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Financial incentives in management deal for contractors on privately- funded job A13 firms face road safety penalty clause

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THE CONSORTIUM appointed to build and run the privately-financed £200 million A13 road in east London last week will be penalised if there are too many traffic accidents on it.

Road Management Services (RMS), which comprises Amec, Alfred McAlpine, Brown & Root and Dragados, is building the 20 km-long road under a 30- year DBFO arrangement. Construction is due to start later this year and will last four-and-a-half years.

But the deal includes an unusual clause which rewards the consortium in proportion to the safety record of the new road.

RMS will be given a benchmark figure by the Highways Agency - derived from the accident records of similar London roads - to measure the accident rate on the A13.

If it busts the benchmark RMS will face a series of financial penalties, but if RMS beats the figure, it will pocket a financial reward. Both the penalty and bonus will be capped.

RMS chief executive Paul Evans said: 'I'm entirely happy with the arrangement. It encourages us to build a safer road and we've taken a 30-year view on this.'

To help meet the benchmark, the consortium will fit high-grade lighting and speed cameras.

About 70 per cent of RMS's income will come from ensuring that the road is kept open. The operator will be penalised if lanes are lost to roadworks or if traffic accidents take too long to clear.

Among the clauses is one which gives RMS 45 minutes to respond to accidents before lane closure penalties kick in.

A Highways Agency spokesman said: 'These measures encourage the DBFO company to operate a road that is as safe, or safer, than other London roads.'

Mr Evans has called on the government to reimburse the bid costs of losing bidders in DBFO road contests. RMS spent £5 million on its bid for the A13 job.

He said: 'The government should provide money to compensate the losers. This would encourage smaller bidders to enter.'

RMS beat a Balfour Beatty/WS Atkins/Holzmann/Deutsche Asphalt to the deal. Four bidders were originally short-listed for the scheme.