Examination of Witnesses (Questions 1-122)
THE HIGHWAYS
AGENCY
2 NOVEMBER 2009
Q1 Chairman: Good afternoon. Welcome
to the Committee of Public Accounts. Today we are considering
the Comptroller and Auditor General's Report on Contracting for
Highways Maintenance and we welcome to our Committee Graham Dalton,
who is the chief executive of the Highways Agency, Derek Turner,
who is director of Network Operations and Stephen Dauncey, who
is the Agency's finance director. In many ways this is not a bad
report. The condition of roads remains steady, as does the safety
of workers and road users. More projects are being delivered on
time and on budget but when we read this report, Mr Dalton, we
see there are still some shortcomings in the management of information
not so much available to you but how you use it so I might press
you a bit on this. Perhaps I could start by asking a couple of
questions on how you can become a better informed customer. This
is an important issue, by the way, because we are spending about
£1 billion a year on the maintenance of our roads, so if
we can get better deals that is good for the taxpayer. If we look
at paragraph 3.2, we see at the bottom of the paragraph on page
27: "After allowing for this, the Agency estimates that the
costs of resurfacing per square metre treated increased by 17%
...". The National Audit Office say that there are problems
with this estimate, as for example it does not take account of
schemes which have a mix of resurfacing and other work. I was
surprised at this. Do you know in detail how much is being spent
on different types of maintenance work?
Mr Dalton: I welcome the recognition
that this is not a bad report. The point you have drawn us to
is an area which is looking at one particular part of the spend
and that is 17% of the Agency's spend each year. Do we know how
much we are spending on what type of work? Yes, we do. The ability
we had to arrive at the inflation figure of 17% was because we
were able to go down literally the list of each project and each
job that had been done, which we now have available using an Oracle
based finance system that has been in place since 2004-05. That
is why we were able to go back there. We did not have such control
beforehand but a decent finance system is in place there now.
Yes, we do know what we spend.
Q2 Chairman: You now know in detail
what your spend is for instance on resurfacing, do you?
Mr Dalton: We know job by job
what we are doing. As you will see, there was some discussion
and time spent. What we do not have is a metric that says pounds
per square metre of roads renewal. We have a budget line talking
about roads renewal but it covers lots of different types of job.
Some of those things are being done—for example, straight
resurfacing. You literally score square metres of road surface
and treat them as part of the measure. That is recorded. Some
of the things we do are not. They are still drawn out of the same
budget. If we are replacing a central reservation barrier or if
we are improving drainage, if we are doing lighting, we are still
spending money from that budget. We are tracking it. We know where
we are spending it, but it is not recorded square metreage. There
is an indicator there that is sensitive, not just for the unit
price of doing the work but an indicator that is sensitive to
what the split or proportion of work is between the different
types.
Q3 Chairman: Mr Dauncey, why do I
read in 2.18, "The Agency is only now beginning to tap into
this wealth of cost information ..." in all these contracts
which are made available to you? "The only analysis of unit
costs which it had performed prior to 2007-08 was a survey of
Managing Agents to establish the extent to which they believed
their cost base had increased ...". Surely you should not
only have access to this information but you should be using it
to drive down costs, should you not?
Mr Dauncey: Prior to that time
we again knew how much we were spending in detail on each project
but in 2007 we changed our contract structure to include the costs
so we could break down by activity rather than the project itself.
As Graham has already explained, some of our projects will cover
road surfacing but maybe concrete barriers or lighting, because
we look at the best value of the intervention at the time so we
do not do just one activity. What we now have through the contract
structure from 2007 onwards and each renewal we do is a contractual
obligation to break down the costs into each activity. We did
not have that before.
Q4 Chairman: If we look at page 31,
figure 15, "Average cost per tonne of thin surface material
...", this is not a very complicated product. We can see
there is a huge variation here, Mr Dalton, between £60 per
tonne and £100 per tonne. This suggests to me that somebody
in your organisation is not saying to the contractors who are
charging £100 a tonne, "Why are you charging so much?"
Perhaps they are not saying that because up to now you have not
had a clear idea of what you are spending on what. It seems pretty
basic to me.
Mr Dalton: There will always be
quite a wide variation in unit costs, especially cost of material.
This is excluding laying. This is material that is highly dependent
upon haulage distances. It is material where haulage is quite
a significant part of the cost. Stone used in the south east,
has to come a lot further than that used in other parts of the
country.
Q5 Chairman: As much as £40
a tonne difference?
Mr Dalton: Potentially. What Mr
Dauncey has described is the cost capture system that we now have.
He is quite right. We went through this stage and it was in the
early part of this decade, getting expenditure control and frankly
getting good, modern accounting systems in place. We know where
the money goes. We can manage the money and the contract. We now
have cost capture. It takes time to build up the information.
Contracts change so we can put the clauses in obliging the contractors
to disclose information. What they are disclosing to us is not
just their tendered rates. They will always compete for rates
and there will be variation in rates. They will load some rates
and not others, depending on what they think the work will be.
We are now able to take from them details of what it costs them,
what they have to spend on subcontractors and suppliers. As we
build up that knowledge, that helps us to take an informed basis
on the building up detailed costs—
Q6 Chairman: You have to have a real
handle on your contractors' cost base; otherwise they can run
rings round you, can they not?
Mr Dalton: It is right we should
have a handle on it and we need to do more to have a handle on
it.
Q7 Chairman: It is only once the
NAO started looking at this and getting the sort of figures that
we have in figures 14, 15 and 16 that you started doing this,
is it not?
Mr Dalton: There is always value
when the NAO do come and look at something, as in any other audit,
but we—
Q8 Chairman: When you are spending
£1 billion a year of taxpayers' money, one would have thought
you would know exactly how much, especially as this information
is available to you.
Mr Dalton: We put the variation
clauses into the group of contracts that were bid in 2006. Before
then there was no obligation on contractors to give us that information.
Indeed, there are a lot of reasons why they might not want to.
Q9 Chairman: Why was there no obligation
on contractors to give you that sort of information?
Mr Dalton: Because in those earlier
forms of contract the obligation was not there. We wrote it in
there in 2006 for contracts that went live in 2007. From 2007,
the other contractors who were not obliged could see that was
the way the game was being played.
