Greater Anglia in financial negotiations

[trebor79]

I concur with FGEs view that not enough trains have been ordered (especially for the intercity services) and that some of the old stock will have to be retained as a result.
Or the service pattern may be reduced which they may be able to justify if passenger numbers continue to fall.

It's certainly going to be interesting to see what happens.

They still seem to be spending money on other areas. Attleborough station building has been completely renovated despite being completely disused. A TVM has appeared also, which is great as it means I no longer need trek to Diss or Thetford to collect tickets.

 

[F Great Eastern]

I concur with FGEs view that not enough trains have been ordered (especially for the intercity services) and that some of the old stock will have to be retained as a result. Or the service pattern may be reduced which they may be able to justify if passenger numbers continue to fall.

The problem is that most people could have told you that from a while back that they were going to end-up short, but what was quite revealing in the other GA Rolling Stock thread, was the admission that essentially the numbers were developed entirely in-house by the bidding team based on their own models and the operational side had no input over the number of vehicles that were required.

That is pretty shocking and is what happens when you have a senior management team who doesn't have a mix of skills and are mostly from a commercial and bid management background and add the fact that a vastly experienced engineering director left the company and was replaced by someone new to the industry in the fairly recently and you can see why such mistakes are made.

It'll be interesting to see whose heads are on the line if the proverbial does hit the fan in the next 18 months or so, whether it will be the people who didn't order enough units and got the numbers wrong, or the operations team who are going to be given the task of making the whole thing work despite the fact they may well have been sold a pup on this.

I think it's great that the region is getting a whole load of new trains because certainly it deserves it, but you have to ask if Abellio have really bitten off more than they can chew here and whilst their plan looks great from a marketing point of view about replacing every train, there are still serious questions about if their plan is deliverable.

 

[trebor79]

I think their planning replacing EVERY train is silly. There's absolutely nothing wrong with the 170s for example. There's some argument about having a uniform fleet, but I doubt there's really much of a saving there.

The fact that even I as a railway layman can see there aren't enough trains for the service pattern suggests that not only were the bid team divorced from operations, but that they were a bunch of jokers.
It's not as if that's the only problem that's emerged, there's a litany of errors:
Not enough trains
Trains too long for platforms
Bimode FLIRTs too heavy for Sprinter differential speeds. So they remove some fuel tanks. Now it appears they may be incapable of carrying enough fuel to fulfill a typical diagram, and STILL be too heavy.
The Brantham depot débâcle.
The Crown Point refurbishment impacting current fleet maintenance to the extent it's got noticeably shabby over the past year.

A more sensible plan would have been to keep the 170s, replace the 15x units with something new(er) and replace the MK3 stock with mk5s or cascaded mk4s and kept the class 90 locomotives.

 

[F Great Eastern]

To be honest I don't see a basis for keeping the diesels on, some of those lines are undergoing quite a lot of growth and newer, higher capacity units were going to be needed sooner or later as even the 2 car 170s are not really ideal anymore and probably not worth keeping a micro fleet of just 3 car ones.

The biggest problem is going to be the EMU Commuter services from my calculations and from what a few of us have been talking about on the GA Rolling Stock thread, there just doesn't seem to be enough units.

 

[HH]

Abellio currently have problems adding two numbers together, let alone working out how many units they need. Whoever the current bean counters are, they obviously don't have enough beans.

 

[47421]

F Great Eastern : "It's very much a case of watch this space in relation to this and may end up being a case study on why operational teams and bid managers and commercial management need to work hand in hand, rather than the GA approach which seems to be the commercial and bid managers plough their own furrow and make the promises and bold claims, without consulting those on the operational side, whilst the operational side are told to make whatever they have work regardless of the practicalities of it.

GA will have to almost certainly either keep some of the older stock on for several years longer than they first planned to deal with these issues whilst they procure additional rolling stock, or keep them on for the life of the franchise to address this issue and this you would think, would have serious implications on Abellio's sums and perhaps someone there has realised this."​

Yep. We dont know the premium payment schedule as that is commercially confidential, but rumour was that other bidders bid £600m less over life of the franchise. The jury is still out, but the evidence is mounting of a franchise with big problems. There are various obligations in the Franchise Agreement that read as if the bid team were over-enthusiastic, including Brantham, fitting of 96 platforms with beacons to allow 12 car 317s by 31 Oct 2018 (presumably never going to happen), extending various platforms to accommodate 10 car 720s by 1 Sept 2018 (no one knows if will ever happen = 317s to run to Hertford East for the duration?), entire fleet with wifi by 31 Dec 2018 (see clause below, seems unlikely).

