Highways Agency overspends on contracts

The Highways Agency is paying above-inflation rates for maintenance contracts and doesn’t ensure good value for money, according to a report released today by the National Audit Office.

The study found that routine maintenance costs have risen by 11% above the rate of inflation since 2002 while planned maintenance costs have exceeded inflation by 5.5%.

It blamed the Highways Agency for spending too much time checking that contractors comply with contractual requirements rather than the cost or quality of the work.

It added: “The agency is only now beginning to exploit the good visibility of costs within these contracts, for example to establish the unit costs of items within jobs, so that it can challenge contractors’ costings and establish benchmarks for continuous improvement.”

The report pointed to “considerable variations” in costs across the regions but said the agency needed more skilled staff to manage contracts effectively.

Amyas Morse, head of the National Audit Office, said: “The latest form of Highways Agency contracts for maintaining motorways and trunk roads provide visibility of costs and the ability to allocate risk appropriately. But, as is so often the case, a lack of probing analysis of the information which is available, and continuing gaps in some areas undermine the drive to maximize value for money.”