Mr Morse: Mr Dalton, you said
it is 17% of the spend. Perhaps I am getting confused. I thought
you told us that the 17% was 17% increase in costs over the period
of time. Have I got that wrong? Is it the same number? Are they
both 17%?
Mr Dalton: Coincidentally, it
is. £493 million on planned maintenance is 17% of the Agency's
overall budget.
Mr Morse: They both happen to
be 17%?
Mr Dalton: It is one of those
quirks of fate.
Q10 Chairman: Mr Turner, if we look
at paragraph 2.8, we read, "The Agency has few quantity surveyors
however, and its engineering capability has diminished. Between
2002 and 2007, it employed only seven quantity surveyors and that
number reduced to six thereafter, with only four in the Network
Operations Directorate at the time." I know you have increased
the number but do you have enough?
Mr Turner: We think we have enough.
Q11 Chairman: How many do you have
at the moment?
Mr Turner: We have 12 and that
is enough to have one allocated to each of the seven regions and
we have a central team as well to deal with specialist work. We
also have qualified engineers at all the senior levels within
the regions to enable us to deal with engineering commercial challenge
to these contracts. I do accept that we have had difficulty initially
recruiting quantity surveyors because of the pressures in the
construction market, but I believe that 12 now is sufficient.
Q12 Chairman: If 12 is the right
number, four was too few, was it not?
Mr Turner: We were not able to
recruit initially and I do think four was too few, yes.
Q13 Chairman: I just want to press
you on being more robust with your managing contractors, Mr Dalton.
If we look at 2.18, we see, "The Agency is only now beginning
to tap into this wealth of cost information." I want to ask
you again why you rely on them. They say here that there was a
survey of managing agents to establish the extent to which they
believed their cost base had increased. Why are you relying on
them? Why are you not pushing them further? You have this information.
You should be suggesting to them how they could reduce their cost
base, should you not?
Mr Dalton: The main way of suggesting
to them how they can reduce their cost base is through competition
and tendering. These contracts run for five years. There is the
option to extend for a further two. Running that competition is
where the real tackle on cost base comes. The last tranche and
the tranche we are just going through at the moment are showing
the real benefits of that competition.
Q14 Nigel Griffiths: First of all,
I am very reassured to see that both you, Mr Dalton, and you,
Mr Turner, are civil engineers which is something worth noting.
It gives me some confidence. When I was Construction Minister
five years ago, I went up and down the country visiting a number
of firms who were dealing with various aspects of highway maintenance,
one in the north west where they were monitoring through software
the maintenance of motorway and other signs and able to note the
faults, group the faults and tackle them fairly quickly and cost
effectively. I would be interested to know whether that has been
rolled out across the country but rather than trip you up with
a question like that are you aware of such firms and how do you
harness them?
Mr Dalton: Are you talking about
remote monitoring? Are you talking about electronic equipment?
Q15 Nigel Griffiths: It was electronic
equipment monitoring whether a sign in a windy area for instance,
subject to wind, was out of action right down to their HQ. They
were able to tackle that and make sure that the one up the road
which was faulty was tackled at the same time.
Mr Dalton: I was up in our control
centre in the north west about a month ago and we had wind speed
indicators located on exposed areas of road such as the Thelwall
Viaduct. As well as the Managing Agent Contractor (MAC), we also
have technical maintenance contractors who are able to monitor
that kind of kit.
Q16 Nigel Griffiths: I would like
to know that the department took the experience of a firm like
that and did a paper and that practical paper then informed the
tender process. One thing I do not share is your confidence, as
you said earlier, in competition and tendering as the key drivers
to cutting costs. I am not convinced that that gives total value
for money.
Mr Dalton: I am not certain on
the background of how we might have picked up anything from any
paper that was done at the time.
Mr Turner: What you are talking
about is outside of this Report but I can assure the Committee
that we do have remote monitoring of our technology and it does
come back to our control centres. It also goes to our maintenance
contractors for the technology, enabling us to respond in I think
quite a satisfactory and fast way.
Q17 Nigel Griffiths: Let me widen
it out with another example. Another firm I saw was doing very
close monitoring of keeping the drains clear on motorways and
A roads and discovered that the blockages occurred, from memory,
in about 5% and that the old idea—I am sure still practised—of
routine maintenance and cleaning was a massive waste of money
because most of them were clear anyway. Is the idea of a lorry
going along and sucking them out generally accepted as a waste
of effort?
Mr Turner: What the MAC contractor
has is a block lump sum of money for the maintenance of the drainage
system. It is much more related to known problem areas rather
than just going through and rodding out drains which are clear.
Drainage is a particularly important area for us now because of
the climate change and the increased tendency towards flooding.
We are very much aware of trying to optimise our maintenance of
the drainage system.
Q18 Nigel Griffiths: How do you make
sure that the old practice of rodding out automatically is not
being done and that the new, latest techniques are being used
in Cornwall as in Scotland and elsewhere?
Mr Turner: That is covered in
a lump sum of money. It is at their risk effectively in terms
of routine maintenance. There is a set sum of money so they have
to maintain the drainage system. Obviously in exceptional circumstances
we would pay additionally for clearing an exceptional blockage.
Q19 Nigel Griffiths: If you will
forgive me, that answer is following a classic problem with Whitehall.
That is: we just give you a lump of money and you have to manage
it. Instead, I would like to see the Agency give a better lead,
to learn from the lessons of the National Audit Office and be
out there, be proactive and say to companies, "Look, this
is how we want you to do it" or at least, "There are
two good models in parts of the country. Why do you not follow
them?" Why do you not do that?
Mr Dalton: There is a lump sum
which is not just us giving it to the contractors. What we are
saying to the maintenance contractors is, "Your job is to
make sure the drains flow." They then have to work out, if
that means going and rodding them every year, if that is what
they think they need to do, they need to do it and price it in.
They probably will not win the contract on that basis but that
does get the contractors incentivised to use monitoring technology
and use detectors if they have areas that might be susceptible
to flooding. The biggest thing that causes flooding at this time
of year is things like leaves blocking gulleys and culverts under
the road. They include a programme that targets when they think
they are likely to have a problem.
Q20 Nigel Griffiths: Give me an example
of what you think are fairly exciting, cost effective developments
now that you hope everyone in the industry, in whatever sector,
is taking up in the areas you are responsible for.
