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IN THE DRIVING SEAT

Change has been on the agenda at the Highways Agency since last year’s Nichols Report. Ed Owen discusses procurement with major projects director, Nirmal Kotecha.

The major projects director post has been a hot potato for the Highways Agency, first becoming vacant on the departure of Keith Miller in the immediate aftermath of the Nichols report.

Jerry England then took the helm for six months before moving to Network Rail (NCE 13 December 2007), with the post reverting to Ginny Clarke, head of Safety, Standards and Research, while a permanent replacement was sought.

Kotecha was a surprise choice for many – not a civil engineer and coming from the water sector. But he is quick to brush aside any suggestion that his background disqualifies him from the job. He is, he says: "An agent of change, someone who can challenge the status quo, who is not afraid of change. Change is a way of life."

Kotecha was at Anglian when it controversially bought contractor Morrison for £263M in 2000. He managed the integration. This gave him first-hand experience of the construction sector, and what he describes as the: "Generic weakness [contractors have] in managing the supply chain."

He says he has already steered changes similar to those demanded in the Nichols report through Anglian Water. The secret will be to ensure the supply chain is trim and efficient.

"The water industry was at the same place the Agency is, but with different issues. The key driver for the water sector was delivering high double-digit efficiency targets, on top of [those of] the previous regime, which were about 14%.

"It was no longer an engineering challenge – they needed something different. Given that 80% of costs are flowing through the supply chain, we were buying an engineering capability, but fundamentally the ability of our supply chain to manage their supply chain."

Kotecha says his brief is to take the Agency on from Nichols. "All but one of the recommendations are now in place – the outstanding one was pending my arrival, so that I would own it – because that was a recommendation based on organisational design."

Driving similar change at Anglian gives him authority, he says. "My key CV credentials would be leadership, really understanding the supply chain. I have developed commercial models that drive behaviour to unlock value. I have the t-shirt. I have done that," he says.

Outgoing Agency chief executive Archie Robertson told NCE that the new major projects director would need commercial clout (NCE 27 September 2007), and Kotecha is building a commercial department, because: "Technically we have always been able to discuss and eyeball the supply chain with authority. Commercially we have not been able to."

"We are able to develop contracting strategies that are fit for purpose. Traditionally, Early Contractor Involvement (ECI) has become one size fits all, but it is by no means the only game in town.

"As evidenced by the M25, we are not averse to DBFO, where the right economics and risk stack-up. My background is based on collaborative frameworks, alliance-type models. There is a whole spectrum available to us, but I will not commit to one size fits all."

While he is new to roads, he claims the water industry is not significantly different. "Pretty much of the people I have met so far, I met their brothers or sisters in the water sector."

And meet people he must, to set out his stall. He has been on a campaign trail, meeting major suppliers during his first few weeks at the Agency.

He claims people have been encouraged so far. "I come from water. For them that means I have no baggage and they should view that positively. I see a blank canvas we can paint together. My preferred style is collaborative.

"I am not about squeezing margins, I am about squeezing waste. I want to tackle the 90% that rests beneath overhead and fee. That is where the real step-change is going to come from."

What Kotecha cannot answer is what spends will be after this year. "Probably the question most asked of me. We are reviewing our estimates, using the recommendations from Nichols.

"Everyone acknowledges that forecasting was at the heart of the big problem of the past. We worked through the Nichols recommendations and developed a better approach to forecasting and estimating. That approach has been tested with third parties and with the (Department for Transport) DfT. We will move away from single point estimates to forecasting a range." Range estimates will then go to the DfT.

"That will come out the other end as a statement, hopefully during the summer. That will give us a platform from where I can say: 'this is the programme of work, and this is the strategy to deliver it'."

Until then, Kotecha supervises a £1bn budget for this year. But he is also keen to stress that perceived cuts in the roads building programme, triggered by cuts to the M25 widening programme and the roll-out of Active Traffic Management (ATM), do not necessarily mean budget cuts in the future.

"ATM is here to stay, but it does not just mean technology. A lot of ATM schemes will require substantial civils work. There needs to be a reality check." But he does need to knock heads together in order to make an impression on the DfT, he believes.

"For the agency and its supply chain to get back on the front foot, we need to get back to a place where we are in control, we understand our costs, we know where waste is and we know we can outperform. Once we are at that place, we can go back to the DfT and give them a positive choice to make," he says.

But as the last few weeks have shown, contractors’ costs are rising at close to twice the rate of inflation (NCE 5 June 2008), and the cost of materials is rising more sharply still.

He insists that rising costs will not prompt him to ask for special consideration from the DfT. "Part of my challenge is to manage that uncertainty, and land the delivery within an acceptable tolerance. History is on our side. In this year we were within 1%, and that is not unacceptable," he says.

CV
- Born and brought up in Nairobi, Kenya
- 1984: BA (Hons) European Business Trent Polytechnic & University of Paderborn (Germany).
- 1984 to 1994: British Gas East Midlands
- 1991: M.B.A. University of Loughborough
- 1994 to 1998: Energy Centres (part of Centrica)
- 1998 to 1999: British Sugar (part of ABF)
- 1999 to 2008: Anglian Water Services - also between 2006 to 2008 he was non-executive director of Achilles Group
- Fellow of the Chartered Institute of Purchasing and Supply (C.I.P.S) .
- Lives in Leicester
- Married with two children
- Interests include squash, golf and Manchester United.

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