Case Studies: Metrolink Light Rail Transport, Manchester, United Kingdom

Jump to: navigation, search
Project Overview
Figure 1: Metrolink Light Rail Transport,Manchester, U.K.
Metrolink Light Rail Transport, Manchester, United Kingdom
Project Type Both
Contract Duration
Phase 1: 15 years
Phase 2: 17 Years
Phase 3: 10 years
Project Time Line
Conception: 1982
Call for tender: 1988
Contract approved: 1990
Contract signed: 1990
Phase 1 Completed: June 1992
Phase 2 completed July 2000
Phase 3 Part A completed: December 2014
Part B expected to be completed in: 2019


Metrolink is a light rail transport system in Manchester. The project was initiated in the early 80’s but its construction only started in 1990 after some years of discussions on different alternatives. Works have been carried out continuously since then up till now. The project has been carried out in three main phases to extend the existing lines, to convert some rail lines to light rail or to build new lines. Project commenced its operations when Phase 1 was completed in 1992; Phase 2 was then completed in 2000; Phase 3 Part A was will be completed in December 2014 and the final part, i.e. Phase 3 Part B, will be completed in 2016/17. Currently the network consists of six lines, which radiate from Manchester city centre and terminate at Altrincham, Ashton-under-Lyne, Bury, Didsbury, Eccles, and Rochdale. The historical development of these six lines is as follows.

Since the early plans, the network was to be built in stages. Therefore, the first stage had to be able to stand on its own. Phase 1 of the project was a conversion of the East Lancashire Railway (Bury-to-Victoria) and Manchester, South Junction and Altrincham Railway (Altrincham-to-Piccadilly) heavy rail lines, and creation of a street-level tramway through Manchester city centre to unite the lines as a single 19.2-mile (30.9 km) network. Phase 1 of the Metrolink opened from Bury to Victoria on 6 April 1992; Victoria to Deansgate–Castlefield on 27 April; Deansgate–Castlefield to Altrincham on 15 June; then the branch to Piccadilly Rail Station on 20 July 1992.

When Salford Quays became a business district during 1990s, in Autumn 1995 a 4-mile (6.4 km) Metrolink line branching from Cornbrook Metrolink station to Eccles via Salford Quays capitalising on the regenerated Quayside was confirmed as Phase 2 of Metrolink. Part of Phase 2 (from City Centre to Broadway) commenced operations on 6 December 1999 and the Eccles lines was fully completed on 21 July 2000.

In March 2000 it was decided by the Government to build the Metrolink extensions as a single project rather than line by line. This led to an ambitious expansion programme, which would see trams running to Oldham, Rochdale, Ashton-under-Lyne, Wythenshawe and Manchester Airport. Phase 3 was split into two sections: Phase 3A involved taking over the main line railway to Oldham and Rochdale station, as well as extensions to Droylsden and to Chorlton-Cum-Hardy. Phase 3B involve extensions to Manchester Airport and Didsbury (from Chorlton), Ashton-under-Lyne (from Droylsden) and Rochdale town centre (from Rochdale railway station), as well as building a new on-street alignment through Oldham town centre bypassing a section of the current railway line. The construction of the Chorlton to Manchester Airport, and Second City Crossing (2CC) are still underway. Further extensions are also planned, from Didsbury to Stockport, and to The Lowry and to the Trafford Centre in Trafford Park (from the Eccles line). According to Greater Manchester Local Transport Plan 3 Capital Programme, these Metrolink extensions to Trafford Park and Centre, at an estimated cost of GBP 350 M, is projected to be completed by 2019.

The project was first identified in the 1960s but due to issues concerning route and method of delivery it was not taken forward until the 1990s. The tender call was made in 1988 and the contract was approved and signed in 1990. Two years later, in 1992, the project started operations. The overall budget exceeds GBP 1,000 M and is a combination of publically funded sections and concessions. More specifically:

PHASE 1 (Approx. budget: GBP 145 M). Phase 1 included the original link between Victoria and Piccadilly stations in addition to stops previously served by Manchester’s aging electric railway system. Phase 1 was a publically funded project with private contracts for design, construction, operation, and maintenance.

PHASE 2 (Approx. budget: GBP 160 M). Phase 2 further expanded the Metrolink system and was a full concession aimed at leveraging private sector resources to fund system expansion.

