Jason Schirnack

A Consultants Perspective of Highway Network Asset Management Practice in England A New Zealand Asset Management Engineers Experience Working in Highways Agency Area 13
Jason Schirnack BE (Civil), R. Eng, M.IPENZ Asset Management Engineer Opus International Consultants (UK) Ltd Unit 7A, Chase Park Daleside Road Nottingham NG2 4GT United Kingdom email: jason.schirnack@opusnz.co.uk

ABSTRACT The authors employer is currently working as a highway network asset management consultant for the Highways Agency in England. This paper draws on the experience of a New Zealand practitioner who has worked as an Asset Management Engineer in both New Zealand and England. The Highways Agency organization is discussed and the process they have used to outsource the highway network asset management service reviewed. The contractual framework existing in Highways Agency Area 13 is reviewed with attention given to the tender evaluation processes, asset management system components and the agent responsible for each in Highways Agency Area 13, and the term maintenance contract work components. A comparison is made between the reactive unplanned maintenance and cyclic work components of the term maintenance contract specifications used in New Zealand and England. Performance criteria for the respective Highways Agency consultant and term maintenance contract agreements are reviewed. Finally future procurement initiatives that the Highways Agency will pursue are detailed. INTRODUCTION This paper details the authors observations made while working in England since April 1999. The author currently works in England in a role which encompasses programming duties for Highways Agency Area 13, providing specialist technical advice to internal and external clients on highway network asset management practice (including procurement models), and facilitating transfer of systems and processes between the countries where the authors employer works. Prior to working in England the author worked for the same employer in New Zealand in highway network asset management practitioner, auditor, and training roles. For the purposes of clarity Consultant is used for all future references to the authors employer. CLIENT The Highways Agency maintains, operates, and improves the network of some 10 500km of trunk roads and motorways and 16 000 structures in England on behalf of the Secretary of State. The Highways Agency network has an estimated replacement value of 65 billion. Historically Local Authorities carried out both the Consultant and Term Maintenance Contractor functions for the Highways Agency. Since its inception in 1994 the Highways Agency has overseen the rationalization of the 91 Local Authority Maintenance Agents that were in place to the current 24 competitively tendered areas. The first of these area contracts commenced in April 1997 and the last

Jason Schirnack

commenced in April 1999. All of the contracts through the three (3) tranches of the outsourcing process were of a similar type. The Highways Agency is now in the process of re-tendering the first tranche of contracts ready for commencement in September 2001. The procurement models being used are discussed elsewhere in this paper. CONTRACTUAL FRAMEWORK IN HIGHWAYS AGENCY AREA 13 The Consultant has a Highways Agency Managing Agent contract for the Area 13 trunk road network. The Consultants contract requires a highway network asset management service for the complete highway corridor to be provided. The Consultant works alongside a Term Maintenance Contractor who is in place to provide resources required to carry out physical works under 100K value and including winter maintenance and incident responses. This contract framework also exists in the other Highways Agency areas and both the Term Maintenance Contractor and the Consultant obtain three (3) year contracts through competitive tendering. Some of the contracts awarded in other Highways Agency areas have been for durations that can be extended to five (5) years. Tender Evaluation The tender evaluation process used for the Consultants contract was carried out by weighting a range of non-price quality attributes for each tenderer, weighting tenderers respective tender prices and summing the weightings to determine the tenderer with the highest weighting (or mark). The non-price attributes assessed were Agency (maintenance experience, highways improvement experience, availability of technical facilities, technical accreditation, communication links), Staff, and Approach. The quality and price submissions were weighted in the ratio 40:60. Upon award of contract the Consultant prepared and tendered the term maintenance contract on behalf of the Highways Agency. The tender evaluation was carried out by a three (3) person tender evaluation team comprising two (2) Highways Agency representatives and one (1) Consultant representative. The tender evaluation process used for the term maintenance contract was again carried out by weighting a range of non-price quality attributes for each tenderer, weighting tenderers respective tender prices and summing the weightings to determine the tenderer with the highest weighting (or mark). The quality and price submissions for the term maintenance contract were weighted in the ratio 20:80. Tenderers were required to submit non-price quality attribute information on the following: The arrangements proposed for the provision of an operational maintenance and improvements service. Details were to include previous experience, available resources, any innovative ideas and the general approach to the contract, Proposals for accepting Works Orders, Works Instructions, programming of works, execution and measurement of works including submission of accounts, The names, professional or technical qualifications, and practical experience of the Group Director (or equivalent) with overall responsibility for the project and the Contract Manager who would be responsible for the day to day operation of the contract, Details of the site management structure with names, grades and CVs of all key staff including the proposed Agent, Health and Safety Representative, Traffic Safety and Management Coordinator, Highway, Bridge and Electrical Works Supervisors, Details of Head Office support facilities including policy statements on Quality Management, Health and Safety and staff training statements to be supported by details of QA accreditation and the completed health and safety questionnaire, The procedures and criteria for selection of sub-contractors, also the type of work to be undertaken, Proposed location of Offices and Depots and proposals for Operational coverage of the contract area, Proposals for customer care and liaison procedures with the Engineer, Employer, adjacent highway authorities, emergency services, Police, Utility Companies and transport authorities, Details of the percentage of workers registered under the Construction Skills Certification Scheme.

