Ministers’ demand for additional transport efficiency savings will be met in the short term in large part by the Highways Agency getting a better deal out of contractors by re-tendering maintenance contracts.
But the County Surveyors’ Society warned this week that drilling down contractors’ prices because there was a recession risked a return ‘to the bad old days of an adversarial approach’.
Local government and the transport industry are braced for tight times ahead, with scrutiny of last month’s Budget revealing that capital spending by Whitehall will plummet from £44bn today to £22bn in 2013/14.
While the chancellor hailed ‘historically high’ investment levels – £8.3bn for the Department for Transport in 2010/11 – for the next two years, after that, investment would increasingly rely on ever-greater savings, including £20bn from property sales (Surveyor, 23 April).
Darling gave the Department for Transport the most demanding efficiency savings up to 2010/11, representing 3% of its total budget, requiring the HA to deliver double the savings by 2010/11, against an original target of £144M.
The Highways Agency’s finance director, Stephen Dauncey, told Surveyor that the £140M expected to be saved from the re-tendering of maintenance contracts alone would be achieved by ‘increased commercialisation in order to ensure that we can deliver value-for-money for the taxpayer’.
The HA’s re-tendering of contracts in 2008/09 had generated savings of ‘at least 15%,’ according to the Budget 2009.
Dauncey said that savings would also be achieved through the benchmarking of costs across the HA’s supply chains, to drive down per unit costs, and through the greater standardisation of contracts, to reduce the cost of procurement.
In future, the HA would, ‘as early contractor involvement develops, work ever more closely with our supply chains, looking to them to find more innovative ways to achieve increased savings,’ he added.
Local government is also expected to deliver £600M in additional savings by 2011. County Surveyors’ Society engineering chair, Matthew Lugg, agreed with the HA that, in the short-term, standardising contracts and examining the supply chain would deliver savings. ‘Every pound of savings will be a pound of cuts avoided as the public spending squeeze looms.’ The regional improvement and efficiency partnerships of councils were using pump-priming money to develop a number of standard contracts.
However, Lugg said there was ‘much greater scope’ for joint procurement, if local authority leaders overcame fears they would lose control – and the HA was also ‘not acting in the best interests of collaborative working’. He added: ‘Simply following an approach of “Let’s get the cheapest price from contractors” could see a return to ‘us and them’ relationship between the client
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