In
nnova
ation
n in Franc
F
chisin
ng
Fun
nding Schem
me Gu
uide
Ju
uly 201
14
Innovation in Franchising Funding Scheme Guide
The Department for Transport has actively considered the needs of partially
sighted people in accessing this document. The text will be made available in
full on the Department’s website. The text may be freely downloaded and
translated by individuals or organisations for conversion into other accessible
formats. If you have other needs in this regard please contact the Department.
Department for Transport
Great Minster House
33 Horseferry Road
London SW1P 4DR
Telephone 0300 330 3000
Website www.gov.uk/dft
General email enquiries FAX9643@dft.gsi.gov.uk
© Crown copyright 2012
Copyright in the typographical arrangement rests with the Crown.
You may re-use this information (not including logos or third-party material)
free of charge in any format or medium, under the terms of the Open
Government Licence. To view this licence, visit
www.nationalarchives.gov.uk/doc/open-government-licence/ or write to the
Information Policy Team, The National Archives, Kew, London TW9 4DU, or
e-mail: psi@nationalarchives.gsi.gov.uk.
Where we have identified any third-party copyright information you will need
to obtain permission from the copyright holders concerned.
Draft
2
Innovation in Franchising Funding Scheme Guide
DOCUMENT CONTROL
FRANCHISING PROGRAMME
SRO/Department:
Chris Brown
Issue Date:
Revision No.:
Innovation Funding Scheme Guidance
Status:
DRAFT
DOCUMENT CONTROL
CHANGE
NO.
REV. NO.
INC.
CHANGE
ORIGINATOR
OF CHANGE
DATE OF
CHANGE
DESCRIPTION OF
CHANGE
1
0.01
Mike Powell
Jan 2014
New document created
2
0.02
Mike Powell
31/1/14
Following DfT, EIT & TSC
review
3
0.03
Mike Powell
10/2/214
Structure change, and
additional DfT feedback
4
0.04
Mike Powell
12/2/14
Flow diagram presentation
5
0.05
Mike Powell
17/2/14
Rail Advisory, ICEC policy
and specification comments
6
0.06
Mike Powell
04/3/2014
FA alignment and IPR
revision
7
0.07
Mike Powell
10/3/2014
DfT additional review
8
0.08
Mike Powell
21/3/2014
IPR policy updated
9
0.09
Mike Powell
24/3/2014
Comments by CB
10
0.10
Mike Powell
28/3/2014
DfT legal review
11
0.11
Mike Powell
02/04/2014
DfT legal review
12
0.12
Mike Powell
07/04/2014
Issued to RDG (T&O) for
consultation and lodged in
the ICEC dataroom.
13
0.13
Mike Powell
16/05/2014
RDG (T&O) SG review
14
0.14
Mike Powell
27/05/2014
TOSG Task Force structure
review
15
0.15
Mike Powell
28/5/2014
Including TOSG
recommendations
16
0.16
Mike Powell
9/7/2014
Published in draft form
Note: This guidance document remains in draft form until: a) RDG (T&O) Group have been
fully consulted; and, b) it has been professionally reproduced.
Draft
3
Innovation in Franchising Funding Scheme Guide
DOCUMENT APPROVAL
Name
Position
Prepared
by:
Mike Powell
FutureRailway (with
support from TSC)
Checked
by:
Chris Brown
R&D and Innovation
Manager
Checked
by:
Colin
Westwood
Franchise Design
Accepted
by:
Elizabeth De
Jong
ICEC Specification
Accepted
by:
Ed Palmer
Rail Analysis
Approved
by:
Stuart White
Franchise Design
Cleared by:
Peter Sayer
DfT Legal
Endorsed
by RDG
(T&O):
Guy
Woodroffe
RDG (T&O)
Programme Lead
Draft
Signature
Date
4
Innovation in Franchising Funding Scheme Guide
Contents
1. Background
6 2. Purpose of this guide
6 3. Purpose of the Franchise Innovation Fund
9 4. Scope and Process
9 Appendix 1- Funding Scheme Process Explanation
11 Introduction
11 5. Planning
13 Innovation Implementation Plan Development
14 Innovation Fund
15 6. Development
16 Develop Detailed Proposals
17 Expected Benefits
18 Innovation Board
19 7. Trial
21 Intellectual Property
22 8. Review
24 Business Case for Deployment
25 Trial Review and Lessons Learnt
25 9. Rollout
26 Appendix 2: Summary IiF-FS Timeline for ICEC
27 Appendix 3: IiF-FS Participants RACI Analysis
28 Appendix 4: Glossary of Terms
29 Draft
5
Innovation in Franchising Funding Scheme Guide
1. Background
1.1 The Department for Transport (DfT) is working with the Technology
Strategy Board (BIS’s innovation agency), RSSB, FutureRailway and
the Transport Systems Catapult (TSC) to build a comprehensive
support framework for innovation in the rail sector.
