Motorway Charges

Nearly_Old

taffy056 wrote: »

Yes I understand that, but lets face it here, they are not buying any of that equipment as they have it on a truck already, and as they already have the truck, [but nobody gave it to them as a present] all these costs are running costs of the company, and that includes the staff to do the work, they are not specifically hiring or buying for that incident. This money that they are charging is almost all profit apart from the repairs themselves which I can understand costs money.

If they have it already it is because they have either had to buy it all in the first place; or they are leasing the vehicles and hiring the equipment - the initial costs to obtain all the plant, etc are extremely high. On the consultancy side (managing the contractors) our upfront costs meant that the commission may not become cash positive for over a year.

In civil engineering for work that cannot be measured; it's not x sqm @ £y per sqm there are various ways of measuring the "cost". There are nationally agreed charge rates for different items of plant, etc. There is the purchase cost (depreciated over time) plus the running costs - that can be £s per hour. For leased vehicles it can be done on a cost plus basis.

taffy056

Yes but if they can claim vat on the said items they are operating costs of the company, the same for vehicles and employees who would be employed whether an incident happens or not, or would be leased in any case. So they are not specific to one incident these cones , signs , vehicles and employees would be used elsewhere. The cost of actual work doesn't come to almost £2k for coning off a small section of motorway. Can you honestly say that most of that cost is not profit ?

bazster

Very informative Nearly Old, but I am touched by your quaint assumption that Vehicle Excise Duty has anything much to do with road maintenance. The idea of VED being a hypothecated tax for road construction disappeared in 1937, now it's just a tax.

Perhaps people would resent it less if it were spent on the roads.

peter_the_piper

taffy056 wrote: »

Yes but if they can claim vat on the said items they are operating costs of the company, the same for vehicles and employees who would be employed whether an incident happens or not, or would be leased in any case. So they are not specific to one incident these cones , signs , vehicles and employees would be used elsewhere. The cost of actual work doesn't come to almost £2k for coning off a small section of motorway. Can you honestly say that most of that cost is not profit ?

Assuming they are saying that they are paid a contract fee how come the above is supposed to represent the cost of repair?

bazster

Have to say I agree with taffy.

If someone sent me a £2,000 bill for repairing a road I'd want to see evidence of the disbursements. If all they've done is use vehicles they already owned or leased, and staff they already employed, then there wouldn't be any disbursements, apart perhaps for a small outlay on materials.

It'd be interesting to see an insurance company challenge this practice through the courts.

Nearly_Old

bazster wrote: »

Have to say I agree with taffy.

If someone sent me a £2,000 bill for repairing a road I'd want to see evidence of the disbursements. If all they've done is use vehicles they already owned or leased, and staff they already employed, then there wouldn't be any disbursements, apart perhaps for a small outlay on materials.

It'd be interesting to see an insurance company challenge this practice through the courts.

What a quaint notion - I'm getting quotes for a new garage so if the quote incudes:
1 JCB for 1 day excavating + driver
1 Tipper wagon for 1 day + driver
4 Tonne hardcore delivered
Roller + driver 4 hours

So I can say: Sorry but I'm not paying for the JCB, Tipper and Roller as you already own these? I don't think that the builder would accept this as a valid argument for not paying

Nearly_Old

Before this gets too far away from the facts remember that the HA's Agent is recovering authorised costs paid by the Secretary of State (SoS) under the signed Conditions of Contract.

The 1980 Highways Act provides the legal basis for the SoS to recover costs for the repair of damage to the highways infrastructure. The Contract requires the HA's Agent to attempt to recover these costs on behalf of the SoS. In an extreme case any legal proceedings would be between the SoS and the person(s) deemed to be liable for the damage.

Many contracts operated on a Schedule of Rates (SoR), hundreds of pages with thousands of individual items. If all the items associated with repairing the damage have rates in the SoR then the "cost" paid by the SoS will be the cost paid to the contractor in accordance with the SoR. Do not get confused with what it may, or may not have actually cost as legally the cost being recovered under the Act is the cost paid by the SoS under his contract with the contractor.

Where there is no item in the contract then the usual recourse in the contract is to use the national dayworks rates. These are nationally agreed rates for plant and labour for works incidental to the contract works. Again when these are used then the SoS is legally obliged under the contract to pay this cost and again it is this cost that is being recovered.

The latest contracts have moved away from specific routine maintenance requirements; e.g. all drains shall be cleaned every 5 years, etc. to an asset management style of contract. The contractor now decides what work will be done and when it will be done and is measured on keeping the network at, or above a specified condition. Therefore it could become more common that initial temporary measures will be taken after an accident with the final repair being done after the required plant is hired specifically for the work. That then brings in other factors such as minimum hire periods; e.g. one day that has to be paid even if the plant is only required for; say 4 hours.

Unfortunately pricing civil engineering works is a very complex subject and even the move towards Actual Cost contracts does not simplify things that much. There are numerous rules about what is / is not allowed as Actual Cost - yes not everything counts but some things that are not that obvious do count.

