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Metronet set to crash

Robert Peston | 08:22 UK time, Monday, 16 July 2007

Unless there’s a last minute intervention by the Treasury this morning, Metronet – the private-sector company responsible for most of the maintenance and upgrading of London’s underground network – will go into administration today.

It would be the first serious blow to Gordon Brown as Prime Minister. As Chancellor, he forced a reluctant Ken Livingstone to adopt a so-called Public Private Partnership for refurbishing and improving the Tube.

The collapse of Metronet has been triggered this morning by a decision of the PPP Arbiter – whose purpose is to ensure that this largest of Public Private Partnerships delivers value for money – to award only a fraction of the cash Metronet said it needed to keep going over the coming year.

Since Metronet has exhausted most of its borrowings and faces years of receiving less cash than it wanted for the work it is doing, its directors have almost no choice but to put the business into administration under insolvency procedures. The personal-liability risks for them of keeping the business going outside of administration protection will be giving them the heeby-jeebies, to put it mildly.

Metronet directors are meeting this morning.

To state the obvious, Metronet has been a disaster for its five shareholders, WS Atkins, Balfour Beatty, Thames Water, Bombardier and EDF – two of whom, Atkins and Balfour Beatty have disclosed that they value their investments in Metronet at zero.

The losses for Metronet’s lenders may run to hundreds of millions of pounds.

Comments   Post your comment

  • 1.
  • At 09:22 AM on 16 Jul 2007,
  • Dick wrote:

Oh dear. Another element of Brown's smart alec economic shenanigans undwinding very publically.

Carbon trading next hopefully.

  • 2.
  • At 09:57 AM on 16 Jul 2007,
  • Neil Small wrote:

This just proves that PFI schemes are nonsense. The private companies make the lowest bid possible, only to discover that they do not have any cashflow after winning the contract.

Since the Tube is essential to London's economy, the Treasury will bail Metronet out, at a cost to the taxpayer, and most likely in the long run a greater cost than if the PFI had not been implemented.

We see the same in schools, hospitals, and other areas which were once state-controlled.

PFI is now starting to bite GB on the backside, and at a masive cost to the taxpayer.

  • 3.
  • At 10:29 AM on 16 Jul 2007,
  • Mark wrote:

There are two things that stand out from this whole sorry affair, one of which is less relevant - the London Tube does not need improvements, but must be completely torn down and rebuilt from scratch! The amount of delays and closures it has everyday would simply not be tolerated in other countries. Rebuilding won't happen though, so let's move on!

I find it strange how big projects in this country seem to always run into financial problems - the Dome, Wembley, 2012 Olympics, the trains (not so long ago). Why did Metronet overspend so much? Did the government not see this coming? Is the whole concept of PPPs not working? How will visitors react when they come for the Olympics in 5 years time and find that they'll miss two hours of events everyday because of 'a signal failure'?

  • 4.
  • At 10:40 AM on 16 Jul 2007,
  • Gavin wrote:

Perhaps this shows that PPP does get value for money in some cases - albeit by shutting the dodgy deals down?! I'd assumed the arbiter would just bale them out but no, they've nailed them for their incompetence. That said, there are plenty other ridiculous deals (schools, hospitals, train carriages) that will no doubt escape this so called value for money objective.

  • 5.
  • At 10:54 AM on 16 Jul 2007,
  • Oliver Potter wrote:

Metronet was always doomed given that Ken and London Underground didn’t want the PPP. It is clear that LU and Ken have sought and used every opportunity to undermine Metronet and this is a damning indictment of the governments decision to force PPP upon a party that was extremely unwilling.

  • 6.
  • At 11:12 AM on 16 Jul 2007,
  • Stephen wrote:

Gordon Brown pushed this PPP onto Londoners so that he could redistribute London's taxes to Labour's heartlands in northern England and Scotland. This looks like one huge chicken coming home to roost for our newly crowned PM and his aide in number 11 (not to mention millions of Londoners who rely on the tube).

  • 7.
  • At 11:49 AM on 16 Jul 2007,
  • Eric wrote:

"To state the obvious, Metronet has been a disaster for its five shareholders".

True: but what about us Londoners? We're the ones who are really suffering from this disastrous Labour policy. If there was any justice, it would be Labour party itself that had to bail the tube out, not the taxpayers.

