199607 – O’Rourke – Outsourcing and Partnering in Signalling and Communications

Industrial development, productivity improvement and the ensuing globalisation of industry are causally linked to increasing technical specialisation. As development increases, so does the required degree of specialisation. In turn, to be productive, the specialisation requires an increased market size to sustain its efficient application. This coupled with the reduction or breakdown of national barriers to entry is forcing globalisation of sectors within the transportation supply industry to increase at a rapid pace.

The implications of this have been, and will continue to be profound for the ways in which railway services are provided. Most of us can readily look backwards and see the changes that have occurred. However, the causes of these changes and the ongoing consequences for the organisation and provision of these services in the future are often misinterpreted or not well understood, because a number of factors may be at work at the one time. For example, as well as the driving factor of industrial development, increasingly competition is being seen as a method of ensuring best practice. Although the aim is the same – efficient provision of quality services – the driving forces are different. As a result, confusion can and does occur between objectives and outcomes. A brief look at some history is therefore worthwhile to gain a better appreciation of the forces at work.

Railway engineers, in general, and the engineering organisations within which they operated were once an integral, and in some cases a dominant, part of the railway, which was itself in most cases a fully vertically integrated entity. In the early part of this century, railway workshops manufactured a full range of equipment from locomotives to mechanical signalling equipment. Signalling schemes and equipment were designed and constructed within the integrated railway which trained its staff to perform the required specialist functions. The equipment was subsequently maintained and modified, again within the integrated railway.

Practically, all signalling equipment has now come to be made by specialist manufacturers and increasingly this is being done on a global scale. Similarly, all major construction of signalling schemes in Australia is now contracted to specialist signalling construction companies which operate on a national, and increasingly a global scale, and increasingly on a turnkey basis. The reason for these changes is that it is the most efficient way to provide these services and facilities. Specialist staff can consistently undertake work of a similar nature for many railways, and through increasingly global linkages do this in the most technically up to date way. Finally, design and specification, other than for performance requirements, is more often being undertaken external to the railway, or by using specialist consultants.

So advanced has been this transition from internal supply to external sourcing that modern railways are now dissolving the close organisation link between business based operations and the supply of technical services; either by restructuring to physically separate the functional entities, or
through contracting out and other forms of outsourcing.

The immediate future in Australia is therefore about how this should be best done, and whether Australian signalling engineers will place themselves and their industry in the best position by positive involvement in, and facilitation of, the change process. This means clearly understanding the changing nature of the customer, and ensuring that the solutions offered are both technically efficient and compatible with the other factors driving change in the railway business. Fortunately for signalling as it is the last major railway technical activity to undertake the transition, many models are available to provide guidance. Additionally, the solutions found in other industries which are more advanced in the process can provide useful inputs.