Mr Dalton: The sorts of developments
are in how we are able to use the network and get more out of
it. It is things like the work we have been doing on the Severn
Bridge over the past couple of years, which picks up from the
experience the Scots had on the first Forth crossing with corrosion
in the cables. We have been able to put ultrasonic detectors in
there and sample examinations so detectors can tell us anywhere
along that bridge where corrosion is causing one of the strands
to fail. That is using a relatively low cost technique and monitoring
to monitor the condition of that structure and keep it going for
a much longer time. It is something that otherwise traditionally
would have involved just going out to replace the main hanging
cables, which would have been extreme.
Q21 Nigel Griffiths: It is not a
bad example, close to my home. In terms of the Report itself,
on which aspect of the Report do you find your performance or
the performance of the Agency was the most disappointing and how
have you addressed that to reverse it?
Mr Dalton: I think it is about
the degree and pace that we have put on to picking up the information
that we are now drawing from contractors. The Comptroller and
Auditor General says that we have formed a contract that has all
the levers and controls we need to manage the risk and to manage
performance and efficiency. It does take some time to migrate
a critical mass of contracts onto the new form, so that was not
just a switch in 2007. It takes time once the contractors are
mobilised to start putting the data in there, but really it would
have been nice if it had happened earlier and we certainly need
to be putting a pace on it now.
Q22 Mr Mitchell: You have increased
the amount of costs information which is available to you. Why
do you not use it to assess different performance of different
contractors?
Mr Dalton: We are assessing the
performance of the contractors to make sure that they do the job
they do for us, which is to keep the road maintained in a steady
state and condition and increasingly to help us keep traffic moving.
We then compete these to get the best price we can. We are increasingly
using the material on this database of costs and in the more detailed
tenders that they have to put in now to then set the target costs
for when we are doing the target costs for this type of work.
Q23 Mr Mitchell: The Report says
at paragraph 2.18 that the only information you had available
prior to 2007-08 was a survey of managing agents to establish
the extent to which they believed their cost base had increased
to inform the Agency's bid for funding under the 2007 Comprehensive
Spending Review. "The Agency did not directly interrogate
the cost information itself." Why not?
Mr Dalton: I am not sure of the
details of why not at the time. I do know spending review submissions
do tend to be drawn together. From a bottom up assessment it came
out with a very large number to improve the condition of the network.
There is something about getting a balance between everything
you need to do. We know that we are keeping the network in a steady
state condition at the moment. We know what it is costing us to
do at the moment. We are just trying to drive some more efficiency
off this.
Q24 Mr Mitchell: Now you have all
this information, are you going to use it to analyse the data
and establish a clearer performance index?
Mr Dalton: Yes. The real value
is in setting the target costs for the planned maintenance work
and to really make sure that we are setting challenging and demanding
target costs. It will also help us with our estimating when we
are doing bid propositions and to just have better control of
the numbers. Ultimately though the numbers will be driven by what
the market bids.
Q25 Mr Mitchell: That is costs in
construction. When it comes to routine maintenance you have had
detailed costings for a number of areas but you appear not to
have tapped into them too thoroughly. Paragraph 3.6 says, "Costs
for specific components of maintenance work also vary significantly
between Areas." Why can you not use the average cost of thin
surface materials information to drive costs down across the areas?
Mr Dalton: Figure 14 is relating
to the thin surfacing and that varies between areas. It is not
the same thing that you buy at the same price in the same part
of the country. In that table there are different thicknesses
so the graph shows that it is 91mm of thickness going down, which
is over twice some of the thinnest layers going on. That clearly
affects the cost not just of the volume of material but laying
costs and so on as well. On stone and aggregate availability,
there are parts of the country with the right stone and aggregate.
It has to be shipped to other parts. Working in London and the
south east there is a high element of transport costs to bringing
them in. Haulage is another cost driver.
Q26 Mr Mitchell: The Chairman referred
to figures 14, 15 and 16, average costs per hour of traffic management,
average cost per tonne of thin surface material and the cost of
resurfacing per square metre. Accurate use of that information
must give you the ability to drive costs down in the areas they
are higher, the consistent pattern of which area is higher. There
is the information there to give you better control of costs and
drive them down.
Mr Dalton: It gives information
but when the main tender goes in the contract comes in with a
lump sum for doing the routine maintenance. It then comes in with
a number of rates for different types of things and things like
laying an area of thin surfacing material will be one of those
competing rates. Those rates are all taken into account in working
out the financial weighting in assessing the tenders. We take
account of all the different rates for all the different activities
in that tender. It is the tendered rates that are then priced,
so there will always be some things that will be relatively expensive,
perhaps above the norm. Maybe a contractor takes the view that
we have underestimated the amount it will be but it is a matter
for the market. There will be some things that will be particularly
cheap, but it is the tendered rates that one uses. It is getting
that balance on competition.
Q27 Mr Mitchell: You must also have
information about best practice, even though some variations are
inevitable.
Mr Dalton: This certainly helps.
It helps us when we are doing either jobs out of the ordinary
or where we are referring to setting target prices and target
costing. Now we have the cost data being captured. Now we can
draw it into MACs and it will become easier for our area managers
to sit down with a contractor and say, "That is all very
well but £48 per square metre is just too much. I am getting
it at near half that somewhere else."
Q28 Mr Mitchell: Why have you only
recently begun to conduct surveys of the subsurface condition
of the roads? There is a lot of eloquent information here about
rutting which, as an agricultural enthusiast, I read with great
interest. Why have you only recently begun to conduct surveys
of those subsurface conditions?
Mr Dalton: It is the wearing surface,
the top course, that is the most critical and the one that is
most likely to break down. The subsurface generally stays in better
condition.
Q29 Mr Mitchell: Long term it must
be the subsurface condition.
Mr Turner: Absolutely right. That
is one of the reasons why we are so keen to maintain the top surface
in good condition. If the top surface is in good condition, the
structure of the road is well maintained. One of the problems
with the techniques up until fairly recently about surveying the
subsurfaces is that they are very intrusive in that you can only
do it at walking speed. It involves lane closures which causes
a lot of disruption. Fortunately, we are involved with TRL Ltd,
the Transport Road Research Laboratory, in developing some new
techniques. We will now be able to test surveying the subsurfaces
at driving speed. You are right in the analysis but by maintaining
the top surface in good condition we avoid the deterioration in
the bottom surface. We will be able to carry out fast surveys
of the subsurface in terms of disruption to traffic very shortly.