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Best Practice Highway Network Asset Management Systems The author understands that a best practice highway network asset management system comprises the following components: Information Management the system used to record and manage all related asset information, Asset Maintenance the system used to maintain the integrity and functionality of all assets within the network, Asset Development the system used to improve the networks safety and efficiency by assessing future needs and developing projects to address them, Asset Protection the system used to maintain and protect the highway corridor through administering the asset owners policy (and including maximizing network availability and safety), Asset Valuation the system used to assess the assets market value, determine the amount the asset owner needs to invest each year to maintain the assets level of service, and quantify how much levels of service will reduce if the required investment is not made, Financial and Risk Management the system used to record and report expenditure (including asset depreciation costs) and assess risks associated with a variety of asset management scenarios, Implementation the system used to implement annual programmes of work in the most cost effective manner possible, Compliance Measurement the system used to determine the asset owners success in achieving strategic objectives and associated levels of service together with the appropriateness and affordability of the levels of service.

In Porters paper Trends in Procurement Models for Highway Maintenance(1) the range of procurement models commonly being used by highway controlling authorities around the world are discussed. For each highway network a health team exists and comprises the Highway Controlling Authority, the Consultant, and the Term Maintenance Contractor (albeit in a Performance Specified Maintenance Contracting environment the Consultant and Term Maintenance Contractor combine to form a single service provider). The components of the highway network asset management system delivered by the respective agents change depending on the procurement model being used (1). The fundamental requirement for best practice highway network asset management is ensuring each of the components of the highway network asset management system is delivered. Assignment of Highway Network Asset Management System Responsibilities in Highways Agency Area 13 Responsibility for each component of the best practice highway network asset management system detailed above is apportioned as follows in Highways Agency Area 13: Highway Network Asset Management System Component Information Management

Responsibility

Consultant uplifts asset inventory information from previous Agent, validates information, and maintains inventories through duration of contract, Consultant collects all routine and scheme specific condition survey information and maintains the information through duration of contract, Consultant and Term Maintenance Contractor manage documentation associated with all operations carried out, Consultant collects and manages accident information, Consultant maintains records of all work undertaken by service authorities, Consultant performs coordinator role for all work activities on the network (highway and service authorities) to deliver Highways Agency strategic goal of maximum network availability, Highways Agency provides a mechanism for public reporting of network availability,

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Highway Network Asset Management System Component

Responsibility Consultant maintains a register of all corridor management issues identified and including recording and tracking of all associated actions. Consultant identifies all reactive unplanned maintenance requirements, tasks Term Maintenance Contractor to complete repairs, and inspects work prior to certifying payment, Consultant manages cyclic work programme and inspects work prior to certifying payment, Consultant analyses routine condition survey records and programmes scheme specific surveys where exceptions are identified, Consultant bids for maintenance funding in accordance with the Highways Agency procedure for annual Term Maintenance Contract operations, Consultant bids for maintenance funding in accordance with the Highways Agency procedure where periodic (area wide) highway maintenance schemes are identified which meet intervention and whole of life cost criteria, Consultant carries out inspection and management of highway structures, Consultant bids for maintenance funding in accordance with the Highways Agency procedure where bridge schemes are identified which meet intervention criteria, Highways Agency assesses submitted bids and notifies funding to be provided, Consultant manages delivery of all schemes of value <3M where funding is obtained (the Term Maintenance Contractor carries out the work where the scheme value is <100K whereas a Works Contractor competitively selected carries out the work where scheme value is >100K). Consultant and/or Highways Agency identify and analyze projects which may be justifiable for reasons of safety or efficiency, Consultant manages delivery all schemes of value <3M where funding is obtained (the Term Maintenance Contractor carries out the work where the scheme value is <100K whereas a Works Contractor competitively selected carries out the work where scheme value is >100K). Consultant maintains and protects the highway corridor by administering Highways Agency policy, Consultant and Term Maintenance Contractor manage winter maintenance and incident responses, Highways Agency manage approvals for accessways and new developments with Consultant providing technical advice on proposals when requested, Consultant inspects and manages the function of facilities provided for environmental protection together with identifying requirements for additional measures required to mitigate environmental risk, Consultant inspects a sample of the work carried out by service authorities and reports on compliance with Codes of Practice. No obligations exist within the Consultants brief for providing valuation information, The Highways Agency has carried out a valuation of the network. The author understands that the Highways Agency is setting about obtaining the required services to have an asset valuation component within their highway network asset management system. The Highways Agency would be likely to acknowledge that at present it would not be possible to report on whether the existing management regime is improving the condition of the asset, maintaining the asset in steady state, or consuming the asset. Consultant records and reports expenditure against financial profiles.

