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Framework Outline Business Case
Executive SummaryNovember 2015
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1.ExecutiveSummary
Thisdocumentsupportsarecommendationthattheaccelerationofdigitalmodernisationontherailwayshouldbethebasisofrail’sInitialIndustryPlan(IIP).
Analysisidentifiesthattheexistingplanistooslowandpiecemealtomaximisereturnoninvestment. A c.25 year digital strategy that spans technology, business change andcommercial innovation offers a more cost-effective and higher-performing railway thatdeliversabiggereconomicbenefitforBritain.Theproposal:
Supports Government policies for facilitating economic growth and reducing thecostsofrunningtherailway;
MaximisesdeliveryconfidencebyrelyingonproventechnologyandlearningfrommajorinfrastructureinitiativesacrossEurope;
Releases the capacity and connectivity Britain’s economyneeds from the railwayinfrastructurethenationalreadyhas–providingstrongsupporttotheprioritiessetfortheNationalInfrastructureCommission;
Delivers benefits on every type of route that are tailored to local priorities – bethey formoretrains,better connectionsor greater reliability–eachdeliveredatlowercostthanpurelyconventionalalternatives;
Willbestrengthenedwithanadditionaloption toupgradetothenextgenerationof technology and allow further acceleration that delivers greater benefits overc.15-20years;
Facilitates commercial innovation that enables access to 3rd party sources offinance,toincreaseaffordabilityandsustainablerisk-transfer;
Is a catalyst to growengineering talentwith thedigital skillsand knowledge thatBritish suppliers need to succeed in the strategic growth market for digitalinfrastructureathomeandabroad.
Digital Railwaywill now develop this analysis and the plan for implementationwith IIPpartners,enablinganOutlineBusinessCasetobefinalisedin2016thatconfirmsanationaldeploymentsequenceandtheplantosupportrapidprogress.ThiswillformacriticalpartoftheIIPinSeptember2016.
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1.1 Thestrategiccaseforchange
The government is funding and supporting a package of major upgrades to the railway to boost
productivityandgrowth(includingthroughitsbackingofinitiativessuchasCrossrailandHS2)aspart
ofaNationalInfrastructurePlan.
But beyond these critical upgrades, a national capacity strategy that is rooted in conventional
construction-basedenhancements(suchasbuildingnewtracks)alonewillnotmaximisethebenefits
of this investmentordeliver thecapacity thatBritainneedsover the longer term. Ultimately,we
canonlydeliver and fund the capacityweneedby complementing targetedupgradeswithdigital
innovationthatmakestheinfrastructurewealreadyhavesignificantlymoreeffective.
Ifwedonotactnow,passengersandfreightcustomerswillfacelongerwaitsfortrainsthatareless
reliableandevenmorecrowded,with fewerchoicesaboutwhereandwhen theystop. Important
contributionstowidergovernmentobjectives–fromalowercarboneconomyto‘digitalfirst’public
serviceswillalsobemissed.
Butbytakingconcertedactiontotackleconstraintstorailwaycapacity,therailindustrycanmakea
powerful contribution to the priorities of the National Infrastructure Commission, recently
established to sustain London’s global economic success by keeping the city moving and to
transformconnectivityintheNorth.
DigitalRailway isavitalenablerfor long-termgrowthbecause itreleases latentcapacity intheGB
rail infrastructuretosupporttheeconomy.Oneverytypeofroute,newoptionscanbecreatedto
meetthelocalprioritiesthatmattermost–betheyfor:
Makingthe rightchoicesabout infrastructureisoneofthemostpowerfulwaysanycountrycan
secureitslong-termeconomicsuccess.
For Britain today, a vital task for the railway is to help our great cities in the regions become
engines of national growth, and to sustain London’s global economic leadership. This needs a
railwaythatconnectsmorepeople,skillsandgoodstomoreplaces,withreducedoverallend-to-
endjourneytimesatlowercost.
With the railway already full in important growthmarkets, andwith passenger numbers set to
increasesubstantiallyinthedecadesahead,Britain’sresponseneedstounlockcapacityfromthe
infrastructureitalreadyhasinamorecost-effectiveway.
Byfacilitatingthis,fasterdigitalmodernisationaddressesprioritiesoftheNational Infrastructure
Commission,helpingBritainmeetthetransportchallengetosupportgrowthin jobs,housingand
theeconomy.
