160405 Tim Reardon Writes About Kier Rates

From: Reardon, Tim [mailto:tim.reardon@highwaysengland.co.uk]
Sent: 05 April 2016 18:26

Subject: Kier charges

Dear Mr Swift

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.

We have noted your comments on the audit. We disagree with them. We believe the
audit was conducted properly and we support its findings.

As I have said before, Kier is responsible for justifying to you the sums claimed. If they
cannot satisfy you have various legal avenues open to you. Highways England (and we
think Kier) has supplied you with the information you should need in order to make an
informed judgment.

Yours sincerely
Tim