06/03/2016 FoIA Pricing Methodologies used by Kier

https://www.whatdotheyknow.com/request/pricing_methodologies_2#comment-75229

Sarah Joseph 6 March 2016

Dear Highways England Company Limited,

How many pricing methodologies has Kier Highways Ltd used over the past 5 years when charging Highways England for ad hoc work or when repairing damage to the highway, barriers or signage?
What were the pricing methodologies?
When did they come into effect?
What increases in charges have been agreed year on year?

Yours faithfully,

Sarah Joseph



NDD C DST, Highways England Company Limited 6 April 2016

FOI 735547.pdf

Dear Ms Joseph,
Thank you for your freedom of information request dated 06 March 2016.
Please find attached a response to your request.
Regards

Mrs D Davies, OTD – Directorate Services Team Manager

Highways England  | The Cube | 199 Wharfside Street | Birmingham | B1 1RN

Web: http://www.highways.gov.uk

The attachment response can be found hereFOI 735547, the text reads:

Dear Ms Joseph

I am writing to confirm that we have now completed our search for the information,
which you requested on 06 March 2016.
In your email you asked for the following information:

 How many pricing methodologies has Kier Highways Ltd used over the past 5 years
when charging Highways England for ad hoc work or when repairing damage to the
highway, barriers or signage?
 What were the pricing methodologies?
 When did they come into effect?
 What increases in charges have been agreed year on year?

Taking each of your questions in turn:

How many pricing methodologies has Kier Highways Ltd used over the past 5 years
when charging Highways England for ad hoc work or when repairing damage to the
highway, barriers or signage?

Kier operates a number of maintenance contracts for Highways England; in the north
west region (Area 13), the midlands region (Area 9), the south west region (Area 1) and
the south east region (Area 3). More information on how we manage our network can
be found on the GOV.UK website: https://www.gov.uk/government/publications/roadsmanaged-by-the-highways-agency
For Area 1 and 13, services are delivered under a Managing Agent Contract and
services for Areas 3 and 9 are delivered under an Asset Support Contract. More
information on these contracts and on how we procure Highways England contracts can
be found via the following link:

https://www.gov.uk/guidance/the-highways-agency-tendering-for-projects

 What were the pricing methodologies?

The pricing methodologies that are used for both MAC and ASC contracts in repairing
damage to the highway, barriers or signage are:

Lump sum: our maintenance contracts are structured so that our service
providers are paid a “lump sum” for a wide range of general maintenance duties
(such as pothole repairs);
 Schemes: where larger repairs and improvements are packaged into more
detailed and scoped programmes of work;
 Cost reimbursable service: the service provider is reimbursed the actual costs
they incur in carrying out the works, plus an additional fee. This is used where
the nature or scope of the work to be carried out cannot be properly defined at
the outset and the risks associated with the works are high, such as emergency
work.

When did they come into effect?

The Kier contract access dates are as follows:
Area 1 – July 2010.
Area 3 – November 2013
Area 9 – July 2014.
Area 13 – July 2010

Please note that Kier Highways has only been involved in these contracts since it
bought out the previous service provider (EM Highways) in August 2015.

What increases in charges have been agreed year on year?

In accordance with the contracts, the prices are adjusted by the contract price
adjustment for inflation on an annual basis


Mr P Swift left an annotation (20 April 2016)

Dear Ms Joseph
You may wish to seek clarity about the enquiry you made, to receive some reassurance about the accuracy or more detail.
The statement:
“Please note that Kier Highways has only been involved in these contracts since it bought out the previous service provider (EM Highways) in August 2015.”
appears flawed.
It does not appear you have asked about Kier Ltd, but specifically Kier Highways Ltd (KHL). 01611136 : KIER LIMITED acquired 05606089 : KIER HIGHWAYS LIMITED in 2015. You may wish to review the likes of:

http://www.managementtoday.co.uk/news/13…

http://www.londonstockexchange.com/excha…

http://www.telegraph.co.uk/finance/newsb…

05606089 : KIER HIGHWAYS LIMITED (KHL) were until at or about 16/10/2015, EM HIGHWAY SERVICES LIMITED, prior to which they were ENTERPRISEMOUCHEL LIMITED.

