Cost optimisation

Russian Railways is pursuing a comprehensive programme focused on improving its performance, including cost optimisation.

The programme factors in Russian Railways’ benchmarking against global peers in key lines of business, best Russian and international practices, state of technology, management practices, and optimisation opportunities broken down by:

  • improvements in labour productivity;
  • improvements in quality standards for utilising the rolling stock;
  • introduction of resource-saving technologies;
  • improvements in procurement procedures and supplier management with a view to curbing price growth;
  • decrease in specific consumption of electricity and fuel for train traction;
  • operating domain technologies;
  • asset optimisation, including through disposal of non-core assets;
  • review of existing regulations and standards in the light of the cutting-edge materials, equipment, transportation and track repair technologies;
  • technological improvements and innovations, including better maintenance standards as part of the railway line classification, differentiation of freight and passenger railway lines, new equipment and techniques, advanced transportation technologies, higher efficiency of low intensity railway sections, etc.

The programme is focused on ensuring continuous and comprehensive improvement of operational efficiency and cost optimisation across all of its key business processes.

Key effects of Russian Railways’ efficiency improvement initiatives in 2018

assessment and optimisation of operating expenses

RUB 6.6 bn
  • higher energy savings and energy efficiency
  • optimisation of expenses related to third-party work and services
  • lower expenses due to re-use of materials
  • higher efficiency of track facilities maintenance
higher efficiency of the procurement and supply chain management system
RUB 4.4 bn
  • lower prices resulting from tender procedures for services procured
introduction of cutting-edge technologies and innovations
RUB 1.1 bn
  • Lean production and other projects
higher asset management efficiency
RUB 15.4 bn
  • optimisation of the traction rolling stock through its better utilisation
  • modification of track repair schedules
  • higher efficiency of property, plant and equipment maintenance and repair management
improvements in labour productivity
RUB 10.9 bn
  • a set of technical and organisational measures
from other initiatives
RUB 6.6 bn
  • tax benefits
  • effect of the non-indexed part in the price indexation formula for maintenance and overhauls

Total cost of optimisation is
RUB 45 bn