Surrey questions partnering route

Ringway and Carillion's highways maintenance contract worth £200m may revert to traditional method.

Surrey County Council (SCC) is looking to switch its £200m, 10-year, partnering highways maintenance contract to a traditional arrangement with its contractors Ringway and Carillion.

Its decision comes after a surveillance initiative found problems with productivity and management practices which have led to bills being reduced.

Andy Roberts, strategic director of community services at SCC, explains: "Following what we found from the surveillance, councillors reviewed the contract and decided that the partnering approach was not for us on this contract any more, and asked for a more traditional client relationship." If the switch is made, signing-off of works and post-work inspection, previously done by the contractors, could now go back in house under TUPE.

Roberts told CJ that recent surveillance revealed some productivity issues with Carillion’s work gangs and "poor management practices" on its contract for the east side of the county.

This led to a £1.1m reduction in charges for 2006/07 and £750,000 offered to SCC by Carillion as "work in kind" for 2007/08.

Carillion denied the figures given, however it declined to comment, claiming "commercial confidentiality".

The company, said Roberts, has restructured the management structure on this contract.

Ringway, meanwhile, fared better from its investigation, although problems have been found on its contract for the west of the county. The firm has also offered to pay £240,000 as a "goodwill" payment to SCC and has improved its practices.

A Carillion spokesman claimed the company received two one-year contract extensions as a result of excellent performance and that as the agreement was a partnership, any changes to the contract would have to be "mutually agreed". Continuous improvement can be delivered only if both partners play their part, he said.

The council’s decision to turn its back on the more consensual contractual form much favoured by best practice gurus could, if agreed by all parties, come into effect once contract negotiations are complete in April and could be seen by some as a retrograde step.

"We owe it to Surrey to make the contract more simple and transparent and that means going back to a more traditional route. Our councillors want to specify exactly what work is done," said Roberts.

SCC has also whittled down its 22 Key Performance Indicators (KPIs) to just eight, a majority of which will now centre on the core areas of getting the job done right first time, to budget and on time.

Both firms have recently won a one-year extension to the contract until 2009, by meeting the core KPIs. "Neither contractor achieved the optimum two-year extension," Roberts said.

In the event that Carillion and Ringway fail to meet performance expectations, after 2009 the contract may switch to one contractor.

Ringway regional director for Surrey, Jerry Pert, said: "Since the start of the partnership, we have welcomed all discussions about its improvement with Surrey County Council.

"Over the past 3 years we have worked extremely hard to drive efficiency into the contract, and have delivered savings of over £1.6m which has helped SCC to by far exceed its Gershon targets.

"We have also worked positively together to set up working groups covering; working practices, risk allocation, other areas for improvement and innovation and look forward to delivering the best possible highway maintenance service over the remainder of the contract.”

[Contract Journal, 13 December 2006, p 1]