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NATS(EnRoute)plcServiceandInvestmentPlan2017IndependentReviewerReport
GrantBremer,ChasePartnersLimited
17January2017
NOTE
ThisdocumenthasbeenproducedfortheCAAaspartofCondition10totheNATS(EnRoute)[NERL]Licenceandisbasedonobservationsandresearchbetween1Sep16–17Jan17byGrantBremer.Thisreportsummarisestheauthor’sfindingsandopinionsandrepresentsasnapshotofthesituationasof17Jan17.
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BackgroundCondition10(3)oftheNATS(EnRoute)plc[NERL]AirTrafficServicesLicencedated29June2016requiresNERLtoprepareaServiceandInvestmentPlan(SIP)thatreferstothemostrecentBusinessPlanandtherelatedAirspaceandTechnologyplanseachyear.Condition10(11)saystheSIPshallprovideanupdateofNERL’sinvestmentplans,includingTechnologyandAirspaceprogrammes,withanupdateofdeliveryagainstpreviouslyprovidedprogrammemilestonesandanymaterialchangesintheexpectedlevelsandqualityofservicesprovidedbyNERLaswellasanylikelyimplicationsforUserchargesbeyondthecurrentReferencePeriod(RP2).Additionally,whenapprovingNERL’sSIPfor2016,theCivilAviationAuthority(CAA)statedthat1:
• WhereNERLisproposingtochangeserviceandinvestmentplans,itshouldclearlyarticulatenotonlytherationaleforchange,butalsoprovideoptionsandassociatedcosts/benefitsforconsiderationbyairlinesattheearliestpossibleopportunity;
• TheSIPshouldexplicitlyarticulateairlines’feedback/viewonproposals,alongwithNERL’sresponse;
• TheSIPshouldsetoutperformanceagainstallindividualkeyperformanceindicators(notethatthe2016SIPdoesnotreportKEAperformance);
• TheSIPshouldprovideforecastunitcostsandchargesprofilesforthecurrentandfollowingreferenceperiod,basedoncurrentassumptions;
• Whereprojectsandprogrammesarerenamedand/orcombined,appropriateandclearlinksbetweentheoldandnewshouldbearticulated.
ReferencePeriod2(RP2)BusinessPlanThecurrentNERLBusinessPlan2coverstheperiodto31Dec19.TheBusinessPlanoutlinedtheSIPapproachanddefined9programmeareas3:
• AirspaceDevelopment;• CentresSystemsSoftwareDevelopment;• CNSInfrastructure;• SafetyNetsandAirspaceEfficiency;• Environment(CO2andFuelSavings);• iTECFDP;• DevelopmentofSAATS;• FacilitiesManagement;• Military.
InthepublishedBusinessPlan,thecapitalinvestmentwasassessedtobe£575m,in2012prices,includinganadditional£15mfortheLAMPandNCTAairspaceprogrammescomparedtothelowcaseplan.Theinvestmentprogrammeforecastbenefitswere4:
BenefitCategory EstimatedBenefitEnabledbyRP2InvestmentSafety 43pointreductioninNERLweightedSSEIndexFuelSavings c1mtonnesCO2pa(incOceanicairspaceandairports)ServiceCapacity 20-25extraflightsperbusyhourOperatingCosts c£10mpareductionAssetSustainability Reductioninnetweightedbusinessriskofc£520mCarbonFootprint Reductionofc34mtonnesCO2paacrossNATSestate
1.CAAOfficeofGeneralCounsel[fromDavidStoplar]toNERLrefLicenceCondition10.7,dated1Jul16.2.NERLRP2RevisedBusinessPlan(2015-2019)dated18Oct13.3.NERLRP2RevisedBusinessPlan(2015-2019)dated18Oct13,page39.4.NERLRP2RevisedBusinessPlan(2015-2019)dated18Oct13,page41.
