Imagine having a $300 million annual IT budget, about 1.5% of company revenue, and then being told by Congress that you need to spend an additional $350 million to $400 million a year on an IT project that will yield minimal business benefits and for which there are minimal federal subsidies.
That's the situation Union Pacific finds itself in with its version of Positive Train Control, a set of interoperable systems under development industry-wide aimed at preventing train-to-train collisions, over-speed derailments, and injuries to rail-side workers. PTC systems are designed to keep a train within authorized limits on a track. When necessary, the technology will override the engineer or operator to slow down or stop a train. "It self-enforces safety," says Michael Newcomb, the IT director who oversees UP's work on PTC.
A train crash in California in 2008 in which 25 people died led to the Rail Safety Improvement Act, which mandates that all major U.S. railroads implement a PTC system by Dec. 31, 2015. Currently, 11 PTC projects, involving nine railroads in at least 16 states, are in varying stages of development and implementation, according to the Federal Railroad Administration, which estimates that the systems will cover about 70,000 miles of track when the program is completed. A consortium led by UP, CSX Transportation, Norfolk Southern Railway, and BNSF Railway is leading the interoperability effort.
PTC is a huge undertaking, one that UP CIO Lynden Tennison equates to a massive "science project" requiring each railroad company to overhaul its communications, back-office, "wayside" switching and signaling, and on-board train infrastructures. Newcomb says the system will have to pass 10,000 test cases before it can go fully operational at UP. Already, there's widespread talk in the industry of the need to extend the deadline beyond 2015.
Tennison estimates that when all is said and done, the industry will have spent about $20 billion and UP itself more than $2 billion on PTC. Originally, it was thought that the program would let the railroad companies eliminate one of the two engineers on board each of their trains, yielding substantial cost savings over time, but union pressures scuttled those plans, Tennison says. So UP is looking for other ways to monetize its PTC work.
For example, that work is giving UP crews improved real-time feedback if they're violating train handling rules, it's helping with remote management of track wayside equipment, and it's improving communications security for national critical infrastructure.
A more tangible outcome of UP's PTC work is a system that alerts on-board engineers to optimal throttling and braking procedures given track, traffic, and other conditions, helping the company cut fuel costs by 4% to 6%. Deeper savings are possible, as UP studies show that its best engineers use two-thirds the fuel of its worst engineers. (UP now publishes the fuel metrics of its train engineers, rewarding the top tier with $75 gas cards while having serious chats with the underperformers.)
The fuel savings are noteworthy, Tennison says, "but you don't need $100,000 worth of hardware on the locomotive to do that. We could've done it for a much, much lower price."