  • 8.
  • At 11:56 AM on 16 Jul 2007,
  • John, Devon wrote:

It appears to me that the whole PFI / PPP debacle arose because of the Government's desperation to keep this type of investment off the balance sheet, so it would not count as Government borrowing. So we pay over the odds and give private companies contracts to do things which should be done by the public sector. For once one of these has gone pear shaped. I for one have no sympathy for Metronet, who seem to have underpriced the job and expected to get bailed out if things got tough.

As I understand it the Treasury Rules which govern the definition of capital spending etc. date back to the 1930s. This seems crazy and outdated to me. Can some hotshot economist explain why can't we revise the rules so investment in major infrastucture projects doesn't get classified as government borrowing to finance current expenditure, in which case there would be no incentive to force PFI on the public sector? Or am I missing something?

  • 9.
  • At 12:09 PM on 16 Jul 2007,
  • b smith wrote:

You get what you pay for.
The difficult conditions under which tube works are carried out both physically and the clients' red tape should have been reflected by a client contingency sum. When a client changes his mind a cost is attached.

  • 10.
  • At 12:38 PM on 16 Jul 2007,
  • Peter Forbes wrote:

Why is it that while the smaller suppliers to these groups are always pushed on prices, the groups themselves seem to throw money away?
We could probably do quite well on what they waste per year.

The lack of proper costing controls has also been evident in quite a few contracts that we have seen over the past 4-5 years, thank heavens we didn't get involved!

Peter

  • 11.
  • At 12:50 PM on 16 Jul 2007,
  • Concerned Citizen wrote:

I wonder if parent company guarantees (from owners of Metronet were sought when contract was placed with Metronet. If the answer is yes, will the guarantees be legally enforced?

  • 12.
  • At 01:22 PM on 16 Jul 2007,
  • Mart wrote:

Oliver Potter wrote:

"Metronet was always doomed given that Ken and London Underground didn’t want the PPP. It is clear that LU and Ken have sought and used every opportunity to undermine Metronet and this is a damning indictment of the governments decision to force PPP upon a party that was extremely unwilling."

A nice way of shifting the blame for the failure onto Ken Livingstone.

Unfortunately for Ken-hating adherents of this theory, the other PPP company, Tube Lines, seems to be doing just fine. Perhaps you can alter your conspiracy to involve Ken Livingstone in some Tube Lines share dealing, and perhaps a secret job on their board?

  • 13.
  • At 01:37 PM on 16 Jul 2007,
  • Adam wrote:

I agree absolutely with comments 2, 7, and 8. The whole thing was a crazy idea that should never have been allowed to happen if anyone in charge had had the slightest dose of common sense.

And apart from the financial disaster, the whole episode of privatising the Tube maintenance has been a disaster for commuters. My partner has to commute by Tube every day, and she's noticed a huge deterioration in reliability since the system was privatised.

Let's hope this acts as a wake-up call to those in charge to start doing things properly rather than dreaming up dodgy accounting wheezes to try to balance the books.

  • 14.
  • At 02:04 PM on 16 Jul 2007,
  • Andy wrote:

The fundamental problem with PFI/PPP is that the private sector can go bust but the public sector can't. In other words, if the private sector is found wanting then the public sector has to pick up the pieces and carry on.

John Devon - the rules governing 'off-balance sheet' finance are largely based on UK Generally Accepted Accounting Practice (FRS 5) with a bit of guidance from HM Treasury on top which was written about 7 or 8 years ago. The rules will be much tighter when the UK moves to International Financial Reporting Standards. I think its the beginning of the end for PFI once more deals have to be treated as 'on-balance sheet' and once the government realises you can't pass reputational risk and ultimate responsibility for service continuity onto the private sector.

  • 15.
  • At 02:05 PM on 16 Jul 2007,
  • Mark - London wrote:

The comments here all miss the key point that the other PPP operator - Tubelines - is delivering broadly to time and efficiently. It receives bonuses from LUL and its station upgrade plans are delivering to time

It is not an issue as to whether the PPP does not work - as with Tubelines it clearly does - the bigger question is to why Metronet as a private sector company is an inefficient operator? And if it is - it should pick up the price - or go to the wall.

  • 16.
  • At 02:17 PM on 16 Jul 2007,
  • P.Taylor wrote:

Whilst the PPP may be flawed, Tube Lines, the other provider are in much better health. The issues probably lie with Metronet's abilities rather than PPP as a policy.

  • 17.
  • At 02:17 PM on 16 Jul 2007,
  • Nat wrote:

With all respect, I dont understand why people complaining about PPP. The idea of involving private companies in large projects like Tube network is a good and logical one. (Remember, there is another spectrum of people who complains about fat govt!)