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Theplannedoutputsfortheinvestmentwere5:
OutputDimension MetricSafety AccidentRiskperFlight 13%reductionPrice RealreductionincostbaseendRP2vendRP1 -18%DeterminedCosts CumulativedeterminedcostsavingsduringRP2vendRP1 -£80mpaEnvironment CO2EmissionsTarget(-10%/flightby2020) 9%by2019
AnnualFuelSavingenabledby2019(v2012)(exc.Oceanic&Airports)
£180mpa(277,000Tpa)
ServiceDelivery TotalATFMDelayallcauses(avginRP2)(exctransitiondelay) 6-12secsNERLEnRouteATFMDelay(exctransitiondelay) <6secsDailyDelay>10,000min <5daysper
yearAirportATFMArrivalDelays(mainlyweatherrelated) c20%reductionServiceResilienceRisk LowRisk
Investment TotalRP2investment(at2012prices) £575mTheBusinessPlanalsonotedthatNERLwouldmanagethedeliveryofinvestmentstocommittedcost,scheduleandbenefits)viatheSIPprocess.SIP16Inadditiontoacceleratingsomepartsoftheprogrammetoreducespendingonlegacysystemsandequipment,the2016SIP(SIP16)updatedcoststo£620minoutturnpricesandwithupdatedinflationassumptions.SIP16revisedtheprogrammeareastobe:
• AirspaceDevelopment;• LegacySystems;• Platform&Deployment;• TrajectoryServices;• CriticalFacilities;• Comms,Info&SurvServices;• FoundationServices;• FacilitiesManagement;• CO2andFuelSaving;• RiskandContingency;• Oceanic;• Military.
SIP16alsocommittedNERLtothefollowingupdatedtargets6andassertedthatalltargetswereontrackforsuccessfuldelivery,excepttheenvironmentaltargetsthatwereallshownasatriskbecauseoftheimpactofthedelaytotheLAMPprogramme7:
OutputDimension MetricSafety AccidentRiskperFlight 13%reductionPrice RealreductionincostbaseendRP2vendRP1 -21%DeterminedCosts
CumulativedeterminedcostsavingsduringRP2vendRP1 -£80mpa
Environment CO2EmissionsTarget(-10%/flightby2020) 9%by2019AnnualFuelSavingenabledby2019(v2012)(exc.Oceanic& £180mpa
5.NERLRP2RevisedBusinessPlan(2015-2019)dated18Oct13,page3and16.6.SIP16FinalSubmissionforCAASubmission(Issue1.2),page10.7.SIP16FinalSubmissionforCAASubmission(Issue1.2),page52.
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Airports) (275,000Tpa)ServiceDelivery
TotalATFMDelayallcauses(avginRP2)(exctransitiondelay) 6-12secsNERLEnRouteATFMDelay(exctransitiondelay) <6secsDailyDelay>10,000min <5daysper
yearAirportATFMArrivalDelays(mainlyweatherrelated) c20%reductionServiceResilienceRisk LowRisk
Investment TotalRP2investment(atoutturnprices)8 £620mNote:ItalicisedtargetsarenotspecificallymentionedinSIP16,butareimplicitlystillvalid.
SIP17AfterconsultationwithCustomers,NERLprovidedSIP17asacomprehensiveslidedeck/briefingpacktotheCAAon23Dec16.TheSIP17packcoveredawiderangeoftopicsthatprovidedappropriateandhelpfulcontextforSIP17.Inparticular,NERLhighlightedthattheoriginalRP2planwasbasedonamodestforecastintrafficgrowthandwithhighfuelprices9.However,sincetheRP2planwasagreedfuelcostshaveunexpectedlyhalved,andsummer2016sawunexpectedlyhightrafficlevelsneitherofwhichhadbeenforecast.Thereisalsoanemergingneedtomakeservicemoreresilient.NERLassertedthatthisisanadditionalandsignificantrequirementthatneedstobereflectedwithinthedeliveryprogramme.Considerableefforthasbeeninvestedindevelopingmoredetailedandcompletebottom-upplansfordeliveryofcriticalsystemsandcapabilities.InfurtherdevelopingtheirplansNERLhasanincreasedawarenessofthecomplexityofmanagingtransitionandtrainingespeciallyinthecontextofhigherthanplannedtrafficvolumesandthattheseessentialareasneedcarefulandclosemanagement.Moredetailedplanningandcostingofprogrammes,aswellastheaccelerationoftheSESARProgramme,hasallowedamorerigorousunderstandingofthecostsneededtodeliversuccess.TheaccelerationofSESARdeploymenthasallowedNERLtosecureINEAfundingofc£100m,withthepossibilityofafurther£30mafterthe2016AwardCycle,whichwilloffsettheimpactofincreasedcapitalexpenditureassociatedwithSIP17.SIP17Plan&MilestonesSIP17outlineshowNERLwilldeliverboththeAirspaceandTechnologyprogrammesthroughRP2.FortheAirspaceProgrammethekeyplannedmilestonesare10:
