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Maintenance remains cost issue for Highways Agency

A new report by the National Audit Office (NAO) has criticised the Highways Agency’s Maintenance Area Contracts (MAC), which it says is responsible for cost hikes some 11% above inflation for routine maintenance.

The report acknowledged that work to keep costs down had progressed well, but maintenance remained problematic. Costs for routine maintenance increased by 11% above inflation since 2002/3 while spend on planned maintenance had risen by just 5.5% above inflation.

Head of the NAO, Amyas Morse, said: “The latest form of Highways Agency contracts for maintaining motorways and trunk roads provide visibility of costs and the ability to allocate risk appropriately. But, as is so often the case, a lack of probing analysis of the information which is available, and continuing gaps in some areas undermine the drive to maximize value for money.

“The Agency has not yet established and benchmarked the unit costs of planned maintenance tasks, such as resurfacing; and it does not have enough of the information on or analysis of the continuing condition of assets necessary to drive down whole life costs of planned maintenance projects. The Highways Agency also now needs to strengthen the engineering and commercial management skills of its area teams.”

Benchmark

Chairman of the influential Committee of Public Accounts of MPs, Edward Leigh, agreed: “It’s welcome news that the Highway’s Agency is getting better at delivering road maintenance projects to time and budget. But it is extraordinary that it doesn’t know whether it’s getting value for money for the extra cash being spent. 

“The Highways Agency needs to become a more intelligent customer. By improving the way it manages maintenance contracts it could cut costs without affecting the quality of the work done. To do this, the Agency needs to have staff with the right level of skills to be able to challenge a private sector contractor, not just meekly accept what they’ve been told. 

“Making sure that the work done on our roads is safe and of good quality is vital. But fewer and fewer companies are passing the quality threshold set by the Highways Agency. The Agency needs to work with the private sector to drive down the cost of road maintenance – particularly in these severe economic times.”

Management

The NAO were critical of the Agency’s accounting for increases. It said precise estimates for costs were difficult to make because of the Agency’s lack of management information.

From available data, the NAO estimates a 70% increase in the cost of road resurfacing between 2002/3 and 2008/9 against the Agency estimate of a 17% increase in spend. The true figure is likely to lie between the two figures.

At fault, says the NAO is the MAC contract and the checks the Agency makes - focusing on contractors meeting contractual requirements rather than benchmarking costs or quality.

Staffing

The NAO say the Agency needs additional engineers and commercial staff to manage risks, costs and contractors’ performance and challenge contractors’ design specifications. It has lost more than 50 engineering staff over the past five years, and had only had four quantity surveyors at the time of the review.

While MAC contracts attracted a a number of contractors, an increasing proportion of bidders fail to meet the quality threshold, limiting price competition and increasing the risk to value for money.

Chief Executive of the Highways Agency, Graham Dalton, said: “The NAO believes that the price per square metre of road resurfacing - one of the Agency’s maintenance tasks - has increased since 2002 by somewhere between the NAO’s estimate of 70% and the Agency’s figure of 17%. 

“The Agency’s view is that this cost increase reflects the increasing proportion of work to renew drainage, lighting and crash barriers which makes the motorways and trunk roads safer,  and that we are doing much of the work at night to reduce delays.

“The NAO found that most schemes are delivered on time or early and that we are making journey times more reliable for road users. Over the last five years we have transformed the Highways Agency into a leading roads operator. Maintenance contracts are now being let on a similar basis and we are using this to drive down the cost of highway maintenance. 

“We are pleased the NAO recognises that the MAC contract follows best practice and we are delivering more maintenance projects on time and to budget. I will now move forward with my team continuing to keep the strategic road network in good condition while delivering increased value for money,” he said.

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