190704 Tim & Introduction of a national schedule of repair costs for network damage (Green Claims)

04/07/2019 – Tim and NSORC conversation

Tim – Tim Reardon HE General Counsel

1. RS Hello?
2. PS Good morning. Good morning?
3. RS Hello? Hiya, morning Phil; is that Phil?
4. PS Speaking.
5. RS Oh, hiya Phil, apologies for the short delay, I’m having err phone trouble. Um I have with me…
6. PS Don’t worry.
7. RS … um Tim Reardon, our General Counsel, and Ramesh, um the Head of Cost Planning to help err go through some of these err comments that you’ve, you’ve forwarded to Martyn.
8. Tim Hello Philip, it’s Tim here, how are you?
9. PS I’m fine, thank you.
10. Tim Good, good. Um yeah, we, we’d welcome the opportunity to talk through this um national schedule of rates um, so um, err so, so yeah, so um, um… How do you want to play this? Do you, do you want to, err do you want just start, just go through your questions? Is that the best thing to do?
11. PS That sounds like a nice idea, yes.
12. Tim Okay, fine. Right. Okay, um so the question, first question…
13. RS Yeah, so um, what was it? Documentation for ensuring the green claims staff obtain sufficient, sufficient from contractors, some of the TR430 schedule, they do not want to be going back to the contractors, yeah, err not to be paid for the admin role. I believe Ramesh has a…
14. PS Sorry, is this the email I sent yesterday to you?
15. RS Yeah, err the email that you sent to Martyn.
16. Tim I mean do you want, do you want to… I’ll tell you what, before we get into this, um what’s your, what’s your general reaction to the national schedule, Philip?
17. PS Immediate is it lacks clarity, transparency, which is somewhat ironic given that that’s what it was intended to address. It appears to hark back to pre-2015 days, and at first blush it is an overstatement. But for me to, to be confident about that I would need to understand… Th-there-there seem to me to be three factors I don’t understand:

a. 1) is the, the source of the rates that’s being used,
b. 2) is the composite rates being used – what is the composition, so in other words what is the breakdown of labour, plant, being used?
c. And there is then the issue of the new thresholds, so we have 20k and 50k.

18. It would not be fair for me, I, I don’t believe it would be fair for me to make a sweeping statement about the rates at this stage because my understanding, my experience is based on a £10,000 rate, therefore if for example, the average of a £10,000 incident was £5,000, for me to apply this to a, a new threshold of 20 and say, ‘Well hang on a minute, you know, the average is 5,’ that would simply be wrong, I couldn’t justify it. Um, you know, it may be that the average is 10 and therefore I need to be doubling my considerations.
19. However, you’ll be aware that what I tend to look at it is common denominators in every incident and therefore I look at ISUs and AIWs who are first respondents, so I look at the operatives and then I look at the, the plant to see what I can gauge from that. So initially the, the initial attendance, the make safe and get traffic flowing does appear a little excessive.
20. Tim So that’s the um, this was the… On here?
21. RS Yeah, err…
22. Tim Just [inaudible 0:03:45]
23. RS And based on your experience, Phil, err wh- how much excessive would you say that is? And…
24. PS Well again, it’s difficult to say because I’ve been working to a 10k threshold. Now, to give you an example, back in August 2015 I met with Kier Highways and they… No, I beg your pardon, it wasn’t, it was… There was an email in August 2015 from Kier Highways and they subsequently attended in about October 2015, and they were looking to put into place a new process, and that was based on their consideration of an attendance but again I, I stress it was up to £10,000. Now, I haven’t got the figures to hand, but I’m almost sure that they didn’t exceed £500 to get an operative to the scene.
25. RS So this rate err is a, it’s a reactive rate , straight, err, err in an emergency situation, this is an activity we will require in an emergency situation and it’s, err it’s a full shift rate, not err an, an hour, two hour or three hours, it’s a full, err it’s a nine hour…
26. PS Exactly, yes.
27. RS … shift rate includes two man with a van err and a sweeper.
28. PS Oh, and sweeper?
29. RS Yeah, in the case where there is an ic- accident and there is err shattered glass or anything else …
30. RS [inaudible 0:05:18].
31. RS … that needs to be cleared before we can restore traffic, that is what it’s, err it includes at the moment, but it’s a full nine-hour shift, on a nine-hour shift basis.
32. Tim I shall… Tell you what, as, as we’re speaking, what we will do, I’m conscious of the fact, Philip, that um we’re having this conversation with you and you, you, you didn’t sort of go through the, kind of the hotline that [email has 0:05:44]… What I will do, if we keep a note of these answers…
33. RS Yeah, yes.
34. Tim Sirish, can you keep a note of these? And then we’ll, then we’ll um, we’ll put these on the we- we’ll put these answers on the, on the website to, to… ‘Cause, I mean the questions you’re raising are, are, are good questions and it will be helpful for everybody to understand the-these answers, so we’ll do…
35. PS Yeah, and please bear in mind, I mean this simply was, it wasn’t intended to be a response to the, the new proposal, it was simply to be a follow up to my conversation with Martyn and saying, ‘Look, before I can make informed comment I need to know the composition.’ I’m only learning today that there’s a sweeper involved, so I need to know the composition and I need to know where these rates have come from.
36. Tim Yeah, and, and it’s a useful thing for everybody to know so, you know, we’ll, if you don’t mind…
37. PS Yes, but … As I’ve explained to Martyn, I will follow this up, I’ll have something with him for his return on Monday um…
38. Tim Okay, fine.
39. PS … which I think is next week.
40. RS Yeah and, again on, on that, on that err, on that activity, so err that activity may not err be, or that rate, that component, that item rate might not be applied to every claim. Not every claim will require make safe or err… You know, there might be incidents there we don’t have to use that at all.