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► More trains where they are needed most, for example, to rapidly growing metropolitan
regionssuchasLondonandManchester;
► Betterconnections,enabledthroughmorechoiceabouttrainpaths-forexample,between
oursystemofcitiesintheNorthorforprimefreightroutes;
► Greaterreliabilityandareductionintheimpactofdelayswhenproblemsdooccur.
Astheseprioritiesaremet,afutureplanbasedonDigitalRailwayprovidesBritainwith:
► Apowerfuldriver forproductivityandgrowth,clearlyalignedtoprioritiesof theNationalInfrastructureCommission,includingtofosteradynamicNortherneconomyandtosupport
London’sglobalsuccessforthelongterm;
► A railwaybuilt,maintained and run at lower cost. A digitally-enablednetwork has fewercentralisedoperationscentresandhasthepotentialtodelivermaintenancecostadvantages
achievedbytheremovalofheavyassetsandareducedcostofdisruption.Withmorespace
inthenetwork,newoptionsarecreatedtoundertakemaintenanceandnormalserviceside
bysideresultinginalowercostrailway;
► Better customer experience frommore reliable services supported by better, up-to-date
information.
In achieving these benefits, Digital Railway facilitates the wider transformation of the railway
industry, for example, through new investment models that harness private investment, new
customerservices,andnewoptionsforfreightservices.
Therealisationofthesebenefitsisenabledthroughconfigurationphasesthatfacilitateabuild-upof
skillsandknowledgealongsidethedevelopment,testinganddeploymentofdigitaltechnology:
► Phase1configuration-StrategicPilots;
► Phase2configuration-Technologyintegrationandcorebusinesschange;
► Phase3configuration-Optionalenhancement.
PleaserefertoFigure5onpage14foradescriptionofthephaseconfigurations.
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1.2 Theeconomiccaseforchange
1.2.1FasterdigitalmodernisationisavalueformoneyresponsetothechallengesofGB’sbusiestroute
Analysis has examined the case for faster digital modernisation on a key commuter route – the
SouthWestMainLine.Thisindicatesthat:
► DigitaltechnologyavailablenowwoulddeliversignificantreliabilityandcapacitybenefitsfromthePhase2configuration,whichcomprisesTrafficManagement(TM)andETCSLevel2
(L2)1;
► As part of a package ofmeasures, accelerating the deployment of this digital technology
wouldreducethecostofmeetingdemandforcapacity;
► Accelerating digitalmodernisation avoids the need for amajor and costly intervention to
builda5thtrackbetweenSurbitonandLondonWaterloo;
► Upto11moretrainsinthemorninghighpeakhour-30,000newseatsaday,deliveredfouryearsearlierwithDigitalRailway;
► A£60millionlowerinitialcapitalcostinpresentvaluetermsthantheconventionalupgrade
plan;
► 5percentfewerpassengertraindelayminutesasaresultofTM,evenwithanincreasein
trainsonthenetwork.
A furtherupgrade to thePhase3 configuration,which includes thenextgenerationof technology
(ETCSLevel3orL3)2,whenavailable,willextendthesebenefitsformorereliabilityandcapacitywith
lessinfrastructure:
► Resultinginafurthercapitalcostsavingof£70millioninpresentvaluetermscomparedto
thePhase2configuration.
1Pleaserefertosection3.5.2foradescriptionofthesetechnologies.2Pleaserefertosection3.5.2foradescriptionofthesetechnologies.
Analysis ofdemands and constraints on the SouthWestMain Line shows a value formoneycaseforacceleratingdigitalmodernisationalongsideapackageofconventionalmeasures.
Additional routeassessment reinforces this findinganddemonstratesthepotentialfordigitalmodernisationtodeliverbenefitsoneverytypeofroutethatcanbetailoredtolocalpriorities.
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► 9 per cent fewer passenger train delay minutes, even with an increase in trains on thenetwork
3.
Overall, the benefit to cost ratios (BCR) are comparable to other major programmes and justify
further investigation of the benefits on offer. This analysis includes transport benefits (webTAG4
compliant);widereconomicbenefitswillbecapturedinthenextstageofanalysis.