KHL have a parent company 01686040 : MOUCHEL LIMITED and an ultimate holding company 02708030 : KIER GROUP PLC whose share history can be viewed on-line having fallen from about 1,600 to about 1,200 in the past year, see:

http://www.kier.co.uk/investor-relations…

As Kier Ltd are, in 06/2015, reported to have acquired ‘Mouchel’ it seems unlikely the August 2015 date you have been supplied is in fact correct. See:

http://www.worldhighways.com/categories/…

I am intrigued by the response you have been supplied in respect of the question:
Q:
What increases in charges have been agreed year on year?
A:
In accordance with the contracts, the prices are adjusted by the contract price adjustment for inflation on an annual basis.

The answer you have received does not appear to address your question. You appear to have asked for the increase, not how they are calculated.

This aside, the answer does not sit well with me. I have raised questions with KHL for in excess of a year due to the manner in which they calculate their charges. In late 2015 KHL abandoned their pricing process due to concerns raised, issues that remain ongoing.

I also have a recent email from Highways England which suggests the charge they are paying for a specific type of worker has significantly increased, well beyond any inflation index. HE were, last year, paying less than £50 for an AIW (as an example). Now, it appears they are paying more than £70 … a 40% increase! An AIW attends initial incidents (emergencies – which I note is referred to in the reply you have been supplied), picks litter fills pot holes etc.

£70 / hr equates to an annual cost of £160,000+ / annum.

Should you require further information, please email pswift[at]cmaclaims.co.uk

Regards

P Swift


Sarah Joseph 20 April 2016

Dear NDD C DST,

Please see above.
Please explain the relevance of the ‘August 2015’ date.
Did Kier Highways buy out EM Highways
Who are Kier Highways
Were Kier Highways involved in the contracts since August 2015
I asked about Kier Highways Ltd
Who is providing me correct information, Highways England or P. Swift
Thank you

Yours sincerely,

Sarah Joseph


Sarah Joseph left an annotation (23 April 2016)

Thank you for your email. I will send a pm


Mr P Swift left an annotation (25 April 2016)

Further to your email. We have been advised by Highways England:

“the service provider is reimbursed the actual costs they incur in carrying out the works, plus an additional fee. This is used where the nature or scope of the work to be carried out cannot be properly defined at the outset and the risks associated with the works are high, such as emergency work.”

The response you have received suggests that the rates were set at the commencement of the contract, that these “are adjusted by the contract price adjustment for inflation on an annual basis.”

The cost reimbursable approach is how we understand HE are charged by KHL. The figures we have seen for the ‘additional fee’ appear to be:

initially 6.5 %
more recently 7.38 %

However, the response you have received does not indicate any other charging methodology (we see no reference to ‘1153’ – see my pm) and General Counsel for Highways England has recently stated:

“The current charges levied by Kier are as follows:

a) AIW staff hourly rate: £70.32
b) AOW vehicle hourly rate: £35.53
c) CO1 Standard Beam:£41.52

General Counsel subsequently clarified in an email to us:

“Referring to your email of 6 April, the rates quoted were confirmed to us by Kier as the rates they charge Highways England and were current as at December 2015.”

The above rates at ‘a’ to ‘c’ appear very different to the ‘actual costs they incur in carrying out the works, plus an additional fee’ charges; they appear to contradict one another.

Good luck achieving clarity. I am updated about additions to your request by the whatdotheyknow web site and will monitor them.

Regards

P Swift


Sarah Joseph 27 April 2016

Dear Highways England Company Limited,

Please pass this on to the person who conducts Freedom of Information reviews.

I am writing to request an internal review of Highways England Company Limited’s handling of my FOI request ‘Pricing Methodologies’.

I have had no reply
I am receiving differing information
I have not been given all the information

A full history of my FOI request and all correspondence is available on the Internet at this address: https://www.whatdotheyknow.com/request/p…

Yours faithfully,

Sarah Joseph


FOI Advice, Highways England Company Limited 4 May 2016

Dear Sarah Joseph

Thank you for your email dated 27 April requesting an internal review in relation to the response you received from Highways England.

I acknowledge your request for an internal review of your Freedom of Information request.

We will respond by twenty working days from the date of receipt of your request for an internal review, that is 26 May 2016.

Please remember to quote reference number 737,927 in any future communications.

