Canada blows its combatant ship budget out of water

31 December 2015

The price of war is set to cost the Canadian tax payer dearly as the cost of building 15 surface combatant ships for the navy balloons more than $16 billion to reach $30 billion. The increase was found following an audit by independent professional services firm A.T. Kearney. One suggested way forward is to reduce the number of ordered ships.

Canada, following continued geopolitical uncertainty and its proximity to the sometimes disputed artic region, has sought to upgrade its navy. 15 newly designed combat ships were ordered in the late 2000s, for the price of $14 billion as part of a wider budget for the navy of $26.2 billion. Yet the federal government recently announced that even that budget has been blown out of the water.

To develop a clearer picture of the total cost of the programme, A.T. Kearney was called in to audit the programme and develop a projection of total costs. The consulting firm was hired to provide a qualitative analysis that examines “the relationship between the project requirements and feasibility, and affordability to provide a solution that allows [the Navy] to fully realise its mission.” The analysis shows that the cost was put at $30 billion for the combat ships, thus $16 billion above budget and pushing the total navy budget to $42 billion.

A.T. Kearney hired for audit

The problem for the Canadian government is a result of a mismatch between expectations, cost and requirements. There were already initial concerns about the $14 billion agreement when it was agreed to. “We had concerns all along,” says Vice-Admiral Mark Norman, Commander Royal Canadian Navy, in an exclusive interview with the CBC. “It is obvious that the concerns were less acute in 2008 and 2009, when the foreclosure process [cost] down was still fresh and the ink was drying. But as we went forward, you know, we had real concerns.”

Concerns about the costs blowout associated with the construction programme were further raised in 2013, when the Auditor General of Canada Michael Ferguson warned that there were considerable unknowns involved in the project, including labour and equipment, inflation and other project uncertainties, placing critical questions about the originally decided budget cap of $14 billion.

The cost explosion has been attributed to a number of factors: the marine requirements did not exist to meet the construction demand and needed to be developed. It was almost impossible to judge the cost of the technology required for advanced war ships, given the pace of development. Even today, the final costs produced by A. T. Kearney remain projections, as the ships are still only in the design phase.

Canadian Halifax class frigate

The programme has been placed under pressure from the Minister of National Defence when Jason Kenney, who in October suggested that, given budget constraints, the number of ships ordered may need to be lowered to 11. “Based on expert advice that we received from the Royal Canadian Navy and after exhaustive analysis the Ministry of Public Works, following the most comprehensive and transparent major process in the history of the Canadian government, we believe that it is possible with a budget of $26 billion to build between 11 and 15 warships surface,” Kenney explains.


How data insights helped Network Rail improve the South-East route

11 April 2019

Amey Consulting has leveraged data insights to assist Network Rail with the improvement of its South-Eastern route. Using the Quartz tool, which monitors train movement, Network Rail will now be able to commit to data-enabled interventions to quickly improve underperforming train stations.

With rail services in the UK coming under strain from the demands of modern commuter life, while the infrastructure and service delivery of the nation’s railways has come in for sustained criticism in recent years, a period of regeneration is on the cards at last. Network Rail is the owner and infrastructure manager of most of the railway network in Great Britain, and has subsequently tapped the consulting industry on a regular basis to help find areas of improvement.

The group recently drafted in consultancy BearingPoint to conduct a thorough organisational evaluation and advise Network Rail (High Speed) on attaining a ‘fit for purpose’ organisational standard – for which the consultancy was nominated at the 2019 MCA Awards. Meanwhile, ArupArcadis and Aecom have been contracted to help Colas Rail and Babcock Rail implement a decade-long framework for Network Rail, aimed at supporting the delivery of the next generation of rail systems, with the contracts said to be worth as much as £5 billion

How data insights helped Network Rail improve the South-East route

As Network Rail further aims to improve its performance and customer service offering, another area it has sought help from the consulting sector for is its South-East route. The network of railways connects London with the southern parts of the country, as well as with Europe, making it the busiest in the country, with more than 500 million passenger journeys per year. This crucial expanse of rail was plagued with small minute delays, which were impacting millions of passengers every day, while reducing the efficiency and capacity of the overall network – something Amey Consulting was selected to help solve.

Amey Consulting soon determined that with the sub-threshold delays to services only lasting for 1 or 2 minutes, most were not the subject of detailed root cause analysis, and this made their corrections almost impossible – with dire consequences. Without addressing these delays, passenger satisfaction would fall, while the capacity and efficiency of the network would be reduced, stinging the income of Network Rail even before a host of delay-related fines would hit the company.

In order to help the client gain a better understanding of where, how, when and what these small delays occur, Amey Consulting looked to demonstrate the value of data-led consulting, with a significant reduction in delays within the first month of rolling out changes to key stations. The consultants embedded themselves in Network Rail’s team, helping them learn the key skills needed to support and apply data-driven solutions.

Agile transport

This involved the deployment of the Quartz tool. The system utilises to-the-second train movement data to present the performance of individual stations across the South-East route. It allows users to effortlessly understand station performance with a high level of detail, and use this information to identify losses caused by small-minute delays. The granular data allows for targeted actions to drive efficiency savings and performance improvements. More importantly, it allows users to understand the impact of small process changes on performance. 

Steve Dyke, an Executive Partner at Amey Consulting, said of the project, “We looked to identify the physical root cause on the infrastructure, building a case for change then managing that project implementation and tracking the benefit/value.  In doing so we are working to define a data performance improvement service to the operational and infrastructure owners.”

Just as important for the project as the technology, however, was teaching the Network Rail team how to leverage it after the consultants were gone. The Amey Consulting team worked to develop an agile working culture within Network Rail’s South-East division, helping staff to be confident in using data to improve the journeys of millions of people per year by attacking the problem from the ground up.

Dyke concluded, “This is less about the tools and about the approach to managing performance.  It meant using by-the-second analysis, data science, and then agile development to visualise and identify areas where improvements can be made.  We then worked with NR to change the way they approached the management of the infrastructure changes.  So rather than pass the information down the value chain, any of which could have been missed, we managed the change end-to-end.”

The project was so successful that Amey Consulting was also among those honoured at the recent MCA Awards. The firm scooped the Performance Improvement in the Public Sector prize for its work with Network Rail, at the 2019 ceremony in London.