NR NR/PRC/MPI/TK0051 ISSUE 1 PDF

This Management Procedure applies to all contracts where work is undertaken on behalf of the Programme Director Track.

This procedure is to be implemented by the Head of Contracts & Procurement Track and delivered by the Territory Commercial Managers.

To properly deliver the scope, the TCM must

• Understand the specific requirements of the conditions of Contract

• Have checked the accuracy and veracity of the Contractors cost systems to ensure they accurately capture information.

The audit scope can be summarised but not limited to:

• Pre-contract build-up to the Target Cost and Overhead components of the Contract.

• Post-contract the audit will interrogate the robustness of both the incurred Actual Costs of the constructed works and, if appropriate, the veracity of the Overhead Costs associated therewith.

The audit will ascertain that:

• The actual costs are being incurred and reimbursed in line with the provisions and principles of the appropriate contracts.

• Process and procedures used to calculate an appropriate contribution to Overheads are financially sound and in line with the Contract.

The principal audit functions can be summarised as:

• To allow Network Rail to satisfy themselves they are achieving Value for Money through contracting processes;

• To ensure robustness of interim applications for payment such that they accurately reflect true Actual Costs incurrence;

• To ensure that all Actual Costs have been reasonably and properly incurred – Schedule 4 clause 1 of the Collaborative Agreement refers;

• To ensure there is no duplication between Actual Cost and Overheads;

• To ensure there are no hidden profits within either the Actual Cost and the Overhead (Profit on profit);

• To provide a mechanism for continuous feedback where commercial processes may be improved

The audit scope is to validate the process, not to revisit any bona fide historic contract and/or commercial decisions.

There are ten RT 24 Track Renewals Contracts.

1. Scotland, Contract for Plain Line Track Renewals (First Engineering)

2. North West, Contract for Plain Line Track Renewals (First Engineering)

3. West Midlands, Contract for Plain Line and S&C Renewals (Carillion)

4. LNE (incl Scotland S&C), Contract for Plain Line and S&C Renewals (Jarvis)

5. East Midlands (Incl.Southern), Contract for Plain Line and S&C Renewals (G/rail)

6. Great Western, Contract for Plain Line Renewals (Amey SECO JV)

7. Great Western, Contract for Plain Line and S&C Renewals (Carillion)

8. Southern (Incl. Anglia), Contract for Plain Line and S&C Renewals (BBRIS)

9. National, Contract for High Output Plain Line Track 2 Renewals (FeSW)

10. National, Contract for High Output Plain Line Track 3 Renewals (FeSW)

Purpose

To describe the principles and process to be utilised by Network Rail to audit Target, Reimbursable and Actual Costs during the life of the RT24 Plain Line and Switch and Crossing Renewals Contracts. This document defines the terms of reference for carrying out Periodic and Annual Final Account audits.

Where there is any discrepancy between this procedure and specific Contract provisions, the conditions of Contract shall take precedence.