What are Damage to Crown Property (DCP) Rates?
DCP Rates, also referred to as ‘base rates’, ‘defined costs’ or notional rates’ are the cost to a Highways England contractor for the various ‘assets’ they use when attending an emergency incident (collision, fire or spill) and repairing the damage.
They are the actual cost to the contractor of something:
- staff – office workers / management / admin’
- operatives – employees who attend / repair
- plant – vehicles i.e. vans and HGV’s
How are DCP Rates used?
- Third Parties
For many years, several of Highway England’s contracts had a £10,000 attendance & repair cost threshold:
- over £10k, the contractor billed HE using DCP Rates + uplift called a ‘fee’
- under £10k, the contractor billed the Third Party using DCP Rates + uplift called the ‘Third Party Claims Overhead’ (TPCO
Defined Costs / DCP Rates should be common to both parties – but Kier Highways have failed to comply with this process since the commencement of the contract (07/2014 in Area 9). Kier charged the Authority in accordance with the process but not Third Parties (drivers, fleets, hauliers or their insurers). Whilst the process by which a TP is to be charged is set out in the contract at Appendix A to Annex 23, Kier has not complied with this and Highways England not only (coincidentally) kept the procedure secret, they failed to enforce the process. Kier uses their own process which sees a TP charged substantially more.
The uplifts should be:
- to HE – 7.41% (Area 9)
- to TP – 25.29% (Area 9)
The difference should, therefore, be about 18%. As examples:
- Kier charges HE about £15 / hour for an operative + 7.41% uplift but charges a TP £65 to £130 / hour for the same person. Kier
- Kier charge HE £13.20 / hour for a van + 7.41% uplift but charge a TP £36 / hour for the same vehicle.
The uplifts are well over 100% on 1,000’s of claims.
If further evidence were necessary that Kier does not comply with the process, the uplift to a TP of 25.59% incorporates ‘planning’ of the repair – as evidenced by Appendix A to Annex 23. However, Kier charges separately for this, a sum of over £400 / claim on 1,000’s of claims.
- Highways England
DCP Rates / Defined Costs are used by a contractor when reporting to Highway England. The contract has an Annex that sets out the information a contractor is to supply the Authority:
Third-Party Claims handled by the Provider Service Information Chapter 1.9 & Annex 23 Report detailing, for each claim:
- the amount claimed from third parties,
- a calculation of Defined Cost and resulting Third Party Claims Overhead,
- the amount recovered,
- an explanation of any differences between any of these amounts, and
- explanation of why any loss greater than Defined Cost has been claimed.
An example of the report can be found here.
Do Highways England Understand the Issue?
Why is Highways England trying to convince all that DCP Rates no do exist?
Do DCP Rates exist?
They are rates which are to be the same to
2. When billing the Authority (above threshold) to these rates is added an uplift of about 8%. When billing a Third Party the uplift (Third Party Claims Overhead) has not been seen to exceed 26%. The difference between the two should therefore be about £18%. But it is not. For example, between 07/2014 and 10/2016, Kier Highways charged a 500% premium and subsequently, over 100% on some items.