Q30 Mr Mitchell: I see that competition
in price terms is becoming more limited because fewer bidders
pass your quality test. Why is that? You have presumably been
employing the same series of contractors for years. Why are more
of them failing to pass your test?
Mr Dalton: One can ask them and
there is no immediate, obvious reason. My hypothesis is that the
infrastructure market and the engineering market certainly in
2007 and 2008 have remained sellers' markets. There has been a
lot of work out there. Where commercial building and property
had dropped off, the infrastructure kept going fairly strongly.
That has changed and particularly that is being seen by bidders
as likely to change in the next two or three years quite seriously.
I think they had not been trying as hard to make sure that they
really were meeting the quality threshold. It was not quite as
business critical—
Q31 Mr Mitchell: One would assume
that the competition would get more intense now with the recession.
Mr Dalton: Now, I quite agree.
Since the Report was done—in fact, in the last few days—I
have been getting some figures back on the assessment. We are
reletting three areas at the moment. We have had some preliminary
figures back on two of them and certainly the indication thus
far is that the success rate in getting past the quality threshold
and indeed the degree by which they get past it is a lot better.
We are looking closer towards the sort of figure that we had in
tranche three, back in 2002. The indications are that we are getting
a much better success rate now. This is good work for contractors.
It is a five year contract with the option for two further years.
It is nice work to have.
Q32 Mr Mitchell: I see from paragraph
4.11 that you do not give your contractors enough direct incentives
to minimise whole life costs. I would have thought that would
be extremely important and in fact a dominant consideration.
Mr Dalton: I am not sure. Do we
explicitly have this incentive: this incentivises whole life costs?
No, we do not. On the whole, whole life cost translates into spending
more up front on a better product and then lower maintenance costs
subsequently. The contractors themselves are therefore incentivised.
If there is a better solution it is probably going to put more
work through their books in current contracts. I think there are
some incentives intrinsically there anyway.
Q33 Chairman: Could I ask the Comptroller
and Auditor General to resolve this because your Report seems
to suggest that Mr Dalton is not using information to manage contractors
during the contract. He seems to say that he is. What is it?
Ms Barker: There's been a lot
of emphasis on the competition and driving costs down during that
and through the extension of the contract but if Members look
at figures eight and nine in the Report which are about changes
in reimbursable costs over the life of the contract and changes
in lump sum costs that is evidence that more could be done to
manage costs down during the life of the current MAC contracts.
We think the access that the Agency has to the contractors' information
should give it further levers to drive costs down during the course
of the contracts, and not just waiting for the procurements.
Q34 Keith Hill: I would like to ask
some questions first of all about your knowledge of the condition
of your assets and secondly, if we have time, to test if you have
the skills properly to cost and monitor the contracts. Let me
just pick up on the questioning from Austin Mitchell about the
subsurface work that you have undertaken quite recently. Can I
ask what these surveys have found so far? Perhaps this is one
for my old chum, Mr Turner.
Mr Turner: The subsurface is substantially
in good condition and it is because we have maintained the running
surface within the tolerance that we have set out, which is related
to the rutting, which is where the wheel tracks run, as you will
see particularly on lane one of a motorway. We have maintained
that in a fairly tight tolerance so that it avoids deterioration
of the subsurface levels of the construction of the road.
Q35 Keith Hill: That is reassuring.
Road surface conditions seem to be broadly similar across all
regions. Is the same true of bridges and other assets?
Mr Turner: Yes. We have a system
in terms of bridges, in terms of routine maintenance for bridges
and prioritising reconstruction works to bridges. Our bridge stock,
as is shown in the report, is in a fairly reasonable condition.
Q36 Keith Hill: When are you going
to start using data on the condition of road and roadside assets
to drive the maintenance budget for each region?
Mr Turner: We are introducing
a system called integrated asset management which will take these
pieces of information from the cost capture which has occurred
from 2007 and enable us to identify them across each individual
region. During 2010, we will have the other types of roadside
asset like street furniture and drainage put on an asset condition
database and we will use the cost capture information that we
are getting from the contracts to look at a consistent approach
across the regions and drive down those costs against the individual
contracts.
Q37 Keith Hill: The Chairman asked
you about the number of quantity surveyors working in the network
operations directorate and your answer was 12. Is that 12 now
working in the operations directorate?
Mr Turner: 12 from today. The
12th one arrived today.
Q38 Keith Hill: What has been the
history on this? When did you begin going up from four to 12?
Mr Turner: We had a problem in
recruiting over a period. Probably now the real success started
in about March time this year which corresponded with the downturn
in the construction economy. Prior to that, attempting to get
quantity surveyors was really like extracting hens' teeth.
Q39 Keith Hill: For quite a long
time you probably did not have a sufficient number of quantity
surveyors. What was the effect of that absence of a proper number
of quantity surveyors in terms of the quality of supervision and
control that you could exercise over the contracts?
Mr Turner: I was reasonably happy
with the level of supervision because the engineering staff below
me—my regional directors, my area performance directors
and my construction directors—were very much all qualified
engineers with one or two exceptions. It was the commercial edge
which is what we are now being able to bring through (a) the quantity
surveyors and (b) we have this cost capture and (c) the integrated
asset management system that we are developing will enable us
to further improve the value from these contracts.
Q40 Keith Hill: You mention engineers
but you have lost quite a lot of skilled engineers over the recent
period, have you not? It has gone down by 50, I seem to recall.
Mr Turner: That is correct but
that is over a staffing in my directorate of about 800 in terms
of the engineering staff. Six of the seven regional directors
who report to me are qualified engineers. Of the regional performance
managers who manage the MAC contracts, six out of seven of those
are qualified engineers. For the area performance managers, who
are responsible for the contract management and are named in the
contracts, it is 12 out of 13 and seven out of seven of the construction
managers. In terms of engineering staff at the top end of the
organisation who actually manage the contractors, I think the
quality of work can be assured.
Q41 Keith Hill: If you have lost
50, is it 50 out of 800 engineers or out of 200 engineers? I thought
the table we were looking at suggested 200 engineers.
Mr Turner: It is 200 engineering
staff but the people who are managing the contracts remain qualified
engineers.