RP2Milestone Description CompletionAS:TimeBasedSeparation FullOperationalServiceforLHR May15✓AS:LAMP1A AirspacechangesdeployedincludingLCY
PointMergeFeb16✓
AS:SwanwickAirspaceOptimisationProject:Module1
ChangestotheACHurnSectorstoreducetrackmileageforGatwickandHeathrowarrivals
Nov17
AS:PLASNearTerm
IoM/AntrimChangeswithPBNroutestructure
Dec17
AS:SwanwickAirspaceOptimisationProject:Module2
IntroductionofhigherlevelrouteforGatwickarrivalsfromtheNorth
Mar18[1]
AS:EnhancedTBS
RECATEUseparationstotouchdownandOptimisedRunwayDeliver(ORD)
Mar18
8.SIP16FinalSubmissionforCAASubmission(Issue1.2),page56.9.NERLSIP17,Final,dated23Dec16,page3.10.NERLSIP17,Finaldated23Dec16,page50.
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AS:FutureAirspaceCapability:ORTAC
WideningoftheBrest/JerseyinterfaceatORTAC
Mar18[1]
AS:FutureAirspaceCapability:Shawbury
ATSRoutesacrossShawburyTriangle(knownasMOSUN)
Mar18[1]
AS:FutureAirspaceCapability:Capital/Central
TCCapital/ACCentralre-sectorisation
Mar19[1]
AS:AMANEnhancements
AMANenhancementsrequiredtosupportIPAdeliveredintooperationalservice
Sep19
AS:PLASMediumTerm
ManchesterTMAairspacechangesincludingPointMerge
Nov19
AS:IndependentParallelApproach FullOperationalServiceforLHR,subjecttoHALcommitmentandpublicconsultation
Nov19
Note:[1]TheseprojectsarecurrentlyintheirFeasibility&Options(F&O)phases–milestone/datewillbeconfirmeduponcompletionofF&O.
WhilstNERLhasdeclaredtheseAirspacemilestones,nodeliveryplanthatdetailshowtheywillbedeliveredorwhatdependencies(technologyorotherwise)wereprovidedinSIP17,althoughNERLstatedthatthesewouldbeprovidedintheAirspaceandTechnologyplansdueforsubmissioninMarch2017.ThedeclaredSIP17TechnologyProgrammekeymilestonesandstatusare11:
RP2Milestone Description CompletionDP:TemporaryOperationsRoom TransitionofSwanwickAreaControlintothe
newTemporaryOperationsroomcreatingthespacewithinwhichthenewcombinedoperationsroomwillbecreated
Nov15✓
DP:iTECPCUpperAirspace
TransitionintoFullOperationalService(FOS)ofiTECwithinPrestwickUpperAirspace
Jun16✓
DP:FoundationServicesSpringboard
TestandDevelopmentfacilityallowingapplicationtestingtobecarriedoutonthenewinfrastructureandnetwork
Sep16✓
DP:Baseplatformavailable
Thefullbaseplatformservice(applicationsandinfrastructureservices)willbecreated,butnotintroducedoperationally
Dec17
DP:Simulationplatformavailable
Afunctionallyrepresentativesimulationenvironmentwillbecreatedusingthenewbaseplatformallowingcontrollersandengineerstotrainonthenewplatformbeforeitisintroducedoperationally
Mar18
DP:TerminalControl:ElectronicFlightStrips
TerminalControlmoveoffpaperflightstripsontoelectronicflightstrips,providingimmediatesafetyandefficiencybenefitsandanecessarysteppingstonetowardsafulltoolbasedoperations
Jun18
DP:AreaControlVoiceCommunication
AreaControlmovesovertoanewVoiceoverIPcommunicationssystemtogetherwithahigherperformancebackupsystem
Feb19
DP:EnRoute:AreaControl&PCUpperiTEC
AreaControlandmilitarymoveintothecombinedopsroomatSwanwicksupportedbyiTECandFourSight.PrestwickUpperAirspacemovesontothelatestversionofiTECwithFourSight,commonacrossbothcentres
Mar20
11.NERLSIP17,Finaldated23Dec16,page64.