41. PS I suspect you will, and, and that’s why, it’s, it’s a common denominator. I don’t, I don’t have an issue with AIWs attending, I don’t have an issue with AIWs full stop. What I know is that, and, and I’ve looked at the, the post, I’m encouraged by the fact you want to provide to the insurance industry the, the rates that you’ve managed to obtain. So, let’s look at an AIW, £24 per hour, um to which you add 8%, which is a fiver , they sometimes go out singly, they sometimes go out in pairs, their vehicles £13.02, £13.20, sorry, per hour, to which there’s 8%. I can work out those figures, that if you’re doubling up, um if you’ve got two individuals and a vehicle it comes to about £60, plus 8% brings it up to £66 an hour. If I take your £1474 and I take that £66 and I put it into 1474, I get 22 hours, so a full shift being nine hours, at first blush it’s too much. Now, I haven’t added in a sweeper, a sweeper will probably require an operative and that’ll probably bring it down. It’s rare that I see sweepers attend on a first incident, I cannot um… They’re generally called out to, to an incident as opposed to attending.
42. RS Yeah, but this is an ac- it’s… These, these rates are based on what we would err on the AD contract, if you’re looking at AIW ISU, that is already covered within Highways England’s contract , i.e. to assess what’s required.
43. PS Well assessing what’s required, let’s take Area 9, I mean it, you know, it’s, it’s one that I’ve had a, a great deal of um activity with. You know, it’s, it’s said by Kier to be their most expensive area, and yet £23.71 is the hourly rate you are charged for an AIW. I’ve rounded them up to £24 because I’m nice like that, so you are simply working on the rates that I’ve got, of, of what I can see, I haven’t seen any AD schedules , I don’t know what you’ve agreed in ADs, whether you have um agreed schedules of rates.
44. RS Err we have agreed err schedule of rates, but these agreed schedule of rates are informed by, err by a set of resource rates, planned material, labour, equipment.
45. PS Yeah.
46. RS And we’ve used those resource rates averaged from the, err what we have received on various, on, on, the contracts, contract, from the contracts err from five regional areas in England.
47. PS Yes, and I, I haven’t seen those rate-, I can only go on what, what for example um I have been provided and what I know and what I’ve seen over the years. You know, I’ve known since July 2014 when Kier took over Area 9 that the rate for an AIW following an FOIA response has never gone above twenty… Well it’s never gone above £25, I’m going to err on the side of caution. So, you know, I spoke to Jim, he reckons these guys are paid, you know, £12 to £15 an hour, £25 to you guys, that’s about the going rates. I’ve seen BBMM’s, Balfour Beatty Mott MacDonald’s rates, you know, it should be about £24 an hour. A van, that’s not going to change, if anything you would argue that it’s depreciating each year, so I’m seeing HX14 as a standard vehicle, in other words a 2014 plate vehicle being charged at £13.20 for the last three years?
48. RS Yeah, I mean…
49. PS So we have rates. But again, I come back to what I said at the, at the… Well there’s two things.
a. 1) my email to you wasn’t intended to be a, a comprehensive response, it was just a means by which to, to reinforce why I wanted, which is my second point, the source of those rates, how you’ve come to them, and
b. secondly their composition, how they’ve made up.
50. RS Yeah, but the planned rates are err for all those activities, are average, I, are built up using the average resource rates from other, err from Highways England’s AD contracts .
51. PS Yeah, well they haven’t been in place that long. And, and as I say, I haven’t seen those, nobody’s ever provided me a schedule of rates for an AD contract. I can’t say I have, you know, I, I could be somewhat awkward and say that it could be argued within some of the requests I’ve made they would be captured, but I accept I’ve never asked for AD rates specifically, I just don’t possess them. on the basis you’re, you’re sort of switching to a new set of rates as of the 24th of June, I do know for example that I have March, 12th of March 2019 rates from Kier that I’m seeing on a claim, so I can see that they haven’t changed… You know, it’s… I don’t want to be in a position where I’m critical of yourselves and your process and being seen to pooh-pooh them where it is unfair at this point in time for me to do so, and therefore I won’t, I’ll make some sweeping statements but I will be very fair and, and explain that I am not in a position to make an informed decision.
52. RS Okay. I mean we would like the opportunity to, if you, if you, to explain how these have been built up, if you would like to come and see us or, you know, we can come to see you.
53. PS Well in, at first what I’d just like is the information so I can actually prepare. I’ve got a number of clients that are interested, in fact it’s rather expanded, the developments has meant I’m somewhat inundated at the moment with questions about this and I’m simply saying, ‘Look, you know, at this point in time I cannot make an informed decision, at first blush it seemed a little high. but I’m encouraged by two things:
a. there was the reference to proportionality, as you’ve just said, you know, this is a, um a shift allowance, nine hours, so if somebody’s there for three hours we would anticipate a third, um and the
b. second is that you’re prepared to provide rates you’ve agreed with contractors. That’s very encouraging.
54. RS We, we are happy to show you the rates from these contracts, yes. Um…
55. PS Perfect. Is, is that… Tim Reardon heard that, did he?
56. Tim No, no, no…
57. RS Well, when, when I say show you the rates that we’ve used to err come up with this rate, not share with you. We can show you how we’ve built up these rates.
58. Tim Yeah, we can’t, we can’t… Sorry, we can’t, we can’t show confidential information.
59. RS Yes.
60. Tim Um so…
61. PS Well, sorry, which, which bit are we talking is confidential?
62. Tim Well, the, the rates which were actually bid . So, but I mean what, what I would say is this, Philip. What, what… The number you have here, um and it’s not just, you know, the- it, it’s throughout these, um, err are… There, there’s a, they’re a mean, they’re an average.
63. PS Yes. No, I get that.
64. Tim And, and so, so actually, err this is why I sort of struggle to see why you need to, you need to understand this [sort of information 0:14:41]. It, it’s an average…
65. PS [Slight laugh]
66. Tim … so, so if you, in a sense you could…
67. PS Do you know, I can be, be really blunt and say, ‘At first blush I just don’t believe you.’ I mean, why would I given, given the history of, of obstruction and frustration?