Q42 Keith Hill: Has the organisation
suffered at all from the loss of 50 engineers over a four year
period?
Mr Turner: I would rather have
kept the 50 engineers, yes.
Q43 Keith Hill: You are reasonably
confident it has not affected your ability to supervise the contracts?
Mr Turner: To supervise the contracts
to date, I do not think so. With the increased emphasis that we
are making in terms of our commercial management, I would welcome
more engineering staff.
Q44 Keith Hill: Do you have a longer
term objective of boosting the number of both your quantity surveyors
and your skilled engineers?
Mr Turner: Skilled engineering
staff are growing and the organisation is intending to upskill
in terms of the number of qualified engineers in the organisation.
I believe at present that 12 quantity surveyors is sufficient.
Q45 Keith Hill: The long and short
of your answer to my questions is that generally speaking you
think you have a good understanding of the conditions of your
asset and therefore are unlikely, in the course of the contracts
that you set, to have surprises unveiled as they begin to carry
out their work?
Mr Turner: With an asset of this
value and size there will always be the occasional surprises but
I believe that we have the asset in good hands and under good
stewardship.
Q46 Keith Hill: You also feel reasonably
confident that you are able to keep a close eye on the performance
and the outturn of the work carried out by the contractors?
Mr Turner: Yes.
Q47 Keith Hill: You would say that,
would you not?
Mr Turner: Yes.
Q48 Mr Curry: Mr Dalton, what is
the life expectancy of a motorway?
Mr Dalton: The life expectancy
of the different parts of the motorway? Something like a bridge?
We tend to think 125 years.
Q49 Mr Curry: Let me give you a specific
example. As you know, you have had a programme of removing roundabouts
from the A1. You can now go up the A1 and you do not hit a roundabout.
There were three roundabouts in south Yorkshire which were removed
in short order. What would be the life expectancy of the road
which replaces the roundabout?
Mr Dalton: If you put bridges
in, they tend to be—
Q50 Mr Curry: No. There are no bridges.
Mr Dalton: Road straight through?
Q51 Mr Curry: Yes.
Mr Dalton: Wearing course is 20
to 25 years. That is the main component. If it is steel barriers
or—
Q52 Mr Curry: Can you remember when
work was completed on the last of those roundabouts on the A1?
Mr Dalton: Not offhand.
Q53 Mr Curry: How many months ago
was it?
Mr Dalton: We are talking north
of Peterborough?
Q54 Mr Curry: Well north of Peterborough.
We are talking round about Doncaster.
Mr Dalton: I am afraid I do not
know.
Q55 Mr Curry: That was less than
a year ago. Why is the road now under repair? Why, less than a
year after opening? Are your specs so poor that we just build
bad roads or are your contractors incompetent so they cannot build
good roads? Do you not give them enough money to do a decent job?
I never find this when I am on a French motorway. I am just astonished.
I go up and down the A1 constantly because I have a huge constituency
and it is not practical to go by any other means. I am just astonished.
Thank God the roundabouts are out of the way and literally, within
five minutes, you have road repairs and I just cannot understand
why.
Mr Dalton: I do not know particularly
on this site. We do sometimes have to go back in after a period
of time if there has been for some reason some defective work
or if there have been materials which have not behaved as we expected
or there has been something in the design that has not worked
quite rightly. We have to go in and put that right.
Q56 Mr Curry: By now you have built
a lot of roads, have you not, so you would not expect those things
to happen?
Mr Dalton: No, and generally they
do not.
Q57 Mr Curry: It would be the contractors'
responsibility if they had happened?
Mr Dalton: If there is a defect
found, then it would be the contractors' responsibility. If it
is something in the design then we will take that up with the
designers, whether it is the contractors' designer or, if it is
a larger scheme, then it will be one of the others.
Q58 Mr Curry: When you award contracts,
do you specify any rules about how they should treat the customer?
In other words, about the minimisation of the inconvenience to
the motorist or is this bottom of the list of priorities?
Mr Dalton: It certainly is not
the bottom of the list. There are clear guidelines on how roadworks
and traffic management with cones and lane closures should be
done. We set very clear criteria on what lane closures may be
taken and when.
Q59 Mr Curry: For example, how much
of the road may be coned off on either side of the roadworks actually
taking place?
Mr Dalton: Yes.
Q60 Mr Curry: How many miles is that?
Mr Dalton: If I can use the example
of the M25 widening that is going on at the moment, the north
west section of the M25 that is being done, the contract is to
go from junction 16 at the M40 right the way round to junction
23. The contractor is strictly limited on the length it can take,
which is about a third of that at any one time. He cannot go onto
the second section until the first section is clear.
Q61 Mr Curry: The M25 happily (a)
is not in my constituency and (b) is not a good subject of conversation
because that is exactly the section of the road I have to go through
to get to one of my daughters. As my last journey took me three
and three quarter hours in first gear, that would not be a productive
conversation, I think, if I may say so at the moment. You would
expect your contractors to have as one of their priorities minimising
the inconveniences this causes to the motorist?
Mr Dalton: Commensurate with getting
the job done.
Mr Curry: Could I come back to one of
my old complaints which is the signage you have to warn you when
there are roadworks? Could I suggest that a sign which says, "Road
closed after A59 or A93" is about the most useless piece
of information you can give me unless you want me to fish in the
back of the car while I am travelling, reach for my Atlas and
try and work out where the A59 is?
Chairman: We have to be very careful
about this because we are all driven mad by cones and signs and
we could go on all afternoon because we are all motorists. Do
ask the question because it is fascinating stuff. It is not strictly
relevant. This is of more interest to middle aged men.
Q62 Mr Curry: I am grateful for my
rejuvenation. I note the threat to accountability and the strictures
about the procedures of the Committee. If you just said, "Road
closed after Peterborough", would it not be so much easier?
I would know where it was closed. "Road closed after Doncaster
turn off". Then I would know where I am. Can you not give
information which is useful?
Mr Dalton: Sometimes we put up
the junction number and people say, "Can you not put up a
name?" When we put up a name, some people want a number.
Q63 Mr Curry: Put both.
Mr Dalton: What we can fit on
many of the signs is pretty restricted. We are acutely aware of
the sensitivity.
