Railway Accounts Department Examinations

Showing posts with label outsourcing. Show all posts
Showing posts with label outsourcing. Show all posts

Friday, September 22, 2023

Outsourcing - Workshop Accounts


Outsourcing - Workshop Accounts  

  • Source: Rolling Stock Code 2022 -11th chapter - Capacity Optimization and Product Development 




  • In this dynamic world, new products emerge and old ones disappeared.  


  • Demand shifts from one product to another. 


  • Innovation alters methods of production and so on.  (Examples is Vande Bharat Trainsets/DPRS- Distributed Power Rolling Stock) 


  • However to meet such rapid changes in technology and to meet the wide changes in the product matrix or quantum of Outturn, out age old Production Units and Workshops (3 to 4 decades) are not ready. 


  • Moreover such changes are notified only during the year in question and not having sufficient time for advance planning. 

  • So it is necessary to create flexible structures with complete freedom to adopt strategies like outsourcing, staff multi-tasking, multi-skilling, flexible deployment of manpower amongst different shops within the PU/Workshop to match capacity with demand etc. 


  • In PUs/Workshops, final assembly and production of certain critical sub-assemblies and components has to be done in-house. 

So that, non-critical jobs can be outsourced and the staff that may be rendered excess in these shops to be re-deployed in assembly and critical items of work.  

Need to Outsource: Where the outsourcing the work to other agencies become inescapable under circumstances such as: 

  1. No possibility of getting the work in other Railway Workshops with known capacity & capability for the Product. 

  2. Sudden spurt in the requirement of components/sub-assemblies far beyond the capacity of the shops. 

  3. Reduction of staff in Non Core shops (due to shifting to Core shops) 

  4. Introduction of new mateial/technology for which skills/capacity/equipmet may not be available within the PU/Workshop. 

  5. Economy in Cost due to large scale of production with the supplier. 

  6. Short-term or One time jobs - For which permanent capacity cannot be feasible. 

  7. Requiring heavy infrastructure which may not commensurate with the quantity required by Railways.  

Under the above circumstances, the Shopin-charge should decide to opt for Outsourcing.  

  • Outsourcing - Two types  

  1. Outsourcing to Units outside the Railway Workshop  


  1.  Outsourcing for Works within the Railway Workshop premises

Outsourcing to Units Outside the Railway Workshop

  • Approval of the PU/Workshop In-charge  


  • Finance Concurrence required.  


  • Certain excluded items - finalized by Zonal Railways only with Finance concurrence. 


  • Pricing: In-house manufacturing cost minus  over heads plus overheads at commercial rates  for cost comparison purpose.  

Outsourcing for works within the Railway Workshop premises 


  • In case of certain assemblies, sub-assemblies and critical items and their testing. (because quality is important) 

  • Control of quality of workmanshipi through stage inspections. 


  • Specilized large-scale infrastructure needed for the manufacturing process not available with vendors. 


  • The costly specilized equipment not useful for other than Railway works. In such cases, it will inflate the vendors bid price which will ultimately get loaded on the cost of production. 


  • Logistiical problems and disproportionate transportation costs.  

Safeguards to avoid contract disputes - If Work is outsourced within the Railway Premises: 

  1. Separation: Work area for the Contractor and Railways 

  2. Defining Shared machine and equipment time available to the Contractor to avoid mix up. 

  3. Raw materials and consumables to be supplied by the Railways - Stock should be kept separately and accounted for. 

  4. Consumption norms for raw materials and consumables for eachh item issued to the Contractor by the Railways 

  5. Agreement - signed by the Contractor and Shop In-charge 

  6. Accounted and documented of Electric power, water and utilities incl: tools provided by  Railways 

  7. Control of quality of workmanship by Inspection 

  8. Accountal of Scrap / left over material to be returned by the Contractor and kept separate 

  9. Industrial safety standards as prevailing in the shop – equally applies to the workers engaged by the Contractor. 

  10. Compliance of all legal provisions. 


Check List



Check list for precautions to be taken before contract is awarded for outsourcing work inside the workshop with outside labour. 



Precaution to be taken 




Separate work area for Contractor  



Requirement of Railway supplied consumables – like special electrodes, water, electricity etc. been computed and listed   



Material requirement for outsourced job been separately worked out 



Machine hours for use of Railway equipment for the job been computed and listed  



Payment to contract workers is being made through bank, in a transparent manner or not  



Separate ID for workers of Contractor



Accountal of contractor supplied items, raw materials and consumables  



Proper Railways supervision on the work. 



Complying of all legal provisions  



Note: The answer to all the items is to be ‘yes’,  Before outsourcing Contract is awarded. 



Saturday, August 13, 2022

Vadlapudi Wagon Repair Shop - Outsourced


First outsourced Wagon Repair Workshop  - Vadlapudi 

  • At Vadlapudi, near Visakhapatnam In ECoR 

  • Construction by RVNL


  • 203 Acres  


  • 360 Crores - Cost of Construction 

  • Capacity 200 Wagons per month (2400 Wagons per year) 


  • Operation and management  (POH activity) of Wagon Repair shop entrusted / outsourced to Railway PSU - M/s Braithwaite & Co. ltd.  


  • First time, complete operationalisation and maintenance (POH activity) of Wagon Repair shop outsourced with the approval of the Railway Board.

  • It seems POH activity of Rolling stock in New workshops going to outsourced citing staff shortage. 


Tuesday, July 21, 2020

Is it Privatisation or Outsourcing in Indian Railways ?

In-house vs. Outsourced Software Development | App Owners Perspective

Is it Privatization or Outsourcing in Indian Railways ?

The Railways has around 13 lakh permanent employees and over 4.5 lakh contractual and outsourced staff. It shows a ratio of 3:1.  May be in coming days, it may be jump to 2:1

Activities (termed as Non Core) that are already outsourced on a phased manner in Indian Railways are :

·         AC Coach attendants
·         Platform cleaning
·         Security
·         Executing the works in Indian Railways
·         P.Way maintenance
·         Catering & Pantry car
·          Hospitality
·         Doctors in Railway Hospital
·           Supply of Bed linen in AC Coaches
·          OBHS – On Board Housekeeping Services
·          Parcel vans
·         Sanitation in Railway colonies
·         Managing Retiring Rooms Dormitories
·         Housekeeping of Railway Stations
·         Railtel for telecom operations
·         RVNL for construction activities
·         Disburse salaries through NEFT (thereby reducing the Cash office staff)
·         Doorstep Banking
·         Engineering Surveys
·         Painting or removal of paint of Rolling Stock in Production Units / Workshops
·         Maintenance of IVRS – Interactive Voice Response System
·         Transportation of released track material
·         Leasing of SLR space
·         Unscheduled and scheduled repairs of house wiring and operations of  Pumps/DG sets / Stationery AC Plants/ Distribution network of power supply
·         Unscheduled repair of major electrical assembly of locomotives / multiple units / Alternaor / fans / Compressor in AC Coaches
·         Waiting halls in Platforms

Proposed / Contemplated activities are

·         PMC – Project Management Consultancy – Supervising the Works
·         Corporatisation of Railway Production Units and Workshops
·         Corporatisation of all construction activities
·         Railway Station operations (as a whole )
·         EPC – Engineering , Procurement and Construction (from estimate stage to completion stage)
·         Certain activities of Salary preparation, maintenance of Provident Fund / NPS etc
·         Private Trains

The above list is endless. I advise Railway employees to face any eventuality of the rapid changes in the Indian Railways in coming days.


I am neither pro nor against the above reforms / privatisation of the Non core activities of Indian Railways.