68. Tim [Inaudible 0:14:57].
69. PS But I am trying to take this 24th of June as a point moving forward. And let’s give you an example, you say you don’t understand, you know, when it comes to repairing a steel vehicle restraint system, you’ve doubled the costs from planned rates. Now, in simple terms, in, from my dealings with Kier, going back to what I mentioned earlier which was their attempt to impose upon us a new process which we quickly undermined, with the repair of the steel vehicle restraint, I take plant, plant is an inanimate object, you know, it’s not like operatives who are going to turn round and say, ‘Well I’m not too keen to come in on a Saturday night because…’ they’ve got social events. Plant is simply there, it doesn’t cost you a penny more whether it gets pulled out at eleven o’clock at night, six o’clock in the morning or midday of a weekday, so doubling that doesn’t make a lot of sense, even if it was argued…
70. RS [Inaudible 0:15:59]…
71. PS Yes, yes.
72. RS … if I, if I was to err hire a car, hire a transit van to go out on site and I only go on err, you know, an, an Internet website and I say, ‘I want it in an hour because I want it urgently, now…’
73. PS Yes.
74. RS … err will I not be paying a premium?
75. PS Possibly, but that’s not the situation. We’re talking about items of plant which are owned by the operatives, they’re possibly leased/financed, they have the, the contractors possess them, and taking them out today, being told they’ve got to be out at eleven o’clock at night may inconvenience the drivers, the operatives, the people, but it won’t affect what the individual vehicle costs either buying, running or fuelling. It simply just doesn’t work like that.
76. RS Err not, not, not to deliver the works associated with the damage or making safe, err making safe the network. Not [inaudible 0:17:06]…
77. PS How does, how does it cost…
78. RS … the operatives are not there to deliver the works or to make safe the, err make safe the motorway err to en- err to ensure, to, err to restore traffic flow. They, that is the contract. We, the contract doesn’t… Is, what, what it says basically in our contract is that we are, any incident err that occurs we, the works for repairing that damage and to make safe and restore traffic is on a, is, is on a cost reimbursable basis , as such they will buy that equipment, that plant, that, those operatives on an emergency basis .
79. PS No, that’s, that’s not correct. You, you can’t turn round to me and say that a traffic management vehicle or a barrier repair vehicle has been bought on, for emergency use. It’s there as a means by which to undertake works if and required under planned operations, and it will be known to the contractor that there are X number of incidents per year. I think there’s, there’s an issue here of, of considering the reality with the phraseology. When we talk about emergency incidents, we’re not talking about unexpected incidents, and I think there’s some confusion there. For example, with regard to Kier, we know from their correspondence that they say they attend 5,400 incidents per annum, that’s 13 a day. You can’t exactly say that these are unexpected. These are anticipated events for which they acquire plant, for which they have labour, and for which they expect to be paid and for which my clients will pay them if their insureds are negligent. You know, make no mistake about this, this is simply we want to pay appropriate amounts for appropriate claims. That, that’s our philosophy, it’s very straightforward.
80. RS Right…
81. PS But to sort of say that, you know, the, this, this plant is going to cost more because it’s bought for an emergency incident, I don’t believe is supportable.
82. RS Err no, the, the rates you’re looking… There’s planned rates and there’s err, err reactive rates. Err I, I understand, you know, in terms of planned, yes the err whether it’s today, tonight, Saturday, Sunday, the plan doesn’t know that, but yes, operatives, err the labour, there is a premium. However…
83. PS Well, if, if there is a premium because, and again this, this is… It’s interesting to have this discussion because it helps me to clarify without having to go into lengthy emails what is exactly meant by a reactive rate. Are you telling me that with your AD contracts you now have an agreement with your contractors that you now have two schedules of rates – there is a schedule of planned rates and there is a schedule of reactive rates?
84. RS We, we do not have any reactive rate in any of the AD contracts . [Inaudible 0:20:19]…
85. PS So who has said to double them? Who’s, who’s said to double the planned rate? Because if you’ve, if you’ve, don’t have a reactive rate, in other words if the right hand column doesn’t actually exist, yet the left hand column, the planned rate, the column is based upon actual figures, who was it decided to double them to get the reactive rate, and why?
86. Tim Well, I mean it is a… It, it, the, the reactive rate is considered to be a reasonable rate. The, the contract, the mea- the, the calculation of the, the sort of the, the mean rate which has been applied is in rela- is in relation to the planned rate. So, but the, um the reactive rate is, has been, in a sense it, it is um, err a, um, err… It, there, there’s not a specific calculation which lies behind it , err it is a, it is double the planned rate, but it is less than um, err it’s less than [Seeker 0:21:26], considerably less than Seeker. [Cough] So… Sorry, I’ve got a cold, so that’s why I’m coughing.
87. PS I’m sorry to hear.
88. Tim So um, so it’s considered to be a reasonable rate but there’s no, it is not derived from rates which were bid on as part of the contract , um it, it is a, it, it assumes that basically um the equipment will have to be gone out, they would have to go out and, and get the equipment, they won’t have that equipment um, err lying around, they will have to go and procure it. Whether that’s, you know, whether they go out and lease it or whether they go out and buy it or, or sort of hire it, it will be hire, won’t it? They’ll just go out and… [Cough]
89. PS No, no, Tim, it won’t. No, and we can demonstrate that. Goodness, I mean, I’m now worried, from your perspective. With regard to non-identified culprits, so you’ve got an unidentified person that’s caused the damage, are you telling me that Highways England are going to pay that reactive rate to your contractor?
90. RS It, it will be a define- whatever will be the defined costs of delivering that work.
91. Tim It will be… Yeah…
92. PS [Laugh]
93. RS And if…
94. Tim The cost will be [inaudible 0:22:36].
95. RS And if, if they bring two sweepers, if, if they bring four operatives in, because that’s the emergency err cost to Highways England to ensure that the tra- err the, the, the network is made safe immediately and will restore traffic…
96. PS No, I, I get all that. No, look, let’s go back to the question please. Are you telling me that the repair of the steel restraint system, up to £20,000 I seem to recall… Yes, is going to be £2,178 per shift, that you are going to pay that if there’s nobody to claim against?
97. RS It could be more than that.
98. PS Yes it could be multiples of that.
99. RS Yeah.
100. PS But you’re, you’re going to use for your payment, you’re going to allow your contractors to invoice you based upon that column, where there’s no culprit, nobody to claim against?