Yours sincerely

Layla Beckett, Freedom of Information Officer
Highways England | Piccadilly Gate | Store Street | Manchester | M1 2WD
Web: http://www.highways.gov.uk


Richard Jones left an annotation ( 8 May 2016)

have you seen:
http://www.contracthireandleasing.com/ca…
Annotation above form ‘Swift’ and ‘Swift’ quoted at link
R Jones
These might sound like cherry-picked and isolated incidents, but CMA’s managing director Philip Swift says: “I don’t not make these comments lightly, but certain Highways England contractors seem to be acting in an informal environment. The tail appears to be wagging the dog, particularly where contractors have agreements to retain claims under a certain threshold, commonly £10,000.


Sarah Joseph left an annotation (12 May 2016)

Thank you to those who have added to my request. I have seen Kier Highways Ltd use two types of pricing for the same work. The systems are so different that the reply from Highways England which I have copied below makes no sense so I am appreciative of any help.

The dates at ‘3’ indicates charges were set the start, that there is a set of fixed rates.

The only change seems to be at ‘4’ when, on an annual basis, an inflation rise occurs. But I would not expect the change to be more than 2% yet the changes I saw in papers are much different to this.

3a and 3c seem to be similar but ‘additional fee’ could be anything. Can anyone tell me what it is?

I phoned Kier Highways Ltd and was referred to their DCP team who would not help and told me to contact Highways England because they Kier Highways) did not have to disclose anything by law.

Sarah Joseph

Taking each of your questions in turn:

1. How many pricing methodologies has Kier Highways Ltd used over the past 5 years
when charging Highways England for ad hoc work or when repairing damage to the
highway, barriers or signage?
Kier operates a number of maintenance contracts for Highways England; in the north west region (Area 13), the midlands region (Area 9), the south west region (Area 1) and the south east region (Area 3). More information on how we manage our network can
be found on the GOV.UK website: https://www.gov.uk/government/publicatio…

For Area 1 and 13, services are delivered under a Managing Agent Contract and
services for Areas 3 and 9 are delivered under an Asset Support Contract. More
information on these contracts and on how we procure Highways England contracts can be found via the following link:
https://www.gov.uk/guidance/the-highways…

2. What were the pricing methodologies?

The pricing methodologies that are used for both MAC and ASC contracts in repairing damage to the highway, barriers or signage are:

a) Lump sum: our maintenance contracts are structured so that our service
providers are paid a “lump sum” for a wide range of general maintenance duties
(such as pothole repairs);

b) Schemes: where larger repairs and improvements are packaged into more
detailed and scoped programmes of work;

c) Cost reimbursable service: the service provider is reimbursed the actual costs they incur in carrying out the works, plus an additional fee. This is used where the nature or scope of the work to be carried out cannot be properly defined at the outset and the risks associated with the works are high, such as emergency work.

3. When did they come into effect?

The Kier contract access dates are as follows:
Area 1 – July 2010.
Area 3 – November 2013
Area 9 – July 2014.
Area 13 – July 2010

Please note that Kier Highways has only been involved in these contracts since it
bought out the previous service provider (EM Highways) in August 2015.

4. What increases in charges have been agreed year on year?

In accordance with the contracts, the prices are adjusted by the contract price
adjustment for inflation on an annual basis.


Richard Jones left an annotation (24 May 2016)

this might help understand what is going on
https://www.whatdotheyknow.com/request/c…
RJ


FOI Advice, Highways England Company Limited 25 May 2016

1 Attachment

Highways England Internal Review CRS 737 927 Pricing Methodology Sarah Joseph.pdf

214K Download View as HTML

Dear Sarah Joseph

Please find attached a response to your request for an internal review.

Yours sincerely

Layla Beckett, Freedom of Information Officer
Highways England | Piccadilly Gate | Store Street | Manchester | M1 2WD
Web: http://www.highways.gov.uk


Mr P Swift left an annotation (26 May 2016)

Sarah

Highways England (HE) are writing at a cross purpose. I have never suggested that the information was incorrect or lacking, I have suggested you seek clarity. You appeared to be very specific; you asked about a Limited company, a legal entity in its own right – Kier Highways Ltd (KHL) Company number 05606089.

HE responded about ‘Kier’, they were non-specific. That they wrote about specific areas indicates they are referring to KHL.

But who are ‘Kier Highways’? I believe you (and I) are owed an apology because it seems HE have unnecessarily complicated the history, likely innocently.

