Highways providers are under pressure like never before to show that they are adding value. Local politicians of all stripes are wanting to radically simplify delivery and no longer necessarily view the private sector as more efficient.
The Conservatives in Derby are saying that by bringing maintenance in-house next year, “we can strip out unnecessary bureaucracy” allowing the council to “deliver faster, more robust repairs”. A Conservative/Labour administration in Cumbria took back control of highway services at the start of this month from Amey to give them more direct control and flexibility over the work carried out.
Councils appear to be coming to the view that, as Mike Jackson, Norfolk County Council’s director of environment, transport and development, advised his cabinet, there is “no one optimum model of delivery”.
Alison Quant, former president of the Association of Directors of Environment, economy, Planning and Transport, told me that moving to a new delivery model of any description allows savings to be made, and that includes moving from an outsourced to an in-sourced model.
No matter how effective providers are at present at delivering services, they will need to do something radically different if they are to reduce costs and improve productivity within a dwindling budget envelope. More of the same is not going to pass muster if there will be further reductions in revenue funding beyond the 28% cut planned over the period up to 2015 as the Chancellor announced last month amid lacklustre economic indicators. An increasingly common response we are seeing in the sector is for two or more providers to join forces to offer more integrated services.
These have the potential to develop as far more than marriages of convenience in particular places at particular times. We are seeing a number of them maturing as their own distinct entities that are winning work across the country. We are seeing the rise and rise of Ringway Jacobs, a joint venture incorporated in 2005 that is now working across the country, from Essex to Cheshire?East.
As a standalone company, Ringway Jacobs has a certain independence from the shareholders of the constituent companies. It can both respond to local circumstances and replicate what it has implemented elsewhere. It is transferring innovations from one area to another when that is what clients want, such as the service information centre first established in Buckinghamshire to other areas it is now working such as Essex.
MGWSP, a merger of May Gurney and WSP formed to successfully win Northamptonshire’s contract in 2008, is now one of eight joint ventures vying for the London Highway Alliance contracts. Many of these joint ventures are new creations because clients in the capital have not tended to date to ask for integrated contracts (LTT 2?Mar). Each of these new joint ventures on the block has the potential to develop and carve out its own identity in the marketplace.
Back in Northamptonshire, the client and MGWSP are exploring the potential for giving the joint venture new functions so there would be a fully integrated highways team. This follows years of gradual further integration of the teams. The partners acknowledge that transferring staff from one organisation to another is not enough.
The retention of skills in the joint venture for lower cost will mean in-house silo working cannot be replaced by outsourced silo working. This is likely to require staff who are able to turn their hand to more tasks than at present. And the in-house commissioning organisation, meanwhile, will require staff with commercial nous and negotiating skills.
It is encouraging that, unlike in the recessions of the 80s, there is an evident commitment from all parties in the sector to develop the skills of the workforce alongside changes to delivery. MGWSP and Northamptonshire have agreed to “consider whether the appropriate skills, competencies and capacity are in place to meet the requirements of the new relationship” and to plug any gaps.
This recognition is part of a growing trend. We are seeing highway providers are supporting initiatives such as the Highways Agency’s Roads Academy and the new highways Masters at the University of Brighton supported by the SE7 Alliance. Investing in skills at this time so that we have individuals and organisations that can adapt to the new world makes a lot of good business sense. We cannot as an industry do things in the same way, no matter how well that has served us in the past.
Discuss the subjects raised in this article at our Future of Highways Delivery event in Manchester on the 27th June
James Dark is away.
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