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ThesemilestonesarepartoftheoverallTechnologyPlanthathasaBaselineDeploymentSchedule12of:Thereislimiteddependencymappingwithinthishigh-levelschedule,butthereisinsufficientdetailtoassesstheoverallviabilityoftheplanpresentedinSIP17,althoughsomedetailhasbeensharedwiththeauthorindependently.TheSIP17packalsoprovidedafinancialupdateonthecostsassociatedwithdelivery13:ReportingTheSIP17packreportedonServicedeliveryandInvestmentPerformancethrough2016.TheServiceDeliveryelementofreportingappearstobecomprehensiveandprovidesagoodoverviewofNERLperformanceduringtheyearasrequiredbytheCAA14.IntermsofreportingontheprogressofSIP16delivery,SIP17doesnotspecificallyhighlightprogressagainstSIP16milestones,althoughakeyelementoftheSIP17wastodescribechangestotheTechnologyPlanandwhythishadchanged.However,sufficientdataisprovidedtoallowsuch
12.NERLSIP17,Finaldated23Dec16,page63.13.NERLSIP17,Finaldated23Dec16,page70.14.CAAOfficeofGeneralCounsel[fromDavidStoplar]toNERLrefLicenceCondition10.7,dated1Jul16.
RP2 Investment Plan
Technology Plan
> Baseline Deployment Schedule
SIP17 Final Page 63Forecast vs last SIP The table below shows the deltas between the Revised RP2 forecast and the SIP16 Report
RP2 SIP Programme, values in outturn prices £m SIP 16 Revised RP2 Forecast Variance (Fcast v SIP16 Plan) Platform & Deployment 62 91 (29)Trajectory Services 190 222 (32)
Comms, Info & Surv Services 69 99 (30)
Critical Facilities 35 38 (3)
Foundation Services 83 99 (16)
Airspace Development 68 65 3
Legacy Systems 56 71 (15)
Facilities Management 21 21 -
CO2 and Fuel Saving 5 5 -
Risk and Contingency 5 5 -
Oceanic 6 22 (16)1
Military 20 12 8
Total 620 7502 (130)
SIP17 Final Page 70
RP2 Capex Plan
1. This figure has been subject to separate consultation - see slides 67-68. An update will be provided in 2017.
2. There remains uncertainty in the overall outturn costs of the programme within RP2 until the planning processes are complete. NATS estimates that the outturn will be in the range £750m- £780m.
3. Values are in outturn prices and reflect latest inflation forecasts. Actual values may differ due to changes in inflation
4. Of the £750m, c. £90m relates to un -hedged non sterling expenditure (mainly Euro, assumed rate of £1 = €1.11)
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acomparisonoftheSIP16DeploymentSequence15andtherevisedscheduledetailedinSIP17.ThekeydeploymentdatesinSIP16comparedwithSIP17are:
DeploymentPoint SIP16Date
SIP17Date Slippage Comment
1. SwanwickACtoTempOpsRoom
2015 Nov15 Nil Complete
2. iTECliveinPrestwickUpper 2016 Jun16 Nil Complete3. SwanwickACnewVoice
Comms2016 Feb19 26months+ --
4. FDPonStratus/Nimbus 2017 Mar18 3months+ Thiscapabilitywillnolongergolive,butisreplacedbythesimulationplatformavailableasamilestonetowards[6]
15.SIP16FinalforCAASubmission(Issue1.2),page17.
