The parties recognise the importance of establishing and meeting interim milestones on the way to delivering better performance in the long run. TfL adopted this kind of approach to the PFI contract for the new "Oyster" card that passengers started using in January 2004. TfL and the contractor, Prestige, agreed confidence building milestones such as the development of a staggered launch in the months leading up to full launch, which avoided what TfL describes as a "Christmas Tree" scenario involving a one-time, annual flick of the switch and a hunt for the failed bulb.
The parties report the following progress towards delivery on longer term projects:
■ The Infracos are meeting initial milestones for placement of work with sub-contractors - For example, between June and October 2003, Tube Lines awarded a £100 million contract to Alstom to add a seventh carriage for all Jubilee Line trains, a £150 million contract to Grantrail - Trackwork for track replacement and refurbishment across all JNP lines, and a £300 million contract to Alcatel for new signalling systems on all of the JNP lines.
■ The first asset condition assessment was completed in December 2003
■ Annual asset management plans are being delivered - Tube Lines delivered its annual asset management plan on schedule in January 2004, and Metronet delivered its equivalent plan on schedule in March 2004.
■ A full asset register, required two years into the contract, is on track.
■ By September 2004, the Infracos have committed to provide data for a Master Projects Database that LUL can use to assess progress on capital projects.
LUL reports that information provided by the Infracos to date is of an inconsistent quality and level of detail. For example, Metronet is providing sub-contract information to LUL, and in early 2004 agreed to copy what Metronet considers to be material variations to LUL. There is, as yet, no agreement with Tube Lines over the provision of information on material variations to LUL, although Tube Lines maintains that it complies with all requirements that were envisaged at deal close and will provide confidential information to the Arbiter (see Section C1). LUL has other concerns, including the fact that they do not yet have visibility over whether the Infracos are spending on maintenance economically and effectively, or the extent to which they are using their contingency allowances - an allowance that the Infraco made for risk but was unable to quantify and allocate specifically at the bid stage. It is difficult to monitor the drawdown of risk funds, as the contingency sum that was separate during bid evaluation has been aggregated into Infraco general budgets.