Purpose

In order to implement the new AVL/TMS system by Hitachi an NEC 4 Option A contract needs to be awarded following on from a previous NEC4 Option E design contract that is currently agreed.
The original tender bid had the implementation work valued at £3.485M. The 2026 updated submission from Hitachi was originally £4.8M, brought down to a final valuation of £4,606,271.
The reasoning for the increase is a result of not meeting some of the key dependencies agreed in the original tender.
D2 – Provision of protocols and where possible, real simulator of the interfaces. (2 months from programme start)
D2 – System Functional Review approved and TRS Frozen (3 months from programme start)
D3 – Early approval required of the BOM. (4 months from programme start)
D4 – Bill of Materials and purchase of long lead items approved (6 months from programme start)
Due to the absence of a simulator environment, implementation of the new AVL/TMS system must be undertaken using a phased deployment approach. This approach significantly mitigates risks that cannot be fully addressed through factory testing alone; however, it extends the programme duration to accommodate the additional iterative testing and assurance activities required.
The increase in contract value also reflects a financial adjustment resulting from the review and recalculation of inflationary impacts.
Further detail regarding the contract value increase is provided within the T&T Final Review, referenced in the supporting background documentation.
The previous RODF form - Appointment of Framework Technical Partner –Mass Transit Work Package 5, Supervisory, Control and Communication. – from May 2025 agreed a total cost of £5,446,746.
This was the above figure of £4,946,746 with an additional £500,000 allocated for risk.
As of June 2026 the TMS/AVL current spend is as follows - £1,105,380.59:
The decision required is to increase the agreed value from £5,446,746 to £5,873,035.
With tight programme timescales the Option A contract needs to be signed by 14th August 2026 to not incur any further delay by long-lead procurement .
 

Decision

Approval Requested: Increase to RODF Funding
The total variance for implementation works is £1,121,166, bringing the combined design and implementation value to £5,873,035.
This increase is covered by risk allowance previously allocated within the project budget.
The increase above the amount currently approved within the RODF is £426,289.
Current design expenditure is approximately 75% of the forecast budget, with four months of the design phase remaining. In addition, several design changes are yet to be finalised, including the temporary server room, master
clock system, and on-board alarm systems. There is also an anticipated requirement for R2P technical support during migration activities.
Once these remaining costs have been quantified, a separate request for additional funding will be submitted, if required.
Approval sought: £426,289.
 

Alternative options considered

Don’t agree – Option A contract can’t be agreed, implementation works won’t begin for WP5 and new AVL/TMS system not installed leaving the current
system the network runs on at risk.
Agree – agree option A contract for Hitachi to implement the new AVL/TMS system.