NEW Research Paper: Total Cost of Ownership
12 May 2010
The cost of installing and maintaining railway signalling could be reduced if rail companies adopt the findings of a new independent study on the Total Cost of Ownership of rail signalling systems.
The study, the third in a series examining the costs and benefits of investment in transport networks, was commissioned by Invensys Rail and undertaken by strategy consultancy Credo. It builds on earlier findings which concluded the most economically beneficial method of increasing rail capacity is through signalling, particularly the latest in-cab solutions.
By adopting a variety of methods advocated in the new study, and focusing on Total Cost of Ownership (TCO) rather than just the cost of purchase and installation, operators can benefit from a significant increase in value from their existing and new signalling systems.
After analysing similar in-service operations in North America, Europe and Asia, the study found that 60% of a signalling systems’ TCO relates to implementation and the remaining 40% to operation, with the major component across both being labour costs. Using real life examples, the study analyses a variety of initiatives that can be adopted to reduce TCO, for example using modular signalling systems formed from standard components, which saves money in the long term and also increases reliability. Comparing rail to other industries, such as telecommunications, it also sounds a warning for those operators who focus on the cost implementation in the short term and fail to recognise the cost of operation in the longer term, and recommends a new approach to financing as a result of a closer appreciation of TCO.
Other ways of reducing operating costs are also explored and analysed - including the use of condition-based monitoring equipment to anticipate equipment failures and replace components before they expire, and using handheld computers to improve staff training and enhance the quality of installations.
Invensys Rail President and CEO James Drummond said: "This is an important body of work which confirms the importance of looking at the whole picture when making investment decisions on signalling. Ensuring operators gain the maximum return on their investment, both in terms of installation and ongoing operation, is a critical aspect in ensuring the long-term success of rail transportation around the world.”
The report is available to download now at:
http://www.invensysrail.com/index.php/thought_leadership/whitepapers