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Pricing Methodologies

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Dear Highways England Company Limited,

How many pricing methodologies has Kier Highways Ltd used over the past 5 years when charging Highways England for ad hoc work or when repairing damage to the highway, barriers or signage?
What were the pricing methodologies?
When did they come into effect?
What increases in charges have been agreed year on year?

Yours faithfully,

Sarah Joseph

Highways England, Highways England Company Limited

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If you are reporting a real time issue which requires immediate attention
please call the Customer Contact Centre on 0300 123 5000. 

 

A map of the roads for which we are responsible can be found here
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NDD C DST, Highways England Company Limited

1 Attachment

Dear Ms Joseph

 

Thank you for your freedom of information request dated 06 March 2016.

 

Please find attached a response to your request.

 

Regards

 

Mrs D Davies, OTD - Directorate Services Team Manager

Highways England  | The Cube | 199 Wharfside Street | Birmingham | B1 1RN

Web: http://www.highways.gov.uk

 

 

show quoted sections

Mr P Swift left an annotation ()

Dear Ms Joseph
You may wish to seek clarity about the enquiry you made, to receive some reassurance about the accuracy or more detail.
The statement:
“Please note that Kier Highways has only been involved in these contracts since it bought out the previous service provider (EM Highways) in August 2015.”
appears flawed.
It does not appear you have asked about Kier Ltd, but specifically Kier Highways Ltd (KHL). 01611136 : KIER LIMITED acquired 05606089 : KIER HIGHWAYS LIMITED in 2015. You may wish to review the likes of:

http://www.managementtoday.co.uk/news/13...

http://www.londonstockexchange.com/excha...

http://www.telegraph.co.uk/finance/newsb...

05606089 : KIER HIGHWAYS LIMITED (KHL) were until at or about 16/10/2015, EM HIGHWAY SERVICES LIMITED, prior to which they were ENTERPRISEMOUCHEL LIMITED.

KHL have a parent company 01686040 : MOUCHEL LIMITED and an ultimate holding company 02708030 : KIER GROUP PLC whose share history can be viewed on-line having fallen from about 1,600 to about 1,200 in the past year, see:

http://www.kier.co.uk/investor-relations...

As Kier Ltd are, in 06/2015, reported to have acquired ‘Mouchel’ it seems unlikely the August 2015 date you have been supplied is in fact correct. See:

http://www.worldhighways.com/categories/...

I am intrigued by the response you have been supplied in respect of the question:
Q:
What increases in charges have been agreed year on year?
A:
In accordance with the contracts, the prices are adjusted by the contract price adjustment for inflation on an annual basis.

The answer you have received does not appear to address your question. You appear to have asked for the increase, not how they are calculated.

This aside, the answer does not sit well with me. I have raised questions with KHL for in excess of a year due to the manner in which they calculate their charges. In late 2015 KHL abandoned their pricing process due to concerns raised, issues that remain ongoing.

I also have a recent email from Highways England which suggests the charge they are paying for a specific type of worker has significantly increased, well beyond any inflation index. HE were, last year, paying less than £50 for an AIW (as an example). Now, it appears they are paying more than £70 … a 40% increase! An AIW attends initial incidents (emergencies – which I note is referred to in the reply you have been supplied), picks litter fills pot holes etc.

£70 / hr equates to an annual cost of £160,000+ / annum.

Should you require further information, please email pswift[at]cmaclaims.co.uk

Regards

P Swift

Dear NDD C DST,

Please see above.
Please explain the relevance of the ‘August 2015’ date.
Did Kier Highways buy out EM Highways
Who are Kier Highways
Were Kier Highways involved in the contracts since August 2015
I asked about Kier Highways Ltd
Who is providing me correct information, Highways England or P. Swift
Thank you

Yours sincerely,

Sarah Joseph

Sarah Joseph left an annotation ()

Thank you for your email. I will send a pm

Mr P Swift left an annotation ()

Further to your email. We have been advised by Highways England:

“the service provider is reimbursed the actual costs they incur in carrying out the works, plus an additional fee. This is used where the nature or scope of the work to be carried out cannot be properly defined at the outset and the risks associated with the works are high, such as emergency work.”

The response you have received suggests that the rates were set at the commencement of the contract, that these “are adjusted by the contract price adjustment for inflation on an annual basis.”

The cost reimbursable approach is how we understand HE are charged by KHL. The figures we have seen for the ‘additional fee’ appear to be:

initially 6.5 %
more recently 7.38 %

However, the response you have received does not indicate any other charging methodology (we see no reference to ‘1153’ – see my pm) and General Counsel for Highways England has recently stated:

“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

General Counsel subsequently clarified in an email to us:

“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 above rates at ‘a’ to ‘c’ appear very different to the ‘actual costs they incur in carrying out the works, plus an additional fee’ charges; they appear to contradict one another.

Good luck achieving clarity. I am updated about additions to your request by the whatdotheyknow web site and will monitor them.

Regards

P Swift

Dear Highways England Company Limited,

Please pass this on to the person who conducts Freedom of Information reviews.

I am writing to request an internal review of Highways England Company Limited's handling of my FOI request 'Pricing Methodologies'.

I have had no reply
I am receiving differing information
I have not been given all the information

A full history of my FOI request and all correspondence is available on the Internet at this address: https://www.whatdotheyknow.com/request/p...

