Major Programs: Company Established a Management Framework for Long Distance Fleet Replacement Program but Can Improve Risk Management and Clarify Lines of Authority

Our objective was to assess the company’s management and oversight of this program and to identify any risks to its successful delivery.

We found that the company is in the process of identifying car builders for the first phase of the Long Distance Fleet Replacement Program—intended to replace equipment on 9 of 15 long distance routes. The company plans to use up to $7 billion it received through the 2021 Infrastructure Investment and Jobs Act for this first phase. Early challenges in developing design requirements for the trainsets, however, have delayed the schedule. Moreover, the complexity of the program itself poses an innate risk of cost increases and additional delays. Given the program’s significant size, any such increases or delays could have cascading impacts on the company’s ability to accomplish other major capital projects and maintain its existing long distance service. We also found that although the company has established a management framework to execute the program once it selects a car builder, it has not fully developed contingency plans for the program’s highest risks or established clear lines of authority, resulting in slow decision making.

Because the company is in the process of amending its requirements for the trainsets, we are not making a recommendation in this area but note that any future decisions that would add complexity to this program warrant thoughtful consideration and caution. Regarding the management framework, we recommend the company review and clarify roles, responsibilities, and lines of authority for each stage of the program; fill program vacancies; and identify contingencies for its high impact risks.