Prestwick Upper 2 4 8
Deployment sequence & planned timing by operation*
6. Swanwick AC new ITEC ops room using enhanced iFACTS (Foursight)
7. Swanwick TC joins ITEC ops room
8. Prestwick new ITEC ops room with Foursight
9. Foursight deployed in lower airspace
Common platform
Technology
1. Swanwick AC moves to temporary ops room
2. ITEC goes live in Prestwick Upper
3. New voice comms in Swanwick AC
4. ITEC FDP on new common hardware platform (Stratus) and communications infrastructure (Nimbus)
5. Electronic flight strips in Swanwick TC
Swanwick AC 1 3 6
Swanwick TC 5 7
9
PrestwickLower
8
2015 2016
2016 2017
2017-18
2018
2019
2019
2021
*Dates are indicative with higher certainty earlier in the programme
1. Strategic Update
SIP 2016 Final Page 17
SIP16
RP2 Investment Plan
Technology Plan
> Baseline Deployment Schedule
SIP17 Final Page 63
SIP17
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5. ElectronicflightstripsinSwanwickTC
2017-18 Jun18 -- --
6. SwanwickOpsRoomusingiTEC/FourSight
2018 Mar20 15months+ --
7. SwanwickTCjoiniTEC 2019 2020+(RP3)
12months+ --
8. PrestwickonFourSight 2019 2020+(RP3)
12months+ --
9. FourSightinLowerAirspace 2021 2020+(RP3)
-- --
NERLfeltthatithadbeenclearthroughSIP16andtheinterimSIPthattheDeployingSESARprogrammewasatanearlystageofdevelopmentandthattheplansandcostswereindicative,especiallyforthelaterelementsoftheprogramme.However,itisclearthatthissituationdoesnotappeartohavebeenunderstoodorappreciatedbyeithertheCAAorCustomersatthetimeandonlybecameapparenton1Nov16atthefirstSIP17Consultationevent.Therewaslittleanalysisorexplanationofthedelayinthedeliverymilestonesbeyond16“wherethedateshavechangedthisreflectsthedevelopmentofthedetailedintegratedplanbasedonthe“MostLikely”deploymentdates”.Inpart,thisexplanationreflectsthepreviouscommentregardingtheemergingcomplexityoftransitionandtrainingfornewsystems.Inlinewithbestpracticeofintegrationofusersanddeliveryteams,itappearsthatsomeoperationalstaffareactivelyengagedwith,andsupporting,programme/projectdelivery.Toensurethatanysurgeinliveoperationsdoesnothavedirectandnegativeimpactonprogramme/projectdelivery,andtoensurethattherearesufficienttrainedpersonnelavailabletosupporttransitionandtraining,itwouldbeappropriateforNERLtosharetheirworkforceplanningasakeysupportingelementtotheSIP.Giventhelead-timefortherecruitmentandtrainingofcontrollersitisimportantthatthiselementofplanningisdevelopedandimplementedinparallelwiththeinvestmentplan.NERLhavestatedthatwhilethiswasnotsomethingthathadbeenincludedintheSIP,furtherinformationwillbeprovidedintheforthcomingAirspaceandTechnologyplanstorespondtotherequirementfor“anexplanationofwheretraininganddeploymentactivitiesmayimpactservicequality”.ConsultationTheSIP17consultationprocesshasbeenwelldetailedintheSIP17pack.NERLhasengagedwithitsprimaryCustomers,notedthefeedbackontheemergingSIP17plan,andrespondedtothewiderangeofqueriesthatwereraised.TheCustomerConsultationperiodranfrom25Oct16to14Dec16andwasacombinationoffacetofacebriefingswithopen“Q&A”sessionssupportedbywrittenupdatesandwebinars.The6keyissuesthatCustomersraisedduringtheConsultation,andthehighlightsofNERL’sresponse,were:
Issue NERLResponseConfirmationthatLAMP2needstobedeliveredattheearliestopportunity
NATShasproposedarevisedAirspacePlantoincreasecapacityanddeliverfuelefficienciesinRP2,withsomeearlyelementsofLAMP2,buttheremainderofLAMP2isdependentonnewtechnologyandwillbedeliveredinRP3
TheneedtoprovidetransparencyanddetailtocustomersontheDeployingSESARProgramme,tofacilitateanunderstanding
NATSproposesmorefrequentanddeepercustomerengagementoverRP2toprovidecustomerswithgreatervisibilityofthecapital
16.NERLSIP17,Finaldated23Dec16,page60.