Yours faithfully,

Sarah Joseph

Highways England, Highways England Company Limited

This is an automated response:

 

Thank you for your email to Highways England.

 

If you are reporting a real time issue which requires immediate attention
please call the Customer Contact Centre on 0300 123 5000. 

 

A map of the roads for which we are responsible can be found here
[1]http://www.highways.gov.uk/publications/... If
the road you are interested in is not on this map it will fall under the
jurisdiction of the local authority.  You can find details of local
authorities using the search facility on the gov.uk website
at: [2]https://www.gov.uk/find-your-local-council

 

If your email does relate to an issue on Highways England's network it
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Yours sincerely

 

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FOI Advice, Highways England Company Limited

Dear Sarah Joseph

Thank you for your email dated 27 April requesting an internal review in relation to the response you received from Highways England.

I acknowledge your request for an internal review of your Freedom of Information request.

We will respond by twenty working days from the date of receipt of your request for an internal review, that is 26 May 2016.

Please remember to quote reference number 737,927 in any future communications.

Yours sincerely

Layla Beckett, Freedom of Information Officer
Highways England | Piccadilly Gate | Store Street | Manchester | M1 2WD
Web: http://www.highways.gov.uk

show quoted sections

Richard Jones left an annotation ()

have you seen:
http://www.contracthireandleasing.com/ca...
Annotation above form 'Swift' and 'Swift' quoted at link
R Jones
These might sound like cherry-picked and isolated incidents, but CMA’s managing director Philip Swift says: “I don't not make these comments lightly, but certain Highways England contractors seem to be acting in an informal environment. The tail appears to be wagging the dog, particularly where contractors have agreements to retain claims under a certain threshold, commonly £10,000.

Sarah Joseph left an annotation ()

Thank you to those who have added to my request. I have seen Kier Highways Ltd use two types of pricing for the same work. The systems are so different that the reply from Highways England which I have copied below makes no sense so I am appreciative of any help.

The dates at ‘3’ indicates charges were set the start, that there is a set of fixed rates.

The only change seems to be at ‘4’ when, on an annual basis, an inflation rise occurs. But I would not expect the change to be more than 2% yet the changes I saw in papers are much different to this.

3a and 3c seem to be similar but ‘additional fee’ could be anything. Can anyone tell me what it is?

I phoned Kier Highways Ltd and was referred to their DCP team who would not help and told me to contact Highways England because they Kier Highways) did not have to disclose anything by law.

Sarah Joseph

Taking each of your questions in turn:

1. How many pricing methodologies has Kier Highways Ltd used over the past 5 years
when charging Highways England for ad hoc work or when repairing damage to the
highway, barriers or signage?
Kier operates a number of maintenance contracts for Highways England; in the north west region (Area 13), the midlands region (Area 9), the south west region (Area 1) and the south east region (Area 3). More information on how we manage our network can
be found on the GOV.UK website: https://www.gov.uk/government/publicatio...

For Area 1 and 13, services are delivered under a Managing Agent Contract and
services for Areas 3 and 9 are delivered under an Asset Support Contract. More
information on these contracts and on how we procure Highways England contracts can be found via the following link:
https://www.gov.uk/guidance/the-highways...

2. What were the pricing methodologies?

The pricing methodologies that are used for both MAC and ASC contracts in repairing damage to the highway, barriers or signage are:

a) Lump sum: our maintenance contracts are structured so that our service
providers are paid a "lump sum" for a wide range of general maintenance duties
(such as pothole repairs);

b) Schemes: where larger repairs and improvements are packaged into more
detailed and scoped programmes of work;

c) Cost reimbursable service: the service provider is reimbursed the actual costs they incur in carrying out the works, plus an additional fee. This is used where the nature or scope of the work to be carried out cannot be properly defined at the outset and the risks associated with the works are high, such as emergency work.

3. When did they come into effect?

The Kier contract access dates are as follows:
Area 1 - July 2010.
Area 3 - November 2013
Area 9 - July 2014.
Area 13 - July 2010

Please note that Kier Highways has only been involved in these contracts since it
bought out the previous service provider (EM Highways) in August 2015.

4. What increases in charges have been agreed year on year?

In accordance with the contracts, the prices are adjusted by the contract price
adjustment for inflation on an annual basis.

Richard Jones left an annotation ()

this might help understand what is going on
https://www.whatdotheyknow.com/request/c...
RJ

FOI Advice, Highways England Company Limited

1 Attachment

  • Attachment

    Highways England Internal Review CRS 737 927 Pricing Methodology Sarah Joseph.pdf

    214K Download View as HTML

Dear Sarah Joseph

Please find attached a response to your request for an internal review.

Yours sincerely

Layla Beckett, Freedom of Information Officer
Highways England | Piccadilly Gate | Store Street | Manchester | M1 2WD
Web: http://www.highways.gov.uk

show quoted sections

Mr P Swift left an annotation ()

Sarah

Highways England (HE) are writing at a cross purpose. I have never suggested that the information was incorrect or lacking, I have suggested you seek clarity. You appeared to be very specific; you asked about a Limited company, a legal entity in its own right – Kier Highways Ltd (KHL) Company number 05606089.

HE responded about ‘Kier’, they were non-specific. That they wrote about specific areas indicates they are referring to KHL.