101. RS No culp-… Well yes, if that is the defined cost of delivering the repair damage for that…
102. PS No, sorry, you’re using the term ‘defined cost’ now, and this is going to confuse matters because I’ve known about defined costs and their various interpretations for years. What I’m asking is, you’ve got a column of numbers on the right…
103. RS Yeah.
104. PS … which are reactive rates, are you going to… are that your contractors going to invoice you and are you going to pay those reactive rates when there’s nobody to claim against?
105. RS Err Phil, the contract we have err which we will be delivering these works under is we will have to pay them a defined cost to make safe…
106. PS Not answering the question. [Laughing] Not answering the question.
107. RS [Inaudible 0:24:19] I think that…
108. PS Are you going to pay those rates?
109. RS We, we…
110. Tim Well we’ll pay, we’ll pay presumably, we… I, as I understand it we’re paying the cost, we’re paying, it’s cost reimbursable…
111. Sirish Yes.
112. Tim … so we’re paying whatever it costs .
113. RS Yes.
114. PS You, Tim, you-you-your earlier… There’s a couple of things you said earlier, that the, the rates were not based on rates bid as part of the contract.
115. Tim No.
116. PS That’s the reactive rate, but they are, they must be.
117. Tim No, no they’re not. No.
118. RS No.
119. Tim What, what, what it is, is we pay, we pay the, the, the, um whatever that cost is, so we will pay it. Now, um, I mean you could, you could, I suppose you could um just say, you could just write ‘cost reimb-‘ you know, whatever it is we paid or something in, in this, in this, in this reactive rate column, but what we’ve tried to do is err, you know, so… Err we’re, we’re going to have to ring you from another room err ’cause I think we’re going to be chucked out this room. But what, what we tried, what we’ve done here is um, because obviously, you know, we don’t know what that, what that reimbursable cost is going to be, because it will be, it will be what it will be and it could vary and it could be um… Err there’s all sorts of factors which come into play.
120. So what we’ve done here, what we’ve done here, to give sort of clarity and to give sort of, err to, to, to give sort of um, err insurance companies um a sort of certainty about what they’re going to be paying is we’ve specified a rate, we’ve specified this reactive rate which is double the planned rate, but which is still considerably less than industry benchmarks such as CECA. So, it is a, it is a, you know, it’s, it’s if you like a um, err an informed estimate of, of what we think these costs would be, it just does not represent what we’re actually paying . Err I mean it’s, it’s probably, it could be more, we might be paying, we might be paying more . There might be cases where we’re paying a bit less, um but we think it’s a, we think this is a, a reasonable, a reasonable cost.
121. And look, you know, at the end of the day Philip, and I know we’ve had this argument before, the, the whole question here is what is the reasonable cost of repair ? You know? And, and it’s, um it, so if you, if you had to go down the road to its, you know, if, if you, your assets, the asset’s been damaged, we have to get it done quickly, so we, um and so, you know, we have to, we have to procure the equipment and the labour to, to have it done. Thi-this equipment and labour is not sitting there waiting to, to go on and repair that, repair that damage, it, it’s [inaudible 0:26:52]…
122. PS Yes, it is.
123. Tim Well no, it’s not. It’s not, it’s not, [inaudible 0:26:55] misunderstand.
124. PS Yes, it is.
125. Tim It’s not.
126. PS No, it’s not a misunderstanding, because I can actually evidence this from the registration marks. You’ve said about, you know, the stuff isn’t lying around, it has to be buy- bought or hired in, let’s take ‘make safe and restore traffic flow’, you know, HX14 HFN is a Mercedes AIW spec vehicle that attends every incident. I’ve only got to look at a matter that was brought to our attention yesterday, and we’re talking about traffic management, 18 ton trucks that, you know, Iveco wagons that we see time and time and time again used on exactly the same type of work, and we know enough about these vehicles to see that they’re sign-written um in some instances and that they’re financed by the contractors and others. These are vehicles that they own, and they are bought in for this work because, as I‘ve said, they have 13 incidents every day. Now, they’re not all barrier work, don’t get me wrong, and that’s just the ones that we know about in certain areas. So, these, these are trucks they own, they’re not, they’re not hired in. I have never, ever seen a hire invoice.
127. I have seen some contractors, Balfour Beatty being a favourite, that brings in sub-contractors and then we see the rates there. But Tim, guys, you know, they don’t buy, oh sorry, they don’t hire in stuff to attend an incident, and there is a fundamental misunderstanding if you believe that’s the case. I don’t believe they’d have the time to do it. Now, I do have some sympathy if there is abortive work to undertake, but we’ve gone down this road with Highways England, and in particular with Kier, they used to add a standard £832 per incident charge for abortive, they claimed to a judge that this was the average, they quickly withdrew it when they couldn’t substantiate this because they have all the equipment sat there ready to go and it is not aborted on many occasions.
128. Quite a lot of the stuff, as you’ll see, and, and you must understand because it’s built into this new system, quite a lot of the works is being undertaken within planned works, in other words that same equipment is being used, they have it available for other reasons. So, you know, let’s, let’s try and clear the air a little bit as to, to what they have and how much it’s being used for.
129. Tim [Inaudible 0:29:30] Well, I think that… Hold on, so what we’re saying here is where, where this work can be carried out as part of planned work it will be. So, you know, if there is, if they do have the equipment there available…
130. RS Planned rate.
131. Tim … then, then the planned rate applies . It’s, it’s, it only becomes reactive if they have to do something in a sense out of the ordinary.
132. PS No, I understand that. I get, un-unplanned.
133. Tim And so, so actually, so actually, you know, I think we’re kind of um… So, I mean, yes they, yes they will have a complement of equipment…
134. PS Yes.
135. Tim … and labour which, which is there to do the, the work at, you know, the work they think is going to be arising on, on that day, and obviously, you know, the, the, the main work that, that really that is the planned work. Where, um where something can be done um as part of planned work then, err then, then it will be done as part of planned work and, you know, and they won’t, we won’t apply the reactive rate, they will use the equipment and the labour that, that, that is there. It’s only where they um, err it, it’s only, it’s only where it, it has to be done and, you know, and we will make this decision within 48 hours, it, it’s only where the work has to be done and it can’t be done as part of planned work err so therefore it can’t utilise the existing [presence 0:30:52] of, of equipment that they, that, where they have to go out and get, they have to go out and either err get some more equipment or um, err divert resources um that, that, that we will, that we will charge the reactive rate.