PHASE 3: Phase 3 (also known as “the big bang”) was originally proposed as one large system expansion, but was later scaled down into two smaller phases (“A” and “B”) of price escalations and limited public funding capacity.

Initially proposed in March 2000, its total cost estimate was GBP 429 M (GBP 289 M Government’s contribution and GBP 200 M private sector contribution). In December 2002, there was a new estimate of GBP 820 M (with the Government contributing GBP 520 M and the private sector GBP 300 M).

Phase 3 part A (Approx. budget: GBP 575 M). It was approved in July 2006 to be funded with part of the GBP 520 M budget and Greater Manchester Passenger Transport Executive (GMPTE) borrowings. for the rest. Phase 3a involves separate contracts for

  • Design and construction, including electrical and mechanical works
  • Tram operations and maintenance
  • Operating systems and infrastructure maintenance
  • Rolling stock provision

Figure 2: Metrolink Future Network

  • Fare collection (This forms part of the operations contract with farebox risk retained by GMPTE.
  • Management of other contracts (e.g., for separate projects such as the Queens Road Depot expansion).

Phase 3 part B (Approx. budget: GBP 440 M). It was approved in 2008, through Transport Innovative Fund 2007 (TIF) for GBP 1,500 M, to be funded through contributions from local transport programmes, future GMITA levies and regional allocations.

PHASE 1 and 2 Upgrades (Approx. budget: GBP 102 M). Because of delays in commencing Phase 3, phase 1 and 2 upgrades were required to provide essential improvements and/or renewals. First round approved July 2006, and Second round 1 February 2008. These are for essential improvements and/or renewals, which would have happened in the early stages of a new concession. They include 8 additional vehicles; power supply upgrades; stop and vehicle upgrades to comply with Disability Discrimination Act and Rail Vehicle Accessibility Regulations; major infrastructure works including the upgrade and renewal of track).

Metrolink carried about 8.1 million passenger journeys in its first year of operation, 1993/93, and last fiscal year, 2013/14 has sold 29.2 million. TfGM projects that 41.7 million passenger journeys per year will be made on the Metrolink system once Phase 3b is completed in 2016.

The Contracting Authority (Public Party)

GMPTE (Greater Manchester Passenger Transport Executive) is the responsible authority on behalf of the Public Sector. It owns the assets of the Manchester Metrolink, and it is an independent entity that implements the policies of GMPTA.

GMPTA (Greater Manchester Passenger Transport Authority) is a planning and policy body representing 10 district councils in the Greater Manchester Area. It formulates transport policy and prepares strategic planning.

The Concessionaire (Private Party)

Metrolink, is owned by TfGM, has an operate and maintain contract by RATP Dev UK since August 2011(RATP Dev UK is a subsidiary of the French state-owned company RATP)

The SPV (Special Purpose Vehicle) varies depending upon the phase as follows:

Phase 1 * GMA (AMEC, GM Bus, Mowlem, GEC)

Phase 2 * Altran (Serco, Ansaldo, Laings)

Phase 3 * TfGM is the network owner / RATP is the system operator

MPact-Thales consortium, composed of Laing O'Rourke, VolkerRail and the Thales Group, was awarded with most works of this phase. Stagecoach, was appointed as system operator, but later in 2011 it was replaced by the French RATP group. Between 1992 and 2007 Metrolink was operated and maintained as a concession by Serco. From 2007 until 2011 it was operated and maintained by Stagecoach Metrolink – as part of the Stagecoach Group. Metrolink RATP Dev, a part of the French state-owned RATP Group, which operates the Paris Metro, bought the Metrolink contract from Stagecoach on 1 August 2011.

Financing structure:

  • Phase 1 –Borrowing by GMPTA, including European Investment and European Regional Development Fund and Government Bonds funding
  • Phase 2 – Private financing by Altram Consortia and Developers contribution, participation of European Regional development Fund
  • Phase 3 – GMPTE/Dept of Transport funding package/private financing


A number of 29.2 million passenger journeys were made on the system in 2013/14, up from 25 million the previous year. Patronage rose steadily in the years following the Phase 1 system's opening, from a start-point of 8.1 million in the 1992/93 fiscal year to 14.2 million in 1999/2000.