But who are ‘Kier Highways’? I believe you (and I) are owed an apology because it seems HE have unnecessarily complicated the history, likely innocently.

'Kier Highways' did not buy out EM Highways. Kier Group PLC ultimately acquired EM Highway Services Ltd. EM Highways Services and Kier Highways Ltd are the same company, the latter being the new name of the former. Currently KHL have a parent of 01686040 : MOUCHEL LIMITED and in turn an ultimate parent of 02708030 : KIER GROUP PLC.

Therefore Kier Highways Ltd have been involved in the contracts since before August 2015 albeit when being differently named:
ENTERPRISEMOUCHEL LIMITED
EM HIGHWAY SERVICES LIMITED
and current KHL.

The latest response is no less confusing and I would suggest it is ignored. If you need the company history, you will likely find the following link helpful:

https://beta.companieshouse.gov.uk/compa...

the August date is irrelevant save that it is about the time KHL was acquired after which the name changed to KHL. To correct HE’s response:

Kier Ltd has been involved in these contracts since it bought out the previous service provider (EM Highways) in August 2015.

Kier Highways Ltd (KHL) Company number 05606089, the company about which you enquired, has been involved in the contracts since they were entered into under their previous trading name.

References to ‘Kier Highways’ are misleading. Any reference to a Limited Company, should be clear and I would suggest, include the company number for the sake of clarity.

You appear to be awaiting a response to:

• What increases in charges have been agreed year on year?

The response supplied was:

“In accordance with the contracts, the prices are adjusted by the contract price adjustment for inflation on an annual basis.”

It is unclear if this is just inflation or if the ‘contract price adjustment’ permits more. The information in my possession indicates that KHL are now charging HE £70 / hour for a service which, a year ago, was £35 or less. With inflation currently running very low, I am having trouble reconciling the information you have been provided with that in my possession.

P. Swift

Dear FOI Advice,
thank you all for your involvement.

please can you clarify:
What increases in charges have been agreed year on year?
the specific values agreed and that have occurred

Yours sincerely,

Sarah Joseph

FOI Advice, Highways England Company Limited

Dear Sarah Joseph

Thank you for your email received on 27 May 2016. In your Freedom of Information request, you wanted to know "what increases in charges have been agreed year on year? The specific values agreed and that have occurred".

For the purpose of clarity I would like to know which charges you are referring to . I will be unable to proceed with your request without clarification of the information you wish to receive.

Please note that if I do not receive appropriate clarification of your information requirements within three months from the date of this letter, then I will consider your request closed.

If you wish to discuss any of the above, please contact me. Please remember to quote reference number to your new FOI request CRS 738,807 in any future communications.

Yours sincerely

Layla Beckett, Freedom of Information Officer
Highways England | Piccadilly Gate | Store Street | Manchester | M1 2WD
Web: http://www.highways.gov.uk

show quoted sections

Dear FOI Advice,
i originally asked for -
How many pricing methodologies has Kier Highways Ltd used over the past 5 years when charging Highways England for ad hoc work or when repairing damage to the highway, barriers or signage?
What were the pricing methodologies?
When did they come into effect?
What increases in charges have been agreed year on year?

there have been annotaions made and i am asking what increases in charges have been agreed year on year with Kier Highways Ltd? The specific values agreed and that have occurred. it seems the contacts have been in place for years. for each contract what was agreed and what has occurred, the actual percentages or sums.

Yours faithfully,

Sarah Joseph

Yours sincerely,

Sarah Joseph

Dear FOI Advice,

when can i expect a reply.

Yours sincerely,

Sarah Joseph

FOI Advice, Highways England Company Limited

Dear Sarah Joseph

The due date for a response from Highways England is 4 July 2016 as you provided clarification on the 4 June.

Yours sincerely

Layla Beckett, Freedom of Information Officer
Highways England | Piccadilly Gate | Store Street | Manchester | M1 2WD
Web: http://www.highways.gov.uk

show quoted sections

Ops Dst, Highways England Company Limited

1 Attachment

Dear Ms Joseph   

 

Thank you for your request for information dated 04 June 2016 regarding
pricing methodologies.

 

My colleague has dealt with your request under the terms of the Freedom of
Information Act 2000. I have attached the response to your query on behalf
of Dawn Davies. I apologise for the delay in sending you this response.

 

Regards

 

 

Kayleigh Wedderburn
Correspondence manager, Highways England

 

 

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Mr P Swift left an annotation ()

Ms Joseph

Having read the response, no specific date is given for the commencement of ASC’s however, it appears the only question not addressed is:

• What increases in charges have been agreed year on year?

It appears that these started at 4.5%, increased to 6.5% and the latest we have seen are 7.38%. What I cannot say is when these were applied and whether they are contract / area specific.

As you have not sought the specific component costs, the ‘defined costs’ it is not understood why the annual increment cannot be disclosed.

Subject to your interest, you may wish to pm – as before.

ASC and MAC are used in the response and relate to ‘contracts’. ASC’s are clearly the current and I note the charges are explained as:

• Defined cost plus
• Fee

Additionally, the ‘defined cost’ is described as being calculated using ‘Notional Rates'.

These Notional Rates are defined as in essence:

• the average costs of a person, plant or equipment captured over a time period to provide an average hourly cost.

Subject to what you are seeking, I believe we can demonstrate this approach is likely being applied to the charges a contractor presents to a Public Authority but that it is not being applied to the charges the contractor is presenting to drivers, fleets and insurers.