4.1 "by no later than 31 December 2018 and throughout the remainder of the Franchise Period, provide the Mobile Communication Services in accordance with Schedule 13.1 (Rail Industry Initiatives) in both first class and Standard Class Accommodation on all of the Train Fleet used for the provision of Passenger Services"

And by way of reminder TSR2 is due May 2019 and TSR3 May 2020. TSR2 requires only relatively small enhancements, see below, have to see if they will be delivered. TSR3 is full recast, with many more services. No drafts have ever been published, have to see if deliverable in practice. Assuming new fleet delivers better acceleration and breaking may be possible to squeeze them in, but reality is that dwell times need to increase as at most secondary stations are 30secs only which is undeliverable and needs to be increased to 1min, and also new IC / Airport units are 1 door only per carriage, 10 per train, where a 8 car unit currently has 16, 12 car 24. Also now that Crossrail is late I think that means platform extensions at LivSt originally planned to be done Summer 19 will be delayed, not sure how that affects capacity and ability to deliver the May 2020 timetable.

All this is in addition to the introduction of all the new trains with all the commissioning and staff training that goes with that. It is a tall order.

TSR2 enhancements are:
- Hertford East 2TPH to 3TPH off peak only
- Southend Vic 3TPh to 4TPH off peak only
- Norwich Cambridge hourly extended to Stansted Airport all day
- LivSt Ipswich hourly semifast extended to Norwich all day
- introduction of STAR

 

[Kite159]

(no one knows if will ever happen = 317s to run to Hertford East for the duration?), entire fleet with wifi by 31 Dec 2018 (see clause below, seems unlikely).

Would those refurbished 321s be able to work to Hertford East (assuming no issues with driver training)?

 

[Carlisle]

Trains too long for platforms
Bimode FLIRTs too heavy for Sprinter differential speeds. So they remove some fuel tanks. Now it appears they may be incapable of carrying enough fuel to fulfill a typical diagram, and STILL be too heavy.

Teething problems with brand new trains from what I’ve read and experienced appear to be almost as old as the railway itself, so I doubt this particular bid team whether history proves them good or awful will change anything much in that respect.

 

[dk1]

It's only a little hiccup. Will all blow over soon enough. The doom mongers are out in force on social media I see

 

[eastdyke]

If another franchise fails, that looks rather bad for the DfT, and in particular the Secretary of State who approved the contract to be let under those terms. I wonder who is going to take the decision on the deal proposed?

The current incumbent would, in normal times, have had reasonable expectation of being 'shuffled out' by now. The average time in the post since 2002 being less than 2 years.
But of course these are not normal times.

 

[Esker-pades]

There's an accident waiting to happen in this franchise with the recent revelation that the operations team had no input in relation to the total fleet replacement and the number of trains ordered which was a fully commercial decision made by bid managers and the senior management team that is also made up of bid managers and little in the way of operational experience.

Many of us strongly believe that they have not ordered enough units in order to provide adequate capacity on the services from 2020 onwards as well as the fact there have been things which have come up late in the day versus the train lengths and the size of some of the platforms not being ideal, that appear to have been overlooked when the order was placed.

It's very much a case of watch this space in relation to this and may end up being a case study on why operational teams and bid managers and commercial management need to work hand in hand, rather than the GA approach which seems to be the commercial and bid managers plough their own furrow and make the promises and bold claims, without consulting those on the operational side, whilst the operational side are told to make whatever they have work regardless of the practicalities of it.

GA will have to almost certainly either keep some of the older stock on for several years longer than they first planned to deal with these issues whilst they procure additional rolling stock, or keep them on for the life of the franchise to address this issue and this you would think, would have serious implications on Abellio's sums and perhaps someone there has realised this.

The jury in my opinion has very much out on the deliverability of the Abellio bid from day one almost and it looks like Abellio may well be trying to look into ways to try and bring in extra revenue or reduce outgoings because of they may well have got their sums wrong.