Q64 Mr Curry: Who are your top five
contractors? If you gave me a list of the top five contractors
by value of work, who would they be?[1]
Mr Dalton: I do not have a list
with me but I would come up with names such as Carillion and Balfour
Beatty.
Q65 Mr Curry: Would it be possible
to have a list, say, of each of the last five years?
Mr Dalton: I am sure we could
do that.
Q66 Mr Curry: Would you find they
are tentatively the same people in the same order? Are they the
sort of Manchester United, Chelsea and Arsenal of the contracting
business?
Mr Dalton: No.
Q67 Mr Curry: There are no Manchester
Cities?
Mr Dalton: There tend to be some
familiar names. There has been a certain amount of consolidation
in the market with the likes of Mowlem and Alfred McAlpine being
bought by Carillion for example or Birse bought by Balfour Beatty,
so that changes it. We do get quite a shift over time.
Q68 Mr Curry: I am not implying there
is a problem. I am just interested in the information, to know
whether in fact there are some big numbers who are constantly
in this field, who tend to stand the best chance of winning the
competition, apart from experience.
Mr Dalton: There is a group. They
target the market. They target the work we do. It is valuable
work to them and they certainly try and make sure they have a
proportion. When they drop down to having maybe only one contract
left, certainly that is when they get very exercised in making
sure that the quality and price of the bid goes—
Q69 Mr Curry: You keep them on their
toes?
Mr Dalton: Yes. I think we should.
Q70 Mr Curry: How much road did you
hand over to local authorities when we detrunked?
Mr Dalton: Off the top of my head,
it was something like 5,000 lane kilometres.[2]
Q71 Mr Curry: Have you any information
about what happened to the repair history of those roads?
Mr Dalton: No, and there is no
reason why we would collect it.
Q72 Mr Curry: You will not be surprised
to learn that the repair rate was probably lower than it had been
when you had them because local authorities do not have the cash,
do they? Highways always get squeezed when there is a problem.
Mr Dalton: I have no evidence
to know how much they may or may not have spent. I do know that
when detrunking is being talked about the local authorities certainly
make sure that any significant work has been done before it is
transferred over.
Q73 Mr Curry: I take it you are not
responsible for the Rotherhithe Tunnel?
Mr Dalton: I am not responsible
for the Rotherhithe Tunnel.
Mr Curry: That saves me from risking
the Chairman's anger yet again on the subject of closures at ten
o'clock at night. Thank you very much indeed.
Q74 Mr Williams: Part of the credit
crunch proposal is to bring forward road projects. How far and
to what extent are you bringing forward programmes as a result
of this?
Mr Dalton: The budget in this
financial year is £400 million higher than it would otherwise
have been against the base line.
Q75 Mr Williams: Is that starting?
Mr Dalton: No. That is money being
delivered in this financial year. £100 million of that is
on the A46 between Newark and Widmerpool, where that job is now
on site. We accelerated getting that project started. That has
been brought forward two years, from my recollection. We are doing
a substantial amount of work. We have surveyed and used ground
penetrating radar and other surveys on the hard shoulder where
we are proposing to put in a managed motorway, which means hard
shoulder running. We are doing quite a volume of reconstruction
of hard shoulder so that is ready for managed motorway technology
to be installed. We are getting ready there and we are doing a
number of renewals that would have been in the plan over the next
couple of years and we have brought some of those forward as well.
Q76 Mr Williams: Looking to the immediate
future programme, what is the amount envisaged that you are aiming
for or have been asked to aim for?
Mr Dalton: I am expecting—at
the moment we are half way through the year—that we will
spend the money on schemes that will use the budget available
to us, or very nearly.
Q77 Mr Williams: What I am asking
is: for the slightly further forward future, obviously it is not
only going to be one short lived burst. Is there a medium term?
Mr Dalton: The brief that I have
at the moment is it is this year. There is no additional budget
identified for fiscal stimulus next financial year.
Q78 Mr Williams: How much has this
put a strain on your resources? One gets the impression that you
are not over-endowed with resources; otherwise you would be doing
many things you are not already doing. I do not mean that nastily,
because it is still an impressive report.
Mr Dalton: It has been quite important
that we did have a reasonable geographic spread so we were not
overloading individual area teams. It has been a big ask on the
area teams and on my major projects teams.
Q79 Mr Williams: That is one of the
things I was going to ask. How far are you consciously looking
for a regional spread? Have you a target for each area? Is it
about equitable between the areas and regions?
Mr Dalton: Broadly equitable.
There are defined schemes. We are not looking for things to spend
money on. We have been able to bring forward other renewals in
connection with the managed motorways programme and parts of the
routes that are identified.
Q80 Mr Williams: One of your problems
has been a shortage of contractors. All right, it is a bad time
for the industry but will there be adequate supply of extra contracting
capability available?
Mr Dalton: The work is being done
now. For many parts of the construction industry, they had seen
the drop off. Talking to one of the big quarry stone provider
firms—they also do the basic civil engineering in road construction—their
market had dropped 25% or more before this financial year because
of the drop in the commercial side, so what we are doing really
is taking advantage of that capacity.
Q81 Mr Williams: That is what I was
going to ask next. Has the situation led to any identical reduction
in tender prices?
Mr Dalton: We are getting competition
on quality coming in the next round of MAC contracts. I confirm
that certainly last year we were seeing around 15% reduction in
price. The first indication we are getting for the latest round
is that or more, so we are getting some pretty sharp prices coming
in at the moment. A big issue for us is making sure that those
are deliverable, so getting our skills up, making sure we have
the people skilled to manage where contractors are going to have
to be working a bit harder.
Q82 Mr Williams: We are told that
only around a fifth by value of the schemes entered into in 2008-09,
entering the renewals programme, have been subject to formal whole
life cost appraisal. Why is that? That is a rather low percentage,
is it not?
Mr Dalton: It appears as such
and certainly was a bit of a concern to me when I saw those figures.
We believe it is rather more than that.
Q83 Mr Williams: Has this been a
point of difference between you and the NAO?
Mr Dalton: No. Some of the whole
life costing is achieved just by setting the design standard or
the standard solution. On heavy trafficked motorways, we now do
not replace steel barrier in the central reservation with steel
barrier, which has a life at best of 25 years and requires regular
replacement. We use a concrete barrier. The concrete barrier is
more expensive to install. It is about 40% more expensive to put
in, but it is almost unheard of for that to need maintenance.
