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Alliances deliver on performance and cost

01 Jun 2004

INTRO: Australian Rail Track Corporation relies on contractors to maintain the standard gauge trunk lines linking major cities. By switching to alliances that set target costs and share risks between client and contractor, ARTC has more than halved its average maintenance bill to A$8500/track-km a year despite rising tonnage

BYLINE: Malcolm Owens BSc (Civil Eng), MMgt, MIE Aust

General Manager, Engineering & Infrastructure, Australian Rail Track Corp

OVER THE SIX YEARS that Australian Rail Track Corp has been in business, it has brought a new approach to the management of railway infrastructure.

In that period, ARTC has upgraded Australia's Defined Interstate Rail Network (DIRN) from Kalgoorlie to Broken Hill in New South Wales, and also to Albury via Melbourne and Adelaide, to meet Australian Transport Council standards. ARTC has not only cut infrastructure maintenance costs to create an Australian and international benchmark, but successfully sustained both of these achievements.

ARTC commenced operations on July 1 1998 as an infrastructure management company. It was born out of an agreement in 1997 by the Commonwealth and mainland state governments to establish a 'one-stop shop' for operators seeking access to the standard-gauge DIRN linking Brisbane, Sydney, Melbourne, Adelaide, and Perth. Tarcoola to Alice Springs was included, but was subsequently leased to Asia Pacific Transport prior to opening of the line to Darwin last January (RG 4.02 p187).

ARTC operates profitably without government subsidy as a commercial venture, and reported a profit of A$20·97m in the year ended June 30 2003. Track access charges reflecting net tonne-km of freight hauled are posted on our website www.artc.com.au where many other details will be found. Our shareholders are the Federal Minister for Transport & Regional Services and the Federal Minister for Finance.

ARTC is finalising an agreement with the New South Wales government to lease the DIRN infrastructure in NSW, essentially Broken Hill and Albury to Sydney and Brisbane, and to manage the residual regional rail network on behalf of the NSW government. The intention is to transform the DIRN infrastructure over the next five years to the standards set by the Australian Transport Council in 1997, having already completed this task on the lines we inherited in 1998.

ATC standards relate axleload to speed. Track must be suitable for 130 km/h up to 19 tonnes, 115 km/h for 21 tonnes, and 80 km/h up to the maximum limit of 23 tonnes. This means that Australia will have one uniform standard for interstate lines upon which rail transport can continue to grow.

ARTC's charter

Essentially, ARTC was formed to provide efficient and seamless access for train operators to the interstate network. They are our customers, and our task is to improve the infrastructure to the level they require through better asset management under a 'whole of corridor' strategy. ARTC can invest through direct self-funding, or as the railway investment arm of the Commonwealth where public funding is available.

The corporation is also charged with increasing rail's share of the interstate freight market by attracting more customers and giving them the service and reliability they require. Since ARTC's formation, rail's share of Australia's land (road plus rail) freight market has risen by more than 12% at a time when the overall freight market has grown by 8%. Rail now carries 75% of Sydney - Perth and 81% of Melbourne - Perth tonnage.

Another important task in a nation once notorious for breaks-of-gauge is unifying operating, technical and safety standards and practices. This has been a long task, but ARTC has been involved in the development of National Codes of Practice and is currently rolling these out across the interstate network.

Driving out inefficiency

Generally speaking, Australia's rail industry has operated at low efficiency and with large government subsidies. Competition between train operators has only been introduced within the last decade, and its absence had bred inefficiency.

Annual infrastructure maintenance costs range from A$5000 to A$60000 per track-km for main line track on the DIRN we inherited in 1998. This includes all elements such as signalling and structures, not just the track. For busy electrified suburban lines infrastructure maintenance costs can be greater than A$150000/track-km and can reach A$230000 in specific areas.

In late 1997, the Australian National Railways network in Western Australia, South Australia and the Northern Territory that ARTC was to inherit was costing on average approximately A$23000 per track-km. In Victoria, DIRN routes now leased to ARTC were costing the state in excess of A$26000/track-km.

To operate profitably and without subsidy, ARTC had to get the total maintenance budget down to A$10600/ track-km on average, approximately 43% of what was then the actual figure.

It is a measure of our achievement that average infrastructure maintenance costs on the original DIRN managed by ARTC are now below A$8500/track-km a year, excluding capital investment, and this is being sustained through ARTC's maintenance alliances.

Lump-sum contracts

The organisation that was to become ARTC in July 1998 was already established within ANR as Track Access. While the rest of ANR, including all train operations, was being sold off in the latter part of 1997, Track Access remained under Commonwealth control to manage the DIRN infrastructure within the area bounded by Kalgoorlie, Broken Hill, Alice Springs and the Victoria state border.

At that time, definitive decisions needed to be made by Track Access regarding investments to reduce costs. Indeed, the whole infrastructure maintenance and asset management strategy needed to be reviewed. All maintenance and asset renewal was to be contracted out, but in late 1997 Track Access was only a partially-informed purchaser. There were benchmarks in place for: