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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.