What A Tangled Web We Weave ….

Highways England have sought to convince us (and others) that the fees for repairing damage to our barriers (and similar) are the same whether their contractor presents them to Highways England or to a Third Party (driver, fleet operator or insurer). But they are not!  The obvious questions arising from this are:

  •  Why do Highways England believe this to be the case?
  • Why are the costs different?
  • Why is the difference not known and admitted?

If there is a reasonable, honest explanation why do Highways England and their contractor not disclose, explain and justify the process rather than simply say ‘it is not the case’?

On 05/04/2016, Highways England’s General Counsel emailed that their contractor informed them since 12/2015, “The current charges levied by Kier are as follows:

  • AIW (emergency incident attendance) staff hourly rate: £70.32
  • AOW vehicle hourly rate: £35.53
  • CO1 Standard Beam:£41.52″

The above charges are those raised by the contractor to Third Parties i.e. Highways England conveyed that the charges are the same to both parties.  But we have never seen Highways England charged the above rates. Of the 100’s of claims reviewed in not one instance were the above charges presented to Highways England.

  • Why did Highways England need to rely upon a statement from their contractor? 

To determine what they are charged, Highways England could review the charges that their contractor presented to them i.e. look at the bills they received day in day out?  Could the reason be that this phraseology was designed to enable, if required, a denial such as ‘that is what we (Highways England) were told’, as opposed to ‘that is what we know to be the case’?

In February 2017, the contractor contradicted Highways England’s account stating that the charges ARE different.  The contractor explained to a Judge in Court the ‘base rate’ was the same but the uplift differed, specifically:

  • Highways England pay base-rate plus 7.38% (6.5% in some Areas)
  • Third Parties pay base rate plus 20.58%

The contractor undermined Highways England’s account.  Only one could be right … though it transpires both are false!  Based upon the above account from the contractor, as the ultimate charge to drivers, fleets and insurers is £70.32 / hour, the base rate is £58.32 i.e. £70.32 less 20.58% (£12).  If Highways England were paying base rate (£58.32) plus 7.38% (£4.30) they would be presented an hourly rate charge of £62.62.

The contractor is similarly misrepresenting facts as we have NEVER seen an AIW charged to Highways England at £62.62.  More commonly, an AIW is charged at about £25 / hour.  That is to say, Highways England are paying almost 1/3rd that which drivers, fleets and insurers are charged.

In support of our statement the facts are being distorted, we have attached a bill from the contractor to Highways England – click here. We draw your attention to our numbered endorsements on the attached document which relates to a 07/2016 incident i.e. after 12/2015 (see above):

  1. Two AIW’s have apparently attended the incident.  They have each been charged:
  •  £45.54 / hour (base rate)
  • £2.97 / hour (6.5% fee uplift)
  • £48.61 total per hour

However, it will be noted that no vehicle is associated with the staff, their transport is not detailed i.e. it appears the rate is inclusive of their vehicle (plant), that the staff rate is actually lower. An AIW vehicle is usually charged to Highways England at about £15 / hour – albeit £35.53 / hour to drivers, fleets and insurers.

2. A single AIW has been charged as undertaking ‘planning repair’. Drivers, fleets and insurers invariably see two AIW’s undertaking the planning i.e. the higher fee is doubled.

3. The DCP manager is charged for ½ hour.  The contractor has one DCP manager.  When charged to Third Parties, he is charged for 1 hour on every claim.  We are advised that his time is charged by equally dividing his time between the at-fault claims where a culprit is identified, about 3,300 incident per annum i.e. his charge is ‘annualised’. Of course, simple mathematics undermines the 1 hour charge; the manager, if working 9 hour days, 5 days per week, 52 weeks per year without break, holiday or doing anything else, would complete 2,385 hours … there are about 3,300 culprit-identified claims per annum, he therefore is charged at 3,300 hours in a year.  A Judge remarked ‘for the DCP manager charge to be correct he would need to work 1.4 hours in every hour’.

The attached breakdown relates to a culprit-identified incident but to Highways England the ‘average’ 1 hour is not applied.  How can the charge of 1 hour for the DCP manager be an ‘average’ if less is being charged to Highways England for a culprit-identified incident?

4. The repair took about 5 hours.  It commenced at 11pm and concluded at about 4am.  Had the contractor presented this charge to a Third Party, they could expect to see a 1.5x multiplier applied i.e. they would pay a 50% mark-up.  Why?

If the operatives are paid, as the contractor would have us believe, more money for working unsociable hours (nights) why are Highways England not asked to pay the additional outlay that the contractor incurs? 

We suspect the operatives, when commencing employment, are aware that the role requires them to undertake tasks when roads are quieter (at night) that they agree to work shifts, or predominantly nights, in return for a salary that takes this into account?  If so, who is receiving the 50% uplift that the contractor demands from drivers, fleets and insurers?

Drivers, fleet operators and insurers can also expect to see a charge for a ‘supervisor’ likely for the duration of the repair … in this instance it appears the operatives worked unsupervised.

There appears to be no reasonable explanation for the uplifts being higher to Third Parties.   Our concerns are:

  • the base rates and uplifts are not being applied as stated
  • Multipliers are being claimed that are not charged to Highways England and likely are not an expense incurred by the contractor
  • Hours claimed are inconsistent
  • Annualized charges are being applied differently
  • Staff are being claimed from drivers who appear not to be involved, or not for the duration claimed.

update – on 06/03/2017, a copy of Appendix A to Annex 23 was placed in the public domain.  this identifiers how the contractor should calculate the MAXIMUM  that should be charged to a Third Party.  It is evident the ‘rules’ are not being complied with, have not been complied with since the commencement of the contract 01/07/2014.  To read more, click here.