1.2 The Department for Business Innovation and Skills (BIS) defines
innovation as:
“… successful exploitation of new ideas, which can mean
new to a company, organisation, industry or sector. It
applies to products services, business processes and
models, marketing and enabling technologies”.
1.3 The DfT is committed to facilitating the delivery of innovation through
its programme of letting franchises. To facilitate this, the Department is
trialling a three year pilot of an innovation fund for in-franchise
schemes. The fund will be used to support the research and
development of innovations aligned to the Rail Technical Strategy1
(RTS), that is, within the areas of carbon, customer, cost and capacity
where these are demonstrably to the benefit of the wider railway and
society or would not normally deliver payback or are not commercially
viable to franchisees within the franchise term.
1.4 The trial will cover the forthcoming InterCity East Coast (ICEC),
TransPennine (TPE) and the Northern franchises.
1.5 The Department wants the franchisees to develop proposals for
research and development and to trial these with the aim of assisting
the industry achieve a more efficient and technologically effective
railway.
2. Purpose of this guide
2.1 This Innovation in Franchising Funding Scheme (IiF-FS) guide:
a) Outlines the aims and objectives of the Department and its role
in overseeing the management of the fund;
b) Describes the process the Rail Delivery Group (RDG)
Technology and Operations (T&O) Steering Group will follow in
governing the IiF-FS;
1
http://www.futurerailway.org/RTS/About/Documents/RTS%202012%20The%20Future%20Rai
lway.pdf
Draft
6
Innovation in Franchising Funding Scheme Guide
c) Outlines the approach the Innovation Board will apply in
reviewing innovation schemes submitted by franchisees for
innovation funding;
d) Describes the process to be followed by franchisees in
applying and qualifying for innovation funding;
2.2 The Franchise Agreement for ICEC, TPE and Northern franchises will
include provisions in relation to innovation. In the event of any
discrepancy between those provisions and this guidance, the
Franchise Agreement provision will prevail.
2.3 The following sections of this guidance set out how the fund will
operate in practice and the process to be followed by franchisees when
applying for funding and submitting proposals.
a) The flow diagram in overleaf summarises the Innovation Fund
Application and Qualifying Process.
b) Appendix 1 provides more detailed explanation of each stage
referred to in the flow diagram in Figure 1 namely
• Planning
• Development
• Trial
• Review
• Rollout
c) Appendix 2 is a summary timeline of events associated with the
IiF-FS, and for illustration purposes draws on the ICEC franchise
completion as an example;
d) Appendix 3 summarises, by way of a RACI2 matrix, the roles
and responsibilities of parties involved in how management of
the fund is applied; and
e) Appendix 4 summaries some of the applicable key terms from
the ICEC Franchise Agreement, again as an example.
2
RACI = Responsibility; Accountability; Consulted and Informed
Draft
7
Innov
vation in Franc
chising Funding
g Scheme Guid
de
Figure
F
1 Summ
mary Stages of Innovation Fun
nd Application and Qualifying Process
Draft
D
8
Innovation in Franchising Funding Scheme Guide
3. Purpose of the Franchise Innovation Fund
3.1 The Department is to establish for each of the three franchises a
franchise innovation fund ‘ring-fenced’ from annual franchise revenues.
The Innovation Fund aims to incentivise franchisees and provide a
route for investment in the rail industry by providing funding for trials,
demonstrators and research and development which are expected to
have:
a) A (average) benefit cost ratio (BCR) of 4, recognising some
Innovation Schemes may fail to realise the desired outcome;
b) Including benefits beyond the life of the franchise term for Local
(franchise specific) schemes;
c) Or national (system-wide) benefit; and,
d) A positive contribution to delivering the Rail Technical Strategy
(RTS).
3.2 IiF-FS schemes are not intended to substitute business as usual
continuous improvement initiatives but to be a step-change approach
to meeting the challenge set by the RTS 4Cs, i.e. to reduce cost and
carbon, and increase capacity and customer satisfaction.
4. Scope and Process
4.1 The IiF-FS will be an enabler to delivering the RTS, whilst aligning with
other similar strategies e.g. Network Rail Technical Strategy (NRTS).
The Department will maintain an oversight role on innovation fund
performance.
4.2 For the purposes of the trial a ring-fenced fund for innovation will be
established, equivalent to 1% of annual franchise revenue per year, for
the trial period.
