What does an AIW earn to justify a charge of over £130 / hour?

AIW’s – Asset Incident Watchmen are employed by Kier Highways Ltd (‘Kier’) to attend emergency incidents, fill pot-holes, cut grass and litter-pick.

Since 10/2015 Kier has sought to convince us their AIW’s earn, with bonuses, over £60,000 / annum.  They documented the breakdown – AIW Salary & Training Costs – to justify a charge of £73.05 / hour in Area 9 and £70.32 / hour elsewhere – for Highways England and TfL.

To the above costs, drivers, fleets, hauliers and insurers (Third Parties) could expect to see increases, ‘multipliers’ after 5pm of a weekday because Kier informed us:

  • AIW’s work 8am to 5pm weekdays, not shifts
    • after 5pm of a weekday, AIW’s were paid a 1.5x uplift
    • of a weekend an AIW was paid double time

But this made no sense:

  • prior to 10/2015, AIW’s appeared to be paid just over £30 / hour
  • prior to 10/2015 AIW’s were less expensive than the Damage to Crown Property (DCP) manager
  • Highways England was paying about £25 / hour for an AIW

Furthermore, AIW’s explained:

  • they do work shifts
  • they do not get paid the multipliers after 5pm of a weekday or weekend
  • overtime was at a flat rate

If AIW’s do work shifts, why has Kier documented hours in support of their ‘do NOT work shifts’ statements:

Kier demands payment of these uplifts on rates but it would appear they are not costs the contractor incurs.

2017, we saw a slight reduction in the hourly rate claimed for an AIW apparently because training costs were reduced.  However, this still sees a rate of over £65/hour subject to a multiplier because it is claimed, the operatives work 8am to 5pm.  The rates presented are, therefore :

  • @ 1.5x – £97.50 / hour after 5pm of a weekday
  • @ 2x    – £130 / hour of a weekend

18/09/2019 To: tim reardon @ highwaysengland.co.uk
Subject: FW: Kier charges

Tim,

In early 2016, as below, you wrote AIW’s were charged to HE at £70.32 / hour.

The following is from a presentation slide when ISU’s became AIW’s (2014) and details salary, hourly rate and overtime (I have included the text below).

This conflicts with emails, statements and evidence given to the Court

I would appreciate your comments

Philip

Text from above slide:

Terms and conditions:

New EM Highway services (subsequently acquired by Kier) Employment contract

  • Salary    £35,000 per annum (inclusive of AIW standby allowance)
  • Holiday 24 days plus 8 Bank Holidays (after 3 years Service 1 additional) holiday, then after 5 years 1 additional holiday up to 29 holidays
  • Pension Employer contributions matching Employee’s upto max of 6% of basic annual salary
  • Overtime flat rates basic pay (£14.95 per hour)
  • Call out £51.50 per call out to cover up to 3 hours and over 3 hours £14.95 per hour or pro rata rate for each 30 minutes worked
  • Notice period     1 months notice by employee

11/04/2016 From: tim.reardon @ highwaysengland.co.uk

Dear Mr Swift

Referring to your email of 6 April, the rates quoted were confirmed to us by Kier as the rates they charge Highways England and were current as at December 2015.

The methodology for calculating the charges is that applicable to an NEC3 contract including both lump sum and cost reimbursable elements.  This methodology is well-recognised in the market.

The concept of the multiplier is used for the purposes of presenting the costs of sub-threshold claims to insurers and is the approach developed by Kier with help from the insurance industry.  In over-threshold claims, Highways England seeks to recover the actual costs of undertaking the repair.

We do not accept your comments in relation to the audit.


06/04/2016 To: Reardon, Tim
Subject: RE: Kier charges

I am currently away from the office and will address the issues upon my return next week.

However, I continue to await confirmation of the charges KHL make to HE.  I am aware of the recent charges raised to insurers.  Please confirm that you are stating the following apply to HE i.e. that this is what HE are charged:

 

  1. a)           AIW staff hourly rate: £70.32
  2. b)           AOW vehicle hourly rate: £35.53
  3. c)           CO1 Standard Beam:£41.52

I will send you examples that contradict this next week.  It would help to know the date from which the above charges, if to HE, commence.

It is the charges made by KHL to HE for:

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.

I am seeking; the rates for the above facets.

Please supply the methodology to enable me to better understand what you are conveying.

Also, are you stating that HE are charged the multiplier by KHL?

In the latest I have from KHL, they do not charge a multiplier but charge HE for a complete shift.  Indeed, KHL state that HE would have been charged more than insurers in the specific case.

Your email is unclear and does not enable me to make informed decision.

Multipliers being ‘developed in conjunction with the insurance industry’ is illogical and therefore highly unlikely. Multipliers are said to be those KHL pay their staff (questionable) … why would insurers have any say in this?

I feel that I am subject to semantics.  I have not asked if insurers are being overcharged i.e. currently.  The audit has looked at historical matters.  Whilst I have issue with current matters, the audit is flawed with regard to historical for very obvious reasons which it appears I need to evidence further.

I do not expect HE to present anyone with charges raised by KHL for above threshold matters from 2014 / 2015 when a flawed methodology was used and profiteering appears to have occurred.  For HE to seek the charges would be inappropriate and potentially unlawful given what has occurred.


05/04/2016 From: tim.reardon @ highwaysengland.co.uk
Subject: Kier charges

I refer to your letter of 24 March.

The current charges levied by Kier are as follows:

    1. a) AIW staff hourly rate: £70.32
    2. b) AOW vehicle hourly rate: £35.53
    3. 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.