For example, noting that the ASC has been in force since 2014, it makes no sense that Highways England were, during 2015, paying about £25 / hour for a particular type of staff member, yet now they claim to be paying £70 / hour. For this information to be correct, the ‘defined cost’ (reached by average costs) and / or ‘fee’ would need to have increased separately or jointly by well over 100%.

It appears pressing for the information is necessary, that the public purse is at risk.

Regards

P. Swift

Dear Ops Dst,
can you explain

Damage to Crown Property by third parties
is claimed upon either CECA rates or the principle of Defined Costs using Notional Rates. The latter, in essence, are the average costs of a person, plant or equipment captured over a time period to provide an average hourly cost. Given the rolling nature, the costs will vary over time though and this should not be confused with price fluctuation flowing from discount or inflation. As stated, the principles and rationale behind Defined Cost plus Fee is freely available on the internet.

where on the internet?
are you saying that for third party claims which I was aksing about the costs you use are an average. if so, what period of time did you specify for the average to be calculated.
is the average cost process you describe just for highways England claims or do your providers use another average if they bill the third party

I will write further on this sperately as I have seen a contract on this site

Yours sincerely,

Sarah Joseph

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Dear Highways England Company Limited,

please explain

Damage to Crown Property by third parties
is claimed upon either CECA rates or the principle of Defined Costs using Notional Rates. The latter, in essence, are the average costs of a person, plant or equipment captured over a time period to provide an average hourly cost. Given the rolling nature, the costs will vary over time though and this should not be confused with price fluctuation flowing from discount or inflation. As stated, the principles and rationale behind Defined Cost plus Fee is freely available on the internet.

where on the internet?
are you saying that for third party claims which I was aksing about the costs you use are an average. if so, what period of time did you specify for the average to be calculated.
is the average cost process you describe just for highways England claims or do your providers use another average if they bill the third party

Yours faithfully,

Sarah Joseph

Highways England, Highways England Company Limited

This is an automated response:

 

Thank you for your email to Highways England.

 

If you are reporting a real time issue which requires immediate attention
please call the Customer Contact Centre on 0300 123 5000. 

 

A map of the roads for which we are responsible can be found here
[1]http://www.highways.gov.uk/publications/... If
the road you’re interested in isn’t on this map it will fall under the
jurisdiction of the local authority.  You can find details of local
authorities using the search facility on the gov.uk website
at: [2]https://www.gov.uk/find-your-local-council

 

If your email does relate to an issue on Highways England's network it
will be passed to the relevant team within Highways England and they will
respond to you within a maximum of 15 working days.

 

If you have made a request under the Freedom of Information Act your
request we will respond to you within a maximum of 20 working days. Your
request will be dealt with in line with government guidelines:
[3]https://www.gov.uk/make-a-freedom-of-inf...

 

Kind Regards,

 

Highways England Customer Contact Centre.

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Birmingham B32 1AF |
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Highways England, Highways England Company Limited

Dear Sir or Madam

Thank you for your email to the Highways England Customer Contact Centre dated 21 October 2016 regarding "pricing methodologies.

Your enquiry has been given the reference number 18268524 please quote this in any future correspondence regarding this issue.

Your Freedom of Information request has been referred to the relevant team within Highways England and they will respond to you within a maximum of 20 working days.

Thank you once again for contacting us and I hope that we have helped with your enquiry. If you have any further questions regarding this or any other Highways England issue please feel free to contact us via our 24 hour Customer Contact Centre on 0300 123 5000. Alternatively, please e-mail us at [Highways England request email] or access our website http://www.highways.gov.uk where information on all Highways England policies and procedures can be found.

To help us identify and make improvements to our responses, I would be very grateful if you could please take our feedback survey by clicking here.

Kind regards

Safina

show quoted sections

Dear Highways England,

thank you

Yours sincerely,

Sarah Joseph

Highways England, Highways England Company Limited

This is an automated response:

 

Thank you for your email to Highways England.

 

If you are reporting a real time issue which requires immediate attention
please call the Customer Contact Centre on 0300 123 5000. 

 

A map of the roads for which we are responsible can be found here
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5. mailto:[Highways England request email]

Dear Highways England Company Limited,

please advise when i can expect the information

Yours faithfully,

Sarah Joseph

Highways England, Highways England Company Limited

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5. mailto:[Highways England request email]

Dear Highways England Company Limited,

16th April 2016, you stated:

Cost reimbursable service:

the service provider is reimbursed the actual costs they incur in carrying out the works, plus an additional fee. This is used where the nature or scope of the work to be carried out cannot be properly defined at the outset and the risks associated with the works are high, such as emergency work

It does not appear that this is correct.

The process you describe appears to relate to claims Kier present to Highways England, that your claims are priced using two components, the cost and a fee. The fee is a fixed percentage for all components.

But when Kier present a claim to an insurer a different set of rates are used that are higher but not at a fixed percentage for staff, plant and materials.

a) What process is applied when Kier present a claim to an insurance company?
b) How do the processes differ?
c) Why are Highway England charged less than insurers for the same staff, vehicles and materials?
d) Why is the presentation different?

You have placed a copy of a Kier contract on this site.

e) Where in the contract is it stated Kier are permitted to charge more than what they charge Highways England
f) Why does the contract say Kier must charge no more than the cost?