It is almost unheard of for a vehicle to break through, so that
gives you safety benefits. It gives you disruption benefits. If
you do get a serious incident, it is only one carriageway that
is disrupted, not both.
Q84 Mr Williams: In that case, why
was the figure so low previously? This information must have been
apparent to you.
Mr Dalton: It is slightly embarrassing.
I think there is something about how we record as well. I believe
the NAO quite reasonably looked at the column in our Oracle report,
the column that has a value management assessment being done.
For many of those, about 80%, there was no record there. When
we have gone back into the areas, we believe there are more but
this is certainly something Mr Turner and I will be driving rather
hard because I want to be able to demonstrate that we are doing
100%.
Q85 Mr Williams: You have raised
your threshold for these whole life costs from some £100,000
to £250,000, an increase of 150%.
Mr Dalton: Yes.
Q86 Mr Williams: Why was the original
figure so low there as well?
Mr Dalton: The £100,000 was
set back in 1999, so there is a degree of catching up over time.
More and more things were getting caught above this threshold
as inflation, especially construction price inflation, has driven
costs.
Q87 Mr Williams: How did you arrive
at the £250,000? It looks—
Mr Dalton: It looks a remarkably
round number.
Q88 Mr Williams: It is a suitably
impressive round figure but rather peculiarly precise.
Mr Dauncey: We analysed the volume
of schemes over and above that level and that is a sort of a sensible
80/20 level. It was a good increase. Our contractors may have
wanted to go further but I thought that was the right balance
to take on the 80/20.
Q89 Mr Williams: What about regional
differentials in terms of attitude to the application of the lowest
whole life cost option? How far are you comparing and looking
to spur on some of the regions as opposed to the best performing
regions?
Mr Dalton: I do not think we particularly
have difference in either appetite for whole life costing or in
performance.
Q90 Mr Williams: We are specifically
told that areas often do not choose the lowest whole life cost
option.
Mr Dalton: That is around figure
two, is it?
Q91 Mr Williams: Paragraph 2.5 is
where the question arises.
Mr Dalton: Figure two just below
it takes us through the proportion of schemes that go ahead at
different levels. It is figure two that shows that, of those with
a low value management score, around half of them go ahead at
47%.
Q92 Mr Williams: We can see the proportions.
We do not see why and that is what I am asking you. We see the
differences. We are asking why the differences.
Mr Dalton: Because there will
be other criteria.
Q93 Mr Williams: Such as?
Mr Dalton: It is whether there
is the time and road space to go and build something. Something
on a very good whole life cost will be a very high initial capital
cost as well and quite simply not affordable.
Q94 Mr Davidson: I wonder if I could
pick up a point that has not been touched on before and that is
the question of safety, which has a mention in the final paragraph.
It says here that safety at roadworks for both road users and
workers has not changed much. Surely we should have expected an
improvement?
Mr Dalton: I would like there
to have been an improvement. On safety for road users as a whole,
the number of people killed and seriously injured has been declining
steadily.
Q95 Mr Davidson: Not according to
this. If you look at 3.17 it says that safety at roadworks for
both road users and workers has not changed much.
Mr Dalton: At roadworks.
Q96 Mr Davidson: That is what I am
asking about, yes.
Mr Dalton: It is something we
take very seriously. In 2005 we launched a specific campaign on
road worker safety and you may even have seen some television
or cinema film recently on respecting our road workers.
Q97 Mr Davidson: Why is it not working?
Mr Dalton: It is too early to
know whether the most recent campaign has made a difference. It
just needs a relentless campaign on awareness. We try a lot of
things, things like average speed cameras through roadworks, just
to keep vehicle speeds consistent and steady.
Q98 Mr Davidson: If they are working,
we can expect to see a drastic drop in the number of accidents
at roadworks.
Mr Dalton: I would like to see—
Q99 Mr Davidson: I think we would
all like to see it but I am asking you whether—
Mr Dalton: If they are not working,
we will try something else and we will try more.
Q100 Mr Davidson: I sometimes drive
down from Glasgow and my experience is that there is a substantial
number of people who do not pay the slightest bit of attention
to the hazard notices or anything else at roadworks. If anything,
they seem to accelerate because everyone else slows down. The
closer they get to London the worse it seems to be. There seems
to be a sort of London lunacy. The closer you get, the worse you
drive, particularly at roadworks. In terms of the pattern across
the country of accidents at roadworks, do you have statistics?
Is the north east worse than the south west? Is there a pattern?
Mr Dalton: We record all the incidents.
Fortunately the number of injuries of road workers is still small.
I do not know if there is enough to be statistically significant
so that we could say one region or area is worse than another.
It is more likely to be a trend in a contractor, if some of them
do not have the same ethos.
Q101 Mr Davidson: Which contractor
is worst?
Mr Dalton: I do not have numbers
on particular contractors.
Q102 Mr Davidson: Maybe you could
give us a note.[3]
If some contractors are less good than others, maybe you can give
us a note indicating a league table, as it were?
Mr Dalton: I could give you a
note, saying which ones have had particular incidents in the recent
past.
Q103 Mr Davidson: No, not particular
incidents.
Mr Dalton: A number of them have
not.
Q104 Mr Davidson: What we want to
see is whether or not there is a pattern at all. I find this a
cause for concern. Can I just ask the NAO whether or not, if you
adjust for volumes of traffic, presumably volumes of traffic will
affect the number of accidents just on a random basis? Also, in
a number of locations, there will have been more roadworks and
in others fewer. Is there any statistical information that comes
out of any of that that is of interest here?
Ms Barker: We only looked at the
overall figures, so I would not be able to answer in detail.
Q105 Mr Davidson: Is there any evidence
that new average speed cameras do actually have an effect?
Mr Turner: With compliance and
congestion the average speed cameras are beneficial. The number
of accidents within roadworks is of course a concern naturally
but they are still very small numbers to get statistically reliable
information, which is why it is difficult to provide you with
clear answers to some of these questions.
Q106 Mr Davidson: There is quite
a number of people killed here, is there not? 20 a year is a fair
number. Just to have it expressed as being not statistically relevant
worries me a little.
