• Industries
    • Major Capital Projects
    • Construction and Infrastructure
    • Manufacturing
  • Services
    • Transformation Consultants
    • High Integrity Turnarounds™
    • Safety Consultants
    • Leadership and Organizational Performance
    • High Performance Projects™
    • The School of Coaching
  • Impact
    • What Clients Say
    • Client Results
  • Insights
    • Articles, Blogs & Poetry
    • Press Releases
    • Events
    • Transformation Talks Podcast
    • News
  • People
    • Senior Partners
    • Partners
    • Managing Consultants
    • Board of Directors
    • Founders
  • About Us
    • Our History
    • Our Vision
    • Our Perspective
  • Careers
  • Contact Us
  • Let's Talk

What’s The 2020 Outlook For Major Capital Project Railroad Expenditures?

Published by Chloe Handley at October 1, 2019
JMJ Associates Logo
Latest News
  • From the Web

What's The 2020 Outlook For Major Capital Project Railroad Expenditures?

Latest Blogs

Oct 1, 2019


The major capital projects (MCP) review preparation for railroad capital activity for the year 2020 has begun.It is that point of the cycle when team members in different major capital project departments within each Class 1 railroad firm lay out their expectations for next year's estimates.

The vital issue might be, "What's the forecast in a period of traffic uncertainty?"

My theory implies lower major capital project expenditures (cap-ex) for 2020 than in 2019.

Unlike truckers, railroad administrators face multi-faceted budget challenges. Rail executives have a complicated infrastructure to both support as well as make better.

Railways are comprehensive real estate institutions. They don't pay into a trust fund to keep their "ways" in a configuration as with freeways.

Local engineers have determined their "wish list" of projects based upon this year's out-in-the-field operating activity.

Those localized track, structure, signals and bridge "needs estimates" will then be distributed at headquarters against other system-wide data.

The proof includes evaluations of ultrasonic inspection lines of steel rails as well as evaluations of geometry and surface cracks that at some circumstances require managed repairs.

All these hard data engineering estimates must be prioritized against the other overall industry needs that marketing staff, as well as locomotive and freight car manufacturing units, are accumulating.

Into October and November, there will be a vetting of these competing cap-ex demands.

However, not all MCPs are going to be supported moving forward.

Most major capital projects need an assessed cost/benefit estimate that provides these senior managers to grade projects by the expected percentage of return. Those returns are then reviewed by the finance office according to recommended templates.

Three right-of-way divisions require continuous preservation – plus intermittent heavy-duty support. They are:

  • Track construction
  • Bridges, canals and tunnels
  • Signal and information operations

Beyond that are transferable assets like locomotives and freight cars.

And there are common and organizational major capital assets such as workstations.

When one thinks about the railroad track composition, they probably think first of the actual railroad tracks themselves. In doing so, they might neglect the actual configuration of the railway paths that dissipate vertical forces from train passages down through the different tiers of the construction.

A study of many railroads' investor statements and SEC filings shows that the average allocation of a major capital expenditure plan by kind of plan includes:

  • Track/roadbed – 48%
  • Locomotives – 22%
  • Capacity added – 6%
  • Signals/communications – 6%
  • Freight cars – 4%
  • Safety – 2%

Remember that these ratios describe long-term models. In any given year or set of years, a division can have a significantly greater or weaker split portion of the resources. Track and roadbed percentages might fall to 38 percent or less in some cycles.

Major capital project investment in Positive Train Control (PTC), for example, has been using a fairly considerable share of all major railroad capital dollars over the previous five years or more.

After prioritization, the major capital budget moves to the Board of Directors for review and ultimate judgment.

A reasonable possibility into the year 2020 implies that less than 500 trains will be requested. This is in contrast to orders which, in a good year, number around 900 new locomotives being purchased.

It is likely that the U.S. railways' may reduce their 2020 major capital project (MCP) budgets by as much as 4 to 6% under the value approved for 2019.

Read the source article at finance.yahoo.com



As you read this market view, the planning for year 2020 railroad capital work is well underway.

It is that time of the year when staff members in different major departments within each Class 1 railroad company lay out their expectations for next year's budgets.

The strategic question might be, "What's the outlook in a period of traffic uncertainty?"