I originally asked

• How many pricing methodologies has Kier Highways Ltd used over the past 5 years when charging Highways England for ad hoc work or when repairing damage to the highway, barriers or signage?

• What were the pricing methodologies?
• When did they come into effect?
• What increases in charges have been agreed year on year?

I am referring to the charges made to insurers. I note Kier charges Highways England at cost plus a fee. I understand Kier have charged insurers in various methods since 2012. I ask to be provided:

g) the methodologies used – which does not require the disclosure of charges. I do not believe the exemption was right and ask why I was not given guidance amending my request.

h) I ask to be advised how the charges for AIW staff and AIW vehicles to insurers have changed since 01/01/2014 and the sums involved.

Yours faithfully,

Sarah Joseph

Highways England, Highways England Company Limited

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5. mailto:[Highways England request email]

FOI Advice, Highways England Company Limited

Dear Sarah Joseph
 
I refer to your request for an internal review on 21 October 2016.  Please
see below for my response to each of your questions;
 
 

* where on the internet?

 
The following is a link from the NEC Contract forum to a presentation
given by Turner and Townsend, this assists with understanding issues
around Defined Costs.
 
[1]https://www.neccontract.com/getmedia/347...
 
I would also recommend a search via the main NEC website 
[2]https://www.neccontract.com/
 
The NEC (New Engineering Contract) is an established standard form
contract and universally used by the construction industry. The ASC
Contract is an amended form of the NEC Contract.
 

* are you saying that for third party claims which I was aksing about
the costs you use are an average. if so, what period of time did you
specify for the average to be calculated.

 
A principle underpinning the NEC is that of payment by Defined Cost plus
Fee, this is built upon cost reimbursable activities, these are not actual
real costs but an average of the costs over time.
 
This is logical and to try to give a common place example, a site workers
costs may be seen as his pay packet on a Friday night but the cost to the
employer is more measured over time, he will have training courses through
the year, be issued new personal protective clothing or have absence due
to sickness and ill health. The costs need to be averaged over time to
capture his average “unit cost”. This is in essence what is done under the
NEC but is done so under prescriptive heads of cost. Note reference to a
male operative is incidental and for ease of reading.
 

* is the average cost process you describe just for highways England
claims or do your providers use another average if they bill the third
party

 
What is used is standard industry practice and the claims under Damage to
Crown Property use this standard practices to arrive at cost.
 
If you are not content with the outcome of the internal review, you have
the right to apply directly to the Information Commissioner for a
decision. The Information Commissioner can be contacted at:
 
        Information Commissioner’s Office
        Wycliffe House
        Water Lane
        Wilmslow
        Cheshire
        SK9 5AF
 
Yours sincerely
 
Layla Beckett, Freedom of Information Officer
Highways England  | Piccadilly Gate | Store Street | Manchester | M1 2WD
Web: [3]http://www.highways.gov.uk
 
 
 

show quoted sections

FOI Advice, Highways England Company Limited

Dear Ms Joseph
 
I refer to your request for an internal review regarding Pricing
Methodologies
 
Our response (ref 735,547) was sent to you on 6 April 2016 and your
request  for an internal review was received 20 November 2016. The ICO
guidance states that requests for an internal review should be submitted
within 2 months [1]https://ico.org.uk/for-the-public/offici...
 
Therefore, your request is outside the timeframe and I am unable to handle
your request under the internal review process.
 
If you are seeking information that you have not previously requested, I
would suggest that you re-submit those particular questions to us as a new
Freedom of Information request
 
If you are not content with my response, you have the right to apply
directly to the Information Commissioner for a decision. The Information
Commissioner can be contacted at:
 
        Information Commissioner’s Office
        Wycliffe House
        Water Lane
        Wilmslow
        Cheshire
        SK9 5AF
 
 
Yours sincerely
 
Layla Beckett, Freedom of Information Officer
Highways England  | Piccadilly Gate | Store Street | Manchester | M1 2WD
Web: [2]http://www.highways.gov.uk
 
 

show quoted sections

Mr P Swift left an annotation ()

