CP6 and Growing the supply chain Jo Dunn, Head of Procurement (IP), Network Rail

Contents CP6 Procurement Strategy Objectives Sustainable Procurement Building a Performance Culture Strengthening our Capabilities CP6 Delivering Efficiencies CP6 Procurement Key Risks and Opportunities 12-Jan-19

CP6 Procurement Strategy Objectives Ensure that the needs of the Route Businesses and passengers are met by improving safety performance, demonstrating value for money and allowing innovation to thrive. Improve/reward safety and contract performance with a fair return whilst addressing poor performance. Incorporate lessons learnt from CP5 to promote a stronger performance culture. Foster industry leading collaboration and support an effective & sustainable supply chain. Aligned with Route Services C&P Transformation plan. Ensure that Network Rail remains a client of choice for key suppliers in a growing market. 12-Jan-19

CP6 Procurement Programme - Status Nationally co-ordinated with local leadership Integrated CP6 procurement schedule in place,weekly progress review and reporting by relevant Commercial Directors ITTs staggered to manage resources and enable continuous improvement Contract coverage in place to enable transition Linked to NR website to provide workbank / pipeline visibility to supply market Award recommendation quality criteria being developed 12-Jan-19

CP6 Sustainable Procurement Waste A suite of targets Biodiversity Pollution prevention Responsible sourcing Capital carbon Energy efficiency Climate change adaptation Community engagement Diversity, Inclusion & Accessibility 30% female by 2020 Employment, Skills & Training 1 Apprentice/£3m Local procurement and SMEs 65% spend by 2021 Rail heritage Employee engagement Social Performance Environmental Management Weather Resilience and Climate Change Energy and Carbon Management 12-Jan-19

CP6 Building a Performance Culture Holding suppliers to account for contractual performance and the provision of commercial data for improved cost planning & benchmarking Suite of improvements to our standard T&Cs National Performance Metrics within our CP6 contracts Commercial Performance & Assurance Metrics for Cost Planning, Procurement, Collaboration Commercial & Claims Management More engagement via cross industry working groups Focused work-streams via the Commercial Directors’ Forum on collaboration & commercial working practices Create a ‘BAU’ approach to value capture & efficiency targets Fully embed IPs One Vision One Way program Actively promote a performance culture that bring a focus to efficiency targets & improved commercial practices 12-Jan-19

CP6 Strengthening Our Capability 7 key efficiency categories Scope, Access, Design, Workbank Planning, Delivery, Technology, Commercial Route Targets in £ms & represent CP6 ‘like for like’ savings IP emphasis/contributions will centre on; Effective Procurement, ECI, LEAN, Workbank Planning, Contracting Strategies, Commercial Performance, Benchmarking & Target Setting 12-Jan-19

CP6 Delivering Efficiencies Procurement strategies linked to Route SBPs for aligned objectives – evidenced at Contract Award Integrated planning & target setting Key frameworks competitively tendered, (Central - efficiencies negotiated) Unit rates reviewed communicated & business plans aligned T&Cs refreshed to learn lessons from CP5 Improved commercial capabilities via 1v1w, (RMM , NPM , 4Qs: ‘should, will, did & why’) Quarterly Benchmark rate review & challenge Measure progress against efficiency targets Develop BAU capability through People, Process, Systems, Culture & Capability 12-Jan-19

CP6 Delivering Efficiencies Building a BAU capability to deliver efficiencies via People, Process, Systems, Culture & Capability Sponsorship and Governance The IP Exec will lead Efficiency realisation to support each of the Route Businesses in meeting their targets (e.g. Signalling, Track) to demonstrate efficiencies and share best practice. People and Capability Technology Solution A capable core/discipline team that supports the regions and routes to identify, track & report on efficiency opportunities, proving that targets have been achieved. This team to act as a conduit/catalyst for ideas and resources to get them done. A technology solution that enables the effective collection, storage, management and analysis of performance & benchmarking data. Analysis and insight can be shared across IP & Route Businesses via dedicated tool/platform/web portal, etc Industry Forums Develop commercial measures & techniques, share information, insights & learning across our supply chain and industry e.g. NCDF & TIES Organisational Processes Data and Information A defined process for demonstrating efficiencies will be led by a core team but implemented via specific contracts & programmes with training & monitoring of efficiencies. There will be common standards for evidence required for realising efficiencies, aligned to Route Business targets. Performance & benchmarking data will be structured consistently at a level of detail that enables comparison of repeatable work items. Quarterly updates of SBP benchmark rates will be used to the data points to provide transparency & context as to delivery against targets.

CP6 Procurement Key Risks Threats Mitigations NR / supply chain readiness for CP5 - CP6 transition Staggered procurement timetable CP5 contracts extended to provide overlap Programme management of procurement timetable Supply chain capacity and capability Visibility of CP6 work bank provided Procurement notices issued at earliest possible stage Network Rail commercial capability Implementation of improved competence assessment, management and upskilling through professional development work-streams Resource planning for CP6 underway Consolidation of Signalling / DR market Signalling frameworks structured to encourage supplier diversity Separation of frameworks to encourage competition from smaller suppliers Improved flexibility in CP6 design/procurement through increased technology base Frameworks designed in consideration of Digital Railway work-streams and future transition requirements Opportunity Action being taken Leveraging of category management 1. Integrated category management work-streams being developed Improved packaging of national workloads 1. National review of volumes as part of the CP6 Supply Chain Strategy Lessons learnt from CP5 1. Developing a performance culture where VFM, Efficiency, Performance and Collaborative Working are BAU 2. Lessons learnt from CP5 being developed with each Region Updated Terms and Conditions of contracts 1. Review of terms and conditions underway, particularly payment, performance & target pain/gain share mechanisms.

Summary We have an integrated procurement programme for CP6 to ensure contract coverage throughout the transition period with appropriate mobilisation Lessons are being incorporated from CP6 in how we procure, contract and engage with our suppliers Sustainability requirements are being deployed We have work to do to progress and embed a performance culture and incentivisation in line with National Performance Metrics Efficiencies to be demonstrated at award stage We are working closely with Route Services to ensure alignment with the Transformation Programme Supply chain concerned over lack of visibility of enhancements for CP6