My hypothesis suggests lower capital expenditures (cap ex) for 2020 than in 2019.

Read the source article at finance.yahoo.com


View All Client Results

Capital Projects Client Results
DSME Completes TCO FGP WPMP Fabrication Safely and ahead of Schedule for the Tengizchevroil Expansion Project
DSME Completes
Client Results Manufacturing
Global Manufacturing Corporation Reduces Quality Defects and Improves Bottom-Line Performance
One of the worl
DSHI Fabrication Yards in Korea Builds Strong Safety Culture on TCO FGP Major Capital Project
Client Results Safety
DSHI Fabrication Yards in Korea Builds Strong Safety Culture on TCO FGP Major Capital Project
At Korean fabri
Japanese Engineering & Construction Corporat Achieves Breakthrough Improvement in Safety Performance
Client Results Safety
Japanese Engineering & Construction Corporation Achieves Breakthrough Improvement in Safety Performance
The JGC Corpora
Russian Petroleum Operations Company Achieves a Shift in its Health and Safety Culture
Client Results Safety
Russian Petroleum Operations Company Achieves a Shift in its Health and Safety Culture in 9 Months
SPD had been wo



From the Web

Your Coronavirus Questions, Answered by Experts
Coronavirus From the web
Your Coronavirus Questions, Answered by Experts.
With the coronavirus sending us all indo
coronavirus
From the web
Working from home because of coronavirus? Be careful what you download to keep cybersafe
Welcome to the new normal: working from
Increase engagement through communication
From the web
Increase engagement through communication
Safety training sessions and conducting
The major capital projects (MCP) review preparation for railroad capital activity for the year 2020 has begun.It is that point of the cycle when team members in different major capital project departments within each Class 1 railroad firm lay out their expectations for next year’s estimates.

  • Author
Chloe Handley
Chloe Handley Administrator
Chloe Handley has progressed to Global Senior Marketing and Communications Specialist since joining JMJ in 2011. Chloé’s experience spans both agency and in-house; working with brands such as Sodexo, Rics, Neopost, Harley Medical Group, Lancashire Constabulary, Wyeth Pharmaceuticals and Coca-Cola. Her experience spans lead generation through digital design and marketing, brand narrative and consistent business and client-focused targeted marketing communications. Chloé’s responsible for managing brand development and marketing and communication strategies across JMJ, helping to drive growth and maintain JMJ’s market lead position. She works with internal teams to develop tailored marketing plans across a range of communications channels – in line with JMJ’s business development objectives.
follow me
JMJ
  • Corporate Headquarters
    Arboretum Plaza One
    9442 N. Capital of Texas Highway, Suite 450,
    Austin, Texas 78759
  • +1 (512) 795-0795
  • Email Us

Industries

  • Rail
  • Construction
  • Manufacturing
  • Energy
  • Mining
  • Logistics
  • Aerospace
  • Water and Environmental

Services

  • Incident and Injury-Free™
  • High Performance Projects™
  • Safety Consultants
  • Leadership and Organizational Performance
  • High Integrity Turnarounds™
  • The School of Coaching

Locations

  • Americas Office – Austin
  • APAC Office – Singapore
  • EMEA Office – London
  • Middle East Office – Doha
  • Kazakhstan Office – Atyrau
  • South Korea Office – Seoul
  • Australia Office – Perth

Connect

  • linkedin
  • facebook
  • twitter
  • Youtube
  • Instagram
Privacy | Terms of Use | Trademarks | Accessibility | Cookie Policy | Feedback | Site Map |

© 2020 JMJ Associates LLP. All rights reserved. Republication or redistribution of JMJ Associates content or logo, including by framing or similar means, is prohibited without the prior written consent of JMJ Associates.

    Start Unlocking Human Performance


    Arrange a call with one of our consultants today. Please complete your details below:

    • This field is for validation purposes and should be left unchanged.
    This site uses cookies to provide you with a more personalised service. By using this site you agree to our use of cookies. Please read our cookie policy for more information on the cookies we use and how to delete or block them.Accept Read More
    Privacy & Cookies Policy

    Privacy Overview

    This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
    Necessary
    Always Enabled

    Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.

    Non-necessary

    Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.