The Highways Agency procurement review promises more improvements to benefit contractors, according to the man responsible, Steve Rowsell. Alasdair Reisner talked to him
BACK in 2001 Highways Agency procurement director Steve Rowsell was charged with improving the way the organisation worked with its contractors, to deliver road schemes and maintenance at a higher quality, faster and for better value than it had before.
This task resulted in publicat ion of the agency's procurement strategy, a document that has gone a long way toward changing the face of road-building in the UK.
At a time when firms were still trying to get to grips with a whole new agenda for a modern construction industry following the Egan and Latham reports, the procurement strategy set in stone principles to deliver what had previously only been aspirations, including long-term relationships between client and contractor, early contractor involvement and best value contractor selection.
But writing down targets is only part of the battle.
Mr Rowsell says the real surprise is how the industry and agency have together managed to deliver on these promises. Among the success stories are early contractor involvement contracts for major schemes, managing agent contractor contracts for maintenance and the capability assessment toolkit.
'I did expect it to take a bit longer to get it applied to everything we do. Overall we are pleased but not complacent because there is still much to be done, ' he says.
Here lies the potential problem. If the procurement strategy dragged the agency's capabilities forward at a dramatic pace, how easy will it be for Mr Rowsell to find new battles to fight, new goals to aim for?
Hence earlier this year Mr Rowsell got his pen out again for a review of his 2001 document. As well as detailing how successful the agency had been at delivering on the procurement strategy's recommendations the review also charted the way forward, setting new challenges to overcome.
But does this mean more upheaval for an industry that is just coming to terms with the new contracts and procedures that resulted from the original strategy?
Fortunately not. Indeed it could be said that many of the recommendations made in the procurement strategy review are about making life easier for the contractor, rather than for the agency itself.
Take, for example, collaboration. The review calls for much more co-ordination between the agency and local authorities in order to avoid firms having to jump through different sets of hoops for each client.
'At the moment if one looks at the highways sector there are around 150 highways authorities delivering services in different ways. The resulting differences incur quite considerable costs for the industry as contractors have to take a different approach for each one. I would hope that over the next two years there will be much greater collaboration over future planning so the industry as a whole can see what the future requirements will be, ' says Mr Rowsell.
The Highways Agency is in the process of formalising collaborative arrangements with some local authorities for contracts that cover both the strategic and local roads network under one deal.
Both Kent County Council and local authorities in the south-west are understood to be getting involved in this process, while the agency itself will soon publish its own strategy for collaboration and efficiency.
'Contracts that cover both the strategic roads network and local roads under one arrangement will certainly help the industry to drive out wastage and cost, ' says Mr Rowsell.
But since the Highways Agency has a great deal of experience of procuring roads projects, whereas local authority officers may only procure one major scheme in a lifetime, would it not make sense to centralise all such procurement?
Mr Rowsell says: 'I'm not out to change the whole political environment but the idea does have some merit. We are very happy to have discussions with local authorities where they can package their projects in with Highways Agency projects without losing control over what it is that they are trying to deliver.' But the benefits for the contractor do not end there. A key concern over recent years has been the exorbitant amount contractors can end up paying in insurance to cover their operations.
Worse still, there is evidence that across a project risks can be over-insured as they end up being covered by separate policies for the client, contractor, designer and subcontractors.
The procurement review looks to tackle this issue head-on with pilots for project insurance.
'We have been talking about it for a while but there have been a number of barriers in the way of getting something moving. We have tried it on small value projects but the value for money has not been great because the insurance firms have not been able to spread the risk across a large enough programme of works, ' says Mr Rowsell.
The Treasury also has to give approval before any project insurance scheme can be given the green light. But Mr Rowsell says the agency is now close to getting a solution everyone can be happy with.
'We will be looking for some pilot projects in the next six months. These will be projects coming out to tender over the next nine months. I would like to see it used on a major project and one of our frameworks when they come up for renewals.' Slightly further into the future but also mentioned in the procurement review is the possibility of having project bank accounts for highways schemes. Using a single bank account for an entire construction project mitigates the risk of the main cont ractor unfairly withholding payments from subcontractors further down the supply chain.
