29 Jul 2012

IEP value for money?

I have done a bit of research of my own on whether the IEP is not such bad value for money as it appears at first sight. The initial figure appears to £7.5 million per vehicle, but of course it is substantially less, since it is a supply-and-maintain contract and also includes a lot of infrastructure work to accommodate the 26 metre long vehicles. Presumably, also, it includes a major half-life overhaul and two other refurbishments in between, over the 27.5 year contract period.

Nevertheless, the figure is probably on the high side, though not outrageous. On the other hand, if a decision had been taken to hold to the present 23 metre standard vehicle length or even slightly shorter, much of the infrastructure work would not have been needed. If a further decision had been taken to retain locomotive haulage, existing depots would, with some upgrading, have largely sufficed.

According to a report by Arup as part of the McNulty Value for Money Review, published in 2011, "capital costs account for 31% of the whole life costs for an illustrative fleet on an undiscounted basis. However, translating that figure into lease costs whereby the capital costs are financed over (typically) the life of the asset, can take that figure up to around 60% - depending on how the costs are discounted." That the first costs are critical is important therefore, especially taking into account the cost of finance. But getting at comparative figures is not an easy task in view of all the things that have been included in the package deal.

The alternative would have been a locomotive hauled fleet of about 600 vehicles and 100 locomotives, which would have amounted to about £900 million, ie £1.5 million a piece. This is slightly lower than the cost of an EMU fleet, because these have traction equipment in most vehicles and control equipment in at least half of them. ETMS boxes, for instance, are expensive items which have to go into each unit. In reality, however, 600 hauled vehicles would not have been needed now because the fleet of mark 3 vehicles could have been retained for the residue of their 60-year life, to between 2035 and 2045. And it looks as if the IC225 stock, which entered service in 1992, will also pay an early visit to the scrapyard.

So the Foster review of the IEP project was right after all. The disgraceful thing is that it was shelved and the project pushed through regardless. One of the difficulties is that MPs and ministers seem to have little understanding of the issues involved. But put plainly, it looks as if the same amount of money could have paid for a larger fleet and enabled existing stock to continue in use to the end of its service life. One has to ask what is the use of appointing expensive consultancies to produce reports and then ignoring what they state with perfect clarity?


  1. I think your alternative scheme costing is slightly optimistic. Taking the Austrian railjet as a close approximation to what you are suggesting - the cost of a carriage (in 2008) was €1.7m, (also 26m coaches) e-locos ~€3m (based on ES64U2 cost 2001), and a diesel loco cost of €5million (my guess), 50 of each. I get over €1.4 billion, or more than £1.1billion (?) - that's nearly £1.9 per unit averaged.

    However - the DfT themselves give figures of £2.4/2.8 million capital cost per carriage (electric/bimode) See http://www.rail.co/2012/07/26/ieps-better-value-for-money-than-pendolinos-says-dft/ or http://www.railjournal.com/index.php/rolling-stock/britains-intercity-express-programme-reaches-financial-close.html

    Which is still £500,000 more per carriage than the loco hauled alternative.!

  2. I was thinking of the Vossloh Eurolight diesel, and the Bombardier Traxx. The former is hideous but that's what happens when designers lose the plot with the front end styling. They should employ a Scandinavian firm to sort out the wretched appearance which would probably make it easier to build as well.

    As far as I am aware a hauled vehicle should still not cost more than a million pounds. But since the mark 3 stock is known to be good until well into the 2030s and the mark 4 dates from the early 1990s, how many new vehicles are actually needed until 2030?