The failure of Metronet seems to be wrong project of costs in long run. I dont know what is the scale of mis-calculation, but in huge projects with so many variables right from weather to terrorist problems it is very much understandable.(remember, every time there is a risk alert, the insurance of everything involved goes up!)

And about complains about wasting tax payer's money, it would have cost the same amount, even if the govt. is running the project entirely (may be more!).

So, I think the govt. should bail out Metronet, and recalculate the cost properly.

A company running London Underground going for administration, is not going to do any good for any party, least of of all the Londoners!

And I dont know, when the deal between Metronet and Govt. was struck. But the cost of everything (particularly materials, electronics and skilled professional services) has gone up well beyond the inflation. (Anybody can check the cost of copper, iron, and electronic components, professional service cost between now and 2 years back).

So, all in all, bail out Metronet, and lets get down to business!

  • 18.
  • At 02:19 PM on 16 Jul 2007,
  • Jacques Cartier wrote:

Big business took the risk hoping to make big money. But the risk materialised and they lost their money instead. But aren’t PPPs designed so that it is the private P that looses out, not the public P?

If that is the case, then this shows that PPP is working as it should. On other jobs, the risks might not materialise, and those particular entrepreneurs would profit handsomely. This is business in action – if they don’t like the risks, they should ask for more money to make it worthwhile.

  • 19.
  • At 02:27 PM on 16 Jul 2007,
  • A N Other wrote:

I work for EDF on the underground as part of the station refurbishment program and yes Metronet have had some inefficiencies but London Underground as a client are a nightmare. We are forever changing our install because LUL are so fussy. We install to an approved drawing and to approved industry methods and still it is not good enough for LU. Unless you have worked here you can not imagine to think what it is like.

  • 20.
  • At 02:53 PM on 16 Jul 2007,
  • Brian Herren wrote:

What the genius at the Treasury dreamt this one up and foisted it on us? Oh yes, Gordon Brown.

What many people do not realise is that 95% of the Metronet £2bn bank debt can be "put" onto London Underground.

If LU can sell on the "benefit" of the contacts fine and recoup some money fine, but cannot see many organisations will to form a queue to step into a Metronet II fiasco unless it is at a very attractive price. So ultimately the LU users will pay

  • 21.
  • At 02:57 PM on 16 Jul 2007,
  • Chris Dorren wrote:

The writing for Metronet was on the wall a few years ago. They are constantly blaming Transport for London for not paying them. The fact is they wasted much of their money and effort on many fruitless reorganisations, and countless directors and managing directors in a short time scale, each with their own ideas on how the company was organised. This meant more time and money was spent on reorganising and office moves than delivering what they were being paid for. Whereas Tube Lines the emminantly more successful partner have had no significant changes at higher management, and thus been allowed to continue working for the Underground rather than against themselves.

  • 22.
  • At 03:02 PM on 16 Jul 2007,
  • underground man wrote:

A N Other is bang on correct.

Having worked on the Metronet contract for 4 years the specification filtered down from LU has changed massively and constantly, requiring additional re-work on a huge scale. Those of us on the ground have not only had to suffer from massively increased workloads but from constant penny-pinching from within the consortium. As costs have escalated the number of managers and bean-counters on excessive salaries has increased hugely.

Spare a thought for those of us who have put years of PRODUCTIVE effort into this project and who do not even know if we have jobs to come back to tomorrow!

  • 23.
  • At 03:27 PM on 16 Jul 2007,
  • Paul wrote:

Having worked within the organisation for two years I totally and wholehearedly agree with post 17. I could not have put it better.

Londoners forget that the upgrade to the network has never happened in it's entire history, and the PPP facilitated it. Without the PPP arrangement would we have seen such a huge investment in upgrades within the next 20 years? I doubt it, and the tube would have continued disintegrating.

PPP/PFI might not be the best way to contract in some people's minds, but at least it does enable facilities upgrades now.

  • 24.
  • At 03:28 PM on 16 Jul 2007,
  • Stefan Paetow wrote:

Why is it that Tube Lines can and Metronet cannot?

Granted, they have some of the most heavily travelled lines, but that does not excuse the fact that they keep screwing up. Shutting down the Central Line for maintenance for example should mean improved service, not "oops, tarpaulin fell out of a storage recess to cause a derailment".

THOSE are the kind of incidents that stick in people's minds, not the efficiency. And Metronet would be well-advised to do their job properly for the price they said it would cost, instead of blaming everyone but themselves. If you sell yourself too low, don't complain when you're suddenly running a loss.