136. PS Okay, let, let me, let me, um I’ll play devil’s advocate here and I’ll try to, to point out how I think you’re bringing upon yourself a real problem, and that is if I get a cost to my client, reactive rates, and I write to you because I won’t be writing to your contractor anymore and say, ‘Lovely, you’ve charged me reactive rates, now I’ve got registration numbers AB 123 ABC, please provide me the hire correspondence for that vehicle.’ If I can demonstrate that that vehicle was not hired, presumably I can have the planned rate?
137. Tim Um yeah, and if, if the… Well, I mean it, it’s if the um… If, if, if, if the work has to be carried out as an emergency and that involves either hiring in or getting additional equipment or labour, or diverting resources which means then on that other job they have to get in additional plant or labour, then, you know, then, then um, err then that’s when the reactive rate will kick in.
138. PS You’re going to have a nightmare. Your, your green claims staff are not going to thank you for this. Tim, I’m, I’m being as frank as I can with you, you know, for all our history, you’ve got to get a system that’s going to work, and one that’s not going to open you up to all sorts of queries. You know, I’m, I’m on the opposite side of the fence, but boy, I’m not looking to cause anybody any problems, it’s in my interest for claims to come in, be looked at, deemed that they need an, they’re appropriate to be paid and then work out the appropriate amount. If I have to send a standard letter on each one which says, ‘With regard to vehicles,’ bang, bang, bang, bang, bang, ‘please provide the hire agreements, please evidence that they were diverted from something else…’
139. Tim Well yeah, but, but I mean it’s, it’s… Yeah, but at the end of the day um I mean you…
140. PS You want a working system.
141. Tim … when we, when we invoice you, when we invoice you for the, if we invoice you the reactive rate, we will explain why we had to, why, err why that, why we had to do that.
142. PS You won’t, because you won’t be able to get it from your contractor. They won’t supply this information.
143. Tim Well, I think that they will ’cause we’ll, we’ll…
144. PS No, they won’t. I can assure you, from our experience of dealing with green claims, if, even if they do you are taking on thousands of claims, once these ADs kick in, they’re not going to like it. Now, don’t, you know, I’m sounding extremely negative, and I don’t like myself for sounding this way. What I’m saying is, look, I get a new process is, is required, and it may be, it may just be that the figures on the right hand side, the reactive rates, are okay but I don’t think how you’re going about this is going to help you in the long run.
145. Tim Okay, I mean…
146. PS I see it as, as being…
147. Tim Okay, [inaudible 0:33:55].
148. PS … there- there’s being too many opportunities for criticism and, and for enquiry…
149. Tim Okay, well…
150. PS … that will cause you guys nightmares.
151. Tim … let’s just, I mean let’s just… I mean, just on the um…
152. RS Planned rate.
153. Tim Just, just on the planned rate, just on the planned rate, what do you think of the planned rate?
154. PS I come back to my original, you’re going to hate me for this, it’s very difficult to make an in-informed comment because I don’t know what is involved.
155. Tim [Inaudible 0:34:18] but on the basis that the planned rate is the rate that, is, is the average of the rates which have been competitively tendered for planned work, so this is the, you know, we think these are efficient rates.
156. PS Let me try and do something quickly.
157. Tim [Inaudible 0:34:35] um so, so um, err we think these rates are very reasonable. Now, [inaudible 0:34:43]…
158. PS The planned, you think the planned rates are reasonable? Okay.
159. Tim [Inaudible 0:34:47] we think the planned rates are very reasonable, um and we would be, well, shall I, I think we’d be surprised and disappointed if, if anybody disagreed actually but… So um…
160. PS [Laugh]
161. Tim I mean we can’t give you, err I mean I’m, I’m, I, err I’m, I’m not, I can’t give you um [cough] the err contractor that, there could be actual bids for these rates and [inaudible 0:35:15] so, you know, if you think I’m lying then you’ll just have to think I’m lying and that’s un- that’s, that’s disappointing. I mean, I’m not, err we, you know, Ramesh and the team have done a thorough job on working out what these rates are and, you know, we’re telling you, um and we ask you to believe us, um that these rates are, are the mean of what those bids were. So, um so we think the planned rate is, is, is eminently reasonable.
162. Um now, and, and actually, you know, as we’ve said to you Philip, where we can apply the planned rate we will. We’re not looking to, um we’re not looking to, to, to make a profit out of this. We, we will charge the planned rate where we can, it is only where we can’t that we just have to get in additional resource that the, that the reactive rates comes into play. So, you know, there, I can see there might be… I mean, I mean, I mean we would hope, because at the end of the day, you know, you can, you can, you can try and go right down into err who’s paid what to who for what piece of equipment, etc. etc. but actually the courts do tend to look at the overall cost , and I think if you look at the, if you look at the overall cost, even if something has to be carried out as a reactive repair, from, from, from the analysis that we’ve done we think that these rates are, these reactive rates are still reasonable rates.
163. But as I say, you know, we will… The majority of claims we think will be constructed on the basis of planned rates so, you know, so that, they will form the, the majority of the, probably the considerable majority, significant majority of the, of the invoices. And so, you know, we, we… We, we would hope that, that you would able to be, you know, that, that the reaction should be broadly positive err to, to what we’re doing. I can…
164. PS It, it’s absolutely positive that, that you’re making an effort that… But that, this is the first step so… You know, I am a glass half-full man, whatever you may think, I just have a lot of knowledge of these rates and processes. Um and I hear what you’re saying about planned rates being the majority, but that actually is, is troubling me. but again I think I’m getting a feel for the process. You mentioned earlier that these costs do not necessarily represent what you are paying. If that’s the…
165. Tim The planned, but the, the reactive rates um…
166. PS No, sorry, the planned rates.
167. Tim Oh no, no… Well yeah, yeah , so the… Yeah, so the planned rate is a mean, it’s an average.
168. PS So it’s not actually what you’re paying, it’s not actually what the contractor is charging you, it’s what you’ve decided…
169. Tim Well it’s the mean.
170. RS National [inaudible 0:38:06].
171. Tim I mean it’s, it’s, it’s, it’s calculated from looking across about five areas, isn’t it?
172. RS Yes.
173. Tim Five [inaudible 0:38:12] areas.
174. PS Okay.
175. Tim Um so we’ve taken the, the bid, you know, the successful bidders’ resource for, you know, prices and we’ve averaged it.