Asset Maintenance

Asset Development

Asset Protection

Asset Valuation

Financial and Management

Risk

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Highway Network Asset Management System Component Implementation

Responsibility Highways Agency and Consultant determine the most appropriate mechanism for delivery of annual programmes having regard for network availability and cost effectiveness, Highways Agency determines procurement models to be used through consultation with the wider industry. Consultant monitors and reports in areas of financial performance and annual achievement, Highways Agency monitors customer and stakeholder satisfaction. Table 1

Compliance Monitoring

We draw the readers attention to the fact that the Term Maintenance Contractor makes only a minor contribution to the highway network asset management system, as is commonly the case where a traditional procurement model and an output driven maintenance specification are in place (1). The Term Maintenance Contract The Term Maintenance Contractor carries out his work in accordance with an output driven maintenance specification (1). The maintenance specification for the Highways Agency Area 13 term maintenance contract is entirely method based and very prescriptive. The Term Maintenance Contractor is not required to warrant performance of the works and his maintenance liability is confined to materials provided and workmanship. Work Components Included in Highways Agency Area 13 Term Maintenance Contract The following work components are included within the Highways Agency Area 13 term maintenance contract: Traffic safety and management, Provision of access scaffolding and access plant, Site clearances, Fencing and environmental barriers, Safety fences, safety barriers, and pedestrian guardrails, Drainage and service ducts, Earthworks, Pavements, Kerbs, footways, and paved areas, Traffic signs and road markings, Road lighting columns and brackets, Electrical works for road lighting and traffic signs, Structural concrete repair, Waterproofing of structures, Parapet construction and repair, Bridge expansion joint repair and sealing of gaps, Brickwork, blockwork, and stonework, Provision of staff for specialist work, Winter maintenance, Routine maintenance of highway structures, Landscape maintenance and replacement planting, Highway cleaning and clearance, Provision of emergency service, Site investigations,

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Maintenance painting of steel highway structures.

A COMPARISON OF ASPECTS OF TERM MAINTENANCE CONTRACT SPECIFICATIONS USED IN NEW ZEALAND AND ENGLAND Management of Reactive Unplanned Maintenance Requirements In England the Consultant identifies faults and programmes the method of repair. The Term Maintenance Contractor receives works orders setting out what work shall be carried out. The works order includes each repair component and the associated materials or methods to be used (shown by reference to the appropriate Schedule of Rates item number). In New Zealand the Term Maintenance Contractor identifies faults and programmes a cost effective method of repair selected from a range of technologies commonly available and priced at the time of tender. The repairs that are scheduled are complete or endresult repairs so the Term Maintenance Contractor is paid upon completion of the repair in accordance with specified performance criteria. The Consultant audits a sample from each Term Maintenance Contractor programme of work and provides approval for the work to be carried out. The author considers that the fundamental difference between the regimes is that in New Zealand the Term Maintenance Contractor has some responsibility for management of the reactive unplanned maintenance work, as opposed to the English regime where the Consultant manages such work. The New Zealand regime typically encourages the development of innovative methods of working and using materials (1). In addition, the flexibility provided by the Consultant having audit obligations as opposed to management obligations does create an environment where the term maintenance contract can be administered having regard for desired outcomes rather than concentrating solely on delivery of outputs. Cyclic Work It is worth noting that while the term cyclic maintenance is used in England, its application is somewhat different to the way in which it applies in New Zealand. The cyclic work components are the standard types such as drainage maintenance, vegetation control, detritus, signage and lighting maintenance etc. The method of payment for any work carried out is by quantity of work completed such as length of road verge mown or carriageway swept, number of signs cleaned, number of lamp interiors polished etc. There is no use made of the payment mechanisms used in New Zealand such as $/km/month to deliver a cyclic work component in accordance with a range of specified performance criteria. Such payment mechanisms are intermediate between paying by quantity of work completed (km, square metres etc) and paying a lump sum for the complete service, as is the case when an outcome driven contract is in place (1). Highway controlling authorities wishing to move towards outcome driven contracts should consider the use of such payment mechanisms through the transition period. PERFORMANCE CRITERIA FOR HIGHWAYS AGENCY AREA 13 SERVICE PROVIDERS The Consultants contract has response time performance criteria for reporting and inwards communication actions. In addition the Highways Agency do detail their expectation that annual programmes of work are delivered on time and at budget. The specifications for the work components associated with management of the highway network are predominantly method based, as are the requirements that apply to bidding for maintenance funds. The Highways Agency has retained responsibility for approving all design and documentation prior to delivering maintenance and improvement schemes. Where a method specification exists or responsibility has been retained by the Highway Agency no performance criteria apply. The Term Maintenance Contract has response time performance criteria for maintenance repairs, winter maintenance, and incident response. The remainder of the work components are specified by method and no performance criteria apply.