But just to be clear - generally it is the cost paid by the SoS under the Conditions of Contract that is being recovered; e.g. if the SoR has a rate of £1,800 for a short term, hardshoulder closure not exceeding 100m in length then this is the cost that the SoS will have paid under the contract that is now being recovered.

bazster

Nearly_Old wrote: »

What a quaint notion - I'm getting quotes for a new garage so if the quote incudes:
1 JCB for 1 day excavating + driver
1 Tipper wagon for 1 day + driver
4 Tonne hardcore delivered
Roller + driver 4 hours

So I can say: Sorry but I'm not paying for the JCB, Tipper and Roller as you already own these? I don't think that the builder would accept this as a valid argument for not paying

The builder you choose will build your garage for a profit, and at your request. He will not just send you an invoice for building a garage that you never asked for, that you can't see, and for which there is no evidence that it was ever built anyway.

If you think the situations are remotely comparable, are you saying that these companies are not just recovering the cost of the damage the motorist allegedly caused, they are also making a profit from it?

If someone damaged your property, for example by reversing into your garden fence and breaking it (let's assume for the sake of argument that you have a garden fence), would you expect to charge them the cost of repairing it, and then a nice profit on top? And would you expect them to pay anything until you'd proved - by presenting invoices for your outlay - what the repair cost?

Let's suppose you sent them an invoice for £10,000 with no evidence, and then when they refused to pay you sued them. What do you think would happen in court, besides a great deal of laughter?

Nearly_Old

bazster wrote: »

If you think the situations are remotely comparable, are you saying that these companies are not just recovering the cost of the damage the motorist allegedly caused, they are also making a profit from it?

It was an absurb example to try and illustrate just how some of the responses in the press, etc have been just as bad as they have ignored all the actual facts; i.e.

Fact One: The 1980 Highways Act makes anyone damaging the highway infrastructure liable for the repair of the damage.

Fact Two: In most cases the contractors are recovering the cost that the Secretary of State (SoS) has paid for the repair work through the contracts that exists between the SoS and the contractors.

Fact Three: The payment applied for by the contractor will be based on the terms and conditions of the contract and payment is certified on the basis of the contract.

Fact Four: For contracts based on a Bill of Quantities or a Schedule of rates the payment will be based purely on the quantity of each item and the rate in the contract. This may or may not bear any resemblance to the actual cost as different contractors use different pricing strategies. The contract does not require how the rate against an individual item is made up so there could be a profit or there may not; again depending on the contractor's pricing strategy when compiling their tender for the contract.

Fact Five: If it is one of the newer Actual Cost contracts then there can be veritable army of people ensuring that all applicable costs are correctly recorded. These records are independently audited by the HA as they form the basis of payments to the contractor. The profit element on top of the Actual Cost is part of the contract between the SoS and the contractor so it is a cost legally incurred by the SoS and therefore is recoverable under the Highways Act.

The evidence available usually consists of:
1. A police report and/or CCTV recordings.
2. An inspectors report on the extent of the damage and the repair works required. In most cases the report will include photographs.
3. The works may require more than visit; the contracts allow safety issues to be made safe on a temporary basis with the permanent repair being carried within a specified time. All the visits and works undertaken are recorded and the records are audited by the HA at regular intervals.

Like it or not the legal requirement to reimburse the SoS has been around since 1980. The SoS's costs when based on the contract may, or may not reflect the actual true cost but that is due to the contract that the SoS has entered into. I used to evaluate tenders for the HA and in some cases for an individual item the rates in the 5 tenders could vary from £2 (lowest for that item) to £5 (highest for that item). In the end it was usually the tender that represented the best overall value (cost) that was accepted by the SoS.

If someone damaged your property, for example by reversing into your garden fence and breaking it (let's assume for the sake of argument that you have a garden fence), would you expect to charge them the cost of repairing it, and then a nice profit on top?

No but I would expect that the firm actually repairing my fence to have made a profit from doing the work so the invoiced cost will, by default, include that profit.

taffy056

Its an interesting discussion and I am glad its being done with intelligent and thought out replies. But If you have a contract for maintaining a section of the road and its inevitable that accidents will occur on it, looking at the statistics over many years you can practically predict how many there will be over a set period of say 5 years.

So any price for a contract should take into account these accidents happening, to actually charge and make a profit out of something that should have been taken into account, is like classic PPC tactic. Meaning make a profit out of nothing, or in contractor terms something that is already paid for.

As I said closing a hard shoulder is not going to equate to £2k by any stretch of the imagination, from the report it says that the charge includes an inspection to the barrier, not replacing or fixing it, and as the bill was for £3k the other grand covers vehicle hire, and the actual repairs. So £2k for some cones and signs . Alright if you can get an insurance company to cough up, I mean they specifically hired a vehicle for this incident? Me don't think so!