‘Kier Highways’ did not buy out EM Highways. Kier Group PLC ultimately acquired EM Highway Services Ltd. EM Highways Services and Kier Highways Ltd are the same company, the latter being the new name of the former. Currently KHL have a parent of 01686040 : MOUCHEL LIMITED and in turn an ultimate parent of 02708030 : KIER GROUP PLC.

Therefore Kier Highways Ltd have been involved in the contracts since before August 2015 albeit when being differently named:
ENTERPRISEMOUCHEL LIMITED
EM HIGHWAY SERVICES LIMITED
and current KHL.

The latest response is no less confusing and I would suggest it is ignored. If you need the company history, you will likely find the following link helpful:

https://beta.companieshouse.gov.uk/compa…

the August date is irrelevant save that it is about the time KHL was acquired after which the name changed to KHL. To correct HE’s response:

Kier Ltd has been involved in these contracts since it bought out the previous service provider (EM Highways) in August 2015.

Kier Highways Ltd (KHL) Company number 05606089, the company about which you enquired, has been involved in the contracts since they were entered into under their previous trading name.

References to ‘Kier Highways’ are misleading. Any reference to a Limited Company, should be clear and I would suggest, include the company number for the sake of clarity.

You appear to be awaiting a response to:

• What increases in charges have been agreed year on year?

The response supplied was:

“In accordance with the contracts, the prices are adjusted by the contract price adjustment for inflation on an annual basis.”

It is unclear if this is just inflation or if the ‘contract price adjustment’ permits more. The information in my possession indicates that KHL are now charging HE £70 / hour for a service which, a year ago, was £35 or less. With inflation currently running very low, I am having trouble reconciling the information you have been provided with that in my possession.

P. Swift


Sarah Joseph 27 May 2016

Dear FOI Advice,
thank you all for your involvement.

please can you clarify:
What increases in charges have been agreed year on year?
the specific values agreed and that have occurred

Yours sincerely,

Sarah Joseph


FOI Advice, Highways England Company Limited 27 May 2016

Dear Sarah Joseph

Thank you for your email received on 27 May 2016. In your Freedom of Information request, you wanted to know “what increases in charges have been agreed year on year? The specific values agreed and that have occurred”.

For the purpose of clarity I would like to know which charges you are referring to . I will be unable to proceed with your request without clarification of the information you wish to receive.

Please note that if I do not receive appropriate clarification of your information requirements within three months from the date of this letter, then I will consider your request closed.

If you wish to discuss any of the above, please contact me. Please remember to quote reference number to your new FOI request CRS 738,807 in any future communications.

Yours sincerely

Layla Beckett, Freedom of Information Officer
Highways England | Piccadilly Gate | Store Street | Manchester | M1 2WD
Web: http://www.highways.gov.uk


Sarah Joseph 4 June 2016

Dear FOI Advice,
i originally asked for –
How many pricing methodologies has Kier Highways Ltd used over the past 5 years when charging Highways England for ad hoc work or when repairing damage to the highway, barriers or signage?
What were the pricing methodologies?
When did they come into effect?
What increases in charges have been agreed year on year?

there have been annotaions made and i am asking what increases in charges have been agreed year on year with Kier Highways Ltd? The specific values agreed and that have occurred. it seems the contacts have been in place for years. for each contract what was agreed and what has occurred, the actual percentages or sums.

Yours faithfully,

Sarah Joseph


Sarah Joseph 21 June 2016

Dear FOI Advice,

when can i expect a reply.

Yours sincerely,

Sarah Joseph


FOI Advice, Highways England Company Limited 23 June 2016

Dear Sarah Joseph

The due date for a response from Highways England is 4 July 2016 as you provided clarification on the 4 June.

Yours sincerely

Layla Beckett, Freedom of Information Officer
Highways England | Piccadilly Gate | Store Street | Manchester | M1 2WD
Web: http://www.highways.gov.uk

Ops Dst, Highways England Company Limited 6 July 2016

1 Attachment

FOI 738807 S Joseph fv1.pdf

208K Download View as HTML

Dear Ms Joseph

Thank you for your request for information dated 04 June 2016 regarding
pricing methodologies.

My colleague has dealt with your request under the terms of the Freedom of
Information Act 2000. I have attached the response to your query on behalf
of Dawn Davies. I apologise for the delay in sending you this response.

Regards

Kayleigh Wedderburn
Correspondence manager, Highways England


Mr P Swift l