  • 25.
  • At 03:33 PM on 16 Jul 2007,
  • Dave Hindle wrote:

A lot is being said about how well Tubelines is performing as opposed to Metronet but whilst this may be so they have not been without their own problems. Compared to the task facing Metronet, Tubeline's responsibilities are relatively small - only 3 lines, one of which is half brand new (Jubilee Line) and the other two are in reasonably (for London) good condition. Metronet on the other hand look after 4 deep tube lines, one of which, the Waterloo & City, they recently successfully completely refurbished to budget and almost to time (they were only a week late on completion). In addition, they are responsible for the entire sub-surface network comprising a further 5 lines, all of which were handed to them in a desperate state following years of neglect. Metronet have accepted publicly that they have not been as efficient in a number of areas as they should and have been putting measures in place to improve performance, including adopting the Tubelines’ approach to contracting-out work. However, if TfL think that they are able to make a better fist of it when they would actually be no more than the equivalent of the old LUL set-up that got us into this mess in the first place, they must be living on a different planet. The bottom line is that whether we like it or not the PPP contracts have been signed and sealed by this Labour Government and the Mayor, having opposed the scheme (quite rightly in my view) as one of his main platforms as an Independent, has since rejoined the Labour Party and, by inference, has thereby personally endorsed the PPP contracts. It is, therefore, the responsibility of his Office to make them work and not allow a principal partner to go to the wall so early in his contract.

  • 26.
  • At 03:36 PM on 16 Jul 2007,
  • SM wrote:

I think Tubelines should take over, simple as that.

  • 27.
  • At 03:53 PM on 16 Jul 2007,
  • Fred wrote:

Why is it that the media always portrays Tubelines as the good guys? They are just as bad, have over spent on the station modernisation and the signalling installation is over 2 years late (they have kept that quiet). They just employ good PR, which sadly Metronet don't have. The guy who works for EDF is right, LU are extremely fussy in what they specify and change the goal posts frequently. If Metronet are so bad, who is going to pick up the pieces of this mess? - the work still needs to be done to keep the tube running.

I am not trying to be impulsive or trying to push panic button but seems PM's middle route may drag us towards protectionism and eventually communism -- may be I am too harsh here but I think for long term we need more unpopular decisions .. otherwise we could loose whole economy.

  • 29.
  • At 05:34 PM on 16 Jul 2007,
  • A N Other wrote:

I know guys that have left Tubelines to come to Metronet because it was so bad. Fred is spot on with his comment on PR. Metronet PR should have been sacked along time ago. They never publish all the good that Metronet has done. The station I work on was in terriable state when we started and other than new we have put in it still is. Most of the stations want knocking down and rebuilding. I am in the process of producing a list of extra works. The works we have done differ hugely to the orignal scope. New lighting, rewiring 2 toilets, 2 waiting room all with new equipment, new sockets here there and everywhere the list goes on. I think we are up to at least £500,000 of extra works. Thats just one little station so you can see where the money is going.

  • 30.
  • At 05:36 PM on 16 Jul 2007,
  • Adam wrote:

Stefan Paetow (#24): "Why is it that Tube Lines can and Metronet cannot?"

When you say Tube Lines can, I assume you are referring only to their ability to make a profit, not to maintain the Tube network to a reasonable standard. I assume they manage to remain profitable by cutting costs on those pesky extras like actually maintaining the lines.

Just try travelling on the Northern Line for a month if you don't believe me.

  • 31.
  • At 05:44 PM on 16 Jul 2007,
  • John Constable wrote:

It seems to me that what is urgently required is a profound analysis and debate into what services and projects should be properly be within the private or public domains, or some hybrid thereof, with the prime requisite being value-for-taxpayer-pound, NOT politics.

It seems to me that that is where it has all gone wrong, that is, political imperatives {to disguise spending/offload risk} have over-ridden everything else.

I recognise that 'the market' can be a remarkably efficient mechanism, but not always.

The market is not always appropriate.

Hence, some services may be bettered delivered by the State.

Or the 'State' may provide a very basic level of service, say in education or health, and the private sector may provide enhanced facilities.

We must always be on our guard to ensure that, where politicians spend our money, that they are truly accountable, not notionally accountable.

If that word 'accountability' really meant something then I believe that literally overnight, politicians would be much more careful about how they spent our money.

If such a system of fiscal responsibility were in place, then politicians would hasten to minimise the amount of our money that they'd be prepared to spend.