176. RS Yes.
177. Tim So it’s, so, you know…
178. PS Right, but err, but just to confirm this, that um, that, that charge that is put in the planned rate, that column, those charges are not necessarily what your contractor is going to invoice you, it is what you have decided from an average is reasonable to claim?
179. Tim Err no, the planned… Well, the, the planned rate is what we will be invoiced, so…
180. PS Okay, so you’ve agreed this with your contractors? They, they are going to…
181. Tim Yeah. [Inaudible 0:38:49] these rates are the rates that, that we’ve agreed with the contractor [inaudible 0:38:55].
182. PS Okay, no I… Thanks. I didn’t understand that, um that, that didn’t come across so…
183. Tim That’s okay. So, so these rates have been agreed with the contractor, they’re for the planned… That’s right, isn’t it?
184. RS The plan- these are the resource rate…
185. Tim Yeah.
186. RS … err are all competitively tendered, and we’ve used the competitively tendered resource rates from five areas and used the mean of err…
187. Tim Yeah.
188. RS … err for each resource – labour, plant, equipment, and then came up with the activity, so for example if the, err the, the barrier repair, what do we need as a gang to do the barrier repair? Err we’ve, that, there is a build-up for each activity, so there’s plant and material in, sorry, not the material, there’s err…
189. PS No.
190. RS … labour and equipment in there, we’ve used the average of all the, err all the five AD areas, the resource average, right, and err come up with this composite rate for that activity.
191. Tim Yeah, so there might be…
192. PS Okay.
193. Tim So there might be some areas where we’re paying um less, and there may be some areas, and there’ll be some areas where we’re paying more , so this is, this is a mean.
194. RS Yeah.
195. PS Right but, so hang on then, going back to that, if that’s the mean, this is not what the contractors are going to invoice you, this is what you, you have… Because that will vary from area to area, this is what you’ve agreed to in-
196. Tim … [inaudible 0:40:14] but, but this is the mean of those, of those rates. So, you know, so, so if you, if you, if we just take as a hypothetical example, I don’t know, um say err, err, this will test my, my maths, that, you know, a sort of [inaudible 0:40:32] of one area charges um, err £5, another area charges £10 for a piece of equip- err for a, for a job, another area charges £15 for a job, um so um the, the mean of those is £10, um so, and that’s the, that’s the rate we put in here, but in anoth- in one area they’re going to be charging £5, in, in a, and in another area they’re going to be charging £15. So, you know, so, so we’ve, we’ve taken the mean.
197. PS Right, so, just coming back to the comment earlier, this figure – repair of steel variant restraint system – £1,089, this is not what the contractors in the areas are going to invoice you, this is what you are going to invoice my clients?
198. Tim Yes, yes .
199. PS So there is a difference? Okay, that… Alright, yeah, it’s not…
200. RS So we, we have built up the, you know, this, this rate using err [inaudible 0:41:30]…
201. PS Yeah, this isn’t, this isn’t a trick question. No, I get that, it isn’t a trick question, it’s simply that I want to understand and…
202. RS Yes.
203. PS … and I’ve just had a contradiction, on the one hand it was what they were going to invoice you, and now I’m being told it’s not. I just want to understand what’s going on so I can make informed decisions. That, that planned rate is not what you’re going to be charged, it’s what you’ve decided across all the areas is what’s a reasonable rate, it, it’s a mean and you will charge…
204. Tim [Inaudible 0:41:53] it, it’s a mean, it’s an average.
205. PS Yes. Yes. no, I get that.
206. Tim It’s an average, so it’s not, it’s not just something we’ve dreamt up.
207. PS No, no, no, I’m not suggesting…
208. Tim It’s not something we’ve dreamt up…
209. PS Err this isn’t a trick question. You know, we’re…
210. Tim [Inaudible 0:0:42:01] it is an average, so we’ve taken, we’ve taken the, the, the bids for, in, in these areas, the successful bids, err and for, you know, the, the, the equipment and your labour, etc. etc. um and we’ve taken, and, and we have taken the, the mean of those bids as the basis for building up the, the, err the, what you get…
211. RS Each activity rate.
212. Tim Each activity rate so, you know, until you get to 1089.
213. RS Yeah. For, for example, you know, 1089 err you’ll have a, a VRS operative, a VRS chargehand, a supervisor, a barrier rig, a [inaudible 0:42:38], you’ll have, you know, err other equipment or other, err you know other equipment in there. I mean that’s how we’ve built it up, but the rates, the, err the rates that, err for a operative, for a, a barrier rig are average rates from these five AD areas. And Phil, you know, the AIWISU, that was ASC world, all the rates, the planned, reactive or the information that’s on the website and SORT is all purely based on what we are planning in future, it’s all…
214. PS No I, I get that and, and I’m trying to do this one stage at a time to sort of understand the process. You know, again ASCs are still in force, they’re the rates that I have and I’ve been working with, they don’t change overnight just because the 24th of June you put a new process in, doesn’t mean to say all of a sudden um an AIW that cost £20 odd an hour…
215. Tim [Inaudible 0:43:32] we are applying these rates to the ASC contracts as well. I did say…
216. PS Yes, um I… Well, blurgh, yes, it has sort of changed a little bit. Um I think 6 and 8 are now going to be subject to it. Um…