4.3 The IiF-FS will be subject to the following management processes:
a) The innovation fund will be established for each franchise under
the requirements of the Franchise Agreement (the Innovation
Account) and be subject to Franchise Agreement processes,
including audit;
b) Franchisees will submit scheme proposals to spend funds from
the franchise innovation fund;
c) These scheme proposals will be considered by an appointed
selection panel (the Innovation Board);
d) The Innovation Board (IB) will be supported by a broad range of
expertise in technical, innovation, economic and commercial
matters, collectively known as the Innovation Board Advisory
Group (IBAG);
Draft
9
Innovation in Franchising Funding Scheme Guide
e) IiF-FS administration and management support will be by
persons appointed by the Secretary of State (the Innovation
Board Administrator). It is expected that FutureRailway will be
appointed as the Innovation Board Administrator (IBA);
f) The innovation fund will be governed for industry by the Rail
Delivery Group (RDG) Technology and Operations (T&O)
Steering Group;
g) The Technical Strategy Leadership Group (TSLG) will provide
advice on the RTS and strategic alignment of projects.
4.4 The governance relationship between the parties referred to in the
above is illustrated in Figure 3.
4.5 The Rail Franchising programme is subject to the prescribed
assurance for Government Major Projects Portfolio (GMPP). The IiFFS is not in itself a GMPP project and hence, not subject to Cabinet
Office/HMT assurance in its own right, however, the principles of robust
assurance, governance and project management will apply.
Draft
10
Innovation in Franchising Funding Scheme Guide
Appendix 1- Funding Scheme Process Explanation
Introduction
The following sections are a more detailed explanation of each step of the IiFFS process, as illustrated in the flow chart in Figure 1 above. The structure of
this appendix follows the detailed flow chart illustrated in Figure 2 on the
management stages of:
•
•
•
•
•
Draft
Planning
Development
Trial
Review
Rollout
11
Innovation in Franchising Funding Scheme Guide
Figure 2 Innovation Fund Application and Qualifying Process Flow Diagram
Draft
12
Innovation in Franchising Funding Scheme Guide
5. Planning
The fund will allow franchisees to propose local schemes and facilitate participation
by franchisees in cross-industry and socio-economic innovation projects and the
delivery of innovative solutions in specific franchises (starting with ICEC). In
particular, it provides a mechanism for the development of ideas that will assist in
delivering the RTS vision.
5.1 Post franchise award, franchisees
submits to the Department, an Innovation
Implementation Plan setting out proposals
for Innovation Schemes.
5.3 This should include a ‘high-level’
indication of innovation area(s) of interest.
5.8 At franchise start franchisees establish
arrangements for transferring innovation
funds into the Innovation Account.
5.3 Franchisees are to engage with the
Innovation Board early in the process, to
identify potential ‘national schemes’ for
inclusion in the Innovation Implementation
Plan, such schemes shall be consulted on
within three months of franchise
commencement, and annually thereafter.
5.3 The aim of early proposed scheme
identification is to:
a) Put forward scheme proposals
which fall within the criteria for
innovation set out in paragraph 3;
b) Ensure strategic alignment;
c) Provide the Innovation Board with
sufficient information of proposed
schemes, local & national; so as,
d) To avoid duplication with other
industry schemes;
e) To understand schemes coming
forward for approval and
development and;
f) Identify the estimated annual
spend.
Draft
13
Innovation in Franchising Funding Scheme Guide
Innovation Implementation Plan Development
5.1 Franchisees will produce a draft Implementation Plan which shall
outline a portfolio of the franchisees’ proposed Innovation Schemes.
5.2 Franchisees shall submit the draft Innovation Implementation Plan
within six months of franchise commencement, for approval by the
Innovation Board, endorsement by RDG (T&O) Steering Group and
acceptance by the Department.
5.3 Scheme proposals outlined in the franchisee’s Innovation
Implementation Plan shall contain sufficient detail to adequately inform
the Innovation Board at this stage, for example:
•
•
•
•
•
•
•
•
•
•
•
The proposed scheme and its deliverables,
How it aligns to the RTS;
Potential for national application, where applicable;
Alignment to franchise objectives: customer; service;
performance etc.;
Innovation technical readiness level (TRL) and / or business
process;
Financial information, including co-funding (where available),
and estimate of whole-life and project costs;
Alignment with franchisees Innovation Strategy;
Expected benefits, including potential financial and non-financial
(economic) returns;
Details of stakeholder engagement thus far, and how
franchisees will continue to engage with stakeholders;
Details of supply chain involvement
Details of the expected route to market for successful trials.
5.4 It is anticipated that outlined schemes can be summarised for the
Innovation Board in (typically) 3 x A4 pages.
5.5 The Technical Strategy Leadership Group (TSLG) will advise RDG
(T&O) on national schemes included in the Innovation Implementation
Plan and / or recommend national schemes that could be considered
for inclusion.
5.6 Schemes approved by the Innovation Board in principle shall go
forward for further development by franchisees into detailed
proposal(s), see section 6.7 & 6.8.
5.7 Franchisees will be expected to consult the Innovation Board
throughout the development of any subsequent proposals not included
in the Innovation Implementation Plan.