The probable result?

Instant taxes cuts/real freedom to choose/democracy all round.

  • 32.
  • At 09:11 PM on 16 Jul 2007,
  • Joe wrote:

I think Metronet Rail have done a reasonable job and deserve more credit. I hope for the skake of londoners Metronet carry on

  • 33.
  • At 10:05 PM on 16 Jul 2007,
  • Alan Griffiths wrote:

I think the 3 Tube PPPs are long-term investment contracts, with the contractor taking responsibility for maintaining what they have built. Today's Technology has become so robust that this is the way to get a high-quality job in the first place, with minimum maintaince costs and least time out of use.

That will be, more and more often, the best way for a public sector client to buy big, complicated and robust private sector technology. If you want expert advice on the length of the contract, this depends on the robustness of the Technology not interest rates. Ask an Engineer, not an Economist.

The public sector client has no need for other private sector contractors called Banks to supply credit. They,like Architects, can work for the contractors if there is anything for them to do. The client doesn't need to know.

Many correspondents are very wrong to describe these contracts as different forms of maintenaince or of financing. You are still living in an era that is already over.

The proof of this is the number of Train Operating Companies copying this same kind of contract in buying trains, with the manufacturer building new depots to carry out their responsibility for maintenance. When I read the explaination for this in two brochures published by Virgin Trains, I
1) nearly fell over
2) was tempted to send them a bill for picking my brains.

People alive today will have difficulty in explaining the word "maintenance" to their grandchildren, who in turn will be astonished that private contractors used to be allowed to walk off public projects after a year or two and still get paid!

"If you remembered olde lines of ill-renown, you'd praise the name of Gordon Brown."

  • 34.
  • At 11:01 PM on 16 Jul 2007,
  • Simon wrote:

I can't understand why in the UK it's considered so bad to say 'I was wrong'! The most constructive way forward is to find another solution. A good one would be to take the renewal work back in-house - but efficiently.

  • 35.
  • At 12:31 AM on 17 Jul 2007,
  • Kenny Gifford wrote:

It's nothing to do with poor management or unforeseen expenses, it's down to high-up people sucking all the money out of what is otherwise a worthwhile and very feasible project. It's not limited to PFI projects, look at the Olympics, look at the Scottish Parliament building. When you're talking in the multiples of millions of pounds, what's a few hundred thousand here and there?? Eventually it builds up and you're 20 times over budget.

  • 36.
  • At 04:34 AM on 17 Jul 2007,
  • kam wrote:

may be metronet should not buy hand made tiles that cost £5 each? that will most likely save them a wack.

  • 37.
  • At 08:52 AM on 17 Jul 2007,
  • K. Roo wrote:

I am working for a contractor (through an agency) on one of the Metronet projects. The last month our "company" lost over 70 competent workers. 4 Other contractors are also laying people off on a nightly basis.

Metronet is getting rid of the small guys now in order to safe money.

Right now most of us that are left dont know if we are working tonight or not.


  • 38.
  • At 08:54 AM on 17 Jul 2007,
  • Insider wrote:

Some very interesting comments made above. You can tell those who have experience of working on the Underground.

TLL approached the PPP with a clear set of rules "We don't do any extra work unless we have received a written instruction from LU". What this has meant is that TLL have kept a tight lid on cost escalation but there remains a huge backlog of "issues" with LU (some of which may go to arbitration) together with an asset that still requires a lot of work (albeit hidden from public view).

Metronet on the other hand took on the work with the ethos that if the asset required work to get it into a fit and proper state then that was the correct thing to do regardless of whether the work was explicitly defined in its contract with LU. Unfortunately Metronet relied on a parallel process whereby the commercial impact of doing the work would be addressed as the works were being implemented. As a pro-active approach this way of working has sadly failed.

Both Metronet and TLL suffer from LU seeking to maximise their (LU's) interpretation of Standards and anyone who has worked on the Underground can quote dozens of examples where LU can provide two completely different interpretations of the same Standard depending on whether the PPP Supplier or LU has to foot the bill.

Taking the works in-house or passing the franchise onto TLL will do nothing to solve the inherent difficulty of rebuilding an antiquated railway during 3hr nightime closures or weekend possessions.

  • 39.
  • At 09:19 AM on 17 Jul 2007,
  • neil lark wrote:

Another example of the scandelous rip off that is PPP or PFI. Hospital contracts that tie trusts into 40 year mortgates at rates 5 times as high as givt borrowing. Road contracts being won and sold on 3 times before a spade ever enters the ground and the perennial problem of contracts being won on unsustainable bids then back to the table for renegotiation. Look at the olympics, 2.5bn to 9bn What a joke.