Two years of more rapid increase followed the opening of the Phase 2 extensions; succeeded by another period of fairly steady increase to 21.1 million journeys in 2008/09; although numbers then fell to 19.6 million in the 2009/10 fiscal year. Metrolink revised its method for calculating passenger boardings in 2010/11, meaning figures from that year onwards are not directly comparable with previous years.

The rapid increases in patronage since 2010 largely reflect the ongoing Phase 3 expansion programme, and have resulted in a 40% increase in demand for travel across the system over three years. TfGM's longer term forecasts imply that patronage increase above the 2010 baseline may be expected to be 137% by 2016 (when Phase 3 should be complete), and 171% by 2031.

TfGM projects that 41.7 million passenger journeys per year will be made on the Metrolink system once Phase 3b is completed in 2016.

Key Purpose for PPP Model Selection

This approach was adopted due to the Government requirement that the scheme`s promoters fund a portion of the costs in the early phases. The flexibility of delivery means that the contract has clauses which allow supersedence as each phase is tendered. This means that, at each phase, a new operator is sourced for the whole operation as well as providing the construction of the individual phases.

In addition, value for money analysis was performed after the Phase 2 concession has led to an alternate approach in phase 3 for incorporating private sector participation.

Project Timing

The need for an interconnected transport system was first identified in the 1960s. The idea was not brought forward until the 1990s where a study concluded that adoption of some redundant and underutilized heavy rail infrastructure could form the basis of an interconnected urban tram system. This makes the Manchester Metrolink unique, in that, there are formal platforms for stops. The project was phased to minimize high initial costs. The purpose of the scheme is to connect the northern and southern suburban areas of greater Manchester with the commercial and leisure centre of Manchester. The size and scope is important as the city centre has very low living space, therefore there is high commuter requirements.

  • Date Project conceived: this varies. The need was first identified in the 1960s but due to issues concerning route and method of delivery it was not taken forward until the 1990s.
  • Date of Tender Call -1988
  • Date Contract Approved (signed) - 1990
  • Date of Financial Close - Several

Other important dates:

  • 1981 - Initial studies commencement
  • 1982 – LRT was decided as the best option to provide transport solution
  • 1988 - Government approved plan
  • September 1989 – First contract awarded
  • April 1992 – First operational section open (phase 1)
  • June 1992 – Phase 1 completed
  • 1995 – Phase 2 approved
  • April 1997 – Second contract awarded
  • July 2000 – Phase 2 completed
  • July 2006 – Third extension (Phase 3) approved by Government
  • May 2008 – Third contract awarded, Phase 3a
  • December 2012 - Phase 3a completed
  • May – 2013 First section of Phase 3b line opened
  • 2014 Second section of Phase 3b line opened
  • At 12/2014 – Phase 3 mostly expected to be completed (except for Manchester Airport, which is still under construction)
  • 2016/17 - New Second City Crossing (2CC) to be completed

Project Locality and Market Geography

In the UK, and particularly in the Greater Manchester area, most people live in suburban areas on the periphery of the city (as city centres in many major cities in the UK has very low living space). Greater Manchester is the prime hub for the North West commercial activities. Therefore, there is a need for availability of efficient transport infrastructure to access workplaces and leisure facilities.

Procurement & Contractual Structure


Tendering was initiated in January 1988 after a long period of discussions, when a decision of choosing a 15-years DBOM contract was made.

Initially, about 12 consortia expressed interest in being invited to tender. To minimise tendering costs, a two-stage approach was adopted, and in September 1988, only 8 from the 12 were invited to submit first stage tenders. However, only 5 submitted a first stage tender. There were 3 consortia selected for a second stage. After a complex evaluation of the second stage tenders, the contract was awarded to the GMA Group in September 1989. Three months later the final agreement was reached to start a two-year construction period ending in December 1991. The contract was officially signed on 5th June 1990.

With regards Phase 2, in 2001, GMPTE shortlisted four consortia to be invited to bid for the Metrolink single contract. In April 1997 Altram, a consortium of the Serco, Ansaldo and John Laing was appointed to construct the Eccles Line; Serco, would operate the whole network under contract; Ansaldo provided six additional vehicles — T-68 and signalling equipment. Construction work officially began on 17 July 1997.