Draft
14
Innovation in Franchising Funding Scheme Guide
Innovation Fund
5.8 Franchisees will establish an Innovation Fund and will be required to
deposit 1% of its Estimated Turnover in this fund account at the
beginning of each of the three years of the innovation fund trial, and do
an adjustment against actual turnover at the end of each year
5.9 Innovation Schemes approved by the Innovation Board will be
contracted as a committed obligation (which may extend over a
number of years) under the Franchise Agreement.
5.10
Where an Innovation Scheme is not approved, franchisees may
make alternative proposals in respect of such schemes to the
Innovation Board within three months of the initial scheme being
rejected. No more than two representations will be considered. The
Innovation Board will not unreasonably decline such representations.
5.11
Franchisees are reminded to consider tax implications (benefits)
from undertaking research and development schemes of the type
proposed.
5.12
Any amounts not committed or spent at the end of the
Innovation Period of the franchise are expected to be paid to the
Secretary of State, at his discretion. It is anticipated that such
underspends will be aggregated into a fund for industry-wide innovation
proposals.
5.13
The Secretary of State recognises Year 1 of the franchise fund
operation will be predominately taken up in planning for and putting
together initial innovation scheme proposals, resulting in unavoidable
underspend of the fund. It is also recognised innovation doesn’t lend
itself to accurate budgeting and there is a risk of scheme and hence,
fund overspend. Therefore, early development of the (draft) Innovation
Implementation Plan as required in section 5.1, together with regular
franchise commercial management dialogue and period reporting
should assist mitigating these potential underspend / overspend
events.
5.14
Similarly, and with regard to aiding franchisees own cashflow,
innovation scheme proposals which have upfront innovation fund drawdown milestones for mobilisation activities will be considered
favourably, where appropriate.
Draft
15
Innovation in Franchising Funding Scheme Guide
6. Development
The Department is looking for franchisees to participate in local and national
Innovation Schemes, to achieve an average portfolio BCR of 4. All proposals will
require to have been approved by the Innovation Board. The Innovation Board will
assess / score schemes against set criteria on a scale of 1 (e.g. lacks sufficient
detail to progress), to 5 (e.g. an excellent proposal with detailed analysis of all key
factors). Schemes scored 3 and above will generally be approved for trial.
Schemes scored less than 3 will be referred back to franchisees for further work, or
rejected.
6.8 Schemes
approved in
principle are to be
developed into
detailed proposals
using good practice
project definition
and management
methodologies for
further consideration
by the Innovation
Board.
6.13 The Innovation
Board will score
proposals from 1 to
5, based where
practicable on the
‘portfolio’ of
schemes presented
i.e. it is
acknowledged that
schemes will return
differing BCRs,
collectively.
Draft
16
Innovation in Franchising Funding Scheme Guide
Develop Detailed Proposals
6.1 Schemes shall be developed by franchisees into detailed proposals for
submission and approval by the Innovation Board. The level of detail
expected is set out in section 6.8.
6.2 There will be two elements of the innovation fund:
•
Local – (bottom-up approach) intended for schemes within
franchisees’ own geographical area of services. Detailed
proposals shall be presented to the Innovation Board for
approval, and to allow it the opportunity to give guidance e.g.
value for money (vfm) and compatibility with other initiatives.
Where the Board believes more detail is needed, it may refer
proposals for further work.
•
National – (bottom- up and top-down approach) intended for
schemes outwith (in whole or part) franchisees’ geographical
area of services and / or have a cross-system and / or industrywide benefit. Franchisees shall include in the Innovation
Implementation Plan proposals for larger, cross-system
schemes to be developed, trialled and demonstrated. Advice
and support will be available from the Innovation Board and
TSLG to facilitate the development of cross-system ideas in a
confidential environment.
6.3 Where possible, a franchisee in developing its Innovation
Implementation Plan shall commit Innovation Funds approximately
60:40 (+/- 10%) between local and national scheme proposals.
6.4 The local approach provides the opportunity for franchisees to improve
customer experience, and provides the means for engaging in
innovation with the devolved Network Rail on a route basis and with
local communities.
6.5 The national approach has the advantage that it should enable
franchisees to be engaged on significant cross-system innovation
schemes which may be pathfinders for nationally important
development strategies for the GB railway.
6.6 Schemes may impact not only in terms of technologies deployed but
could relate to operational concepts and / or organisation, training,
maintenance, support service implications and innovative business
models. Such scheme proposals will also be required to meet the
purpose of the Innovation Fund set out in section 3.
6.7 Detailed proposals developed for each approved scheme shall
comprise three parts:
Draft
17
Innovation in Franchising Funding Scheme Guide
•
•
•
Part 1: Typically, a single page summary of key qualitative and
quantitative aspects of the case.
Part 2: The case for undertaking the scheme including initial
business case assessment and envisaged path to
implementation (detail proportionate to scale and complexity of
project).