PFI Profit from Ignorance. Shame on you Mr Brown!

  • 40.
  • At 09:21 AM on 17 Jul 2007,
  • G. Raffe wrote:

I fully agree with comment 27. Metronet PR is poor in relation to Tube Lines. What the travelling public don't know is that the Tube Lines signalling upgrade for the Jubilee, Northern and Piccadilly Lines is seriously behind schedule. The Jubilee line is targeted for 2009 but a realistic date will be around 2011, maybe even 2012. It is only a matter of time until Tube Lines receive the bad publicity. I am totally against the PPP because from what I see, it has opened the floodgates to blood sucking companies who have eyed the opportunity to milk as much as possible out of the London Underground whilst constantly doing minimal work and conveniently blaming others for their lack of progress. Tube Lines, Metronet and all the other sub-contracting companies are all playing the game, getting filthy rich and wasting tax payers money in the process. What I say isn't a revelation because Ken Livingston, TfL and the Government know all this.

  • 41.
  • At 09:24 AM on 17 Jul 2007,
  • LP wrote:

I think comment 22 showed why Metronet are having problems. Too much internal bickering and blameing each other.

  • 42.
  • At 09:27 AM on 17 Jul 2007,
  • stewart wrote:

I've worked on the London Underground as a sub-contractor for three different companies in 6 years, doing the night works essential reconditioning of the Underground. I have worked for a company under Metronet, one under Tubelines and one under LUL that changed to Tubelines where i started my "career" on the Underground and the best, most well organised was when LUL was running the show. I feel as a worker that i don't have any job securety any more and all of us that are trained, experienced and skilled workers at this job don't have any job securety any more under these PPP firms. By bringing in more sub-contractors to do the work that a hand full of sub-cons could do jobs are being lost to people that will work for less that are extreamely under trained, unexperienced and general lack of care about the work they are doing. This for me is, as for every one else that does the night work on the LU, is a very worriyng fact, I've heard of about 200 lay off's through different sub-contractors over the last 3 months. Lets hope the Governement realise that peoples livelyhoods are at stake as well as the traverlling public.

  • 43.
  • At 09:28 AM on 17 Jul 2007,
  • Charlie Clark wrote:

Stephen wrote:
"Gordon Brown pushed this PPP onto Londoners so that he could redistribute London's taxes to Labour's heartlands in northern England and Scotland."

What utter guff. Would this include the money that has continually not been given to Manchester to pay for the extension of the tram system?

  • 44.
  • At 10:35 AM on 17 Jul 2007,
  • David wrote:

Metronet was doomed as soon it it won both the SSL and the BCV bids. It was not geared up to manage two of the three contracts. The internal cost structures within each of the partners was such that even though it was sub contracting work out to another sections of one of it's parent companies, that work still had to have profit and overheads built into it. When I worked for Metronet I could not fathom how it was allowed to to function as it did. Metronet sub contracted work out to another company T4m who were also the same companies as the Metronet group, 4m then subcontracted work out to Atkins, Balfour, EDF etc. It was an internal monopoly of work and each partner was trying to get as much profit from it at all levels. It was crazy!

  • 45.
  • At 10:45 AM on 17 Jul 2007,
  • ACL wrote:

It seems that Tube Lines' dirty laundry is being aired here by industry insiders.
I wonder what the future headlines would read about Tube Lines after this mess with Metronet fully unwinds.

To the person suggesting taking the renewal work back in-house but efficiently - I would suggest that the same Metronet private companies like Balfour Beatty, EDF, etc would somehow still be involved with any in-house solution because they have the expertise and equipment.

  • 46.
  • At 10:50 AM on 17 Jul 2007,
  • John wrote:

One of the many problems with Metronet Rail is that their skills base is divided up between different Infracos. This leaves a skills gap in each one and lack of proper communication between the Infracos. I cant see management under TFL do any good unless they organise it to the ways things used to be before PPP.

  • 47.
  • At 11:26 AM on 17 Jul 2007,
  • Stefan Paetow wrote:

Adam (#30): I am referring to TubeLines keeping their costs under control.

While I agree with Insider (#38) that Metronet tried to be pro-active, being pro-active does NOT constitute good business sense in an environment that contains an overly fussy (and confusing) client such as London Underground.

