A tale of two tubes

The hugely contrasting fortunes of Tube Lines and MetroNet - the two companies which share the £16bn, 30 year PPP contracts to overhaul the London Underground system - offer a salutory insight into the power of management, both good and bad. Given that the two firms are doing essentially the same jobs on different bits of the network, their relative performances should vary more or less directly in proportion to the quality of their management.

by
Last Updated: 31 Aug 2010

In which case MetroNet boss Andrew Lezala and his colleagues have got some work to do. MetroNet's train-load of troubles has been growing longer and getting increasingly out of control since buckling rails first caused passengers to blow their safety valves in last summer's heatwave. A catalogue of continuing problems with both track and station upgrade programmes has left the firm now facing the prospect of a crippling £1bn fine for conducting its business in a potentially "uneconomic and inefficient" manner. Given the pretty generous terms which the Tube PPP deals offered their contractors in the first place, getting to such a parlous position only five years into a 30 year term is quite a feat.

Tube Lines, on the other hand - responsible for the Jubilee, Piccadilly and Northern Lines, while MetroNet does the rest - is doing relatively well. Its station programme is ahead of schedule and while it has experienced its fair share of problems elsewhere - especially with the (new) trains and (ancient) signals on the Northern Line - in the words of LU managing director Tim O'Toole it has done a ‘fantastic job' on the Piccadilly Line and has made ‘improvements' on the Jubilee. (For more on Tube Lines read this piece from the MT archive).

If the fine is levied - a decision dependent on the outcome of a review ordered by mayor Ken Livingstone - it's even possible that MetroNet may go bankrupt, an eventuality thought so improbable when the deal was drawn up that the encyclopaedic 2800 page contracts don't even cover it.

It's all richly ironic, given that the claimed superiority of private over public sector management expertise was one of the key selling points of the PPP deal in the first place. But as the LU story demonstrates all too clearly, there are bad private sector organisations as well as good. Just like the public sector, really.

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Upcoming Events

Subscribe

Get your essential reading delivered. Subscribe to Management Today