In Phase 3, the M-Pact Thales consortium was selected to design and construct phase 3 of the Metrolink system. Bombardier would supply 32 new Flexity Swift LMRT vehicles, and Stagecoach would operate and maintain the system (having won both operation and maintenance contracts). In addition, the short listed consortia included: Maintram (Amey and others); Greater Manchester Tamways (Carillion (Mowlem plc), Alstom, Virgin); Greater Manchester Rapid Transit (AMEC, Bombardier) and Manchester Tram (Serco, SNC Lavallin)

New negotiations were required at each phase of the project. The duration of project assignment procedure was, on average, 18 months for the 3 phases already in operation.

Contract Structure

Metrolink has used different types of contract in its three phases. In phase 1, there was a 15-years DBOM concession contract with small concession fee of GBP 5 M, covered with a financing contribution from the private sector. The contract was granted to the GMA consortium (GEC-Alsthom), Mowlem, AMEC and GM Buses Limited, while the system operator was SERCO.

The estimated cost of the project was GBP 145 M. Sources of funding were in GBP million, 15 from European Investment Bank, 13 from European Regional Development Fund, 48 from Dept. of Transport (section 56 grant) and 69 borrowed by Great Manchester (MPTA). The project included new works for a length of 31 km and 26 new stations. There were some critics because the concessionaire only contributed to the project with a small amount.

Phase 2, was contracted under a 17-year DBOM concession contract. This was granted to a new consortium, i.e. Altram - comprising John Laing, Serco and Ansaldo Trasporti. This time, the payment for the concession was around GBP 90 in comparison with the investment amount for approximately GBP 100 M, which adding other cost total GBP 160 M. Sources of funding were in GBP million, 10 from European Regional Development Fund, 95 from Altram, 12 Developers, 26 Cash from Greater Manchester Passenger Transport Authority (GMPTA), and 17 borrowed by GMPTA. The project included new works for a length of 6.4 km and 10 new stations. During this phase the contract had the following advantages: 1) a single contract to operate a fix number of years was a key factor; 2) contractor pays the public authority for the right to operate services (concession agreement) and offset the construction costs; 3) the private sector bears the commercial risks of the operation without subsidies.

For phase 3, there were a combination of operating and maintenance contract for 10 years, along with separate design and built public procurement contracts. Phase 3a was awarded to M-pac Thales consortium, (Private stakeholders) composed by Thales, Laing O’Rourke and GrantRail and the system operator was Stagecoach. The estimated cost was GBP 575 M. Funding would be covered by Greater Manchester Passenger Transport Executive (GMPTE) 2007 Transport Innovation Fund. The new project extension meant new works for a length of 22.5 km and 28 (est.) new stations.

Other contract information.

There were termination clauses which provided for incoming operators to operate the whole system superseding the activities of the incumbent SPV as well as private provisions. There were also public Authority provision, mainly activities not transferred, such as public relations and commitment to maintain management of the timetable. DBFO form operated in this scheme as a whole, but some works were directly contracted by the grantor, especially in phase 3. As for the repayment method, the concessionaire receives payment from the user fees. The ticket sales are divided between the concession and the sponsor, GMPTE. Some guarantees in Phases 1 and 3 were identified, as bonds held by the government. There were renegotiation clauses, ongoing contract development due to the nature of this project, and the inclusion of termination clauses.

Risk Allocation

Each of the different project phases has a diverse risk profile. In Phase 3, grantor directly carries out most of the procurement task and risk and, therefore, the transaction is more similar to an Operate and Maintain contract. However phase 1 and 2 have many similarities and the risk allocation may be classified as that as the BDOM typical contract.

This is presented in Figure 3.

Design and construction as well as maintenance risk are supposed to be totally assumed by the private contractors. However, in practice, it might not be that clear and often there are cost overruns and the private sector asks for some additional compensation. Not much information about possible compensations on the project were found (certainly not about cash compensation).

Demand/revenue risks were not clear in phase 1. Transfer risk, which was an objective for the Government, was only achieved in part, but in phase 2, the private concessionaire assumed all downside revenue risks and was obliged to partially share upside with GMPTE above a certain threshold. In phase 3, GMPTE assumed all revenue risks but, Stagecoach is accountable for revenue security.

