The following report indicates that Network Rail was focused on investment appraisal procedures in 2004 at the start of a five-year regulatory period.
John Armitt, chief executive of Network Rail, the ‘not for dividend’ successor to Rail track as owner of the UK rail infrastructure, does not expect an ongoing review of the industry’s performance payment system to produce any significant changes.
‘The first half of 2004/5 marked the start of the new five-year regulatory period, which has put the company on a sound financial footing. Our new investment appraisal procedures are ensuring greater efficiency and maximizing the effectiveness of every pound in the ground’ said Armitt.
Source: Network Rail’s Armitt sees no change to performance payment system AFX Europe (Focus); 26 November 2004.
The Annual Report 2009 shows a very different use of wording at the end of the five-year period. There is a strong focus on operational targets such as completion of line renewal, and on the magnitude of the investment programme, but no mention of ‘investment appraisal’ or ‘capital expenditure’. ‘Our investment programme to enhance and modernize the network is the most ambitious it has ever been. We are delivering a 21st century railway for our customers and society at large.’
. . . . It is important to note that the measurement of efficiency improvement against these targets is not, and will never be, a straightforward exercise. The determination did not define baseline volumes of activity or unit costs against which changes could be measured, and there is limited information on the unit costs of activities in 2003/04 to provide benchmarks. The assessment of efficiency improvement over CP3 [the 5-year period from 2004] set out here must be treated with caution as firm conclusions on efficiency rely on assessments of sustainability that, due to the long lifespan of railway assets, can only be assessed over a longer period of time.

Discussion points 

1 What question would you ask in appraising investment in a railway track or a railway station?
2 How easy is it to carry out an evaluation of the success of an investment project?