HIGHWAYS AGENCY: CONTRACTING FOR HIGHWAYS MAINTENANCE
Publication of the Committee's 4th Report, Session 2009-10
Edward Leigh MP, Chairman of the Committee of Public Accounts, today said:
"The Highways Agency's planned highways maintenance work has probably contributed towards the recent improvement in journey time reliability on the strategic road network. It is the value for money of the Agency's spending on such maintenance that is in serious doubt.
"The basic point is that the Agency does not know enough about what it is getting for the taxpayers' money it spends on maintenance across its whole network. Without a better understanding of the costs of network-wide activities - such as resurfacing - it cannot hope to drive those costs down.
"The extent of the variation between different Agency areas in the unit costs of particular types of maintenance jobs is of concern to this Committee. We expect the Agency to find out why it is spending substantially more in one place than another and whether the differences are justified. The ordinary taxpayer would not hesitate to challenge prices for jobs on their own homes, when higher than expected; the Highways Agency should be no less vigorous in challenging its contractors.
"The Agency must maintain and improve the commercial skills and technical knowledge of its staff. They must be better informed and more robust in their management of contractors, not just at the procurement stage but also over the whole life of the contract."
Mr Leigh was speaking as the Committee published its 4th Report of this Session which examined the extent to which the Agency is an informed customer and is challenging contractors to deliver value for money and better outcomes for road users and for those who work on the network.
In many respects, the Agency's letting and management of maintenance contracts, known as 'Managing Agent Contractor' (MAC) contracts, is not a bad story. The contract largely follows best practice and offers the potential to secure value for money and, since its introduction, there has been greater certainty over delivery of maintenance schemes within budgets and to timescales. Journey time reliability on the strategic road network has steadily improved since summer 2007 and the timing suggests that Agency interventions have contributed to the improvement. There are still some serious shortcomings, however, which put value for money at risk. In particular, the Agency lacks basic facts about what it gets in return for taxpayers' money and by how much the costs of some items such as road resurfacing have increased. It has failed to exploit cost information to benchmark prices and drive efficiency improvements, and has lacked the quantity surveying and commercial skills required to manage the contracts effectively. These shortcomings are especially worrying given overall increases in costs and the wide variability of costs between areas.
While competition for road maintenance contracts appears to be holding up, there is a risk that the Agency is too reliant on the procurement stage to deliver performance improvements rather than through the proactive management of contractors during the term of the contract.
The Agency's principal value for money objective is to minimise the whole life cost of maintaining the network. It does not appear, however, to pursue minimum whole life cost as strongly as it might. Only 20% by value of the schemes entering the Agency's renewals programme are subjected to formal whole life cost appraisal and, even where whole life costing is used, it does not appear to drive programme design.
Despite Agency initiatives to improve safety on its road network in recent years, safety at road works for both road users and road workers has not changed much in recent years. We are concerned that the latest year for which statistics on road worker injuries were available was 2006.