Mr Turner: I did not say it was
not statistically relevant. I said it is difficult to draw statistical
conclusions and I did say that the number of accidents within
roadworks is cause for concern. The difficulty is that if you
get drivers who are exceeding the speed limit there is a limited
amount that we can do during those roadworks. We have errant drivers
that are driving through roadworks and it is very difficult to
do anything about that, short of carrying out all of the roadworks
by closing the road off and that would bring a huge economic cost.
Q107 Mr Davidson: I understand. What
percentage of roadworks do have average speed cameras or anything
else that would monitor driver behaviour?
Mr Turner: On long term roadworks,
we are now installing average speed cameras as a matter of course
because we have found it necessary to do so. The blanket 40 mile
an hour speed limit which used to occur we raised to 50 miles
an hour as a result of journey time reliability. To maintain that
we have used average speed cameras for long term roadworks and
it has been extremely successful in terms of controlling the speed
and achieving reliable journey times through those roadworks.
Q108 Mr Davidson: I am not pursuing
at the moment the question of raising the speed limit in order
to allow better times through roadworks. I am pursuing what might
be a contrary point, which is the question of the safety of the
people working there. It is interesting that you seem to be more
interested in maintaining average speeds than in the safety of
the workforce. I think we have noted that.
Mr Turner: Can I just respond?
There was no increase in casualties as a result of increasing
the speed limit through the roadworks.
Q109 Mr Davidson: Have you pursued
the question of adjustable penalties on roadworks? One of my colleagues
gave me a note indicating that they believe that the fines for
speeding double if it is through roadworks.
Mr Dalton: Enforcement of the
law is a matter for the police.
Q110 Mr Davidson: I understand. I
did not ask about enforcement. I asked whether or not you had
been pursuing the question of changing the legislation, which
is slightly different. A recommendation from yourselves would
obviously carry some weight, would it not?
Mr Dalton: As the Highways Agency—
Q111 Mr Davidson: That is a no. Okay.
Mr Dalton: Just for clarification,
you referred to 20. For the avoidance of doubt, that is not 20
fatalities of road workers in any of those years. Unfortunately
there was one fatality last year.
Q112 Mr Davidson: People with major
injuries?
Mr Dalton: Yes. The majority were
major, which is still bad.
Q113 Mr Davidson: The statistics
that you have for fatal and serious casualties in general run
up to 2008 but for road workers it is only up to 2006. Why is
that?
Mr Dalton: There is a question
of when data is available and validated as well.
Q114 Mr Davidson: Sorry? Say that
again.
Mr Dalton: It is just a question
of the last year for which data has been—
Q115 Mr Davidson: Why is there two
years' difference between the date for which data is available
for road workers and for motorists? I just do not understand that.
Ms Barker: We believe that the
first figure is from national statistics and the second figure
is from the Agency's data.
Q116 Mr Davidson: The Agency does
not keep figures for the number of road workers that are killed
or injured, but it keeps statistics for the number of accidents?
Ms Barker: The first one is about
casualties from accidents at roadworks. The second series is by
the service providers.
Q117 Mr Mitchell: Speaking as someone
for whom the high point of my meteoric career was as shadow spokesman
on the cones hotline, self-appointed I may add, I would like to
say to the Chairman how much I agreed with David Curry's line
of questioning. I would like to go local and follow it because
we have been campaigning for ages in both east Lincolnshire and
north Lincolnshire about the resurfacing of the A180, which is
a concrete surface and very noisy. It is also crumbling and deeply
rutted particularly badly. Part of it has been resurfaced and
we were told when that was done—we said, "Why not resurface
the whole of it since you have the machinery in the area. Do the
lot; it is in a very similar condition."—that it would
be no dearer to resurface part of it, send all the machinery away
again somewhere else and then bring it back and do the rest on
a later contract. That seems daft to me.
Mr Dalton: I believe there had
been an undertaking some time ago to resurface all concrete roads
and that was revisited.
Q118 Mr Mitchell: You have done great
chunks of the A180.
Mr Dalton: It was revisited by
ministers and by Parliament, I believe, in 2003, when it was determined
that we should only be resurfacing concrete roads when they were
physically in need of resurfacing, rather than just to do with
noise. If there is a concrete road there that is worse than Derek's
criteria—
Q119 Mr Mitchell: Was it surveyed,
because it seemed to me to be all in an equally bad state and
certainly all equally noisy.
Mr Dalton: Noise has not been
a criterion for resurfacing in its own right.
Q120 Mr Mitchell: It was, was it
not, once?
Mr Dalton: There was an undertaking
to Parliament and that was changed in about 2003 when the priority
was to target a list of sites. From recollection, it was about
90-95 sites, known as the Hansard sites, that were listed as sites
that would be tackled specifically for noise. That can be through
noise screening, bunding or other things and we have got most
of the way through that programme now.
Mr Mitchell: I hope you will go away
and think about why you have not completed the programme on the
A180.
Q121 Nigel Griffiths: I am told that
some contractors, from the moment they put cones on the road,
are able to draw down money for their contracts. Some of them
just leave the cones but do not actually start the contract and
it can be left for days and sometimes even longer than that. Are
you aware of that practice and, if it is a practice that some
contractors adopt, are steps being taken to ensure that when the
cones go down they actually start the work?
Mr Dalton: I am not aware of that
practice. I would be very surprised if there was payment just
for putting cones out and not doing anything. To try and manage
road space, we have a schedule of roadworks that allocates space
and it tracks the time when people are out there. If I find out
that that is happening, certainly my regional directors will be
quite aware that that is not how we should be doing it.
Q122 Chairman: That concludes our
hearing. Thank you very much. Years ago my children were asked
where they lived and they said they lived on the A1. Half the
country would like to have a chief executive of the Highways Agency
in front of them to ask them questions about the great jams we
have known. I think we have been very restrained this afternoon.
It has been a good hearing and I think we have made progress.
We want to make sure that you are going to seriously use the information
that is now available to you to challenge contractors. I would
like you to write to the Committee next February to tell us what
more you have done in this field. It may be two or three years
before the Committee returns to this so perhaps you could do that?
Mr Dalton: I would be very happy
to do so.
1 Ev 13 Back
2
Note by witness: We are happy with the "off the top
of my head" figure but for completeness we have checked the
true figure which is 3,083 route kilometres. Back
3
Ev 13 Back
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