Having worked in an environment such as the current situation with LU, Metronet and TubeLines but in a different industry, I fully support TubeLines' model, even if it does cause backlogs and project overruns, simply because the onus of knowing what they want is on the client (LU), not the contractor. Unless the requirements are in writing, there is NO GUARANTEE that the client will change their mind, then say that "that's not what we said we wanted". Written proof is all that you have to back up YOUR OWN WORK without overrunning costs. If LU don't know what they want, or claim they do, and TL or Metro do the work, only for LU to turn around to say "that's not what we wanted", then clearly someone is not clear on the requirements. You figure out who that is.

And as I pointed out before, it is the glitches (like the derailment due to a tarpaulin falling from its storage recess) that stick in people's minds, not the good work. It is clear that Metronet needs not just better PR, but also needs to set clearer remits.

  • 48.
  • At 12:27 PM on 17 Jul 2007,
  • marion mortlock wrote:

I am a commercial manager for a specialist sub contractor who is currently undertaking numerous works for Metronet. We are due to be receive numerous interim payments this week and have been verbally assured that these interim payments will be released accordingly...what happens if payments are not forthcoming?

  • 49.
  • At 12:37 PM on 17 Jul 2007,
  • Matt wrote:

I'm surprised this is becoming such a scandal.

I would have thought the companies who own Metronet would have been required to submit a Parent Company Guarantee up front.

As the arbiter has made his ruling they would then be legally bound to come up with the funds to cover the deficit.

The taxpayer would then be protected from the failure of the joint venture.

  • 50.
  • At 01:28 PM on 17 Jul 2007,
  • Donald Sims wrote:

I think Londoners agree the underground does need vital investment after decades of under investment under labour and tory governments. However, the nature of how it is done and paid for seems in this case to have proven a costly mistake. LU are a difficult client but Metronet must have known this at the time but Tube Lines have the same client and therefore face the same problems but have faired slightly better. This must be down day-to-day management, managing a more manageable chunk of the underground and not being tied into a fixed supply chain. I cannot understand how your supply chain can also be your shareholder and therefore where do you have leverage when problems arise?

  • 51.
  • At 01:42 PM on 17 Jul 2007,
  • Adeline wrote:

• kam wrote:
"may be metronet should not buy hand made tiles that cost £5 each? that will most likely save them a wack"

Who do you think would have asked for these tiles in the first place? LUL of course!

If you get a builder in to do up your kitchen to a particular specification and then keep changing the spec and asking for more things or different things to be done even before the job has started and then some more halfway through the job, your bill at the end is going to be higher than your original price. It's just common sense. Metronet's mistake was in not getting all the changes down in writing and so like a kitchen job gone wrong, the builder is asking for more money and the client is refusing to pay. And when something like that happens, the builder stops work and leaves you with a kitchen half finished.

Do we really want that to happen to the Underground - a system that is already so decrepit?

  • 52.
  • At 02:54 PM on 17 Jul 2007,
  • sin wrote:

From all the comments that have come out about the good work Tubelines have done, where does all this come from? hard line facts? PR by Ken or just to put down Metronet even more?

All the hype is now when Metronet are in the news! it just shows views are very much moved my propaganda no matter what era you lived in.

  • 53.
  • At 04:50 PM on 17 Jul 2007,
  • RB wrote:

Im sure that their are many small suppliers to Metronet that are feeling very nervious about this situation.
The governement should have kept it in public ownership and not let the big boys set up a company which they thought would enable tham to syphon of profits without risking their own companies.
As a small supplier, were going to lose ou in terms of revenue which will enivatibly result in loss of jobs.
That is the risk of douing business as they say, but i cant help feeling this situation could have been managed better.

  • 54.
  • At 08:59 PM on 17 Jul 2007,
  • Jim Boy wrote:

Metronet gets the blame 90% of the time, well what do you know they have most of the problem stations and the poorest rolling stock and oldest rail and signal equipment.
Double standards from LUL on each job? Who can tell but most Tube Lines stations (run by TL's) are either low volume or total rebuilt stations.
The stock is new the only old one they have is over maintained as it is the air port premier line. The give it a total refurb each 4 or so years. Other lines have to wait and wait.
The vast majority of the delays are actual passanger actions and old age both in the rail and signal equipment.
Otherwise Metronet has done very well especially under its current team of managers.
The idea is sound but control is and will always be key.