217. Tim More like 3 and 9, yes.
218. PS Yeah, I, I knew of them, but, but not 6 and 8, that was a, that’s a new addition. Um…
219. Tim Well that’s [right 0:43:53]. So, but, you know, these rates are being applied across the board.
220. PS No, I… Yes, I think there’s a trial, isn’t there, for three months, and then…
221. Tim Well yeah, you know, but, but I mean, but this is the, this will be the position and it’s… In a sense it’s not a trial, it’s just phase 1 of a ro-… It, it is, it is the rollout, you know? I mean, I mean we, we are, obviously, you know, we’re, we’re very pleased to engage with you on, o-on, you know, understanding these, these rates and, and, you know, seeing if there are any, are any gremlins in here of which we, [inaudible 0:44:21] obviously needs to be looked at…
222. RS Yeah.
223. Tim … err and we’ll, you know, and, and we’ll gather this all together, whatever comments we get from you, from anybody, from any other loss adjuster or insurance company, and we, with a view to in three months’ time making any alterations we need to make but, you know…
224. RS To the rates, yeah.
225. Tim To the, to, to the rates we, that we, we think we need to make, but basically err, you know, err but basically this is it, um and err so… Yeah.
226. PS No, I, I, I get that. Um, you know, it’s…
227. RS [Inaudible 0:44:54] we had to start somewhere Phil…
228. PS I agree, perfect.
229. RS … and we’ve, we’ve, we’ve come up with a process, we’ve started. Err, you know, the… We always would have that distinction, we have planned works, we have reactive works. Planned works is based on the average rates as, as, as we’ve discussed. And again, you know, we, we can take this through the process in detail. The reactive is, yes we need, err we might, because the, given the unplanned nature of the works, yeah, err and the, the way the contract, err the AD contracts work, err it’s, it’s, it is whatever is the cost to re- to repair gets charged to us , we’ve come up with a, err with a rate we believe would cover err that charge nationally err, and err, and, and that’s what we have started with. And…
230. PS Yes, I don’t see a great differentiation between AD and ASC. I, I don’t see the great differentiation. I mean an ASC should have been cost plus the uplift, and to us it should have been cost plus a third party claims overhead uplift, so the idea of something being what it actually cost doesn’t, doesn’t sort of … it’s not unusual, it’s not alien to me, it’s simply that when I’ve looked at this new process, I’m looking at this and thinking, my initial reaction was, ‘Why do you bother?’ you know, you have a perfectly good system in ASC, the fact is you’re not using it because, well, the fact is it’s not being complied with. Under an ASC we have defined costs, we have the base rate to which you add an uplift, what could be simpler than that, than the schedule of component parts to which is added an uplift, 8% to you guys or 7.41%, and then 25.29% as a maximum to us? You know, the system is very simple, the old system is very simple, uncomplicated, sets everything out, unfortunately just wasn’t complied with.
231. RS Err so when, when you say… I thought the issues rose, you know, that all the issues relating to the claims and err some being challenged, some not being paid, some being delayed, was a result of what’s happening out there at the moment, i.e. the, the current system of [inaudible 0:47:12]…
232. PS No, you see, I think you’ve misunderstood. You’ve mis- you’ve, you’ve… No, that’s, that’s not correct, and I’ve, I’ve looked at what you’ve written, what you’ve put online, and again this comes… It comes from the wrong perspective. There are, there are two processes under the ASC which are under £10k and over £10k.
a. Under £10k the issue has not been transparency with regard to the work that’s been done but it’s transparency with regard to the rates and how they’ve been calculated and the fact that they’ve not been applied in relation to the contract.
b. Over £10,000 where they’re billed to Highways England, we very rarely have an issue with the rates. The problem we have, or what we’ve sought to do is to confirm you’ve applied the right rates, those appropriate to the date and time.
233. The rates themselves are generally reasonable, we consider them to be reasonable. The problem you’ve got over £10,000 is the cock ups, for want of a better word, by your contractor in billing and the duplication of charges, incorrect charges because they’re rubber stamped for payment. It’s the process thing, I believe, with Highways England that they need to get right but which I’ve effectively been told is, is too, too costly. So, coming at this from a, ‘it’s the rates that is the problem’ is not entirely correct. Below £10,000, we know what the rates should be, they’re just not used and there’s intransience-intransigence and obstruction to stop us making sure the appropriate payments are made. Over £10,000 the issue is your end, this is, and this is – my understanding, from my experience, and that is you’re paying too much.
234. RS Yeah, I, I… I mean, as, as you have just said Phil, you know, there’s a fee of 7.41 or 8, and there’s another uplift of 25%. In the planned rates there is no uplift of 25%, you’re getting the best deal at the moment. [Inaudible 0:49:08]…
235. PS It… No, no, no, no, that’s, that… You can’t say that. You know, you can’t say that because I don’t know, and I can’t criticize with any conviction because I don’t know how they’re made up because I haven’t been provided the breakdown, but you’re not telling me that you, you know, if you’ve taken these from the figures that have been presented, if they’re a mean then they will include the mean of the cost and uplift.
236. RS There is no uplift .
237. Tim There’s no up- there’s no uplift.
238. PS Okay, so you’ve taken from the costs, you’ve taken the mean, that’s, that’s nice to hear. You know, I need more details, and, and I will accept that. You know, when I’m looking at these and when I’m doing the calculation, I will need to bear that in mind.
239. RS Yeah.
240. PS It, it’s very interesting to see where this all comes from, you know, where, where all these figures come from, but I know that Kier are one of the more expensive, and therefore when I’m looking at their rates… So for example I know you’re, you’re talking barrier repairs, we’re talking… There’s two aspects to a barrier repair – one is get in place the traffic management, and the second one is get the, the repair crew in. We know that there are supervisors, operatives and there’s plant, there’s generally one supervisor, there are two operatives and one item of plant. The supervisor comes in at about £35 an hour max, operatives about £20, plant’s about £48, that gives me a total of somewhere in the region of £125 an hour which for a 12 hour shift is going to give me about, I think about £1,500.