Moredetailedtimetableanalysiswillbecarriedoutatthenextstagetotestthefeasibilityofrunning
11additional trainsata reasonable levelofperformance.To test thesensitivityof theBCRto the
numberoftrains,ascenariowhere6additionaltrainsarerunhasbeenincludedundereachofthe
differenteconomicoptions:
► Option1-Legacyplanandfullconventionalupgradesby2032;
► Option2-DigitalRailwayPhase2configurationplussomeconventionalupgradesby2028;
► Option3-DigitalRailwayPhase3configurationplussomeconventionalupgradesby2028.
Figurei:BenefittocostratiosfortheSouthWestMainLineCasestudy
AdditionaltrainsintoLondonWaterlooinAMhigh-peakhourfromcurrentservice
Option1 Option2 Option3
11(CentralCase) 0.9* 1.3 1.5
6(Sensitivity) 0.4 0.5 0.6
*only10moretrainsarepossible
1.2.2Anetworkwideaccelerationofdigitalmodernisationdeliversbenefitsoneverykindofroute
In addition to the South West Main Line, a further 8 routes have been assessed that are
representative of the constraints and characteristics of the network as a whole. The high level
conclusionsofthatanalysisarethat:
► Digitalbenefitsareacrossthenetworkbuttheydifferdependingonthecharacteristicsoftheroute;
► A system-based deployment of Digital Railway, with a Phase 2 configuration deliverscompellingbenefitswhichcouldbebuiltupon furtherbya futureupgradeto thePhase3configurationoncedeveloped;
3Coreinfrastructurereliabilityimprovedby35percent-moredetailprovidedintheEconomicCase.4WebTAG–webbasedTransportAnalysisGuidance,whichistheDepartmentforTransport’sinterpretationoftheGreenBook
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► Faster digital deploymentmaximises the benefits from investment to passengers, freight
usersandtherailindustry,aswellasthewidereconomy;
► Networkwidereliabilitycanbeimprovedbyupto7percentforthePhase2configurationand11percentforthePhase3configuration.
Figure2providesmoredetail anddemonstrates thepotential forDigital Railway tohave ahighly
beneficialimpactonawiderangeofroutes.
This demonstrates that a digital railway can create options for each line of route to meet local
prioritiesformoretrains,betterconnectionsandgreaterreliability.Italsohighlightstheadditional
capacitybenefitsthatanupgradetothePhase3configurationcanoffer,atalowercost.
DigitalRailwaycanalsooffersynergieswithotherprogrammestogeneratemorereturnfromfuture
investmentininfrastructure,forexamplepotentiallyreducingthecostofelectrificationasaresultof
therebeingnoneedforimmunisationandsignalsightingworks.
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Figureii:AssessmentofDigitalRailwayonsamplelinesofroute
Lineofroutecharacteristics Capacity Reliability Betterconnections LowerCost
SouthWestMainLine–LondonCommuter,freightandinterregional ��� �� � ���
NorthernPowerhouseRail–transformationalprogrammelinkingtheNortherncities ��� ��� ��� ���
MidlandMainLine–longdistancehigh-speed,interregionalfreightandLondoncommuter5 � �� ��� ��
BrightonMainLine–Londoncommuter � ��� � �
Leicester–Ely–FreightFelixstowetonorthandmidlandsandinterregional ��� � �� ���
CardiffValleys–non-Londoncommuter ��� � � �
AberdeentoCentralBelt–interregionalandfreight � � ��� �
Grantham–Skegness–rural - � � �
EssexThameside–Londoncommuterandfreight6 - � �� �
����–OpportunitytoachievegreatercapacitybenefitsandcostsavingswithfutureimplementationofETCSL3aspartofPhase3configuration
5NorthernPowerhouseandMidlandMainLine–DigitalRailwayhasthepotentialtoreducethecostofelectrification6EssexThameside–RouteStudyanalysisbasedonthegrowthforecastsfromtheMarketStudiesshowsthatlengtheningofservicesontheroutewillsupportcapacityontherouteto2043
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1.3 Acaseforsupply-chainstewardshipandcommercialinnovation
1.3.1Aneffectivesupply-chainpartnership
TheProgrammehasconductedan initialreviewoftheskillsandservicesrequiredfromthesupplychaintodeliveranaccelerateddigitalmodernisation.
