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2013 Preview: Roads

Firms operating in the roads sector this year will be watching the government’s long-awaited response to its study on the future of the strategic road network, which now appears set to be released alongside the Budget in March.

The future of the Highways Agency has been called into question by some, including the CBI in 2012, which wants to see it scrapped and replaced by an independent regulator under a regulated asset base model.

CN also reported in November that contractors were already preparing for new road ownership and management models, with Balfour Beatty, Morgan Sindall and Skanska all being linked with private investment.

However, money set aside in the autumn statement by the government highlighted the role the HA has to play in distributing some of the pool of cash.

As the agency responsible for maintaining the strategic road network, this makes sense, but given former transport secretary Justine Greening’s reluctance to change its status when she responded to the Cook Review early last year, it’s safe to say it won’t be scrapped any time soon.

Ms Greening’s response paper also declined to carry forward the review’s central recommendation that the DfT should map out full five-year spending pipelines on investment in roads – representing a major blow to contractors.

The HA’s procurement timetable for major schemes, like many government departments – most notably defence – has slipped.

Major Highways Agency schemes that have been delayed but are due to be let this year and start from September include asset support contracts for Area 6 covering the East of England and Area 8 covering the Home Counties, worth up to £40m and £50m respectively each year for five years.

Encouragingly, roads spending seems to have become a higher priority within government recently and £215m for repair and maintenance has already been allocated to local authorities to spend, just weeks after it was announced in the autumn statement.

Contracts to look out for in 2013:

28 January Deadline for expressions of interest to be delivery partner for Norfolk County Council’s highways construction, maintenance and improvement works deal worth up to £780m

February The Highways Agency to appoint framework contractors to a four-year regionally structured deal for the provision of temporary traffic management services worth up to £560m

18 February Gloucestershire County Council expected to invite contractors to tender for its five-year highways and transportation contract, set to be worth up to £450m

Q1 Transport for London to appoint contractors to a £300m framework for bridge and tunnel repair works including the rehabilitation of the Hammersmith Flyover

Spring Halton Borough Council to announce a preferred bidder from three consortia for the £590m Mersey Gateway Bridge

Spring Contractors will be invited to tender for the £400m Aberdeen Western Peripheral Route under a joint procurement process with the £50m A90 Balmedie-Tipperty scheme

Q2 Peterborough City Council will appoint contractors to its 10-year Highways Services contract estimated to be worth up to £300m

Summer/autumn A preferred bidder from four consortia expected to be chosen by Transport Scotland for its £415m Motorway Improvements project, which will include improvements to the M8, M73, M74 and A8

Q3 Highways Agency to select a winning contractor for its Area 6 asset support contract worth  up to £200m over five years covering the East of England

Q3 Contractor to be selected for the Highways Agency Area 8 asset support contract covering the Home Counties, worth up to £250m

ACE roads sector interest group chairman Mike Llywelyn-Jones says extra money for investment in the autumn statement was recognition that there was a need for investment to improve the condition of UK roads.

He adds: “It is crucial that this increased investment is now maintained as part of a strategic infrastructure plan and not transferred to another area of government expenditure when the political climate changes. 

“This ‘stop-start’ investment in our roads has happened far too often in the past and has led to substantial wasted effort and money.”

The government spent 2012 talking about roads, from the prime minister’s speech at the Institution of Civil Engineers in March where he commissioned the roads study, to the autumn statement where the chancellor made extra roads spending one of his flagship announcements.

But the industry now needs to see that it is possible for schemes to progress through pre-construction and planning quicker.

A £1bn boost for roads in the autumn statement means major schemes including the Dunstable Northern Bypass will go ahead, while the £314m A1 Leeming to Barton scheme has been reinstated after it was scrapped in the 2010 Comprehensive Spending Review.

In 2013, pilot projects set out by the government will look at ways of reducing construction times through methods including greater use of pre-assembled units, offsite construction and 24-hour working.

The government wants to cut construction times by between 25 per cent and 50 per cent and will pilot schemes in Surrey, West Midlands and Derbyshire, with all three to start construction in 2013.

Tarmac National Contracting and Middle East managing director Paul Fleetham welcomes the government’s initiatives and extra spending, but said the industry needs a joined-up plan.

But Mr Llywelyn-Jones points to a part of the autumn statement announced with little fanfare: the £42m pledge for “development of future national road projects”. 

He said if the funding is ringfenced and sustained, it should enable momentum on each project to be maintained, providing improved continuity of work for consulting engineers, leading to business confidence and staff retention/recruitment, as well as continuous pipeline of ‘shovel-ready’ projects for construction, giving contractors more certainty as to the nature and timing of road projects coming to market.

In the third quarter of 2011, ONS figures showed that rail spending reached £1.04bn compared to £979m on roads, the first time on record that rail had oustripped roads spending in the same quarter.

It led to a tough 2012 for roads contractors, but recent signs are that the government has realised roads spending can boost short-term spending and employment, and Transport for London recently outlined plans to double spending on the capital’s roads from a planned £1.9bn to £3.8bn over the next decade.

The outlook therefore is better, but 2013 will start with familiar cries that more needs to be done to bring forward projects so work can start in the first quarters of this year and that a clear pipeline of work is a must for the year ahead.

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