More than 250,000 passengers had journeys disrupted by the four-day overrun at Rugby and a similar 24-hour stoppage at Liver-pool Street station in London after Network Rail admitted that it was caught by surprise when projects overran badly over Christmas.

The Times understands that contractors are likely to be removed from the role of overseeing schemes and could eventually lose much of the £2.5 billion of work commissioned by Network Rail each year.

The move would be the latest step in the creeping renationalisation which began in 2001 with the Government’s decision to replace Railtrack with Network Rail, a public interest company with no shareholders. In 2003, Network Rail announced that it was sacking all its maintenance contractors and bringing 15,000 staff in-house to carry out day-to-day repairs.

All major upgrades are still done by contractors, but Network Rail yesterday signalled that it was reviewing their future role with a view to doing more work itself.

Iain Coucher, Network Rail’s chief executive, is understood to be furious with Bechtel, the coordinating contractor for the upgrade at Rugby. The project should have been completed by New Year’s Eve but overran by four days, severing the West Coast Main Line and forcing more than 50,000 people a day to catch replacement buses. The contractors failed to supply enough qualified engineers to replace overhead lines, forcing Network Rail to step in and take over from Bechtel on New Year’s Eve.

A senior Network Rail source said: “We are absolutely seething about some of our leading contractors, notably Bechtel, which completely failed to deliver on repeated promises given before Christmas.

“This episode calls into question the future role of contractors and one of the options is to take more of the work in-house. When the model of using an outside project management company fails as badly as this, we have to ask very tough questions.” Other contractors who may lose work include Jarvis, Balfour Beatty, Amey and First Engineering.

The Rail Regulator is investigating what went wrong at Rugby and also at Liverpool Street, used by more than 200,000 passengers a day. The regulator is likely to fine Network Rail several million pounds, though it is unclear what effect this will have as the company is dependent on public subsidy and reinvests any profits in the network. Network Rail will also pay millions of pounds in compensation to the train companies, but very little of this money will be passed on to passengers.

Network Rail claimed that it had been unaware of any problem at Liverpool Street until 1am on Wednesday, less than four hours before the lines were due to reopen. The company said that its contractors had failed to keep it up to date with their progress, especially in replacing overhead power lines.

National Express, which operates services into Liverpool Street, said part of the problem was that resources had been diverted to Rugby. An upgrade at Stevenage was also abandoned so that engineers could concentrate on Rugby.

David Franks, rail director of National Express, said: “The contractors appear to have gone where they were going to get the most cash.”

Bechtel was overseeing eight other contractors at Rugby, which was being redesigned to create a new platform and allow express services to bypass the station at 125mph. Bechtel failed to return calls from The Times last night.

Jeremy Candfield, the director-general of the Railway Industry Association, which represents Network Rail’s contractors, said: “It’s premature to say what happened at Rugby, but we do not believe there is a generic problem.”

Mr Coucher, who was belatedly called in last night by Ruth Kelly, the Transport Secretary, to explain what went wrong, has himself summoned Bechtel and other leading contractors to a high-level meeting next week.

Mr Coucher, who has a salary of £466,000 and received a £76,000 bonus last year, confirmed that normal service would resume this morning. He said: “I can take no comfort from this news in the knowledge of the pain and inconvenience we have caused passengers over the past few days.”

Gerry Doherty, the general secretary of the TSSA white-collar rail union, said that the large number of contractors involved at Rugby had been a “recipe for confusion”.

Bob Crow, the general secretary of the Rail Maritime and Transport union, said: “It is ludicrous that work planned months ahead should have overrun so seriously because there weren’t enough contract staff to do the work.”

See also:

Delays spark fears on vital rail upgrade

Financial Times: January 4 2008
By Robert Wright, Transport Correspondent

Concern is growing over Network Rail’s ability to complete on time a vital upgrade to the London-Glasgow west coast main line after the company admitted it had overstretched itself over the festive period.

Over-ambitious engineering plans led to the closure of the vital trunk route at Rugby for three days longer than originally planned. On Thursday night, the company was expecting to be able to reopen it in time for the first passenger trains on Friday .

Full reopening of London’s busy Liverpool Street station was also held up for a day until Thursday by the overrunning of engineering work there.

Tony Collins, the chief executive of Virgin Trains, said he was now concerned about future work needed before December. “The project has been in planning for a long time,” he said. “For them to have this type of problem so late in the day and not to know that it was going to happen makes you ask, ‘Are there more projects planned like that?’”

Two groups – Virgin Trains, the long-distance operator on the west coast route, and National Express, the UK’s second-largest passenger train operator – have made formal complaints to the Office of Rail Regulation (ORR) about Network Rail’s handling of the Christmas engineering work, as has Freightliner, a large freight operator.

Iain Coucher, Network Rail’s chief executive, has called Bechtel, the engineering company in charge of the Rugby work, and other contractors involved to a meeting on Monday to discuss what went wrong and to ensure there is no repeat.

