11/12/2019 To: Jim O’Sullivan @ highwaysengland.co.uk Colin Matthews @ highwaysengland.co.uk; Tim Reardon @ highwaysengland.co.uk
Subject: Exaggeration & Misrepresentation – Kier Highways / Areas 6, 8 & 9 Rates
Dear Mr O’Sullivan,
I have written to you previously being concerned about rates presented by Kier Highways. 17/04/2019, I received an email from Tim Reardon (attached)
I have compared the rates Kier use to bill third parties for damage to the strategic road network with those Kier use to bill Highways England. You are aware of this, I presented an example to Mrs Green 21/06/2017.
Whether or not there is a published or available schedule of rates among service providers for unplanned / emergency work is a distraction, irrelevant insofar as Area 9 and my concerns/allegations are concerned. I accept repair costs are a bespoke calculation, repair charges (rates) are not; they are consistent.
Unplanned work may be less efficient than planned repair work, more costly. But this applies to above and below threshold; the hourly rate of an operative is unaffected by the extent of an incident, the number of hours allocated will differ.
Some ASC’s specify repair work is to be charged by reference to the Defined Cost plus Overhead. We appear to agree on this. The process applies in Areas 6, 8 and 9 (Kier) but is not followed.
The ‘defined cost’ a.k.a. base rate, actual cost etc. is to be the same to a TP and HE, it is the uplift that differs. Therefore, the difference in cost to HE and a TP should be the difference in uplift. In the Area 9 example provided (2017) the ‘fee’ (uplift) to HE was 6.5%, the Third Party Claims Overhead (TPCO) to a TP was (is) 25.29%. the difference is 18.79%.
I remain surprised KPMG were unable to explain that, in charging HE about £25 / hour for an operative and a TP over £70 / hour for an operative, the process was NOT being complied with. How do Kier arrive at £70 by applying 25.29% to 25?
Mr Reardon also cited a Judgement writing:
In any event, it does not actually matter what Highways England is charged for a repair. As Judge Godsmark QC said in the Hughes case:
“…in a case of chattel damage the diminution in value is the recoverable loss . The Claimant is not obliged to repair the chattel to recover the loss, nor does it matter if the Claimant can get the repair done at less than cost. In these cases Highways England is entitled to recover the reasonable cost of repair of the damaged barrier – not the actual cost.”
Mr Reardon appears to have overlooked HH Godsmark’s pertinent, statement:
It would be odd if a tortfeasor was liable to Highways England for diminution in value of a damaged chattel in one sum if sued by Highways England itself and in a different sum if sued by Highways England via BBMM*. Accordingly, I find that clause 87.2 authorises BBMM to claim in the name of Highways England the sum which Highways England could recover from the tortfeasor.
Yet this is precisely what is occurring; ‘mates rates’ to HE, inflated rates to a TP . Furthermore, your contractor, in the name of HE is misrepresenting facts to Third Parties and the Courts to recover these sums. Kier has gone so far as to document fraudulent uplifts on exaggerated rates in the ‘insurers guide’. A TP can see an operative charged at over £100 / hour by the application of multipliers the contractor does not incur falsely states it meets.
Please confirm you will put a stop to the exaggeration and fraud with immediate effect and have Area 9 / Kier:
1. Apply actual costs
2. Not use uplifts
3. Remove ‘planning’ which is addressed in the TPCO and should not be charged separately
When is the greater transparency around repair costs going to occur?
The 16/12/2019 response can be read here