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Surrey council terminates contract

Surrey County Council (SCC) has decided to terminate their contract with Carillion claiming the construction firm not only overcharged taxpayers, but delivered substandard repair work.

The SCC has said that it will not renew Carillion’s contract after its expiry in 2011, and has also decided not to extend its contract with Ringway, as it emerged in 2006 that Carillion had overcharged taxpayers by around £1.1M through shoddy repairs and overcharging for fixing potholes.

Carillion paid back the £1.1M, and a spokesperson for Ringway said that that firm had paid back a goodwill gesture of £170,000 too.

The original five-year contract made Carillion responsible for maintaining the roads in east Surrey, while Ringway had a contract for west Surrey.

“Unacceptable standards of workmanship”

2006 audit report

On the condition that Carillion improved the quality of work and met cost targets, the council extended the contract by three years, despite a 2006 audit report that criticised Carillion’s “unacceptable standards of workmanship”.

A Carillion spokesman said: “The contract was originally a five-year term with a possible year-on-year extension to a maximum of 10 years and we are pleased that we have secured three out of the possible five years permissible through our achievement against a range of performance criteria.”

Councillor Ian Lake, cabinet member for transport at SCC, said the council had decided to terminate the contract because it was “time for a fresh approach”.

The Ringway spokesperson said that when the council offers a new contract, “Ringway will certainly be tendering for that”.

Readers' comments (6)

  • How much is the fault of the contractor and how much the fault of SCC? Local Authoritiues are increasingly believing that they don't need professional engineers to manage their services, all they need is competent 'managers'.
    This has noticably led to authorities having very few, if any, chartered engineers in post. There are many London local authorities that have NO chartered engineers at all.
    The rise of the Planner or/or Transport Planner, in senior positions who have no experience of construction or contract management is becoming a real problem, because not only are they getting it wrong, they don't know they are getting it wrong.
    Paid elected Members now believe that they know better than the professionals and I fear this is going to lead to major breakdowns in infrastructure improvements and maintenance.

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  • There can be little doubt that the County Council caries a major part of the responsibility for this wicked waste of public money through its failure to properly monitor the work of its contractors.

    But the cobtractors also failed to ensure work was properly undertaken. I have observed potholes being filled without cutting back and clkeaning.

    Sadly, the County Council seems to have little regard to the use of public funds, as witnessed by its abortive High Court challlenge to a poor rating, and the costs it has incurred in the pursuit of its plans foir an incinerator in Capel, losing two High Court cases A former Chief Executive published a highly critical valedictory report

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  • Another, more insidious cause of this problem is the fact that the politicians (of whom, as an Election Agent as well as a Civil Engineer, I am one) have found that cutting 5% off the highways budget in a year does not lead - immediately - to catastrophe. If, however, you repeat this often enough, there is insufficient money to do the job properly. We, as professional engineers, are however, so desperate for work (any work) that we are willing to take on these underfunded contracts and endeavour to make the best of things. The result, in terms of quality of work, if not quality of paperchase and achievment of KPI scores, is sadly inevitable.

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  • We are a small family run company that has traded relatively successfully as a civil engineering contractor for 33 years, employing on average around 20 people, most of whom have been with us for between 10 and 20 years.

    During this time, because we performed well we managed to secure a position on most of the local select tender lists and won our fair share of work.

    We believe many clients and especially local authorities are making a terrible mistake by in effect locking 95% of the industry out for up to 5 years by the introduction of Framework Agreements.

    As everyone knows frameworks are great if you happen to be appointed, but by locking contractors into providing a service at rates which are too low, which is happening at the moment, quality, as can be seen in this case, is the first thing to suffer.

    Moreover, the bidding process lends itself to big firms that are simply good at writing proposals, which leaves smaller companies scratching around for work wondering how to keep their workforce employed, let alone how to make a profit.

    Our alternative is to try to become a subcontractor to those that have been successful, who will probably be given more work than they can realistically cope with, only to find that we are asked to do work for nothing, kept waiting for our payments, not paid in full and run the risk of the main contractor going bankrupt as may of these companies are less financially secure than ourselves. Previously at least we were working directly for the local authorities and we knew our money was safe and we would be treated fairly by them.

    Page 3 of Contract Journal dated 11th November 2009 berates civil servants for their lack of understanding on procurement of work and critics their waste of money. Whilst ‘New Civil Engineer’ publication tells of Carillion and Ringways having maintenance contracts terminated for not only overcharging taxpayers but substandard repair work. We believe frameworks make clients lazy as procurement is done in one go and they just call up someone if something needs doing. This is not partnering as there is no sitting down or communication.

    What is wrong with the old system of select tender lists? It gives everybody large and small the opportunity of gaining work on a regular basis.
    There has been the recent issue with the OFT fining companies for taking covers, but this is really an irrelevance as in all cases there were contractors competing and putting in their lowest prices. In fact, most of the companies that were fined are the ones that are actually securing these deals, just take a look at the recently published YORbuild appointed contractors. Of the 14 appointed contractors mentioned £39 million of fines was handed out between them.

    We believe clients should be stepping outside of the framework when it is advantageous, this would keep contractors on their toes and would also give the client better value for money. If someone is doing good work they should be able to bring them in on the framework.

    Partnering and repeat business have been successful for centuries and were not invented as a result of Framework Agreements.

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  • The first comment (13 Nov, 11.25am) actuallty highlights one of the problems, but thinks they are giving the answer.

    Several years ago I did a stint with SCC highways department, which at the time included both experieneced engineers and Chartered engineers. Unfortunately, some of the Chartered engineers knew very little about construction, but they had a bit of paper and therefore probably progressed up the management tree at the Council.

    Who knows, it's probably the same people now running things!

    "professional engineers" does not necessarily equate with Chartered engineers.

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  • Don't worry engineers, the programme and project management profession is coming to the rescue and will solve the public sector infrastructure management side of the equation.

    Central Government even has set up the OGC as a watchdog and promulgator of best project management practice for public sector clients.

    Given all this promulgation of best practice in client project management, it does seem odd that the experience of many engineers, particularly over the past 20 years, is that at both national and local government level in the infrastructure sector, the development and delivery of projects by clients, as well as ongoing maintenance management, is getting worse in certain cases.

    In my opinion, civil engineers have been excellent project managers for nearly 2 centuries. We may not have been able to express ourselves articulately using management language, but the tangible evidence is all around of high quality design, management and delivery.

    High quality technical expertise remains core to effective client management not an optional extra that can be replaced by a PRINCE 2 or similar process.

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