EFRTC General Meeting INNOTRACK – Optimising the Supply Chain Summary of Success-Critical Areas Munich, 6 th June, 2008

C:\Documents and Settings\tobiask\Desktop\ _GM_ ppt© BSL Management Consultants GmbH & Co. KG 2 Six success-critical areas were identified to get the best value from the supply chain A Market-Approach and - Environment B C Contracting Strategies D Rules and Regulations E On-site Logistics, Processes & Technology F Production Resources Utilisation Planning and Funding

C:\Documents and Settings\tobiask\Desktop\ _GM_ ppt© BSL Management Consultants GmbH & Co. KG 3 Six success-critical areas were identified to get the best value from the supply chain (1) A – Market Approach and Environment  Overall strategies of Infrastructure Managers to exploit the market for  Maintenance contracts  Renewal Projects  Clarity on Infrastructure Managers side about make or buydecisions  Current status of market opening and degree of out-contracting  Functioning and competitiveness of markets, handling of market-entry barriers  Exploitation of full-service, system partnership business models  Coordination between Infrastructure Managers and contractors in purchasing and specification of heavy equipment ("avoidance of over-sized, over- specified fleets")  Active supply market development among equipment manufacturers

C:\Documents and Settings\tobiask\Desktop\ _GM_ ppt© BSL Management Consultants GmbH & Co. KG 4 Six success-critical areas were identified to get the best value from the supply chain (2) B – Contracting Strategies  Current contracting mechanisms (such as "cost-plus", "ad-hoc") often do not include incentives to increase efficiency  Longer-term, output-oriented contracts are a way to enable contractors to dimension their capacities accordingly and to increase efficiency as a result of a steeper learning curve  Risk allocation and reward sharing is a major area of concern, which can be tackled and improved appropriate contracting strategies  Formal, complex and sometimes unrealistic short tender procedures drive cost into the supply chain  Communication between the contracting parties can be improved so that the scope of work and the risk allocation is facilitated ("open partnership in competition")  The fostering of innovations needs an appropriate sharing of benefits between Infrastructure Managers and contractors

C:\Documents and Settings\tobiask\Desktop\ _GM_ ppt© BSL Management Consultants GmbH & Co. KG 5 Six success-critical areas were identified to get the best value from the supply chain (3) C – Planning and Funding  Long term planning is fundamental for contractors and Infrastructure Managers to dimension their capacity to the anticipated market needs (avoidance of often over- dimensioned fleets)  In a back-to-back approach Infrastructure Managers need long term funding commitments from governments ("Planning stability is at the heart of efficient processes")  Long term planning needs to be translated into dependable mid term work programming with a view to  consistent sequencing (over time and geographically) of work (see box 'E' and 'F')  coordination of activities, bundling and  "a clockwork" approach to worksite logistics and work execution (mutual programme management)  Careful attention to detail in planning process and optimisation of the supply chain interface with contractors, including project risk analysis. Crucial to avoid surprises ("Money wasted in early decision-making can never be recovered later")

C:\Documents and Settings\tobiask\Desktop\ _GM_ ppt© BSL Management Consultants GmbH & Co. KG 6 Six success-critical areas were identified to get the best value from the supply chain (4) D – Rules and Regulations  The differing rules and regulations across Europe are a key entry barrier for contractors to market their services internationally  A cross-acceptance of certifications for machinery (technical and process) and for innovations would enhance competition and ensure that efficiency gains are rolled-out more easily  Market opening also positively effect current over-capacity  Sometimes very rigid rules for worksite protection and logistics can have a very substantial impact on productivity.  A harmonisation of rules and standards based on 'good practice' would lead to a simplification and added-value  A long certification process furthermore is an obstacle to innovations

C:\Documents and Settings\tobiask\Desktop\ _GM_ ppt© BSL Management Consultants GmbH & Co. KG 7 Six success-critical areas were identified to get the best value from the supply chain (5) E – On-site Logistics, Processes & Technology  The output during track possessions ("time-on-tools") can be improved by processes and technology.  Minimum disturbance strategies are more and more required and developed in some countries  Innovation-friendly framework has additional potential to improve process efficiency  The cost for moving equipment (logistics) is often very high, it consumes considerable time, often as a consequence of improper planning  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 (elimination of synergies, process perturbations)  Due to the fragmentation of work the contractors can not sufficiently influence the overall efficiency of the project

C:\Documents and Settings\tobiask\Desktop\ _GM_ ppt© BSL Management Consultants GmbH & Co. KG 8 Six success-critical areas were identified to get the best value from the supply chain (6) F – Production Resources Utilisation  Understanding of basic economics of resource deployment (machinery and staff) is fundamental to the optimisation of the supply chain  Infrastructure Managers approach is key to create a cost efficient framework, primarily by  mid term planning and work programming  consistent sequencing of work  logistics and execution dependability  The fundamental building blocks for good economics of resource deployment with a substantial impact on unit cost are  plant and staff deployment during track possessions  well programmed project pipeline and sequencing of plant and staff deployment (logistics from work-site to work-site)  the objective of an even workload distribution over the year