  • 55.
  • At 12:42 PM on 18 Jul 2007,
  • P Smith wrote:

I worked for Metronet and I can tell you that it is poorly managed. The majority of senior managment and site management are on salaries that are completely out of sync with the rest of the building industry. It is also poorly planned. The stations are not properly surveyed or costed.
To add to these problems LU go out of their way to make it as difficult as possible to carry out the work. If they want to get it done on time and within budget, the only way is to bite the bullet and close stations to enable round the clock working. In some stations only an hours work is possible in a shift because LU refuse to allow shutdowns.

  • 56.
  • At 06:12 PM on 18 Jul 2007,
  • Richard wrote:

While the debate as to who is at fault is all very interesting, Metrolines took on a contract with a VERY unwilling client with their eyes wide open. No-one can say that Ken and his cohorts hid their intentions at the time.

Equally look at the shareholders in Metrolines. EDF (the old London Electricity), Thames Water, WS Atkins, Balfour Beatty and Bombardier. Three of those can barely organise any construction in London, there is only one very good, astute contractor who has no doubt been ignored.

I can believe that Metrolines is poorly organised on the ground - all construction is crying out for skilled staff at the moment, and the tendency to employ freelance staff does not get the job done efficiently. LUL is clearly still dominated by those who remember 1987 (Kings Cross) and they can be very pedantic, but all LUL contractors know that. Add to that the ability to work for very limited hours (to suit the travelling public) and there we are, a failure.

The result will either be another layer of bureaucracy and delays, imposed by the treasury and paid for by the travelling public (the taxpayer) or a contract with an organisation with its eyes wide open which will cost even more in profits. Ken can't lose!

  • 57.
  • At 11:52 PM on 18 Jul 2007,
  • fixit wrote:

Balfour Beatty, EDF, WS Atkins and the rest should not be allowed to walk away from this - they knew this was a high risk business opportunity and they should be forced to keep the company afloat, not the Taxpayers. If it requires emergency legislation, so be it. This would immediately signal to all PPP companies that they can't conceal their cockups behind limited liability.

  • 58.
  • At 11:58 PM on 18 Jul 2007,
  • fixit wrote:

Balfour Beatty, EDF, WS Atkins and the rest should not be allowed to walk away from this - they knew this was a high risk business opportunity and they should be forced to keep the company afloat, not the Taxpayers. If it requires emergency legislation, so be it. This would immediately signal to all PPP companies that they can't conceal their cockups behind limited liability.

  • 59.
  • At 12:24 AM on 19 Jul 2007,
  • Dave wrote:

Coming from a health background, it is fascinating to see the parallels between this debacle and the one developing in the English NHS, where the IT project was handed out to a bunch of incompetents (the LSPs) who like the tube infracos came in with stupidly low bids, and then set about trying to increase their revenue with "enhancements" before agreeing to provide a useable system. The only comfort is realising that we may be spared the worst of the Metrolines problems, as the LSPs all use genuinely independent contractors so we may avoid the worst of the elevated prices due to internal trading which seem to best any consortium of contruction companies (anyone remember the channel tunnel cost over-runs?)

  • 60.
  • At 10:36 PM on 19 Jul 2007,
  • Greg wrote:

I have worked on the LU 26 years 4 years for metro net the last one for my self as metronet gave me VS. many thanks.

In the late 8o's early 90' there was various station modernisation programs which were run by LU these programs only changed the decorations but left the infrastructure totally unchanged the stations only looked pretty but the escalators , power supplies Pumps , signals were not upgraded. This is why the LU is falling apart.

Metronet have been trying to fix this infrastructure Tubelines are not. This can easily be seen if you look behind all the PR info and the décor. up to now Tubelines have not done any more than LU done in the 80’s & 90’s. They are not spending any serious money to fix things.

When is LU going to rebuild the things that make the trains actually go and not just give the paying customers a nice station to look at while waiting for a train.

  • 61.
  • At 10:48 PM on 19 Jul 2007,
  • Greg wrote:

These Companies are experts at running a building site but those of us who have had many years experience of running projects on the Underground know that running a building site is totally different from doing work on a running railway the PPP on a working rail was never going to work they just did not know what they were letting themselves in for, and when we tried to tell the Metro Management we were just ignored the proof is in the pudding. With reference to the Tubelines work lets just wait and see if TFL approve the extra funding that will be required for Tubelines to fix the infrastructure and not just make things look good.

  • 62.
  • At 08:46 PM on 03 Sep 2007,
  • Michael wrote:

Let the company crash and burn. And let the workers that have striked go too. Then re-hire some people that actually need jobs, and would be happy to have them!

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