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March 2010
BNSF's implementation plans are currently in progress. We are continuing to build an organization within BNSF to address the far-reaching effects of the Rail Safety Improvement Act of 2008 (RSIA). There are virtually no departments that are unaffected by this legislation. Thus, the review of our organization has been extensive and without precedent. The financial burden, without quantified positive operational benefits, placed upon BNSF and the other Class I carriers has necessitated this review. The filing of our implementation plan has been complicated by the only recent issuance of the Final Rule for the RSIA.
Nonetheless, BNSF is well under way with meeting the regulatory requirements of the law, as we understand it. Our Signal, Network Control Systems, Telecommunications and Mechanical teams are moving quickly to finalize the planning and provide the information necessary for BNSF to meet the April 16 deadline.
BNSF is in a position to provide the information necessary due to our efforts to implement the Electronic Train Management System (ETMS) on selected portions of our railroad. We have been working cooperatively with the FRA to test and qualify ETMS as a system that is fully PTC compliant. We voluntarily developed ETMS, with the FRA's guidance. Therefore, we expect that relationship to be helpful in meeting the requirements of the RSIA.
There are a number of challenges that we are addressing, not the least of which is the funding need. This has tested BNSF in a capital constrained environment as PTC competes with other capital needs.
We have been working in concert with all of our suppliers to produce the volume of material necessary to support PTC. The interoperability issues have yet to be resolved and will continue to be a challenge until they are solved later this year and into 2011.
Because BNSF has had experience in the level of work necessary to complete even one subdivision, we knew that the engineering and material portions of this work would stretch the industry. In anticipation, BNSF began marshalling resources early in 2009 to ensure we would be in the best position possible to complete our PTC installation across the system.
Our major efforts have been directed at development of PTC-compliant equipment and upgrades. We have also directed a great deal of effort at standardizing our installations. We learned from experience that customizing applications to signal systems that have been in place over the course of 60 years complicates the installation greatly. Thus, we are progressing along a path that calls for basic and standard signal installations that will support PTC. That includes vital electronics, batteries, bungalows, trackside hardware and similar material.
Hiring qualified people necessary to install PTC will be a challenge. We will be using our subcontracting agreement with the Brotherhood of Railroad Signalmen to install PTC on portions of BNSF. BNSF labor, supplemented with contract labor, will be beneficial to both BNSF and the BRS-represented employees as it will keep a stable labor force over the life of the project. Our current contract with the BRS has been very positive in that respect during the recent economic downturn.
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Canadian Pacific is making good progress with the development of its PTC implementation plan (I.P.). Many key inputs to the plan are well established, such as the design of the PTC system that is to be developed, as well as the risk factors that define the priority order of deployment. Canadian Pacific will work in lockstep with its tenant passenger railroads to develop the required joint filings of the PTC I.P.
Addressing uncertainty is an important consideration when building a PTC I.P. The industry is still developing the interoperability specifications for PTC, requiring a high degree of inter-railroad coordination and agreement on system architecture and specifications. Specifying, developing and testing a complex system and implementing it with a seamless, interoperable communications network in such a short timeframe will be challenging.
My answer to Question 1 already indicated that most PTC implementation challenges are a product of the system's complexity and the compressed delivery timeframe. Some of the more challenging hurdles will be: 1) timely availability and supply of production version field and locomotive equipment; 2) availability of S&C field forces for wiring, construction and commissioning; 3) coordination of radio spectrum allocation among railroads; and 4) seamless systems management of the interoperable industry-wide PTC infrastructure.
As with any large initiative, there will be the challenge of change management. PTC will have new demands on the management of track data. It will require new processes and procedures for the development and implementation of train operations and maintenance activities, as well as new ways of operating with tenant railroads.
These will need to be addressed in pilots and early stages of implementation so that best practices can be identified and adopted.