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ofthestatus/risksoftheprogramme,andstatusofcapitalexpenditure,andtoprovideassurancethattheplanisdeliveringvalue
investmentprogramme,includingQuarterlyreviews;deepdivereviewsandengagementwiththeCAA-appointedIndependentReviewertohelpdevelopatransparentandeffectiveinvestmentreportingregime
TheneedtojustifytheincreaseinRP2capexenvelopefrom£620mto£750m-£780m,andtoexplainthedis-benefitsofconstrainingRP2capexto£620m,andtodescribealternativeoptionsthathadbeenconsidered
NATSconcludedthatholdingto£620mwoulddelaythebenefitsofkeymilestonedeliveriesby2to3years,andresultin:Investmentinlegacysystemswithknownlimitedlifeandthuspay-back,estimatedtoadd£50mtooveralllifecyclecosts;JeopardisingNATSabilitytomeettherequirementsofthePilotCommonProject;CustomersnotfullybenefitingfromtheINEAco-fundingsecuredbyNATSunderthe2014and2015AwardCycles,c£50mofwhichislinkedtodevelopmentmilestonesincludedinthe£750m-£780mplan;Increasingtheriskofsystemoutagesandcorrespondingimpactsonservicedelivery
Adescriptionofthe£750m-£780mplan’sexpectedimpactonusercharges,comparedtothe£620mplan,isnecessary
RP2UserChargeswillnotbeaffected.RP3-RP5pricesarelikelytobeloweriffundingisagreedfortherevised[£750-780m]plan
CustomersraisedconcernsovertheSENATEinvestmentaspartoftheOceanicConsultation
CustomercouldnotsupportSENATEinvestmentyetsoNATSwillre-planandre-consultin2017
ClarityontheuseandtreatmentoftheINEAfundingisrequired
SpecificguidancefromtheCommissionontheuseandtreatmentofINEAfundsisexpectedin2017butNATSbelievethatpositionisthatitshouldbenobetterandnoworseofffromreceivingINEAfunding.HoweverNATSrecognisethatcustomerswouldlikeINEAfundingtobereturnedrelativelyquickly(i.e.morequicklythan15years),andwillengagewithregulatorsandcustomerstoagreeanappropriateapproach
FindingsNERL’sSIP17providedadetailedupdateonmanyaspectsofservicedeliveryandinvestmentplansforRP2underSIP17.IntermsofthespecificrequirementsofCondition10andtheCAA’sletterof1Jul16,NERLhasprovided:
• Anupdateofinvestmentplans,includingTechnologyandAirspaceprogrammes.HoweverNERL,basedonitslatestassessment,donotbelievethattherearecrediblealternativeoptionsforthecriticalenablingTechnologyprogrammethatcouldbeofferedforconsiderationbytheairlinesorCAA;
• LimitedprogrammedeliveryupdateagainstpreviouslyprovidedprogrammemilestonessincethemilestoneshadonlybeenprovidedintheInterimSIPnotinSIP2016;
• Commitmentstomaintaincurrentservicelevelsandquality;• Tothelimitedextentpossible,analysisofimplicationsforUserChargesbeyondRP2;• Detailedcommentsonthechangedbusinessenvironmentthathascausedchangesin
plans;• Detailedfeedbackandresponsestoairlines’arisingfromtheConsultationanda
commitmenttoimproveCustomerliaisoninplandevelopmentgoingforward;• Performanceagainstserviceperformanceindicators;
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However,andwhilstrecognisingtheconsiderableamountofdetailprovidedinSIP17,thereareanumberofconcernswiththeSIP17asithasbeenpresented.SIP17Format.Theuseofamixedapproachslidepackagetoprovidethescopeanddetailofa£750mdeliveryprogrammeisnoteasytounderstandalthoughitisrecognisedthatthisisanacceptedapproachthathasbeenusedformanyyears.Ifaslidedeckisthepreferredoptionforallstakeholders,thengreaterclarityandconsistencyinnomenclatureandreferencingisessentialwithmuchbettersignpostingofimportantdetails.Themixingofprogrammeareas,targets,milestonesandprojectswithlittleclarityonrelationshipsispotentiallyconfusingandunhelpful.SIP17Detail.TheSIP17packseemstobeaimedatprovidingahighlevelviewofNERL’splansyetfrequentlydivesintodetail,oftenoutofcontext,thatisagainconfusingandunhelpful.Moreover,thereisinsufficientdetailinkeyareassuchaswhataretheactualconstituentsofSIP17?SIP17providesaspecificlistofmilestonesfortheAirspaceandTechnologyprogrammes,butitislessclearwhatcommitmentexistsforelementsoftheprogrammenotcoveredbythesemilestones.ReportingagainstSIP16milestones17isnotagainsttheDeploymentPointsbutcitesspecificprojectdeliveriesthatweredetailedinSIP16annexesandInterimSIPbutnotaspartofanintegrateddeliveryplan.ProgrammeOutcomes.Programmedesignbestpracticewouldexpectprogrammeworkpackagesorprojectstobelinkedtospecificagreedoutcomestodemonstratea“causallink”betweenworkandoutcomes/benefits.However,SIP17simplyarticulatestargetsinkeyareassuchassafety;price;costs;environmentandservicedeliverywithnolinkagesbetweenplannedinvestment/projectsandhowtheproposedtargetswillbedeliveredorenabled.Theproposedmilestonesarenotdirectlycorrelatedwithprogrammetargetsorplannedoutcomessoitisimpossibletoassesstheiraccuracyorusefulness.ThedepthandqualityofNERL’sapproachatprojectleveliscommendableandtheinternalgovernanceandbenefitsmanagementappearstoberobust.However,atthetopprogramme/portfoliolevelthecrossprojectdependenciesandlinkstotheoverallaimoftheSIPislessclear.Withoutthis“goldenthread”topulltheworkpackagestogetherasanintegratedprogrammeofworkitishardtoassesswhatworkisessentialtomeettheoverallaimandwhatworkisoptional,ortomakeanyvalueformoneyassessment.Additionally,whilstNERLhasmademuchofthechangeinthebusinessenvironmentbetweenSIP16andSIP17,forensicanalysisonwhytheforecastswheresowrongandhowNERLwillpreventarecurrencetopreventSIP18beinganothersubstantial,andunexpected,changewouldhelpbuildstakeholderconfidenceinthefuture.Consultation.Asnotedabove,NERLconsultedwiththemajorairlineCustomersbetween25Oct16and14Dec16anddidamendtheplanstoreflectmuchoftheCustomerfeedback.However,whilstNERLengagedwithcustomersduring2016throughtheInterimSIPandAirspaceworkshop,itdidnotprovideanyrealindicationofthescaleofchangefortheTechnologyplanbeforetheformalConsultationperiod.GiventheconsiderablechangebetweenSIP16andSIP17(inccostgrowthofc£150m;significantchangestotheanticipatedprogrammetimetableandnotificationthattheSIP16costbasewasonlyaroughorderofmagnitudecostbasedonatop-downviewratherthanafully-costedprogramme)thisconsultationperiodwasfartooshort.Effectivelythis
17.Forinstancepage38showsmilestonedeliveriesthatwerecitedinSIP16AnnexesandtheinterimSIPonlylimitedcontextisavailablewhichrenderstheupdatesomewhatmeaningless.
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meantthattheSIP17planwasalmostafaitaccompliwithonlyminorchangespossible.InthefutureNERLshouldconsiderengaginginopenconsultationthroughouttheyeartominimisethepressureduringanyformalconsultationperiodandtoensurea“nosurprises”approach.ThiswouldsignificantlyhelpNERLinexternalstakeholdermanagement.Itwasnotablethattherewasverylittleconsultationwithotherkeystakeholderssuchasairports.WhilstairportsarenotdirectCustomers,andthereforehaveaverydifferentrelationshipwithNERL,theydorepresentaconsiderablepartoftheaviationsectorandshouldbeactivelyengagedthroughthesemajorinvestmentprogrammestoaidindustry-widealignmentofaimsandinvestments.TherecentchangestoCondition10oftheNERLLicenceaddsanewobligationtoconsultairportsontheNERLinvestmentprogrammeandNERLfullyintendstomeetthisobligationgoingforward,althoughduetothenatureofthechangestotheplansonthisoccasionNERLfeltthatitwassensibletocompletetheairlineconsultationfirst.Thischangeforfutureconsultationwillbenefitairports,airlines,NERLand,mostimportantly,thefare-payingpassengerswhoaretheultimatecustomersforalltheseservices.Reporting.ThereportingelementofSIP17thathasbeenprovidedisdetailedinsomeareas,particularlyinrelationtoServiceDelivery,butlesssoinprogrammedeliverywithlimitedanalysisorcommentonwhychangesbetweenSIP16andSIP17haveoccurred.Manyofthechangesareduetotheincreaseinunderstandingasplanshavemovedfromahigh-level,indicativeplan,tomoredetailedanddevelopeddeliveryplans.Onaninvestmentprogrammeofthisscale,CustomersandtheCAAshouldexpectmorethorough,forensicanalysisofthecostincreaseandtheprogrammeoutcomeslippagesthatCustomersarepayingfor.ThelackofsuchanalysisgivesCustomersarealfeeingthatNERLissimplysaying“trustus”butwithlittlecollateralevidenceofwhytheycan,andwhytheyshouldexpectbetterdeliveryperformanceinthefuture.ConclusionNERLhasclearlycommittedconsiderableeffortintogeneratingSIP17.NERLalsohasrecentlyintroducedarigorousinternalP3O18capabilitythatwillprovidearealdeliveryenhancement.ResearchintotheworkbehindSIP17hasshownthatNERLisfullycommittedtodeliversuccessanddoesappeartohaveCustomerneedsclearlyatthecentreofitsendeavours.Thereisnodoubtinthedrive,determinationandprofessionalapproachofNATS’seniorleadershipandtheP3OcommunitywithinNERL.Indeed,thetop-downandbottom-upreviewoftheprogrammesandconstituentparts,intandemwiththeimplementationofacentralP3O,shouldgiveconsiderableconfidenceinfuturedelivery.NotwithstandingthisdriveandcommitmentSIP17,asitiscurrentlypresented,provideslimitedevidenceofthelinkagebetweenwork,outcomesandbenefits.Anover-archingstrategyfora“causalchain”isessentialforanymajorinvestmentplan.SIP17hasthecomponentsforaneffectiveSIP,butwithoutthislinkbetweenworkpackages,outcomesandbenefitstherecanonlybelimitedconfidencethatitwilldeliveralloftherequiredoutcomesandbenefitswithintheagreedcostsandtimescales.NATS/NERLhasindicatedthataprerequisiteforimplementationofSIP17willbeCAAapprovaloftheform,scopeandlevelofdetailofthesubmittedplan.AnyapprovaldelayorrejectionoftheSIP17wouldmeanthattheprogrammewouldbedelayedpendingapproval,withconcomitantincreaseinrisksandcostsandaninevitabledeliverydelay.Withthesefactorsinmind,andlooking
18.Portfolio,Programmes,ProjectsOffice.
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forwardratherthanback,thefollowingactionsshouldbeconsideredasamatterofurgency:• NERLshouldprovidefutureSIPs,interimSIPsandtheAirspaceandTechnologyprogrammesin
amorerecognisableandaccessibleprogrammestructurewithimprovedclarityanddetailon:o SIP/Programmeaimsandconfirmationoftheconstituentparts:o Intendedoutcomesandbenefits;o Workstream/packages/keyprojects;o High-leveldependencies;o Linksbetweenwork/outcomes/benefits;ando Programmemilestonesthatarelinkedtodeliveryoftheagreedoutcomes/benefits.
• TheforthcomingAirspaceandTechnologyProgrammesshouldbedevelopedasco-ordinated,linkedprogrammesandincloseconjunctionwithstakeholdersincludingairports;
• NERLprovidestheinterimSIP17,nolaterthan30Jun17,intherevisedformatthatintegratesSIP17,theAirspaceandTechnologyProgrammes,sothatCAAcanconsiderwhethertheinterimSIP17providessufficientdetailintherightform,scopeandlevelofdetailforenablingsuccessandisacceptablewithinCondition10oftheLicence.
ThisreporthasdocumentedthefindingsofanindependentreviewoftheNERLSIP17.WhilsttheCAAwillconsidertheseissuesandwhethertheSIP17initscurrentformisacceptableandnotingthatthereareseveralareasthatrequireurgentattention,thefocusshouldbeonlookingforwardnotback.Thefindingsandconclusionsofthisreportareaimedatimprovingthecollectiveunderstandingof,andcommitmentto,aninvestmentprogrammethatwilldelivertherequiredandagreedbenefitswithintheagreedcostandtimewithouthinderingorslowingprogress.
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