A gap analysis confirms that the industry capabilities required broadly exist and a procurementstrategy will be created to bridge outstanding gaps which heavily emphasises engagement,informationsharingandcollaborationwiththeindustry.
Theachievabilityof thisstrategy is increasedbytheopportunities for the industry tobenefit fromthelong-termdriversforchangebroughtaboutbyDigitalRailway,whichinclude:
► Marketgrowth,notjustforoperatorswhocanservemorepassengerandfreightcustomersontheexistingnetwork,butthroughouttherailsupply-chain;
► Skills development, catalysed by Digital Railway creating a ‘pull’ for the rail industry andrelatedindustries,suchaspowerandprocess,tofuture-proofitsskillsbase,growthetalentand develop the skills needed to succeed in the growing global market for digitalinfrastructure;
► Presentinganopportunityfortherailindustrytoinnovatethroughthepursuitofnewkindsofcommercialpartnershipsandapplicationofskillstonewareasofbusiness;
► Creating new markets, made possible by the process changes necessitated by DigitalRailway, such as new timetabling planning tools that creates new opportunities foroperatorsandfreight;
► Providing a catalyst to develop the skills and knowledge to position the supply chain asgloballeadersindigitalinfrastructureandgiveitacompetitiveedge.
1.3.2Increasedperformancethroughcommercialinnovation
DigitalRailwayhas identifiedhowandwherethecurrentfundingandcommercial landscapemightbe affected by faster digital modernisation. This confirms that commercial innovation will berequired,butwillalsobeenabled,bytheProgramme–makingitanimportantdriverforincreasedaffordability,efficiency,performanceandsustainablerisk-transfer.
Contractingoptionshavebeenidentifiedtoachievethisandwillnowbetestedthroughconsultationagainstcleartestsofsuccess:
► Valueformoney;
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► Accesstofinance,includingprivatefinance;
► Effectivetransferandmanagementofrisk;
► Strongaccountabilityfordeliveryandperformance;
► Incentivesthatpromotehighperformanceandpartnership;
► Increasedfocusandclarityofpurpose.
Casestudy:howDigitaltechnologyandindustryfundingstructuresaffecteachother
Changing thesignallingsystemrequiresclose integrationbetweentrack-basedequipment,telecoms,train-borneequipmentanddriver skills.Asa result, change inthisareamustbeimplemented in a joined-up way that allows risks and dependencies to be managedeffectively – for example, using a single programme of work under one supplier or acollaborative partnership that allows several stakeholders to integrate their activitiesclosely.
In either case, delivery and funding vehicles must help to allocate commercial risksappropriately between those involved. Thismay require new kinds ofcommercialmodelsthatpromotebehavioursandincentivesthatincreasevalueformoney.
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1.4 Meetingtherequirementsforsuccessfuldigitalmodernisation
1.4.1Deliveryrequirements
Historically,therailindustryendorsedastrategytoreplacetraditionalsignalswithETCSnationallyasexisting signaling systems reach life-expiry. This proposed transition is scheduled to take over 50years,eventhoughtherequiredtechnologiesarebeingdeliveredonnetworksworld-widenowandareadvancingrapidly.
Thislegacyplanlacksthepaceandprioritisationneededtomaximisethebenefitsofdigitalcapacity(to thenationaleconomyand to railpassengersand freight customers)or the strategyneeded toaddress risks in respect to technology integration, business change, supply chain capability andprogrammedelivery.
Having reviewed lessons from other major infrastructure initiatives, Digital Railway has beendesignedtomeetthesuccessfactorswhicharenotaddressedeffectivelyundercurrentplans.
► Thecoreproposalisforadeploymentstrategyrootedinproventechnologyandaphasedbuild-upofskillsandknowledge.Thiswilldeliverfasteraccesstobenefitsfromtechnologythatis:
o Compliantwithinternationaltechnicalstandardstoensureinteroperability;
o CompliantwithUKGovernmentsandEUpolicy;
o Availablenowandinusearoundtheworld;
o Knownandtestedonthegroundthroughanumberofacceleratorprojectsalreadydeliveredorinprogress,includingTM(inRomfordandWalesRailOperatingCentres),ETCSL2ontheCambrianLine,thePaddingtonapproachtoHeathrowandontheEastCoastmainLine.