Part 3: Evidence that schemes are in-line with the purpose of the
Innovation Fund.
6.8 With regard to Part 2, the detailed proposal should include, as a
minimum:
a) Analysis of the problem or issue giving rise to the specific
scheme opportunity, efficiency and proposed benefit arising from
investment in the scheme (including which organisations will
benefit from such scheme);
b) Description of proposed solution and measurable deliverables;
c) How the scheme, if successful, demonstrates value for money
(VfM) and contributes to a portfolio average BCR of 4 (through
financial and social-economic factors). Taking a portfolio
approach recognises there will be schemes in excess of a BCR
of 4, and some below it;
d) Information as to whether the scheme is intended to be trialled
‘locally’ within the geographical scope of the Franchise or
whether it brings a wider cross-industry benefit and if so, should
it be considered for the ‘national’ element of the Innovation
Fund;
e) The RTS theme (4 C’s) addressed by the scheme (whether by
way of technological, process, product, safety, or otherwise);
f) Scheme project controls, including proposed commencement
and completion dates of the scheme and any other key dates
and milestones. Where appropriate scheme cross-system
interface and integration plans will also be required;
g) The costs and work packages of the scheme and funding
proposals, including details of other funding arrangements where
appropriate;
h) An estimate of expected benefits e.g. revenue returns,
performance improvement and customer satisfaction created by
the scheme, and forecasts as to when these will be realised i.e.
in-franchise or beyond the franchise term;
i) How the industry will benefit – the path to implementation /
commercialisation, and how franchisees intend to deal with any
intellectual property rights (IPR) arising from the scheme;
j) How franchisees will ensure lessons learnt are shared with
industry within appropriate IP considerations.
Expected Benefits
6.9 Whilst the industry is ideally placed to determine the best use of
monies made available by the Innovation Fund, the Department wishes
Draft
18
Innovvation in Frranchising Funding S
Scheme Gu
uide
to makke clear its aspirations of strateg
gic intent and
a effectivveness of the
t
Innova
ation Fund, during thiss pilot phase (3 years).
6.10
McNulty’s3 review into railway efficiency highlighted
d a numbe
er of
efficien
ncies that could
c
be made
m
togeth
her with arreas where
e it was
believe
ed the indu
ustry could do more. McNulty allso suggessted that he
e
would expect
e
a benefits
b
cosst ratio (BC
CR) of 3-5 on investm
ments throu
ugh
innovation fundin
ng.
6.11
The Department is seeking
s
inn
novation scchemes to achieve an
n
averag
ge portfolio
o BCR foreccast of 4, financial
f
an
nd non-fina
ancial i.e.
econom
mic. By deffinition, inn
novation ca
arries risk and
a the De
epartment
acknow
wledges so
ome innova
ation schem
mes will fa
ail to realise
e market
comme
ercialisation.
Innovation Board
B
6.12
e industry strategic
s
alignment, th
he Departm
ment has
To ensure
delega
ated the roles of gove
ernance an
nd scheme selection to RDG
(T&O) and the Innovation Board
B
respectively, and is expe
ected as to call
upon FutureRailw
F
way as Innovation Bo
oard Admin
nistrator to manage the
processs. These roles,
r
comp
parable pro
ocesses, and
a govern
nance
structures are illu
ustrated in Figure 3, below.
b
Figure 3 Innovatio
on Scheme
e Governan
nce Structu
ure
6.13
The Innovvation Boarrd will gath
her as requ
uired i.e. wh
hen deman
nd
es, to review detailed scheme proposals
p
a assesss / score on a
and
require
scale from 1 to 5, for the ca
ategories set-out
s
in Figure
F
4, an
nd against the
require
ements sett-out in secctions 3, 6.7 & 6.8. Scchemes sccored 3 and
3
https://www.go
ov.uk/governm
ment/publica
ations/realisin
ng-the-poten
ntial-of-gb-rail
Dra
aft
19
Innovvation in Frranchising Funding S
Scheme Gu
uide
more will
w ordinariily be apprroved for im
mplementa
ation. Sche
emes score
ed
less tha
an 3 will be
e deferred back to fra
anchisees with recom
mmendatio
ons,
includin
ng the optiion to conssider other schemes to replace a deferred
d
scheme and / or may be rejjected.
mination of innovation
n scheme
6.14
The Innovvation Boarrd’s determ
propossals will be informed by consulting with the Innovatio
on Board
Adviso
ory Group; formed as necessary
y, it will dra
aw-on a brroad range of
expertise in techn
nical, innovvation, eco
onomic, accademic, sccientific an
nd
comme
ercial disciplines, and
d stakehold
ders where
e appropria
ate e.g.
Passen
nger Focuss etc.
Figure 4: (examplle) Scheme
e Assessm
ment Catego
ories
6.15
Where pro
oposals ap
ppear to du
uplicate or are
a incomp
patible with
h
other schemes
s
and industryy strategies, or lack sufficient
s
in
nformation for
an info
ormed decision, these
e may be referred
r
ba
ack for franchisees to
o
clarify or
o to propo
ose an alte
ernative scheme.
Note: De
etailed evalu
uation criterio
on for schem
me assessment is currentlly under
development and wiill be made available
a
whe
en completed
d.
Dra
aft
20
Innovation in Franchising Funding Scheme Guide
7. Trial
Franchisees are expected to evidence robust project management methodologies.
Foreground IP shall be owned by the Franchisee, with the Franchisee granting the
Secretary of State (SoS) irrevocable royalty-free non-exclusive licence, including the
right to grant sub-licences, to use the same on the franchise on which the innovation scheme was implemented.
7.1 Innovation
Intellectual Property
rights (IPR) to be
agreed early
between the parties
(including
background IP),
where franchisees
and parties are cofunding the
proposed scheme.
7.10 Trials considered suitable
for franchise ‘commercial
deployment’ in the franchise,
and where required by a
franchise variation, will require
a supporting business case for
the Department to approve.
7.1 Franchisees [together with
suppliers, as appropriate] will
manage delivery of Innovation
Schemes, using good practice
governance assurance and
project management
methodologies.
Draft
21
Innovation in Franchising Funding Scheme Guide
7.1 It is expected that franchisees, together with 3rd party suppliers (where
appropriate), will manage innovation trial delivery and project
implementation.
7.2 Following scheme approval the Innovation Board will require
franchisees to produce an innovation trial delivery plan demonstrating
the approach to be taken to project management, including details on
the following areas as a minimum:
●
●
●
●
●
●
Governance process
Risk management
System interface management
Project and assurance
Key stages of delivery and project milestones
Appraisal of continued relevance, deliverability, affordability and
value for money.
Intellectual Property
7.3 All Innovation Intellectual Property shall be owned by the Franchisee
7.4 Franchisees shall grant to the Secretary of State an irrevocable,
royalty-free, perpetual, transferable, non-exclusive licence (including
the right to grant sub-licences) to use or otherwise exploit the
Innovation Intellectual Property for the purpose of its continued use for
the franchise concerned and the wider-industry, where the Franchisee
fails to exploit the same for the benefit of the railway.
7.5 For the avoidance of doubt, it is not the Secretary of State’s intention to
directly and commercially exploit and benefit from such licences or
pursue rights to foreground IP outside the UK. Conversely, the
Secretary of State wishes franchisees to support the spread of
innovation and would encourage franchisees to seek to exploit the
Innovation Intellectual Property by offering other operators licences.
7.6 Franchisees shall grant to the Secretary of State an irrevocable,
royalty-free, perpetual, transferable, non-exclusive licence (including
the right to grant sub-licences) to use or otherwise exploit the
Background for the purpose of exploiting the Innovation Intellectual
Property in accordance with 7.4 and 7.5.
7.7 Franchisees shall:
a) maintain an accurate and up to date register of all Innovation
Intellectual Property in such format as the Secretary of State
may reasonably specify and shall provide copies of such register
to the Secretary of State and the RDG T&O Steering Group
upon request and at least annually in any event;
b) upon request and at the franchisees’ own cost, provide
assistance to the Secretary of State in relation to the protection,
Draft
22
Innovation in Franchising Funding Scheme Guide
enforcement and defence of the Innovation Intellectual Property
including the taking of any steps on behalf of the Secretary of
State which the Secretary of State may specify.
7.8 Franchisees shall provide the Innovation Board and/or the Secretary of
State with:
a) details of all Background Intellectual Property and the proposed
use of the background technology in connection with any
Innovation Scheme proposed by franchisees pursuant to the
relevant provisions of the Franchise Agreement; and
b) such further information in relation to any Innovation Scheme
proposed by franchisees in accordance with the Franchise
Agreement as the Innovation Board and/or the Secretary of
State may reasonably require.
7.9 Confidentiality and contamination management protocols will be
maintained by all parties.
7.10
Where any use of the scheme requires a variation to the terms
of the Franchise Agreement, the Secretary of State will ordinarily
require a detailed business case before agreeing to such a variation,
see section 8.
Draft
23
Innovation in Franchising Funding Scheme Guide
8. Review
Should franchisees wish to realise and commercialise the benefit from a successful
scheme trial, in franchise and beyond the franchise term, it shall be required to
contractualise with the Department using the normal variation mechanism contained
in the Franchise Agreement, if amendments to the Franchise Agreement are
required.
The Department requires franchisees to report on the IiF-FS performance, including
reconciling innovation fund cash flows.
8.4 Trials approved for
franchise rollout by the
Department will be subject to
normal variation mechanism,
contained in Schd. 9.5 to the
Franchise Agreement, where
necessary.