It may not be a bad thing that not enough new stock has been ordered. The 379s, 360s and even 170s simply don't need to be replaced. If one keeps those and replaces the rest of the rolling stock with the new order, then GA will have plenty of rolling stock.

 

[Edders23]

I suspect after some hard negotiation the DFT may be left either taking the franchise back or renegotiating the terms in favour of the franchisee I suspect this will be back in the hands of the taxpayer as it has always been a tricky franchise to succeed at

 

[HH]

I suspect after some hard negotiation the DFT may be left either taking the franchise back or renegotiating the terms in favour of the franchisee I suspect this will be back in the hands of the taxpayer as it has always been a tricky franchise to succeed at

FGE didn't find it tricky. But we had a proper Operations MD in those days.

 

[Journeyman]

FGE didn't find it tricky. But we had a proper Operations MD in those days.

It was also a completely different animal - no InterCity or rural services, for a start.

 

[F Great Eastern]

FGE didn't find it tricky. But we had a proper Operations MD in those days.

Generally a good team, with a good mix of operational, commercial and engineering staff as well as being under the stewardship of good managing directors.

Their marketing wasn't a patch on that of Anglia Railways however.

 

[LAX54]

Would we say that the original 'Anglia Railways' has been the best TOC that we have seen here ?

 

[F Great Eastern]

It may not be a bad thing that not enough new stock has been ordered. The 379s, 360s and even 170s simply don't need to be replaced. If one keeps those and replaces the rest of the rolling stock with the new order, then GA will have plenty of rolling stock.

The problem with the 170s is that the two cars in particular are too small for the needs of some of the services that they run on. The 379s are also said to be highly expensive to lease so that is why they are being replaced.

The 360s are the ones I'd most like to see stay, but the problem that Abellio will have is that their franchise bid is already in serious problems in relation to it's viability, adding extra leasing consts by retaining additional units is going to not help such situation.

It seems that the bid managers and commercial staff have got carried away with promising the world to win the bid because they felt in theory everything would be fine, when really they should have used the knowledge of experienced operational managers and their own operations team rather than ignoring them and ploughing their own furrow.

You need experienced commercial/financial minds and experienced operational/engineering minds for a project like this. The problem with GA is they've got a lot of the former and the little of the later that they do have, they didn't really get involved in the process which is a recipe for disaster.

 

[Esker-pades]

The problem with the 170s is that the two cars in particular are too small for the needs of some of the services that they run on. The 379s are also said to be highly expensive to lease so that is why they are being replaced.

The 360s are the ones I'd most like to see stay, but the problem that Abellio will have is that their franchise bid is already in serious problems in relation to it's viability, adding extra leasing consts by retaining additional units is going to not help such situation.

It seems that the bid managers and commercial staff have got carried away with promising the world to win the bid because they felt in theory everything would be fine, when really they should have used the knowledge of experienced operational managers and their own operations team rather than ignoring them and ploughing their own furrow.

You need experienced commercial/financial minds and experienced operational/engineering minds for a project like this. The problem with GA is they've got a lot of the former and the little of the later that they do have, they didn't really get involve in the process by the sounds of it.

With the new diesel units coming, surely doubling up 170s would be an option?

 

[F Great Eastern]

Would we say that the original 'Anglia Railways' has been the best TOC that we have seen here ?

I would rate FGE higher as a more innovative TOC than that of Anglia, however Anglia probably had by far the best marketing team around at the time.

 

[OrangeJuice]

With the new diesel units coming, surely doubling up 170s would be an option?

Unfortunately the class 170's are going to Wales so will not be able to stay in Anglia

 

[Esker-pades]

Unfortunately the class 170's are going to Wales so will not be able to stay in Anglia

I thought they would be going somewhere. But, my main point was about the 360s and 379s (170s were an afterthought).

Sorry, this has gone off-topic. Back on the financial aspect.

 

[bramling]

It's only a little hiccup. Will all blow over soon enough. The doom mongers are out in force on social media I see

If they do wind up short of stock, from a practical point of view it's not like there isn't a ready supply of existing perfectly-serviceable trains to top things up, especially with the electrics. Whether this is politically and financially viable is of course another matter!

 

[dk1]

Would we say that the original 'Anglia Railways' has been the best TOC that we have seen here ?

I most definatley would Swills but then I am extremely biased on that one

 

[BlyRF]

They will be fine really, Money issues shoud’ve been expected when GA were making a mammoth order of new stock to replace, but the financial returns they will receive should just about meet the merits of the franchise agreement.

