D – Fragmentation of work and interfaces between parties involved • Key issues identified • Maintenance and renewal work is often carried by various parties (e.g. staff of the infrastructure manager for worksite protection, contractor's staff for work execution). That increases the number of interfaces and the effort required for coordinating work • Due to the fragmentation of work the contractors can not influence the overall efficiency of the project • A transfer of all work necessary for the delivery of the project would reduce the number of interfaces and enable the contractor to improve overall project efficiency EFRTC General meeting Barcelona, 30.11.2007

20. E – Industrial engineering and process optimisation • Key issues identified • The cost for moving equipment is very high and time consuming due to varying regulations across Europe (also "B"?) • The output during track possessions could be improved by focusing more on repetitive work. That would lead to a steeper learning curve for the contractor's track worker. More repetitive work could be achieved by awarding longer term contracts for the maintenance and renewal of certain track sections / assets • Fostering innovations (see "C") would have a potential to improve process efficiency EFRTC General meeting Barcelona, 30.11.2007

21. F – Cost of plant and heavy machinery • Key issues identified • Prices (also operating cost including spare parts) for equipment are high as the manufacturer's market is dominated by only two companies ("oligopoly") • Infrastructure managers encourage contractors to buy 'high-tech' equipment only • The specifications for the plant that is eventually used by the contractors are discussed between infrastructure mangers and manufacturers. The contractors so far have hardly the opportunity to feed back their experience to the manufacturers or specify machinery according to their needs EFRTC General meeting Barcelona, 30.11.2007

22. Preliminary list of major issues from interview with IM • All major maintenance activities that require heavy machinery is subcontracted • Heavy maintenance is ordered on an ad-hoc basis • Some maintenance (e.g. vegetation cleaning) is contracted on a long term basis (2-3 years). Contracts are output oriented • Feedback is given to the contractors about quality of work execution on a regular basis (regular meetings) • Contractors have the possibility to penalise the IM if work is not properly specified or the work-site is not accessible as described • There is a lack of competition on the contractor's side due to an ongoing process of vertical and horizontal concentration • It is perceived that the contractors are organised "syndicates" and "find agreements" • The market is very closed due to rules and regulations – initiative underway to lower market entry barrier • "Companies form outside are 20% cheaper than ours" • A vehicle pool shall be established, to optimise maintenance/renewal fleet utilisation EFRTC General meeting Barcelona, 30.11.2007

23. Major conclusion in optimistic scenario The improvement of interface between Infrastructure Managers and Contractors may offer in long term perspective great potential for improving the efficiency of track renewal and maintenance and significant contributions to overall LCC reduction up to targeted 30 % by INNOTRACK provided the identified constraints are removed and proposals for improvements implemented EFRTC General meeting Barcelona, 30.11.2007

24. Thank you for your attention!!! Questions/Comments? EFRTC General meeting Barcelona, 30.11.2007