8.12 Fund reconciliation will
allow franchisees to profile
committed expenditure to
match scheme development
and delivery schedules.
8.8 Reporting at a scheme,
portfolio and programme level
will be required, to inform
governance and Department
assurance performance
reporting. Reporting shall
capture any ‘lessons learnt’,
and feedback into the
Innovation Implementation
Plan process.
Similarly, benefits realised
from rollout of trials shall be
reported i.e. commercial
implementation.
Draft
24
Innovation in Franchising Funding Scheme Guide
Business Case for Deployment
8.1 Where a scheme has been successfully trialled, the Department is
likely to encourage the wider use of the benefit throughout the industry,
and to encourage the franchisee to utilise the benefit beyond the trial
term. Where it is necessary to vary the Franchise Agreement to permit
the utilisation of such benefits, it is expected that the Department will
require a detailed business case before agreeing to a variation.
8.2 When developing the business case franchisees shall adopt the
Departments restructured WebTAG guidance on GOV.UK4, which
checks that value for money is achieved in delivering IiF-FS aims.
8.3 The willingness of the parties to use the normal commercial processes
in this way is vital for the innovation fund to secure value through wide
implementation of the innovation. The proposed approach helps to
ensure that the business case is based on robust evidence from the
trial and that the innovator has an incentive through a long term
interest.
8.4 Approved rollouts shall be included as committed obligations in the
Franchise Agreement, Schedule 6.1., where it is necessary to vary the
Franchise Agreement to permit the rollout.
Trial Review and Lessons Learnt
8.5 An outcome and benefits realisation review will be required for all
schemes funded by the innovation fund, whether the scheme is
successful, or considered to have failed to achieve the desired
outcomes and a report produced including lessons learnt.
8.6 Lessons learnt from the review will feed back into the planning phase
of the Innovation Implementation Plan.
8.7 Franchisees shall report to the Innovation Board Administrator in
accordance with the Franchise Agreement, detailing as minimum:
a) Progress against the Innovation Implementation Plan schemes
and trials underway and funded by the Innovation Fund,
including financial reporting;
b) Progress in delivering rollouts specified in Schedule 6
(committed obligations) of the Franchise Agreement;
c) What engagement it has had with relevant stakeholders in
delivering these schemes, or in developing new innovation
schemes;
d) New Innovation Scheme(s) planned and proposed mechanisms
through which funding has been sought or facilitated, including
any proposals that the Innovation Board needs to consider;
4
https://www.gov.uk/transport-analysis-guidance-webtag
Draft
25
Innovation in Franchising Funding Scheme Guide
e) Update of expected routes to market plans.
8.8 Similarly, franchisees shall produce an annual summary report
reflecting the year’s performance with regard to the IiF-FS.
8.9 The Innovation Board will report confidentially, quarterly and annually,
to the RDG (T&O) at a programme level.
8.10
RDG (T&O) will review and report as to the pilot Innovation
Fund’s performance, as a whole and report to the Department.
8.11
The Department will review the performance of the IiF-FS
annually.
8.12
Annually, and included in the above reporting requirements,
franchisees shall update Innovation Fund forecasts to reflect
performance during the year and scheme projections going forward.
The Department requires franchisees undertake reconciliation of the
Innovation Fund, based on the 1% of revenues, against cost incurred,
committed expenditure and monies which have been provided to the
Department.
9. Rollout
9.1 Subject to the Department’s approval and necessary Franchise
Agreement amendments, trials which rollout and are operationalised in
the franchise may be monitored and reported on for performance and
benefits realisation. Such reporting is expected to be in addition to, and
separate from normal franchise period reporting, for the purpose of
informing the Innovation Board on benefits realisation and also the
performance of the IiF-FS.
9.2 The day-to-day franchise management interface for trials which rollout
will become the responsibility of the Department’s Commercial
Manager for the franchise, a member of the Rail Technical,
International and Safety team, together with representation by the
Innovation Board Administrator, as deemed necessary by the
Department.
9.3 Franchisees shall work with the Innovation Board to promote the IiF-FS
(successes and failures) to the wider-industry and TOC community, by
way of agreed and joint communication strategies and in such a way as
to protect IP.
Draft
26
Innovation in Franchising Funding Scheme Guide
Appendix 2: Summary IiF-FS Timeline for ICEC
IiF-FS (example first year) Timeline
Year
Month
ICEC Franchise Period
ICEC Contract Award
ICEC Mobilisation
ICEC Franchise Commencement
ICEC Proposed Innovation Schemes
Initial
Annual Update
Innovation Schemes Review(s) by IB
ICEC Innovation Implementation Plan
Reporting
IB / IBA (programme)
RDG (T&O) IiF-FS Annual Perf.