But in the long term I doubt the parent company will even want to try and dip their toes into the British railway ever again, especially with a higher percentage of no-deal brexit.

 

[306024]

North of Ipswich perhaps

The customer care side was very good, a legacy that still exists today, but operationally getting a train from Norwich to Colchester on time in the morning peak was more of a challenge.

Back at the finances the next Finance Director has an interesting job. This link between London employment and revenue is a can of worms.

 

[alistairlees]

The fact that even I as a railway layman can see there aren't enough trains for the service pattern suggests that not only were the bid team divorced from operations, but that they were a bunch of jokers.

No it doesn't. There's immense pressure to get in winning bids, leading to this sort of (over-optimistic) outcome. I imagine you have never been on a bid team.
What it does suggest (again) is that the scoring model for franchise bids is not right, as it leads to the wrong outcomes. And this is made worse by the commercial arrangements. Instability rather than stability, and a yo-yo of investment / no investment result. Neither are good for passengers, or the country as whole.

 

[F Great Eastern]

No it doesn't. There's immense pressure to get in winning bids, leading to this sort of (over-optimistic) outcome. I imagine you have never been on a bid team.

Of course, and I and others understand that, but this is a classic example of why the bean counters should not be able to do everything in isolation without any proper experienced operational staff at the table to give their views on what is operationally possible and what isn't.

In the private sector I've always been an operational person, I've been sold pups when the bean counters and commercial staff have over promised and also saw what happens in my younger years when the operations team have no proper commercial and financial input. It made me realise that you need a balance of both to succeed since if you bring a whole load of people to the table with the same skills, then you'll be lacking somewhere.

It's a failure of management of the franchise to have the current situation, but also you have to say it's a failure of Abellio to ensure that the top level management who they recruited, do not have a wide portfolio of skills that are needed to run a modern railway. You can't run everything with accountants, but you also cannot run everything with 'proper railwaymen' either, despite what some here may have you believe about the later.

 

[Helvellyn]

If Abellio had to keep any units I'd have thought Renatus 321s might be the best option - maybe on a power by the hour deal for peak services? 360s or 379s might just end up too expensive.

 

[43096]

Of course, and I and others understand that, but this is a classic example of why the bean counters should not be able to do everything in isolation without any proper experienced operational staff at the table to give their views on what is operationally possible and what isn't.

In the private sector I've always been an operational person, I've been sold pups when the bean counters and commercial staff have over promised and also saw what happens in my younger years when the operations team have no proper commercial and financial input. It made me realise that you need a balance of both to succeed since if you bring a whole load of people to the table with the same skills, then you'll be lacking somewhere.

It's a failure of management of the franchise to have the current situation, but also you have to say it's a failure of Abellio to ensure that the top level management who they recruited, do not have a wide portfolio of skills that are needed to run a modern railway. You can't run everything with accountants, but you also cannot run everything with 'proper railwaymen' either, despite what some here may have you believe about the later.

Anyone used the term “bean counter” is just displaying a lack of real world knowledge of modern businesses. In my experience the “bean counters” are wanting a less risky bid (read: more profitable).

 

[HH]

Apart from the optimism bias, which most bids are prone to in some way, there are also errors. There are often last minute changes, and bids are complex jigsaws, so quite large errors can be made. Many of you (who understand these things) will recall the DfT error on ICWC, where they confused Real and Nominal numbers. Bidders make similar errors, but they don't get publicised. Many errors are caught by DfT and its advisors, but some are bound to slip through. Sometimes bidders won't admit their errors, perhaps because they fear that they won't win if they do (or maybe it's an ego thing).

But the DfT's financial test is only to check whether their is enough parent company support after removing over optimistic projections - they don't check whether they make a profit or not. Obviously the adjustment is DfT's (and adviser's) best estimate of likely outcomes - it's not perfect. However, I would note that bidders have to supply timetables, with unit diagrams - these will show how many units are needed each day. In their plan it will show how many units they are paying for and the assumed number that will be available for use. They would have to justify this, e.g. show a letter of support from the manufacturer that they would guarantee the requisite number of units would be available each day. However, I have seen errors by bidders, which have not been picked up by evaluators and which could have led to an underestimate of RS numbers.