► The deployment strategy includes the creation of options to upgrade to the Phase 3configuration, including ETCS L3 – subject to the pace of development in technology and(international)standards.Developmentactivitywillbecriticaltoenablingthis,supportedbythekeycriteriaforanareabyarearoll-out.
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DigitalRailwaywillnowdevelopitsdeploymentplanaspartoffurtherdiscussionandresearchwithstakeholders.AnindicativesequenceisshownatFigureiv.Fortheavoidanceofdoubt,thesequencepresentedwillbesubjecttochangeastheDigitalRailwayProgrammeengageswiththeindustrytorefineand finalise the sequence.This includes the routeswhowillbeconsideringhow tomanageother assets alongside digital signalling and train control to give full access to theDigital Railwaybenefits.DeliveryofDigitalRailwayisbasedonthefollowing:
► AnimplementationplanforDigitalRailwaythatistechnology-enabledbutledbybusiness-change-prioritisingdeliveryinareaswherebenefitsandreadinessaregreatest;
► A geographically focused deployment plan that allows resources to be concentrated onspecific areas of the network to provide the required delivery capability, whilstimplementationoverashortertimeframeismorelikelytomaintainimpetusforchange;
► Abusiness case that has tested options against criteria to identify an initial sequence fordeployingDigitalRailwayonanareabyareabasis;
► AprocurementstrategythatkeepsthesupplychaincapabilitycloselyalignedtotheneedsoftheProgramme;
► Asystemsarchitectureapproachthatgiveseveryonebuildingthefuturerailwayacommonand comprehensive understanding of the total framework of change – spanning services,people,processes,andtechnology;
► An established programme governance and assurance plan, which incorporatesindependenttestingbygovernmentbodies.
Keycriteriaforareabyarearoll-out► Southerncapacityimprovement
(passenger);
► Support‘NorthernPowerhouse’objectives;
► Improvefreightjourneytimes&paths;
► Improvedtimetableadherence(Performance);
► KeyLineofRoutecompletion;
► Levelofexistinginvestment.
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Figureiii:Strategysummary
7HerMajesty’sTreasury(2015),“FixingtheFoundations:CreatingaMoreProsperousNation”8UKGovernment(2015)“ChancellorannouncesmajorplantogetBritainbuilding”https://www.gov.uk/government/news/chancellor-announces-major-plan-to-get-britain-building
Govts.Strategy7 Challenge Impactofnotchanging
Usedigitaltechnologytoachieveefficiency;
► Updaterailwaystothecurrentgenerationofproventechnology;
► Meettheneedsofincreasinglydemandingdigitallyenabledusers;
► Enablerailuserstoaccessaccurateappropriateandtimelyinformation.
► Missedopportunityforincreasingcapacityoftherailway;makingGBlesscompetitive;
► Userschoosealternativemodesofincreasinglycongestedtravel;
► Railfallsbehindintheprovisionofcustomerservicescomparedtootherformsoftransport.
Useassetsinamoreeffectivemanner;
► Reducethecostsofoperating,maintaining,renewingandenhancingtherailway.
► IncreasedcoststoGovernments,taxpayersandpassengers,asmoreexpensiveconventionalinterventionsarerequired.
Environment; ► Conformtointernationaltreatyobligationstoreducecarbonemissions.
► Environmentalconsequencesofmoreroadtravel–increasedC02;globalwarming;noise;visualintrusion;airqualityandhealthissues.
ImprovetransportinScotlandandWales.
► Improvejourneytimes,connections,quality,accessibilityandaffordabilityoftransport,whilstreducingemissions;
► Connectregionsinternally,withtherestoftheUK,andglobally.
► Missedopportunityforshorterjourneytimesandimprovedconnectionsleadstouserschoosingalternativemodesoftransport;
► Missedopportunitytomakebetterconnectionswithglobalmarketsandboosttheeconomy;
► Environmentalconsequenceofmoreroadtravel.
Infra.Strategy8 Challenge Impactofnotchanging
KeepLondonMoving;
► MaintainingandexpandingthenumberofpeoplewhoareabletoconnectwiththemarketsandplacesofworkwithinLondon.
► Londonlosesitspositionasaglobalcentrefortradeandindustry;
► UKproductivepotentialandeconomicgrowthislimited.
