Transport for London Capital Investment Strategy
London, England

Background

PB Consult is advising Transport for London on an action plan for implementing its new capital investment strategy.

Transport for London (TfL) is the entity responsible for managing nearly all transport services in London, including buses, subway, light rail, and even roadways, taxis and Thames River boat services. It is a relatively new organization, formed in 2000 to link London's separately managed transportation modes.

Until now, TfL's sole external funding source has been grant money from the government.  Those grants established funding amounts only one to three years into the future, which did not provide the flexibility or planning benefits of longer-term financing. 

TfL was recently authorized by the British Government to pursue long-term financing for its capital program.  The agency must now demonstrate to investors and rating agencies that it is capable of delivering projects on schedule and on budget and executing its £10 billion ($19 billion) capital program as planned over the next five years.

PB Consult Services

Recognizing TfL management had a long road ahead of it, the agency engaged PB Consult to provide capital program consulting services that will enhance TfL's financial management policies, analysis and decision-making, as well as its capability to spend money wisely. PB Consult will guide TfL in rapidly developing and implementing a plan to expand project capacity that will satisfy the concerns of investors and fulfill TfL’s stewardship responsibilities.

PB Consult began its work for TfL by conducting a review of TfL's existing management and decision-making practices.  A major component of PB Consult's work is conducting workshops for senior-level TfL managers to explain the requirements of the financial community and guide the collaborative development of an action plan to meet those requirements.

PB Consult conducted an assessment of the existing organizations throughout TfL, and recommended a series of organizational changes necessary to govern effective implementation and oversight of the capital program.  Recommended changes range from the establishment of oversight policies and mechanisms to the basic tools needed to deliver capital projects. 

Numerous other adjustments in TfL policies and procedures will also be necessary. Even the financial reporting requirements that come with external investment can involve substantial changes to accounting systems and practices - all completely new territory for TfL.

Current Status

With PB Consult's ongoing support, TfL is now moving forward with the recommended changes and the implementation of its capital program.  In December 2004, just eight months after getting the approval to establish a borrowing program, TfL went to the capital markets with its £3.3 billion ($6.5 billion) program, with an S&P rating of AA. 

PB Consult will continue to advise TfL on the delivery of its capital program, helping the agency fulfill its commitment to integrate transportation in London and develop a multimodal approach to planning and capital investment.