Traffic Management (‘TM’) Programmer charges made by Kier – exaggerated rates and overstated ‘average’.
In 01/2017, a claim for repair to the road network proceeded to Court. Highways England’s sole witness was a Kier employee, the head of claims, apparently responsible for their current charging process. This witness gave evidence to a Judge (A = answers, Q = questions):
Q. All right. How do we know that the TM programmer spent an hour and a half planning this particular incident?
A. ‘To be, to be completely frank, with these general roles that’s the average for something like a, a TM programmer. That’s the average amount of time they would spend doing any booking because they have to use the system called SRW, which is quite cumbersome at times’
Q. I am not sure how the type of system they use determines what the average is.
A. They have to spend, they, to programme the traffic management, et cetera, they have to communicate with the traffic management team, they have to book the road space. There’s all different steps. There’s a book of the road space used, system called SRW.
A. And roughly, for every road space they book, they spend about an hour and a half on it checking—
Q. However, do we know that is what the TM programmer was doing on this instance?
A. As an average? No. I’m sure I can go back to them and ask them because they can go back to their SRW record for a traffic management programmer, yes.
Q. Therefore, if an hour and a half is the average, presumably there are many instances that take a very short amount of time in their—
A. Yeah, they would take no less than an hour. And there’ll be some that take four hours, so we, we do average that particular instance out because it’s quite a cumbersome thing to time-sheet to the exact minute.
A TM Programmer is, by reference to the above and below, assigned to each claim for 1.5 hours. In support of this, the Cost Breakdown Document from the above claim (T06B428) displays the charge here:
The TM programmer in the above 05/12/2015 incident, is charged for 1.5 hours at £63.29 / hour. The above claim is a sub-£10,000, Area 13 incident, presented to an insurer.
Almost a year later, 20/11/2016 we were still seeing the ‘averaging’ on this occasion in Area 9 (U05B457):
Staff charges appear in most claims, where Appendix A to Annex 23 applies and where it does not, the costs apply to above and below threshold matters. As evidenced by the above, ‘staff’ charges for ‘planning’ appear in Area 13 (where Appendix A to Annex 23 doe snot apply) and in Area 9 where it does.
- It is all the more concerning to see ‘planning’ charges in Area 9 as Appendix A to Annex 23 states ‘Planning repair of damage’ is addressed by the TP Claims Overhead – there should not be a separate charge as ‘planning’ is accounted for in the percentage uplift.
- Why would Kier be averaging any planning charges where Appendix A to Annex 23 applies?
We have compared ‘Staff’ charges to Third Parties with the rates presented to Highways England (HE) and Third Parties (TP). An example of a ‘staff’ charge in Area 3 to Highways England is as follows (U03A991):
In the above claim, the staff member was charged to HE at at ‘defined cost’ of £24.96 / hour + 6.5% (£1.62) fee = £26.58.
However, they were only associated with the claim for 15 minutes (.25 of an hour) i.e. a charge of £6.24 was raised plus 6.5% (41 pence), a total of £6.65:
The ‘defined cost’ or base rate for a TM programmer to Highways England is £24.96 which, plus a 6.5% uplift (£1.62) is £26.58 / hour. It is NOT the £63.29 charged to Third Parties.
Furthermore, the TM Programmer was only associated with the claim for 15 minutes (.25 of an hour) whereas the ‘average’ is said to be 1.5 hours; ‘they would take no less than an hour.’ (see above Court transcript).
The base rate for the TM programmer, the cost of this staff member for the period is £24.96. On the claim presented to Highways England, a £66,000+ repair, the total charge for the TM programmer was £6.65.
On lesser matters, sub-threshold (under £10,000), a Third Party is charged:
- £63.29 / hour and
- 1.5 hours
A total of £94.94 – over 10x more:
In Areas 6, 8 & 9 where Appendix A to Annex 23 of the ASC (contract) applies, a Third Party should be charged in a similar manner to Highways England. There should be a slight variation in the uplift (TP’s are charged more), a ‘claims overhead’ percentage is applied as opposed to a fee. The calculation for charging a Third party is:
Defined cost (£) + TP Claims Overhead (%) = maximum charge
Therefore, throughout Kier managed Areas, the MAXIMUM charge for a TM Programmer to a Third Party should be:
£24.96 + TP Claims Overhead (%) = maximum charge
Whilst not yet confirmed by HE, we are advised by Kier that the TP Claims Overhead percentage is anything between 20.58% and about 26%. A Third Party should therefore be charged £24.96 + 26% (£6.49) = £31.45. This assumes the TP Claims Overhead is not being exaggerated, which we suspect is occurring.
But Third Parties are being charged £63.29 / hour for 1.5 hours.
The contractually agreed ‘Appendix A to Annex 23’ process, is NOT being applied in Areas 6, 8 & 9.
Furthermore, whilst admin’ role charges are said to result from an averaging of the costs, this cannot be the case as the time assigned to Third Party claims exceeds that used when charging Highways England.
|Assistant to Area Manager||0.25|
|Network Occupancy Manager||0.5|
|Traffic Safety officer||0.5|
|Depot clerk 1||0.5|
|deport clerk 2||0.5|
There is another piece of evidence that demonstrates the systematic exaggeration on an industrial scale … the schedule of charges that Kier frequently disclosed to justify their pre-10/2015 charges ‘1153’:
2015 & ‘1153’
‘1153’ was the process Kier adopted nationwide in or about 07/2014 to grossly exaggerate the costs of 1,000’s of claims and profiteer in the £millions. It is not consistent with the contract and saw Third Parties deceived into paying £1,000’s more than they should on each claim. Highways England either failed to identify the process or ignored it. We helped put a stop to the conduct in 10/2015.
Both Kier and Highways England will claim that their 1153 process is history, not used any more and therefore irrelevant, of no consequence. We disagree:
- Kier’s habit of presenting substantial information, detailed cost data to support a claim, evidenced their willingness then to disclose what is now referred to as ‘commercially sensitive’ information when it suited them – to mislead and overcharge. Now they clam up.
- The 1153 figures can be compared with current rates and demonstrate that the current process is exaggeration in another guise.
It is ‘2’ that is particularly insightful as Kier did not slowly change their charging process but, having been caught out by CMA, they abandoned the 1153 charging methodology virtually overnight in 10/2015 and put in place their ‘defined cost’ process. A comparison of the charges is enlightening:
By reference to 1153, Kier had one TM programmer whose annual cost was £6,903.24 and (using 1153, said to be the number of incidents Kier handled / annum) this meant the average charge, the cost per incident, was £5.99. This sum was assigned to every claim (source: S04A735 1153).
However, ‘overnight’, in 10/2015, as evidenced by the above, the new process saw the average of 1.5 hours applied per claim at £63.29 / hour i.e. a set charge (average) of £94.94 / hour.
The 10/2015 process therefore saw an overnight increase of £88.95 / claim on 1153 incidents or over £100,000 more recovered.
But 1153 is not and was not the number of claims Kier handled / annum. They actually attended about 5,400 incidents (source – Kier’s ‘Insurers Guide’) i.e. if they charged to every claim, the over-statement was almost 5x as much.
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