You may need to make a new application. It appears you are the subject of bamboozling, misdirection.
The reference to ‘defined costs’ and ‘unit costs’ is unhelpful. ‘prescriptive heads of cost’ is unnecessary
Averaging out a cost is a reasonable approach. Referring to the costs as ‘not actual’ is odd; they are ‘actual’, they are simply not obvious. A pay packet is straightforward but what is not so clear is the other costs a contractor incurs.
But your question:
* is the average cost process you describe just for highways England claims or do your providers use another average if they bill the third party
Has allowed Highways England to be non-specific and reply ‘What is used is standard industry practice and the claims under Damage to Crown Property use this standard practices to arrive at cost.’
This does not answer your question.
Logic dictates that the average cost of a person, let’s take a Kier Highways AIW, would be the same no matter to whom you present the bill i.e. either your master, Highways England or some unsuspecting driver, fleet or insurer. It must surely matter not to whom you present the bill, the cost of the labour remain the same and ergo, so does the average.
So in 2015, 38 AIW’s cost Kier Highways Ltd £2,750,935.90 or about £72,000 each. This was not all salary but various facets. But Kier Highways Ltd changed their approach in late 2015 and started to charge an hourly rate of about £70 to insurers. AIW’s work 45 hour weeks so over a year that is £163,800
So something is clearly awry.
If the ‘averaging’ process is applied to both Highways England and insurers, why are they charged differing rates?
How does the ‘principle underpinning the NEC is that of payment by Defined Cost plus Fee, this is built upon cost reimbursable activities, these are not actual real costs but an average of the costs over time’ cause Highways England to be charged much less for the very same person doing the very same role?
The breakdown of the £70 can be found here:
http://www.englandhighways.co.uk/claims/...
But how can this be correct if Highways England are charged using the very same ‘NEC’ approach yet their hourly rate is half that charged to insurers?
And how is the AIW staff charge rate of £70.32 / hour made up? If you ask Kier they can provide a detailed breakdown:
1. £18.30 Wages & Salary
2. £7.38 Bonus & Incentives
3. £0.01 specialist allowances
4. £0.96 absence due to sickness and holiday
5. £0.09 Travel
6. £0.01 relocation
7. £0.03 medical examinations
8. £6.52 Protective clothing
9. £3.85 N.I.
10. £0.17 meeting legal requirements
11. £1.26 pensions and life assurance
12. £9.82 general training
13. £0.52 Safety training
14. £0.03 Water
15. £0.02 Gas
16. £0.18 electricity
17. £9.17 consumables for vehicle
£58.32 sub total
18. £12 20.58% contractual overhead fee
£70.32 total
We spoke to a representative of KHL about the ’20.58%’ understanding that this was the person progressing and presenting the new, KHL board-led, pricing initiative. However, it became apparent they could not explain it. One fifth of the hourly rate charge (20.58%), comprises an enhancement that is currently incapable of being defined by KHL.
The KHL representative referred to the 20.58% as an ‘overhead fee’, it was a contractual ‘thing’ but she appeared not to know of the contract from which it originated or how it could be inflicted upon drivers, fleets or insurers who were not party to it, had not agreed the rate.
It appeared the KHL representative believed HE allowed this overhead to be charged out to other people. However, they could only ‘suppose’ it would ‘take into account some of the recovery element’ but added that it is ‘a percentage uplift that is named in our contract that we are allowed to use and we are entitled to use’. The representative had a ‘feeling’ that ‘probably’ KHL were allowed to use it to ‘take into account a lot of the unidentified stuff’.
It appears you will need to ask Highways England to evidence their response, to:
• Advise the hourly rate they are charged for an AIW
• Explain how this is made up and
• Why the sum differs form that charged to drivers, fleets and insurers
I wish you luck
Philip

Layla Beckett, Freedom of Information Officer

you do review outsiide 2 months. Internal Review 748,149

why will you not review my request

Yours sincerely,

Sarah Joseph

FOI Advice, Highways England Company Limited

Dear Sarah Joseph

The requestor had asked for this to be dealt with as internal review last year. As there had been a delay in responding to the requestor, a response was sent in March 2017.

The 40 working day limit is part of the ICO’s code of practice. You can find the information on the ICO website https://ico.org.uk/for-the-public/offici... which is specifically designed to assist the general public/requestors.

If you are not content with my response, you have the right to apply directly to the Information Commissioner for a decision. The Information Commissioner can be contacted at:

Information Commissioner’s Office
Wycliffe House
Water Lane
Wilmslow
Cheshire
SK9 5AF

Yours sincerely

Layla Beckett, Freedom of Information Officer
Highways England | Piccadilly Gate | Store Street | Manchester | M1 2WD
Web: http://www.highways.gov.uk

show quoted sections

Mr P Swift left an annotation ()

i would suggest a new request - the request you made appears to have been the subject of a bland response. i am surprised you were not provided a copy fo Appendix A to Annex 23 of the ACS (Area 9) .

that the process applies to other Areas is borne out by evidence given at Basingstoke County Court earlier this year.

Appendix A to Annex 23 of the contract dictates how KHL are to charge a TP and the process is like that used to charge HE, the maximum is calculated by use of:

• the defined cost – the agreed ‘base’ charge for staff, plant and materials, plus:
• the ‘TP Claims Overhead’ (uplift) – 20.58%

The amount claimed is to be NO MORE THAN the above.

However, since the commencement of the contract KHL has not complied with the contract, has not charged TP’s using the agreed (contracted) process.
for a copy of Appendix A to Annex 23, see:
http://www.englandhighways.co.uk/appendi...

Richard Jones left an annotation ()

pop another request in. there's more to this and they've not told you everything. RJ

Richard Jones left an annotation ()

have proceedings been issued on your matter?
Richard

Sarah Joseph left an annotation ()

not yet but they have said they will issue.
S. Joseph

Dear FOI Advice,

they say there is no Appendix A to Annex 23 in the other areas.
you say they use the same procedure. where did you get 20.58% from and what are the defined costs. have you a list?

Yours sincerely,

Sarah Joseph

FOI Advice, Highways England Company Limited

Dear Sarah Joseph

Please can you clarify what information you are seeking and what the 20.58% is referring to? I am unable to proceed without further information from you.

Please note that if I do not receive appropriate clarification of your information requirements within three months from the date of this letter, then I will consider your request closed.