Given that the FRA PTC rule was not published until Jan. 15 (three months before the implementation plan deadline), we have some challenges. Completing the required risk analysis is no small task. Finalizing the deployment schedules for both locomotive and wayside is a challenge in light of several uncertainties and other issues. The late release of the rule means that we must work quickly to adapt its implications to our wayside schedule. Specifications are not yet complete for some key aspects of field equipment. Vendor development is still ongoing. We are trying to maximize our installation period to ensure that we meet the overall 2015 deadline and that we minimize the impact of these installations on railroad operations. However, to start installations when we want, we will likely have to initially install some equipment without final software features. The final software versions would be downloaded at some point after installation.
Because this is an effort that involves much more than one railroad, we have other issues that need resolution before the implementation schedule can be finalized. Systems must be interoperable; industry groups continue to work toward that requirement. We are also actively working with commuter and passenger agencies to ensure interoperability.
Nonetheless, we do expect to submit our plan on time. We have resources allocated to develop the documentation needed for plan submission. Those resources are working with a number of other subject matter resources within the company, not to mention our supplier community, to gather the necessary information.
The most obvious challenge to PTC implementation from a C&S perspective is the sheer volume of installations and the aggressive timeframe in which to complete the work. We have roughly 11,000 wayside interface units to install. For more than a quarter of our locations, space or equipment limitations necessitate a significant upgrade to enable the site for PTC.
Other issues exacerbate this volume-time pressure. The 2015 deadline forces us to work tasks in parallel that ideally should be worked sequentially. As mentioned before, equipment suppliers are developing products while specifications, industry messaging protocols and radio systems are still being designed. The challenge here is to be able to proceed with installations in light of such uncertainty while avoiding later rework.
Cost is also an issue. While we are committed to doing what is necessary to meet the mandate, it is impossible to ignore the costs of lost opportunities created by shifting funding away from other infrastructure investments to PTC.
Maintaining, and even improving, reliability will be a challenge. We are introducing additional complexity with additional failure points into our system. So, we have to find improvement opportunities to offset any adverse impact of PTC on operations.
These are real challenges, and we believe that we are ready for them. We have to meet the mandate. However, after all of the capital is spent and the work is completed, we have to accomplish more than to simply be compliant with the law. We have to have a better railroad.
Norfolk Southern is working to complete our positive train control implementation plan (PTCIP) by the April 16 deadline, but it is a daunting effort. NS must deploy PTC over a significant portion of our tracks between now and Dec. 31, 2015, to comply with the RSIA and FRA's new 236 Subpart I regulation. Further, the PTC system to be deployed must be interoperable and certified by FRA prior to being placed into revenue service. Since the PTCIP is essentially a high-level project plan describing how, where and when PTC will be deployed, the unknowns presented by the newly released regulatory process will present many challenges for the industry and FRA. NS believes the PTCIPs will be living documents that will require periodic updates to accurately reflect the ever-changing state of PTC development and deployment.
The immediate challenges to implementing any project with a scope as large as PTC deployment will focus on resources, product availability and scheduling. However, we will face a larger challenge as deployment actually begins with the successful FRA certification of PTC systems. This challenge will be related to the reliability and operational impacts of PTC systems, which have never been widely deployed. We already know that overly conservative braking algorithms result in undesired PTC enforcements and an overall reduction in network throughput. We also have little experience with the varied hardware components that the PTC system comprises. Working through these issues to maintain the viability of the railroad network as we race to meet the impending 2015 deadline will present the most significant challenge.
Our signal implementation plan is going well. We have identified the general scope of work required for all of our affected trackage and are in the process of determining the best way to address each area. We know that the first step, which we are concentrating on this year, is getting our systems "PTC ready." This means that we are developing a plan to replace many existing signal systems that are not PTC compatible to processor-based systems that will accept PTC. We are balancing the location priorities with our construction capabilities for each of our seniority zones to ensure we will complete the work on time, while maximizing our labor pool.
The major hurdles we will deal with are funding, systems integration, and cut-over and testing time. Trying to balance the requirement of investing huge amounts of capital money for PTC, while still having enough to continue upgrading obsolete equipment and investing in new technologies, is a significant challenge. We are still working on how we will build the interface with some of our older signal systems that we will not have time to upgrade within the mandatory timeframe. Perhaps the most physically challenging issue of all is getting the track time to perform and test the numerous cut-overs we will have to make each week for the next five years.
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