241. So, when I’m looking at the planned rate I’m saying to myself, ‘Yeah, you know, it’s, it’s, it, it’s getting there, um, you know, it’s, it’s in about the, the sort of area that I want to see,’ but I can’t yet, and this is going to take me time, get my head around the planned rate and reactive rate because these have, these have thrown me a little, because at the moment we do not see any differentiation on any of the claims we see. So, for example Kier will not send us a bill in and say, ‘We’re doing these because it fell within some planned work using our planned equipment and therefore it’s at the lower rate.’ We, we get all at one, all, all at one set of rates so I, I need to better understand and see how these are built up um to understand where the planned rates would fit in this and whether you are in fact going to get the majority, you know, it, it will be a significant proportion.
242. RS Well I’m…
243. Tim Yeah.
244. RS … I’m happy to sh- err take you through how these individual rates have been built.
245. PS Lovely. I’m, as I say I’m in the process of doing something for Martyn. I, I want it to be comprehensive because I want to make sure that this is um, you know, that, that we get this right first off. I don’t like the to-ing and fro-ing, it makes me look like a nutter, which I really do not want to come across as. you know, I have everybody’s best interests at heart because ultimately, we want to be able to settle these matters promptly and reasonably. I get reasonably is, is a variety of things for a variety of people.
246. Tim, when, when, when you quote that to me it’s, it’s all well and good, it’s, it’s, it’s a simple thing to say, but unless somebody gives me some rates, unless I’m shown or, or given the alternatives, it’s very difficult to make comparison, and certainly I think you’re looking at the Godsmark judgment um, you know, the judge was crying out for another set of rates against which to compare. Now, fortunately it wasn’t one of my cases ’cause I could have used the A1 set of rates, but, but they are out there, um it’s just that we have difficulty getting hold of them, and of course people like me are seen as experts and you guys don’t want me to give evidence in court. So, you know…
247. Tim [Inaudible 0:52:55] more than happy for you to give evidence in court, Philip .
248. PS Ah, Tim do…
249. RS [Inaudible 0:53:02]
250. PS … your, your lawyers, your lawyers block me every time. [Laughing] They just block me.
251. Tim I, I don’t see how, I don’t see how we can block you, but I mean it’s a…
252. PS They, they refer to me as an expor- expert and get the judge to kick me out. I’ll drop you a brief line on that, but I don’t, CECAis, is not… I have an email from CECA that I will send to you, let me make a brief note of that, and they’re, CECA are actually saying to me, ‘These aren’t the appropriate rates to use.’
253. Tim Okay. Well anyway Philip, you know, the rates, even the reactive rate is not a CECA rate, it’s less than a CECArate, so…
254. PS And it will be because it, it doesn’t fit the circumstances. CECA is, CECA is just not for this type of work and I think that’s, that’s reinforced by the, by the correlation with planned rates, and that’s why I’ve, I, another reason I find it very interesting um…
255. Tim Well, I think, I mean I think where… Yeah, we’re going to have to sort of… We, we can’t, ’cause I’ve got another, I think we’ve all got [meetings 0:53:57]…
256. PS No, no, no, that’s fine, it’s, it’s…
257. Tim But, but, I mean I think this has been helpful, and I think where, where I’m getting to, just on, just… I think, I think that from your perspective you’re, I think you are fr- err from what I’m hearing I, I think we’re broadly in the same ballpark in terms of the planned rate, err, err I’m getting the impression that um you see where we’re coming from on the planned rate, err the numbers that you were talking about just err a couple of minutes ago would possibly, and actually they, they, they are very much in line with our, with, you know, wi-with the, with the planned rate.
258. So, I mean I think the issues you’ve got are over the reactive rate, um which in a sense I can understand because, you know, this is a rate which we have, in a sense we have created, um which is designed to sort of cut through err, err the arguments. It, it is, it, you know, it has got to be by definition it has still got to be a reasonable rate. If, if everybody, you know, if everybody considers it to be unreasonable, we do need to look at it. At the moment, we think it’s reasonable. Um, you know, the, the fact that it’s twice the planned rate, um but we still think it’s reasonable.
259. But, you know, we are, we are in listening mode, um and um, and it, you know, and it does key off, I think where there is a, where there’s a, a, a difference of view err is this, is actually in a sense the way that this works on the ground in terms of, you know, is the equipment and labour there able to be used on this reactive work? We’re saying to you, I mean you’re saying it is, we are saying, ‘No it, no it isn’t, it has to be procured.’ Um now, you know…
260. PS Hm.
261. Tim … obviously we can both take that away and we will but, you know, that’s, that’s the, that is the, the basis upon which this has been constructed so, you know, that, that seems to be the [inaudible 0:55:44].
262. RS Yeah, and, and it, you know, it may be worth Phil having a [view 0:55:47] of the AD contract which I think we can, they’re publicly available?
263. Tim Yeah.
264. RS To understand, you know, what we will be charged, because at the end of the day it’s the reasonableness of err is basically what we will be paying to deliver that damage repair. [Cough]
265. Tim Yeah.
266. PS Yes. No, I, I, I get that. There is um, I go back to the preamble with your schedule of rates and that you are, you are giving insurers the, the benefit of the, um the rates that you’ve managed to, to secure.
267. RS Yeah, the [inaudible 0:56:20].
268. Tim We have, yes. Yeah.
269. RS Um we’re [inaudible 0:56:22]
270. Tim We’re, we’re going to be, we’re going… Sorry, we’re going to be kicked out. We can continue [inaudible 0:56:29]. Err Philip, err, err do you think we’ve covered enough for today?
271. PS I think so. I, as I say I’m, I am preparing something for Martyn. I will take [laugh] I will review it all in, in relation to what we’ve, what we’ve said today. Um all I will say is that, you know, if you’re paying those reactive rates um keep an eye on, on what’s being presented um because I think that is going to give you a headache. But look, let, let me review that and come back to you. I don’t want to take up any more of your time, it is appreciated.
272. RS [Inaudible 0:56:55].
273. Tim And that’s been a helpful conversation, thank you very much.
274. RS Excellent.
275. PS Quite alright.
276. RS Thank you Phil.
277. Tim Thank you, bye bye.
278. PS All the best. Cheers guys.