DfT IiF-FS (pilot) Annual Review
2014
2015
2016
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
-3 -2
-1
0
1 2
3 4 5
6
7
8
9 10
11 12
First 'pilot' annual review
Notes: IB = Innovation Board; IBA = Innovation Board Administrator
Draft
27
Innovation in Franchising Funding Scheme Guide
Appendix 3: IiF-FS Participants RACI Analysis
Activity
Role of:
IBA = Innovation Board Administrator
I = Informed
IBAG = Innovation Board Advisory
Group
IB / IBAG / IBA⃰
C = Consulted
TSLG
IB = Innovation Board
RDG
A = Accountable
DfT
RDG = RDG (T&O)
Franchisees
R = Responsible
1. Develop and submit Innovation Implementation Plan
R
A
I
C
C
2.
Approve Innovation Implementation Plan
I
I
A
C
R
3. Endorse Innovation Implementation Plan
I
A
R
C
C
4. Accept Innovation Implementation Plan
R
A
C
C
C
5. Establish Innovation Account (fund)
R
A
I
I
I
6. Develop detailed scheme proposal(s): Local
R
I
I
I
A
7.
R
I
C
C
A
8. Propose scheme(s) for open calls
I
A
C
R
C
9. Record IP and maintain register
R
A
I
I
C
10. Prepare scheme (project) reports including Innovation Fund
forecasts and reconciliation
R
A
I
I
C
11. Prepare quarterly and annual reports, at a project & programme
level
R
I
A
I
R
12. Prepare annual report(s) for DfT on the performance of the
Innovation Fund
I
C
A
I
R
13. Review annually the performance of the IiF-FS.
I
A
R
I
C
14. Manage IPR
R
A
I
I
C
15. Scheme proposal evaluation
C
I
A
C
R
16. Scheme Implementation
R
A
I
I
C
17. Scheme (project) review
R
A
I
I
C
18. Scheme (programme) review
C
I
A
I
R
19. Business case for rollout
R
A
C
I
C
20. Lessons to be learnt – Innovation Implementation Plan
R
A
I
I
C
21. Lessons to be learnt – Innovation Fund Scheme
C
I
A
C
R
Develop detailed scheme proposal(s): National
⃰ IBA is expected to be FutureRailway
Draft
28
Innovation in Franchising Funding Scheme Guide
Appendix 4: Glossary of Terms
Background Intellectual
Property
Means Intellectual Property, excluding
Innovation Intellectual Property, in existence
and belonging to the franchisee prior to the
date of notification to the franchisee in writing
that the franchisee may undertake the
relevant Innovation Scheme.
Innovation
Means a research, trial, demonstrators which
aim to successfully exploit new ideas, which
can mean new to a company, organisation,
industry or sector. It applies to products
services, business processes and models,
marketing and enabling technologies.
Innovation Board
Means the board from time to time nominated
by the Rail Delivery Group (T&O) Steering
Group to review Innovation Proposal in
accordance with guidance issued by the
Secretary of State from time to time or such
other substitute board or person as the
Secretary of State may nominate from time to
time
Innovation Board
Administrator
Means the organisation from time to time
nominated by the Rail Delivery Group
Operations Steering Group to support the
Innovation Board in its duties and to provide
programme management oversight support
and systems in respect of any Innovation
Schemes in accordance with guidance issued
by the Secretary of State from time to time or
such other substitute organisation or person
as the Secretary of State may nominate from
time to time.
Innovation Board Advisory
Group
Means the group assembled by the
Innovation Board from time to time to support
it and provide expertise in technical,
economic, academic, scientific and
commercial disciplines, and including
stakeholders where appropriate.
Innovation Fund
Means monies deposited into the Innovation
Account required by the Franchise
Agreement.
Innovation Implementation
Plan
A plan which is submitted within 9 months of
the Franchise Commencement Date in
accordance with the provisions stipulated
Draft
29
Innovation in Franchising Funding Scheme Guide
below.
Innovation Intellectual
Property
Means Intellectual Property which is created
or developed by or on behalf of the
Franchisee in connection with any Innovation
Scheme.
Innovation Scheme
Proposals which the Franchisee may make
and which are approved and funded by the
Innovation Fund under the Franchise
Agreement.
Innovation Strategy:
A plan which is provided as part of the
Franchise bid, and which details the
processes and approach for innovation. This
is an agreed form document.
Intellectual Property
Means all copyrights (including rights in
computer software), patents, design rights,
database rights, rights in undisclosed or
confidential information (such as know-how,
trade secrets and inventions (whether or not
patentable)) and all other intellectual property
or similar rights of whatever nature (whether
registered or not and including applications to
register or rights to apply for registration).
Local Innovation Scheme
Means an Innovation Scheme within the
Franchisee’s own geographical scope.
National Innovation Scheme
Means an Innovation Scheme outwith (in
whole or part) the Franchisee’s system of
control and / or have a cross-system and / or
industry-wide benefit.
Draft
30