TransformtheconnectivityoftheNorthofEngland,andacrosstheUK;
► Operatemoretrains–bringingtogetherthedifferentregionsoftheUKandfacilitatingeconomicdevelopmentthrough:freight,businesstravel,tourism,andagglomeration;
► Betterconnectionsthroughflexibleservicestomeetneedsoffreightandpassengers.
► Northerncitiesfailtocapitaliseontheireconomiesofscale;
► Scottishregionsremainpoorlyconnected,andservicesfailtounlockeconomicgrowthandtackleinequality;
► WalesremainspoorlyconnectedwiththerestoftheUK.
HelptheUKtotackleitsenergyneedsandobligations.
► Betterproductofferfromrail,attractingincreasingnumbersofroaduserstorail;
► IncreasecapacityontherailnetworkwhilstlimitingtheC02impactfromconventionalinterventionsandmaterialssuchasconcreteandsteel.
► Environmentalconsequencesofmoreroadtravel;
► Maximumconventionalinterventionsareneeded,increasingtheCO2footprint.
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Figureiv:Initialrollouttranches
ROCLocation YorkThreeBridges Romford Rugby Manch. Derby B.stoke Glasgow Cardiff Didcot Edinb.
Southerncapacityimprovement(passenger) High High High High Low High High Low Low High Low
Support‘NorthernPowerhouse’ High Low Low High High High Low Low Low Low Low
Improvefreightjourneytimes&paths
High Low High High High High High High High High High
Improvedtimetableadherence(Performance)
High High High High High High High Low Low Med. Low
KeyLineofRoutecompletion High High High High High Med. Low Med. Low Low Med.
LevelofPhase2investment High Low High Low Low Low Low Low Low Low Low
Tranche T1 T1T1andT2
T2 T2 T3 T3 T3 T4 T4 T4
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DigitalRailwayisbeingdevelopedinphasestoreducethedeploymentriskswhilstprovidingtimetodeveloptechnologywhichcanmaximisetheeconomicvalueofadigitalrailway.Responsibilityandriskmanagement of developing the component parts of Digital Railway (ETCS, TM, ATO)will restwithNetworkRail,toenableastandardspecificationforthetechnologyinvolved.
Phase1configuration–Strategicpilots
This phase is intended tomaintaincurrent deliverymomentumon strategic projects, featuringthecomponentpartsofDigitalRailway(ETCS,TM,ATO)invarioustargetedinterventions.ThisisintendedtobecompletedbytheendofCP5–someexampleprojectsare:
► TMdeploymentatRomford&WalesRailOperatingCentres(ROCs);
► ETCSL2deploymentonthePaddingtonapproachtoHeathrow;
► ETCSL2deploymentontheEastCoastMainLine.
Phase2configuration–Technologyintegrationandcorebusinesschange
ThisphaseisintendedtocoverthemajorityofthebusinesschangerequiredforDigitalRailway.Thisincludes(butisnotlimitedto):
► RollingstockfitmentwiththetrainbasedcomponentsofDigitalRailway;
► Drivertrainingtousethenewsystems;
► MovementofsignallingstaffintonewROCs.
Once these are delivered, the baseline plan contained within Phase 2 will be to deliver a railnetworkfeaturingETCSL2overatimeperiodatroughlytwicetherateofthelegacyplan(whichsetsouta50yeardeploymentschedule).ThisplancanbeadapteddependingonthesuccessfuldevelopmentofETCSL3(seebelow);
Phase3configuration–Optionalenhancement
This represents an option for further digital acceleration to release additional capacity andimproveperformanceoverPhase2configurationthroughacombinationof:
► Thedevelopmentanddeploymentof ETCS L3. Through the early part of CP6, ETCS L3willbedevelopedinpartnershipwithotherinfrastructureoperatorsacrossEurope.Onceapproved,Phase3willpresenttheoptionforthedeploymentofETCSL3insteadofL2;
► Openarchitecturetoconvertthebespokesignallingsystemstosoftwarebasedopensystems;
► AutomatedDesignthatstandardisesthelayoutdesigntoasmallnumberofpre-approvedrepeatable“buildingblocks”whichallowsmuchfasterdesignanddeployment.
Figurev:Phaseconfigurations.