New highway code brings improvements

The public accounts committee hears of a vast improvement in maintenance projects on the nation's motorways, but is concerned that the Highways Agency is still not obtaining best value for money from contractors

While travel on the country's motorways has become less stressful for many motorists due to improvement in the Highways Agency's maintenance work, there is still concern about value for money.

The Committee of Public Accounts (Pac) has examined the extent to which the Agency is an informed customer and is challenging contractors to deliver value for money and better outcomes for road users and for those who work on the network.

It found that in many respects, the Agency's letting and management of maintenance contracts, known as 'Managing Agent Contractor' (MAC) contracts, is not a bad story.

The contract largely follows best practice and offers the potential to secure value for money, Edward Leigh, chair of the committe, told MPs.

Since its introduction, he says, in his report out today, there has been greater certainty over delivery of maintenance schemes within budgets and to timescales. Journey time reliability on the strategic road network has steadily improved since summer 2007 and the timing suggests that Agency interventions have contributed to the improvement.

There are still some serious shortcomings, however, which put value for money at risk. In particular, the Agency lacks basic facts about what it gets in return for taxpayers' money and by how much the costs of some items such as road resurfacing have increased.

Drive for efficiency

The committee found that it has failed to exploit cost information to benchmark prices and drive efficiency improvements, and has lacked the quantity surveying and commercial skills required to manage the contracts effectively. These shortcomings are especially worrying given overall increases in costs and the wide variability of costs between areas.

"The Highways Agency's planned highways maintenance work has probably contributed towards the recent improvement in journey time reliability on the strategic road network. It is the value for money of the Agency's spending on such maintenance that is in serious doubt," said Leigh.

"The basic point is that the Agency does not know enough about what it is getting for the taxpayers' money it spends on maintenance across its whole network. Without a better understanding of the costs of network-wide activities - such as resurfacing - it cannot hope to drive those costs down.

"The extent of the variation between different Agency areas in the unit costs of particular types of maintenance jobs is of concern to this committee. We expect the Agency to find out why it is spending substantially more in one place than another and whether the differences are justified. The ordinary taxpayer would not hesitate to challenge prices for jobs on their own homes, when higher than expected; the Highways Agency should be no less vigorous in challenging its contractors"

While competition for road maintenance contracts appears to be holding up, Pac warned that there is a risk that the Agency is too reliant on the procurement stage to deliver performance improvements rather than through the proactive management of contractors during the term of the contract.

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