Summary
The rail network is a significant publicly owned infrastructure asset. It was valued in 2006, along with associated land, buildings, and mechanical plant and equipment, at $10.6 billion. The rail network is used to transport passengers and large quantities of freight.
New Zealand Railways Corporation (a State-owned enterprise trading as Ontrack) has been responsible for the rail network since September 2004, after the Crown purchased it back from private ownership.
We carried out a performance audit to provide assurance about the effectiveness of Ontrack's systems for maintaining and renewing the rail network.
We focused on Ontrack's long-term planning, its systems, plans, policies, and procedures for managing day-to-day maintenance and renewal work, and the checks and evaluations it had carried out of the work done. We did not review rail network safety.
The state of the rail network in 2004 meant that Ontrack needed to start with a strong day-to-day operational focus. Therefore, we expected that its top priority would be to ensure that it had systems, plans, policies, and procedures for managing day-to-day work. We also expected Ontrack to have started preparing a long-term plan for managing the rail network.
Our findings
Overall, Ontrack had, or was putting in place, various systems, plans, policies, and procedures for maintaining and renewing the rail network. However, it needed to do a significant amount of further work to ensure that the systems, plans, policies, and procedures were complete, connected, and able to be used together where needed.
Ontrack's systems, plans, policies, and procedures were focused on day-to-day management of the rail network. However, these varied in completeness and comprehensiveness. In most instances there was room for improvement.
Managing day-to-day work on the rail network
Ontrack planned maintenance and renewal work on a short-term, reactive basis using inspection results. The planning relied heavily on inspections to find problems before they could worsen or lead to failure. Similarly, Ontrack relied on decision-makers to accurately judge how quickly problems needed to be fixed.
Ontrack had not identified all the resources it needed or the constraints it faced in carrying out maintenance and renewal work. Ontrack documents reported that insufficient staff resources or a lack of time to access the tracks had made some planned maintenance and renewal work more difficult. This raises questions about Ontrack's ability to do all the work it needs to do to maintain and renew the rail network. In our view, Ontrack needs to review whether it has the right level of resources, and clarify the effect of constraints on track access and the options for managing them.
Ontrack manages the different rail network assets in three groups. They are the:
- track asset group;
- structure asset group; and
- signals, telecommunications, and electric traction asset group.
Ontrack had a separate set of systems, plans, policies, and procedures to direct work for each asset group. There were no points where information from the separate systems, plans, policies, and procedures could be used together or compared, and it was not clear whether there were dependencies between the different types of assets. This meant it was difficult for Ontrack to co-ordinate work between the asset groups to achieve common outcomes or goals.
Demonstrating that plans and procedures are followed for day-today work
Overall, Ontrack did not have effective systems in place to demonstrate that plans and procedures for managing day-to-day work were followed.
In some instances, Ontrack was not keeping up with planned work, which in turn could create further work. Ontrack did not have an overview of the planned work, or the overall progress it was making against its planned work. Therefore, we could not determine whether Ontrack was close to keeping up with its planned work or whether the amount of overdue work was increasing.
We also had concerns about Ontrack's systems for providing assurance that work standards within code documents were met.
Long-term planning for the rail network
Ontrack had started to prepare a long-term plan for the rail network. Preparing a long-term plan for the rail network is a significant and complex task. Ontrack had not determined the extent of work required or how it would be resourced. It did not have project management disciplines in place to ensure that the plan preparation would occur in a logical and timely way.
Ontrack did not have all the information or systems it needed to prepare a long-term plan. It was doing work to address some of these deficiencies. However, Ontrack had not considered the fit between these pieces of work and the preparation of the long-term plan.
Effective asset management relies on clear service levels. The service levels and performance measures for the rail network were not clear. Ontrack told us that negotiations with Toll NZ have precluded agreement about service levels. Toll NZ told us that they disagree with this view.
Until service levels are established and there is clear, accessible information about the state of the rail network, Ontrack will not be able to determine optimum strategies for managing the rail network or how much this will cost.
Our recommendations
We recognise that Ontrack is not an established infrastructure manager. Ontrack is working to put in place and improve its systems, plans, policies, and procedures for maintaining and renewing the rail network. Although our report identifies a number of areas where Ontrack can improve, our recommendations focus on the most important of these.
Managing day-to-day work on the rail network
We recommend that Ontrack:
- determine the resources it will need to carry out the work set out in its operational plans;
- clarify the extent of constraints on track access and consider the options for managing those constraints;
- update the code documents that are overdue for review; and
- identify the critical points where the systems, plans, policies, and procedures for the three asset groups need to align to ensure that it can co-ordinate work to meet common outcomes and goals.
Demonstrating that plans and procedures are followed for day-today work
We recommend that Ontrack:
- clarify and communicate the purpose and accountabilities for code compliance reports, and consider whether existing controls for structures provide enough assurance that work standards in code documents have been complied with.
Long-term planning for the rail network
We recommend that Ontrack:
- determine the extent of work required to prepare a long-term plan and how it can be resourced, put project management disciplines in place, and have senior management staff actively sponsor the work that needs to be done;
- clarify and convey to staff how their work both supports and is driven by the long-term plan;
- provide clear and consistent information about service levels and performance targets that it intends to meet, and state whether these have been agreed with external parties;
- complete work on its asset information systems so the information is up to date and able to be readily used for long-term planning and decision-making; and
- gather information about expected long-term costs for the rail network.