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MANAGEMENT OF STAFF ISSUES THROUGH THE PROCESS OF OUTSOURCING THE HIGHWAY NETWORK ASSET MANAGEMENT SERVICE Legislation exists within the UK to protect employees through transition periods such as that which occurred when the Highways Agency outsourced the highway network asset management service and, as will be the case at subsequent transfers between service providers. The legislation is the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE) and provides that where there is a transfer of an undertaking the new employer takes over any employment liabilities and the responsibility for the employment contracts of the employees in the relevant undertaking who transfer to the new employer. The previous terms and conditions of service are retained. The Consultants experience has been that existing service providers often exaggerate the numbers of affected staff when work is being tendered and likewise when the time comes to release such staff existing service providers endeavor to retain the majority of the nominated staff. DISCUSSION The Highways Agency has outsourced the highway network asset management service using what we term a traditional procurement model (Highway Authority Professional Services Consultant Physical Works Contractor) (1). The Consultant believes that this choice of procurement model at the outset of outsourcing is prudent (1). As a result of outsourcing the highway network asset management service a maintenance engineering industry has started to form. Within the Highways Agency there is increasing familiarity amongst staff of the deliverables associated with the specified services. Within Consultancies, staff with an aptitude for customer service, highway network administration, pavement asset management, system development and implementation, and contract administration are being identified and moved into specialist roles. Within contracting organizations systems fit for purpose are being developed for management of the work. Collectively all parties are networking with a view to increasing overall performance in the line of work. At time of tender the Highways Agency publish a tender list that typically consists of four (4) service providers selected from the range of organizations who registered interest in the work. The Highways Agency has made a commitment to avoiding market or area domination by any organization. By judicious management of entries on tender lists the Highways Agency are able to maintain a range of service providers in the market. Amongst the range of service providers existing in England there are alliances of Local Authorities and private enterprises that have teamed up and successfully tendered for packages of work. FUTURE DIRECTIONS The Highways Agency has recently completed an extensive consultation exercise with a view to benchmarking current arrangements and agreeing appropriate procurement models for use in the future. At conclusion of the consultation process the Highways Agency have decided to tender three (3) of the four (4) contract areas being retendered this year using a comparable regime to that which exists at present. The fourth contract area being retendered this year is going to be a combined Managing Agent Contractor (MAC) contract. The MAC option requires a service provider to deliver both the managing agent work components and the term maintenance contract work components. The following aspects of the upcoming tenders are noteworthy: The quality and price submissions are weighted in the ratio 80:20, The durations of the upcoming contracts will be five (5) years with options for two (2) single year extensions, A partnering culture will be implicit and may extend to collocation of staff from each of the parties within the Highways Agency contract framework,

Jason Schirnack

It is likely that a Network Board will be formed for both forms of contract, the Network Board will deal with strategic issues, encourage innovation, set and monitor performance targets, and foster a partnering culture for each area.

It is the authors view that the consultation process carried out by the Highways Agency was very well managed and other highway controlling authorities seeking to determine the views of the industry would be well advised to carry out such an exercise in a similar way. ACKNOWLEDGEMENTS The author thanks his employer, Opus International Consultants (UK) Limited and the Highways Agency for permission to present this paper. REFERENCES 1. Trends in the Procurement Models for Highway Maintenance Tony Porter 2001 Transportation Research Record series.