He said it was clear that too much work had been attempted at Rugby in too short a time over Christmas and New Year.

“We are under huge pressure to deliver operational train services over the Christmas and New Year period as well as deliver an upgrade programme,” he said. “It looks likely here that we were over-ambitious in what we tried to achieve.”

The work at Rugby is part of a £415m ($818m, €555m) project to remodel the track layout at a key junction and to expand the Rugby-Stafford Trent Valley section of the line to four tracks. The work is vital to the introduction next December of a new timetable that will see faster and more frequent trains on the west coast line.

Chris Bolt, the chairman of the ORR, said the potential threat to the December timetable change would be an issue during his organisation’s investigation of the train operators’ complaints.

Network Rail could face a fine similar to the £2.5m penalty imposed during 2007 over a botched resignalling project in Portsmouth.

Mr Coucher said the company had examined before Christmas whether the west coast project could still be delivered on time and had concluded that it could be. The issue would be re-examined in light of what happened over Christmas to ensure no further overruns.

See also:

Network Rail ignored warnings for a month

Daily Telegraph: 04/01/2008
By David Millward, Transport Editor

Network Rail has come under fire after it emerged that the company was warned nearly a month ago that engineering works would not be finished on time.

The Daily Telegraph has learned that the issue was first drawn to Network Rail's attention on Dec 6.

Virgin Rail staff deal with inquiries from passengers stuck at Euston station yesterday because engineering work on the West Coast mainline was not completed over the Christmas break

At the time it said there was no problem, only to ask for a one-day extension a week later. Network Rail repeatedly appealed for more time after Christmas.

One rail insider said: "It was common knowledge within the industry that there was a strong risk that the original timetable was falling apart.

"But they appeared blind to the risk. It was almost as if they stuck their heads in the sand."

Contractors working on parts of the West Coast mainline also said that the deadline of Dec 30 could not be met. Network Rail assured Virgin Trains, which uses the network, that services would be able to resume as planned. Engineers at the signalling scheme at Rugby also made their fears known in early December.

On that date Virgin sought reassurances that the railways would be back in operation, according to a well-placed industry source.

Network Rail said that the scheme would finish on time, so the company continued to sell tickets.

Ruth Kelly, the Transport Secretary, summoned Iain Coucher, Network Rail's chief executive, for urgent talks in Whitehall last night.

Miss Kelly said after the meeting that she regarded the delays as "unacceptable" and demanded assurances that the events of last week would not be repeated.

Services on the West Coast mainline - which links London to Birmingham, Manchester, Liverpool and Glasgow - are only expected to resume today. Around 60,000 passengers a day had to travel between Birmingham International and Northampton by bus.

Virgin will refund passengers who were delayed for more than two hours. Network Rail is expected to pay train operators compensation of up to £5 million.

In total 300,000 passengers have been caught in overruns on work on the West Coast mainline and the line from Liverpool Street, which got back to normal yesterday. The Office of Rail Regulation has announced an urgent inquiry

Network Rail has admitted that contractors had "the wrong mix" of experienced staff available at Liverpool Street and Rugby.

A spokesman denied that there had been an abnormal level of absenteeism, with staff from one contractor calling in sick on New Year's Eve. One well-placed source said: "They didn't cover themselves for the work running late when it was clear that there were going to be problems." As a result The Daily Telegraph has learned that Network Rail had to send in its own staff.

Colas Rail, the sole contractor working on the Liverpool Street line, said it was unable to give an indication of what went awry.

Eight contractors were involved in the Rugby scheme, including Bechtel - a US company whose work in Iraq has been criticised

Mr Coucher apologised on television for the misery inflicted on hundreds of thousands of passengers.

He said: "The contractors involved will all be summoned to my office to find out why these works overran.

"We tried to put too much work into too short a space and I want answers to questions as to why reassurances weren't met. We need to get to all the facts."

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Blame game begins for rail bosses

Daily Telegraph: 04/01/2008
By David Millward

Two high-profile figures are in the frame over the shambles that has blighted the railway system.

One is John Armitt, 61, who was the chief executive of Network Rail until he retired last July. Urbane and popular, he set the strategy to implement the improvement programme that has inflicted so much misery on the travelling public.

He had been credited for the recovery of the rail industry after the Railtrack debacle.

Now the inability of Network Rail to deliver a project on time will raise alarm in Whitehall, given that his new task is to make sure that London is ready for the 2012 Olympics.

Mr Armitt passed the baton on to Iain Coucher, 46, in the summer, who is far more abrasive, according to insiders. Ultimately, he will be held responsible for the shambles that occurred on his watch.

Last night Network Rail was blaming the poor project management by contractors.

But a spokesman declined to say who was responsible for choosing them in the first place. "We are trying to find out what went wrong, not engage in a witch hunt."

Perhaps one of the reddest faces will belong to Sir Ian McAllister, 64, the chairman of Network Rail. While tens of thousands of passengers were struggling on the West Coast mainline, he was basking in the glow of a newly awarded knighthood for services to the transport industry.