Highways England dishes out maintenance contracts – Kier taking over Areas 6 and 8

Highways England has awarded contracts under its new Asset Delivery model for maintenance of trunk roads and motorways of Area 13 across Cumbria and North Lancashire and Area 14 in the North East. A CH2M Costain Joint Venture has won the contract for routine maintenance, response and winter service in Area 14, while Kier Highways will deliver the same in Area 13. Both deals, beginning in April 2017, could last as long as 15 years and be worth up to £262m. Two five-year contracts for design services across Areas 13 and 14 have been awarded to Amey OW Ltd.

The new Asset Delivery model has been developed to help Highways England gain greater control over maintenance to build the organisation's knowledge of the true costs of work carried out on the Strategic Road Network. The model, first introduced in Area 7 in the East Midlands, sees the HE assume management of routine maintenance and capital renewal and improvements schemes, with a greater number of contracts awarded to suppliers directly for carrying out works, design and specialist services.

This comes after problems encountered with the previous Asset Support Contracts, which were introduced by the Highways Agency in 2011 to achieve a target of a 20% reduction in maintenance costs, by being less prescriptive on how contractors should achieve specific contract targets. Lump sum pricing was brought in for routine work, with a schedule of rates for pricing discrete capital renewals and improvement schemes.

When introduced in 2011, ASC's were criticised for attracting cut-throat, lowest-price bidding. Problems encountered included irregular pricing and non-compliance issues, which led the Highways Agency to switch the procurement of ASCs for Areas 6 and 8 to a Negotiated Route so that it could discuss queries with bidders part-way through the bidding process. Some ASCs remain in place, but earlier this month the HE and Amey agreed to end the Areas 6 and 8 ASCs two years early as it was reported that Amey could no longer deliver the work as priced.

This week Kier Highways has confirmed that it is in final talks to take over from Amey in Areas 6 and 8. Two-year contracts are understood to have been procured through the HE's Collaborative Delivery Framework to deliver maintenance services in Areas 6 and 8.

Commenting on Kier's latest highways wins, Kier Group’s chief executive, Haydn Mursell, said: "We are pleased to have secured the Area 13 contract and look forward to the completion of the negotiations around Areas 6 and 8. These awards reflect Kier's ability to tailor its services to Highways England’s evolving delivery model, as well as maintain the Group’s leadership in the growing UK highways management and maintenance market."

Further Asset Delivery framework contracts for contracting and specialist services are due to be awarded for Areas 13 and 14 in January 2017.

The HE's executive director for commercial and procurement, David Poole, said: “We are delighted to welcome Kier Highways Limited, CH2M Costain Joint Venture and Amey OW Limited to our Asset Delivery supply chain community in Cumbria and North Lancashire and the North East. The awarding of these four new contracts builds on the new way of working already taking place in the East Midlands and is a real change in the way we have previously operated the network. These contracts demonstrate our commitment to increasing capability and understanding within Highways England and bringing us closer to our customers.

“Collaboration with our supply chain is key to our new way of working and we are looking forward to establishing a successful, long-term relationship with the appointed contractors.”