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Why MACs are getting so PC

Municipal contracts - The first local authority managing agent and contractor contract is up and running in Bedfordshire.Mark Hansford reports on early progress.

Last October contractor Amey took total responsibility for network management, design, consultancy and all maintenance works under the value of £500,000 across Bedfordshire. It is also responsible for winter maintenance.

The five and a half year managing agent and contractor (MAC) contract is the first local government deal of its kind. Working under the name Bedfordshire Highways, Amey has the opportunity to extend the contract to ten and a half years.

Bedfordshire Highways took over design and management from Jacobs Babtie and maintenance from Raynesway Construction Services (RCS). Under the Transfer of Undertakings (Protection of Employment) regulations, widely known as TUPE, all staff from RCS and Jacobs Babtie had the right to transfer to Amey on 1 October.

From Bedfordshire's and Amey's point of view, such transfers would ensure that local knowledge and experience were retained to help make the contract a success. But RCS and Jacobs Babtie, which was setting up a design office in Bedford, battled hard to retain their staff.

'Jacobs Babtie worked hard to keep its people - and I'm sure worked harder to keep the best ones, ' says Bedfordshire Highways general manager Graham Northrop. 'It was quite a game of tennis.' 'I felt almost as though I'd had an affair, ' adds service manager Eddie Ball, who manages the contract for Bedfordshire County Council. 'It was - and is - a difficult time, but that was only to be expected.' In the end around 50% of Jacobs Babtie's 100-strong workforce transferred to Amey, along with all but one of RCS's 55 blue collar and 30 white collar staff. The new team has been augmented with 10 designers from the county council and some 50 staff from Amey.

Bringing four organisations together in a 10 year marriage requires moving everybody into a single home. 'In the past we were not co-located and that created barriers, ' says Ball. The team is all together in an open plan office in Bedford.

Successful partnering is particularly important to the county, which has passed much decision making to Bedfordshire Highways.

'Our MAC goes beyond Highways Agency ones, ' claims Ball. 'The Agency has much more involvement with a business case for each scheme.

Here we say to Amey: 'You know what the targets are, you are the watchmen. So you decide what needs to be done'.' This leaves the council's team as a 'thin dusting on the Amey team', says Northrop. 'A lot of clients only let go a bit of responsibility because they don't truly trust their service provider.

Bedfordshire has said 'off you go'.' Handing responsibility for work programmes to Bedfordshire Highways should also bring signifi cant efficiency savings.

'If you go back three or four years, structural maintenance was based on requests from parish and district councils, ' says Ball. 'Based on these, the council would issue to its consultant a design request. The consultant would do the design and it would then instruct the contractor to deliver it on the ground, ' explains Ball.

'Two years ago we started moving away from that, basing maintenance on a value for money ranking.

'Now, because we have a performance-based contract Amey won't just carry out work because someone says 'do it'.' The approach to reactive maintenance was even worse.

'Previously, we would give an order to the consultant, then he would have to take a look and write an order to RCS. RCS would go out and fix the defect, then Jacobs Babtie would have to go out and check.' Ball explains that 'we are bringing it all back to one team to decide if work needs doing and, if so, to carry it out'.

This should bring savings broadly in line with the 2.5% per annum economies required by the government's July 2004 spending review. 'At tender we did a ghost bill and we anticipate a 8%-8.5% saving. We will spend the same amount of money, but deliver 8.5% more, ' says Northrop.

The fact that Amey is set up to operate as a single service provider played to its advantage in the tender process.

Traditionally most MACs are joint ventures between a consultant and a contractor. Five such JVs tendered alongside Amey for the contract that was to be judged 75:25 on quality and cost. Amey's single provider approach saw it come top for quality. Amey's price was within 1% of the average - but it was not lowest.

'What surprised me was how easy [the slightly higher cost] was to sell to councillors, ' says Ball. 'But highways have not performed as the public wanted and at the last election highways were the number one issue.' The contract is monitored via a top level Network Board, consisting of senior directors and managers from Amey and Bedfordshire County Council, plus the county councillor with the portfolio for the environment.

It will mainly be responsible for reviewing commission performance, best value and innovation and, fundamentally, will decide the in-year performance targets.

Amey is working to existing targets up to the end of this financial year. 'Starting in October means half the budget is already spent, so it is really a case of making best use of that time to understand the network better, ' says Northrop.

The contract proper begins in April when new targets will be set alongside the new budget. These are yet to be finalised, but will cover all the nationally measured key performance indicators such as road condition, the number of accidents and the number of inoperable street lights, as well as client-specific indicators such as adherence to programme and client satisfaction.

Providing Amey meets the targets it will earn one year extensions when the initial five and a half year deal expires in March 2012. The first such extension will be determined as early as March 2007 to allow proper planning and investment in people and equipment.

The detail

Bedfordshire Highways will maintain: 12, 200,000m 2 of carriageways 2,200,000m 2 of kerbs 2,800,000m 2 of footways 10,000,000m 2 of grass verge 380 bridges 63,000 road drains 38,000 signs 1,900,000 road markings 32,000 streetlights 520 sets of traffic lights

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