Figure 3: Original risk allocation

Financial risk (others): The sharing of the financial burden and the onus on the GMPTE to obtain public and private funding suggests that the risk is shared among a large group of providers. However, given the role of public institutions involved, it may be classified as rather public.

Regulatory risk (mostly public): Rail projects required an act of Parliament which meant that the public sponsor had to provide a detailed outline of their proposal. Later amendments to the procedures, due to an increase in demand, meant that the acceptance of LRT schemes was then managed by Ministerial decree. Political risk has been identified as significant in this market. Force majeure risk is usually taken by the public sector. However, not many references about it were found.


Metrolink uses a Performance Management System (PMS)with KPIs and a system of punitive measures that seek to “incentivize timely correction of lagging KPIs without jeopardizing the operator’s solvency”. Key performance indicators from Manchester’s phase 2 PMS were intended to ensure appropriate maintenance; but in Phase 3, PMS goes further to include prescriptive minimum maintenance requirements.

There are Key Performance Indicators explicitly stated in the contract and the operator has to comply with KPI requirements. The underperformance of the KPIs are connected to penalties. Many of these penalties relate to availability. For example, there is a penalty where the service does not operate to 95% of schedule within a 28-day period. This sum culminates in a penalty of 80,000 GBP for lack of performance exceeding 75%.

The Metrolink in Manchester is seen as a resounding success as measured by usage, performance and also the adoption of the PPP model is perceived to have considerably increased the regional GDP.

Robust demand for Metrolink services allowed the phase 2 operator to raise fares significantly. Critics speculated that increased fares were an attempt to “price off” demand and avoid additional rolling stock purchases. In contrast, GMPTA sought to maximize ridership. These conflicting objectives contributed to the concession’s eventual termination.

Phase 1 and 2 exceeded demand forecasts. Phase 3 is yet to be determined.


  • Berry, J.C. (1992): Metrolink: the long road from paper studies to tender evaluation.. IEE Colloquium on Manchester Metrolink. Page(s): 1/1 - 1/6 INSPEC Accession Number: 4178981 Conference Location: London Publisher: IET.
  • Glaister, S., Allport, R., Brown, R. and Travers, T. (2010). Success and failure in urban transport infrastructure projects. KPMG Global Infraestructure.
  • Graffton, P., Streich, S., Djekrif, R., Racine, C. and Schneider, J. (2002): PPP around Urban Rail Transit (EU Project PPP-TRANSIT). Part II Case study report. Technische Universitat Hamburg. Germany.
  • Hall, J.R. (1995). The design, contract as Metrolink build, operate and maintain applied to Manchester’s Metrolink. Introducer:J. R. Hall), Prnc. Instn Ciu. Engrs Transp.,1995, 111
  • Hylén and Pharoah (2002). Making Tracks – Light Rail in England and France. VTI meddelande 926A • 2002. Swedish National Road and Transport Research Institute
  • Manchester Metrolink.
  • Transport for Greater Manchester- RATP Group
  • Peter Cushing (Metrolink Director) /Chris Coleman (Managing Director)
  • Mandri-Perrott, C. (2010): Private sector participation in light rail-light metro. PPIAF. The World bank.
  • Nash, C., Matthews, B., Granero, P. and Marler, N. (2001): Design of New Financing Schemes for Urban Public Transport - the role of private finance. Institute for Transport Studies, University of Leeds. Paper presented at THREDBO7 2001: Molde, Norway.
  • Transport for Greater Manchester (2012): 2011/2012 Annual report
  • Transport for Greater Manchester (2013): Statement of accounts for the year ended 31 march 2013
  • Tyson, W.J. (1992). Planning and financing Manchester Metrolink. Taken from Proceedings of the ICE 1992, Transport Vol. 95 (Thomas Telford Ltd).
  • F. J. Villalba-Romero, C. Liyanage, 2014, Metrolink Light Rail Transport, Manchester, in A. Roumboutsos, S. Farrell and K. Verhoest, COST Action TU1001 – Public Private Partnerships in Transport: Trends & Theory: 2014 Discussion Series: Country Profiles & Case Studies, ISBN 978-88-6922-009-8