Clear As Mud

In June 2019, Highways England published their new ‘pricing schedule‘ of DCP (damage to Crown property) works. These have already been amended, in the main upward!

We would suggest Third Parties (drivers, fleets, hauliers and their insurers) need to hold Highways England to their word, in particular:

  1. adopting ‘transparency’ and
  2. securing the benefit of Highways England Rates

Transparency


‘Transparency’; in a business or governance context, is honesty and openness. At Highways England ‘transparency’ appears to be a platitude rolled out over the years; yet to be understood let alone adopted.

The Authority has written with regard to their new rates:

The Schedule, which also shows the costs of the most common materials, will simplify the process for all parties, make the pricing of Green Claims much more transparent, and should reduce considerably the effort and resources currently spent challenging costs in order for insurers to get comfortable that they are not paying too much.

The National Schedule of Repair Costs have been derived from competitively tendered rates from across England. In arriving at the National Schedule of Repair Costs we have taken in to account other information available to us to ensure that they can be substantiated as being reasonable costs.

We have asked Highways England to provide the rates from which they constructed their new schedule, to substantiate the costs as being reasonable. We were assured the information would be forthcoming but to date … nothing.

We are particularly interested to understand how these ‘lump-sum’ or ‘composite’ rates, that appear to be ‘averaging’, have been arrived at. We are mindful:

  • DCP Rates are not commercially sensitive i.e. there is nothing to prevent disclosure
  • Highways England has previously supported moving away from ‘composite costs’.  Tim Reardon’s 01/2016 Kier Audit referred to ‘granularity of data’, said to be an improvement on ‘averaging’.  We have gone full circle!

The Benefit of Highways England Rates


The Authority has also written:

In pricing repair costs this way, Highways England is giving the insurance industry the benefit of the rates that it has been able to secure in a competitive market.

But this process should have been employed since 07/2014!  This is the methodology set out in Appendix A to Annex 23 of the contracts – a contractually agreed process that was not complied with.  For years the Authority has permitted exaggeration and misrepresentation by its contractors.

Only now, when faced with the task of having to deal with us directly on sub-threshold matters, do Highways England consider pricing.

‘If it ain’t broke don’t fix it’ – just ensure contractors use it! The work has already been done for the Authority, Appendix A states a Third Party should be charged no more than:

Defined Costs (£) + Uplift (%)

A defined cost is the base rate of an item.  These rates are held, at the very least by contractors.  If the Authority wished to establish base rates they need only look at what they are charged – or ask us!

For example, less than a year ago (09/2018), the following IR (incident response) rates were charged to the Authority in Area 6:

An Asset Incident Watchman (AIW) who attends emergencies is charged at £25.29 / hour base rate on top of which HighwaysEngland pay 7.4% uplift (fee).  A Third-Party should be charged the base rate plus a higher uplift of likely no more than 25%, or about £32 / hour total.  Not the £65+ they see … with multipliers after 5pm!

  • How difficult could establishing a pricing schedule be?
  • Why are the Authority unable to undertake this?

Highways England has been charged set rates by their contractors year after year. There is a schedule.  Take the AIW and assistant AIW (above), Mr A and Mr B.  Both men appear in a 2017 incident, charged to the Authority at exactly the same rate presented in 2018:

08/09/2017 18/09/2018
Mr. A AIW £25.29 £25.29
Mr. B A/AIW £18.36 £18.36
HE ref. HE112/006/
SG337
HE112/006/
SG435
CMA ref. X02A607 X11D304
9/33 8/22

Between the above dates, Mr A and Mr B appeared charged to another claim only this time, the bill was presented to a Third Party:

14/03/2018
Mr. A AIW £65.75
Mr. B AIW £65.75 no mention of ‘assistant’ i.e. charged in full
HE ref. not applicable
CMA ref. X07B918
8/46

The AIW vehicle was charged to insurers at a standard £36.91 / hour – to Highways England £11.33 + 7.4% ‘fee’.

Highways England’s contractors have schedules of rates. Whilst the Authority states none of their ASC’s has a schedule of rates, this is incorrect; a contractor has published said rates and the figures above evidence the rates used under the heading (09/2018) that does what it says on the tin ‘RATE’.

Highways England have apparently looked at their contracts, looked at minimum & maximum costs and done a lot of analysis work around the composite rates. Sitting behind these composite rates they have a breakdown of labour and plant. Yet despite months of work, their figures are, in some respects, as much as 50% awry!

Why did Highways England not simply look at the ASC (contracts) and say ‘we will use ‘defined costs’ the schedule used to bill us since 2014, the rates we were ‘able to secure in a competitive market’ and to which their contractors agreed?

For more information about the rate variation and ‘defined costs’, please email www.cmaclaims.co.uk @ DCP Rates update


in the absence of the information we have sought and were assured would be provided, we have made a formal request for the information at WhatDoTheyKnow.com


12/08/2019 the Authority’s site has been returning ‘Apologies for the interruption in service. The Highways England website is currently offline for essential maintenance work and will be restored shortly’https://highwaysengland.co.uk/thirdpartyclaims/