The Highways Agency has been attacked by the government’s spending watchdog for allowing rampant cost escalation in road maintenance.
The National Audit Office (NAO) said maintenance costs are escalating at 11% above the rate of inflation because the Agency is failing to create enough competition for its contracts.
It said the Agency’s quality threshold for contractors wanting to tender for Managing Agent Contractor (MAC) term maintenance framework deals was set at such a level that many firms were excluded from bidding.
This resulted in limited price competition and reduced value for money, although the NAO did not make any recommendations on whether the threshold should be changed.
“The Agency has not yet established and benchmarked the unit costs of planned maintenance tasks, such as resurfacing.”
Amyas Morse, National Audit Office
The NAO expressed frustration at the Agency’s inability to accurately assess cost increases. It estimated that the cost of road resurfacing between 2002/3 and 2008/9 had soared by 70%, largely due to the lack of competition. This is much greater than the Agency’s own estimate of a 17% increase.
NAO auditor general Amyas Morse said the increases were down to a lack of benchmarking. “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,” said Morse.
The NAO said that the Agency had cut too many engineering jobs and as a result was unable to act as an informed client.
The right level of skills
The Agency has lost more than 50 engineers over the past five years and employed only four quantity surveyors at the time of the review, said the NAO.
Commons public accounts committee chairman Edward Leigh said the Agency had to become a more intelligent client. “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.”
Highways Agency chief executive Graham Dalton said the cost increases reflects increased work to renew drainage, lighting and crash barriers.