HE General Counsel, Multipliers & Kier Charges

Kier charge ‘multipliers’ on AIW rates which increase already exaggerated hourly fees of over £65.  These multipliers appear in page 4 of their ‘insurers guide’ issued since 10/2015:

Kier subsequently acknowledged the rate of 2.5x for Friday to Monday was wrong, should be 2x.  however, the evidence indicates there should be no uplift; AIW’s are not being paid this.

For proceedings, progressed in the name of Highways England, the Authority’s witness (Kier’s former claims manager) made a Statement of Truth the following extract relating to the multipliers:

‘The costs are summarised in the “Cost Breakdown Document”. Referring to that document it can be seen that some operatives are charged at a 1.0 rate and some at a 1.5 rate. The reason for this is because the time of the incident and the time recorded for these individuals and for the work that they have done is outside normal working hours and it is within the insureds guide on page 4.’

In another Statement of Truth, the following appears:

Multipliers are used for staff who are called in out of hours and then cost us the same multiplier for those hours: 1.5 for night work Monday to Thursday; 2.5 bank holidays and 2 for weekend work

We have to pay teams the uplifted rates as standard day time hours is what their salaries are based upon. That said we do have a 24/7 control centre (NCC operator) so only ever apply this as a rate of 1 as their salary takes into account a 24/7 shift pattern.’

Note:

the multipliers are NOT just applied (charged) to those ‘called in’.  Kier apply the uplift when an AIW works after 5pm of a weekday or works any time during a weekend.


03/07/2017 Kier confirm Area 6&8 work shifts

a new fleet of vehicles and AIW’s for the Areas Kier were ‘gifted’ 01/04/2017 after Amey could make no money on the contract. A Kier employee wrote ‘The AIW team start their rolling shift pattern from which will allow for 24hr cover‘.

08/07/2017 Just days later, AIW’s working the weekend were charged at double time to a Third Party:

31/07/2017 at almost 2:30am Kier operatives were on the A12 southbound when they responded to an incident on the northbound carriageway.  They were obviously working in the early hours (not 8am to 5pm).  The Incident Response (IR) costs the Highways England were presented as:

  • £25.29 / hour rate
  • £18.36 / hour

The rates are considered in more detail at: 2017 – Kier Fleet.


04/09/2019 email from General Counsel to the National Audit Office

From Tim Reardon @ highwaysengland.co.uk
To: Matt Kay @ nao.org.uk

We have had discussions with Kier regarding the terms of their contract. We have reiterated to Kier that charges for repairs must be reasonable and not duplicative. We have not established that Kier are acting in breach of contract. Kier are of the view that they are acting in compliance with their contract.

Note:

Kier are acting in breach of the contract insofar as they are not complying with Appendix A to Annex 23.


25/05/2019 email from General Counsel:

‘Regarding the use of multipliers, this goes to the issue of transparency in repair costs which we are looking to address in the new national schedule of repair costs.  These are still being worked on; they are on course for publication soon.’

Note:

The General Counsel acknowledges the use of multipliers.  These are costs claimed by Kier but not a cost to Kier.  The new process applies no ‘multiplier’ to rates, there is no difference in rates due to time of day.


11/04/2016 From: tim.reardon @ highwaysengland.co.uk
To: Philip Swift
Subject: FW: Kier charges

The concept of the multiplier is used for the purposes of presenting the costs of sub-threshold claims to insurers and is the approach developed by Kier with help from the insurance industry. In over-threshold claims, Highways England seeks to recover the actual costs of undertaking the repair.

Note:

no such ‘help’ has been evidenced.  Insurers also wish to pay ‘actual cost of repair’.  Multipliers are used to exaggerate claim charges for incidents between 5pm and 8am or of a weekend i.e. for the majority of times


05/04/2016 From: tim.reardon@highwaysengland.co.uk
To: Philip Swift
Subject: Kier charges

I refer to your letter of 24 March.

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

These unit rates are inclusive of either a Direct Fee, Subcontract Fee and Working Area Overhead, whichever is appropriate, and which are set out in the contract between Kier and Highways England. For sub-threshold claims, Kier apply a third party claims overhead.

A multiplier is applied to time related items such as staff and plant and varies according to time of day, whether it is a weekday or weekend and whether a Bank holiday. The multipliers were developed, we understand, in conjunction with the insurance industry. They are set out in the document published by Kier, “Insurer’s Guide to Incident Management and Claims Recovery”, and they apply to all claims, above or below threshold. That Guide is sent out with every claim.

For above threshold claims, the contract between the Kier and Highways England (as with other service providers) sets out a precise methodology for calculating the charges, including the relevant fee percentage.

The below threshold claims include an additional third party claims overhead because, for example, in these cases Kier is pursuing the case the whole way through (rather than the claim being pursued against the insurer by Highways England) and therefore incurring additional costs.

Nevertheless, notwithstanding there may be some differences, the conclusions of the January audit of the way in which Kier calculate their claims concludes that insurance companies are not being over-charged; differences either tend to balance out or the differences are not significant.

Note:

  • The charges (defined costs) are ‘unit rates’ i.e. they are a ‘rate’
  • Multipliers are said to have been developed in conjunction with the insurance industry
    • no evidence of this has been provided
    • why would a development with insurers causes rates to the Authority to be affected i.e. multipliers applied
  • multipliers do NOT apply to all claims; they are not applied to over-threshold (£10,000) claims presented to Highways England
  • Insurers (Third Parties) are being overcharged