160421 To Highways England re Overstatement and Lack of Transparency

21/04/2016 to Tim Reardon & Jim.O’Sullivan @ highwaysengland.co.uk 

I attach a letter in respect of KHL’s processes which further undermines your audit and reinforces my belief this was a white-wash. That exaggeration or over-claiming was not identified by HE is frankly ludicrous.

To convey an aspect in a basic, simplistic manner …

1. If I say my cost of employing staff and vehicles to undertake 10 tasks a year is £100, my average cost per task is £10.

But …

2. what if these staff & vehicles are not actually doing 10 tasks but 20? The average is now £5. If I charge £10, I will invoice £200 … double my money.

3. if these staff & vehicles actually spend only half the time doing these tasks (they attend to other matters for the rest of the time) should I not be halving the charge for the tasks? If I charge their full time for the tasks alone, I am overcharging, the other tasks are being done for free … or am I being paid for another by these? Either way, it seems I am doubling my money again … for every £1, I earn £4.

Now apply the above to the KHL situation and for £100 insert in excess of £3 million. The issue is not just about over-charging but whether the charges for the ‘tasks’ for 2014/15 have already been more than met in full and that further demands for payment are appropriate. I suspect not.

The process was applied during 2014 and 2015. I suspect KHL put me through the hoops during that period knowing that every day they could continue the process was another day of excessive profit.

Yet despite these charges, KHL advise:

I have a copy thanks (of the 07/01/2016 HE audit) Philip and they (HE) were satisfied and confirmed we are not making a profit on claims and actually neither are they Philip. If you do call I will relay some statistics to you and then perhaps you will see nobody is profiting here we are making a massive loss mainly because people drive off after damage or then we receive the no negligence dispute when there is.

I have never raised an issue about a reasonable profit, it is healthy. We also have relatively few liability disputes. Driving-off does not affect us; no VRM, no insurer, no claim. That KHL may not have priced accurately when tendering, despite knowing the untraced figures (about 1/3rd ) is an issue they need to address – but not at the expense of drivers, fleets and insurers. The real issue is the charges presented which the above statement ignores, masks. That a ‘massive’ loss is being incurred by your contractor is noted and I feel sure you do not need me to advise why this is troubling.

Please advise what action HE intend to take in respect of the issues and when a professional, thorough audit is to occur.

I continue to await your confirmation about charges. It appears you are seeking to convince me KHL charge you and insurers the same. They do not by reference to the evidence I possess.

On related issues, please:

  • advise why KHL were advised that the report I submitted to you extended to other companies, with specific companies being mentioned. It appears KHL have been made privy to the report – have the other companies been provided a copy also?
  • Detail the present position with regard to the complaints I made last year via your on-line facility (that I was repeatedly directed to). I wish to understand what has occurred with regard to each.
  • Advise the outcome of your discussions with BBMM and Skanska none of whom have provided an update in respect of outstanding claims. I am due to write to insurers and insureds in respect of each matter.

I await the transparency I understood was to be forthcoming.

My thanks in anticipation.