Yours sincerely

Layla Beckett, Freedom of Information Officer
Highways England | Piccadilly Gate | Store Street | Manchester | M1 2WD
Web: http://www.highways.gov.uk

show quoted sections

Mr P Swift left an annotation ()

Sarah
I have noted the response you have received. have you seen:
http://www.thepicta.com/user/universaldo...
the percentage you are quoting is referred to as either the 'working area overhead' or the 'third party claims overhead'. the FoIA dept' @ HE will likely be unaware of the claims processes. the overhead is the uplift applied to a defined cost and used to charge third parties - or should be.
so in Area 9, for example, there is Appendix A to Annex 23 of the contract that states third parties should be charged no more than the defined cost plus the overhead. this appendix is not in the public domain and the 20.58% is not publicised. if you need evidence of the 20.58% being used, of statements that this is the percentage, please pm me.

for more info, please visit http://www.englandhighways.co.uk and use the search facility to identify references to, for example, 20.58, 'defined cost', 'overhead'

Dear FOI Advice,

Can you refer to the above annotation. the 'working area overhead' or the 'third party claims overhead'. the overhead is the uplift applied to a defined cost and used to charge third parties
Where does 20.58% come from
Please give me the defined costs information
Thank you.

Yours sincerely,

Sarah Joseph

Ops Dst, Highways England Company Limited

Dear Sarah Joseph

I am writing to confirm that we do hold the information you requested on 20 June 2017 but have decided that some of this information cannot be disclosed.

The information that can be released is in relation to your first point, “Where does 20.58% come from”

20.58% relates to sub-threshold claims. These are pursued by the Service Provider directly against the Third Parties and not through Highways England’s Green Claims team. This percentage relates to a Third Party Overhead fee. The sub-threshold claims include an additional third party claims overhead because the Service Provider 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.

The information to your second point “Please give me the defined costs information” is being withheld under the exemption in Section 43(1) and (2) of the Freedom of Information Act 2000 because information is exempt information if its disclosure under this Act would, or would be likely to, prejudice the commercial interests of any person (including the public authority holding it).

In applying this exemption we have had to balance the public interest in withholding the information against the public interest in disclosure. Our arguments are set out below

• The procurement process must be seen to be fair and that commercial interests of the suppliers of services are not unduly prejudiced by the release of commercially sensitive information. It is important to maintain the confidence of our suppliers in order to achieve best value for the tax payer;
• The methodology outlined in the bid may be construed as a “trade secret” in that it is a strategy owned and developed by the consultant. If the methodology was made available to competitors in the market place it would undermine the commercial interests of the consultant when bidding for other contracts by reducing their competitive edge;
• To reveal the details of the bid would seriously undermine our ability to negotiate the best value for money for the public purse on future contracts as the rates and methodology are still current;
• The consultants object to the release of their bid information on the grounds that it contains commercially sensitive information in terms of a “trade secret” and rates; and such a release would be actionable

If you are unhappy with the way we have handled your request you may ask for an internal review within 2 months of the date of this response for Freedom of Information requests and within 40 days for Environmental Information Regulations requests.
Our internal review process is available at: https://www.gov.uk/government/organisati...

If you require a print copy, please phone the Information Line on 0300 123 5000; or e-mail [Highways England request email]. You should contact me if you wish to complain.

If you are not content with the outcome of the internal review, you have the right to apply directly to the Information Commissioner for a decision. The Information Commissioner can be contacted at:

Information Commissioner’s Office
Wycliffe House
Water Lane
Wilmslow
Cheshire
SK9 5AF

If you have any queries about this letter, please contact me. Please remember to quote reference number 752,498 in any future communications.
Yours sincerely

Andy Farquhar
Highways England | Piccadilly Gate | Store Street | Manchester | M1 2WD
Tel: +44 (0) 300 4705188
Web: http://www.highways.gov.uk
GTN: 0300 470 5188

show quoted sections

Mr P Swift left an annotation ()

does this help ...
20.58%, the TP Claims Overhead:
Is the contract claims overhead, so it’s an overhead that's been calculated by Highways England during the tender stage that Kier are told to apply to claims, and it’s based on all of their overhead costs and a figure, and then a calculation is done with the procurement team that basically says, you know, to recover your overall overhead costs you need to apply X per cent to each claim. Every contract in the country has a different contract overhead that is based on actual cost.

But ...
is 20.58% correct, or concocted by Kier?
i suspect you need to look at the defined costs.
feel free to pm

Dear Highways England Company Limited,

Please pass this on to the person who conducts Freedom of Information reviews.

I am writing to request an internal review of Highways England Company Limited's handling of my FOI request 'Pricing Methodologies'.

i do not accept the exemption applied and have been referred to http://www.englandhighways.co.uk/commerc...

A full history of my FOI request and all correspondence is available on the Internet at this address: https://www.whatdotheyknow.com/request/p...

Yours faithfully,

Sarah Joseph

Highways England, Highways England Company Limited

This is an automated response:

 

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If you’re reporting a real time issue which requires immediate attention
please call the Customer Contact Centre on 0300 123 5000. 

