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News » UK » Auditor says Highways England needs to rethink delivery plans » published 22 Mar 2017

Auditor says Highways England needs to rethink delivery plans

Highways England’s Road Investment Strategy is unrealistic and the organisation lacks the staff to deliver it, according to the National Audit Office says.

The National Audit Office (NAO) is calling for "decisive action" from both the Department for Transport (DfT) and Highways England to get it sorted swiftly.

Highways England itself has now identified 16 projects that could be dropped from the programme this summer because they might not offer value for money.

“The Department and Highways England need to agree a more realistic and affordable plan if they are to provide optimal value from the Road Investment Strategy,” said NAO chief Amyas Morse. “Highways England has been working to address the risks to deliverability, affordability and value for money that were present in 2015, but we are now nearly two years into the five-year road investment period. Decisive action needs to be taken before the updated delivery plan is published in the summer if shortcomings in the current strategy are not to be carried over into future road investment periods.”

In 2013 the government committed £11.4bn of capital funding to improving motorways and A-roads during road period 1 (2015-20), with £7.7bn for 112 major enhancement projects and other projects designed to, for example, promote cycling, improve air quality and encourage economic growth. The remainder was allocated to the renewal of the existing network.

The DfT planned the strategy in 17 months to get it published before the May 2015 general election, the NAO’s report1 says. As a result of this, officials selected projects without knowing whether they would be the best value and 54 of the 112 projects are currently scheduled to start in 2019/20.

The DfT chose to set a capital programme which was forecast to exceed funding by £652m. This ‘over-programming’ had been standard practice in the Highways Agency, the NAO says, as it was routinely expected that some schemes would be delayed or drop out of the portfolio as it was refined. By August 2016, the amount by which forecast capital costs exceeded available funding had increased to £841m, however.  This is partly because the original investment plan did not take into account all the capital costs, such as post-project evaluations and IT investment, which will cost an estimated £409m.

So far Highways England has completed six projects on or ahead of schedule and has started construction on a further 19, with 16 planned to be on or ahead of schedule. Highways England forecasts that these projects will be delivered 5% over budget. Highways England met its efficiency savings target of £33m for 2015-16, and expects to exceed its target for 2016-17, but it has to achieve 70% of its savings target of £1.2bn in the final two years of the strategy.

The NAO says that Highways England is also facing challenges in recruitment of staff to cope with the increased workload. It plans to procure contracts for 57 projects in 2017, compared to six in 2016, but it is 19% below its target headcount for procurement and commercial specialists, who are in high demand. Highways England has been filling gaps with consultants and interim staff, who cost three times more than permanent employees, on average.

Highways England is now reviewing the portfolio of enhancement projects to improve value for money, and has so far identified 16 projects which present a risk to value for money. Highways England and the DfT are exploring ways to manage this risk, including revising project design, cancelling projects or delaying projects to enable further assessment of benefits, the NAO reveals. Highways England has also developed options to bring forward the start dates of up to 10 projects and to delay up to 19 to reduce the number of projects due to start in 2019-20 to establish a smoother delivery profile and reduce disruption to the road network.

“While this may mean that some stakeholder expectations are not met, value for money depends on the Department and Highways England proceeding, in this and in future road periods, with a realistic and affordable plan,” the NAO says.

 

1, Report by the Comptroller and Auditor General: HC 1056 Session 2016-17 - Progress with the Road Investment Strategy

 

 

MPU

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This article was published on 22 Mar 2017 (last updated on 24 Mar 2017).

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