'We are very keen to ensure that we have fair and equitable payment terms, and project bank accounts would be one way to achieve that. I am not yet persuaded that it would be a panacea to all problems so it is important that we pilot it first.
There is a groundswell of support to make us think it is something we could make happen but we need a consultation period with the industry, ' he says.
He expects this consultation to begin within the next six months.
But for all these new ideas to be introduced there must be a workload to support them.
While contractors may occasionally gripe about the pace at which work comes through from the Highways Agency there still appears to be a healthy volume of schemes scheduled to come to the market in the near future, including major widening projects on the M25 and M1.
But Mr Rowsell admits that while workloads are strong, there is still an issue over consistency and future planning: 'On the major projects I'd like to see more schemes put out as packages so that suppliers can move on from scheme to scheme subject to performance. That is really where we need help from the investment decision makers, with politicians giving longer term commitments to forward investment plans, ' he says.
Former British Airways boss Rod Eddington is carrying out a review for the Government of long-term spending on transport infrastructure in the UK and Mr Rowsell hopes this will open up such long term planning.
But with an increase in the use of technology as a measure of mitigating congestion, are we getting to the point when new road-building schemes are heading towards extinction? Could the major widening schemes currently in the pipeline be a last hurrah for the sector before it gets overtaken by innovative traffic control measures?
'Information and technology are going to become more important tools in managing congestion in the future but expenditure over the next three years is going to be higher than in the previous three years.
It will always be the case that contractors want more work and for it to be easier for them to win that work.
Ensuring that we have the right infrastructure for capacity in an environment where traffic volumes continue to grow means there will be further schemes to widen other important sections of motorway such as the M1 and the M62 in South Yorkshire. There are also schemes that have gone through the multi-modal studies that still need to be decided on by the secretary of state that will enter the programme so there will still be work for contractors in the future, ' he says.
Steve Rowsell could not be more frank when it comes to the road industry's performance on enticing women and people from ethic minorities into the industry. 'We are bloody hopeless when it comes to diversity, ' he says.
But he is taking steps to improve the situation.
An advisory group is looking at how the agency's capability assessment toolkit can be used to ensure a fairer make-up of the workforce.
'A greater focus on diversity is something we are looking at in the next round of CAT assessments.
This year we are looking for examples of best practice from across our supplier community.' Mr Rowsell has also asked the industry to set up a group looking at diversity through the supply chain with a remit to look at the barriers that prevent women and representatives of ethic minorities getting through to positions of responsibility in significant numbers.
Working on live carriageways is recognised as just about the most dangerous job in UK construction. The Highways Agency is constantly reminding both workers and road users of the dangers associated with road works. Later this year the agency will launch its latest campaign to try to dramatically reduce the number of worker deaths on the nation's roads.
This is not the only front in the agency's battle to reduce deaths and injuries. It is taking a hard line with firms that fail to meet its rigid safety standards.
'There have been examples where we have had to prevent suppliers from working on the network until they have satisfied us they have improved their procedures. There have been other examples where we have declined to give f irms the opportunity to tender with us until they have responded to concerns we have raised, ' he says.
THE INTERNATIONAL BRIGADE
With the widening of the M1 and M25 due to come to the market in the near future contractors must be licking their lips at the prospect of bumper workloads. But it is not just UK-based contractors that are hoping for a slice of the action. Such is the scale of these schemes that overseas firms are also preparing to throw their hats in the ring.
'Particularly with jobs like the M25 there is a limited supplier base out there that can deliver them. You can expect to see some international interest being expressed, ' says Mr Rowsell.
But native firms should not expect to be pushed out of the way by the likes of Vinci, Bechtel and Fluor. Mr Rowsell points out that overseas firms will very likely look to partner with UK firms.
'They will be looking to set up relationships with British contractors for the delivery. They will bring in some of the management skills and the technical innovation they have developed in the international market, ' he says.