 

A map of the roads for which we are responsible can be found here
[1]http://www.highways.gov.uk/publications/... If
the road you’re interested in isn’t on this map it will fall under the
jurisdiction of the local authority.  You can find details of local
authorities using the search facility on the gov.uk website
at: [2]https://www.gov.uk/find-your-local-council

 

If your email does relate to an issue on Highways England's network it
will be passed to the relevant team within Highways England and they will
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Birmingham B32 1AF |
[5]https://www.gov.uk/government/organisati... |
[6][Highways England request email]

 

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Mr P Swift left an annotation ()

have you seen:
https://www.whatdotheyknow.com/request/e...

you ask, for example 'What is the uplift' and the information has been 'withheld'.
i an aware this has been raised before and one matter is with the ICO. Earlier this year a release by Highways England referred to 20.58% uplift by Kier, the Third Party claims overhead, sometimes referred to as the TP working overhead or Third Party Overhead Fee. Highways England, when considering your review should be referred to their ref: 753,299. the relevant extract reads:

The information that can be released is in relation to 20.58%

20.58% relates to sub-threshold claims. These are pursued by the Service Provider directly against the Third Parties and not through Highways England’s Green Claims team. This percentage relates to a Third Party Overhead fee. The sub-threshold claims include an additional third party claims overhead because the Service Provider is pursuing the case the whole way through (rather than the claim being pursued against the insurer by Highways England) and therefore incurring additional cost

Sarah Joseph left an annotation ()

Seems commercially sensitive is used commonly on anything about money. Some transparency!!!

FOI Advice, Highways England Company Limited

Dear Sarah Joseph

I refer to your request dated 5 September for an internal review with regards to 'Pricing Methodologies'

I note that you have submitted a number of requests in the past 18 months seeking details in relation to pricing methodologies and defined costs. Some of the information you have requested has been provided to you. The information specifically relating to the rates has not been disclosed because we consider it to be commercially sensitive. For each request where we have withheld information, you have asked for an internal review. These reviews have been investigated and conducted by myself and I have informed you on each occasion that the correct exemption has been applied and handled appropriately in accordance with the Freedom of Information Act.

I am sorry that you are not satisfied with my response and that you disagree with the exemptions we have applied. However, we have explained in our responses the reasons for withholding the information and I am unable to add anything further

Your next step is to approach the Information Commissioner's Office for a decision. . The Information Commissioner can be contacted at:

Information Commissioner’s Office
Wycliffe House
Water Lane
Wilmslow
Cheshire
SK9 5AF

Yours sincerely

Layla Beckett I Freedom of Information Officer I IT Directorate
Highways England | Piccadilly Gate | Store Street | Manchester | M1 2WD
Web: http://www.highways.gov.uk

Richard Jones left an annotation ()

suggest you refer to
http://www.englandhighways.co.uk/commerc...
and report to ICO. seems the information is provided to some.
R. Jones

Dear FOI Advice,

see above. you provide information to some but not to me. please explain this conduct the prejudice displayed toward my requests.
why are rates given to some and not to me?
this site displays percentages and rates. when i ask for them they are withheld. why?

Yours sincerely,

Sarah Joseph

FOI Advice, Highways England Company Limited

Dear Sarah Joseph

Please can you clarify what you are referring to when you state 'see above'

Yours sincerely

Layla Beckett I Freedom of Information Officer I IT Directorate
Highways England | Piccadilly Gate | Store Street | Manchester | M1 2WD
Web: http://www.highways.gov.uk

Dear FOI Advice,

there are figures on this request

historyhttps://www.whatdotheyknow.com/request/3...

such as

The cost reimbursable approach is how we understand HE are charged by KHL. The figures we have seen for the ‘additional fee’ appear to be:

initially 6.5 %
more recently 7.38 %

However, the response you have received does not indicate any other charging methodology (we see no reference to ‘1153’ – see my pm) and General Counsel for Highways England has recently stated:

“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

General Counsel subsequently clarified in an email to us:

“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.”

Yours sincerely,

Sarah Joseph

FOI Advice, Highways England Company Limited

Dear Sarah Joseph

I am sorry that you are not satisfied with my response and that you disagree with the exemptions we have applied. However, we have explained in our responses the reasons for withholding the information and I am unable to add anything further

Your next step is to approach the Information Commissioner's Office for a decision. . The Information Commissioner can be contacted at:

Information Commissioner’s Office
Wycliffe House
Water Lane
Wilmslow
Cheshire
SK9 5AF

Yours sincerely

Layla Beckett, Freedom of Information Officer
Highways England | Piccadilly Gate | Store Street | Manchester | M1 2WD
Web: http://www.highways.gov.uk

Dear FOI Advice,

you asked me to clarify. i have.

please explain why you asked for this and why after i have done so you have made no further comment.

Yours sincerely,

Sarah Joseph

Mr P Swift left an annotation ()

for the sake of clarity, I am not saying 20.58% is correct, it is simply what we have been told is used. It appears high. If you are presenting this to the ICO please pm and i will send you the rate (Third party Claims Overhead) for another area ... and breakdown of all their costs!

Dear Highways England Company Limited,

Please pass this on to the person who conducts Freedom of Information reviews.

I am writing to request an internal review of Highways England Company Limited's handling of my FOI request 'Pricing Methodologies'.

see above. you provide information to some but not to me. please explain this conduct the prejudice displayed toward my requests.
why are rates given to some and not to me?
this site displays percentages and rates. when i ask for them they are withheld. why?

Yours sincerely,

Sarah Joseph

A full history of my FOI request and all correspondence is available on the Internet at this address: https://www.whatdotheyknow.com/request/p...

Yours faithfully,

Sarah Joseph

Highways England, Highways England Company Limited

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