Highways Agency

Introduction

Achieving Efficiency Gains From Collaborative Roads Procurement

This document sets out a strategy for the whole roads industry to jointly deliver efficiency gains. This involves improving the quality and cost of service provision across the whole road network for the benefit of all customers - i.e. those using, relying on, or affected by the road network. The intended audience for the Strategy is the whole industry: public sector clients for highway services and the whole supply chain. Detailed projects and workstreams will be developed and taken forward as part of a separate delivery plan.

This Strategy sets out the industry's vision, strategic objectives and the principles on which it will be implemented. It has been produced following consultation and a series of workshops with industry partners (see Appendix A). The key element of the Strategy is for highway authority clients to work collaboratively, and in close partnership with their supply chain.

The Highways Agency has been given a challenging new role as a "change agent" as part of the Department for Transport's Efficiency Programme . This role involves the Agency working with other highways clients, suppliers and key industry representative bodies, to assist the achievement of efficiency improvements in local roads delivery. The Agency will also bring the lessons it learns from local highway authorities to its drive for efficiency in strategic roads delivery.

1.1 Background

In July 2004, Sir Peter Gershon published the report of his independent review into public sector efficiency - "Releasing Resources To The Front Line". The cross-public sector Efficiency Programme, which has been set in place to implement the outcome of the Review, is now a central element of Government policy, and reads across to many other Government initiatives (see Appendix B).

The Gershon Report identifi ed a total efficiency gain target in excess of £20bn per year across the public sector, to be achieved by the end of the Spending Review 2004 period (2005/06 - 2007/08). Of this at least £6.45bn will come from local government efficiencies. In addition to these short-term (2005 - 2008) efficiency targets, the Report also emphasised the need to plan to achieve longer-term efficiency gains, i.e. beyond 2008.

The Highways Agency is leading two major workstreams which will contribute substantially towards the delivery of the Department for Transport's (DfT) efficiency target to achieve £785m in efficiency gains by 2007/08. One of these workstreams is to achieve significant increases in quality and customer benefi t from improved levels of service in existing contracts for the strategic road network and from achieving savings in new maintenance contracts. The other major workstream is for the Highways Agency to work collaboratively and/or in partnership with local authorities to achieve procurement efficiency improvements. At least half of all efficiency gains must be found by achieving cashable savings which can then be re-invested to support priority front-line activity.

The Office of the Deputy Prime Minister (ODPM) requires councils to achieve 2.5% per annum improvements on their 2004/5 baseline, of which at least half should be cashable. By 2007/8 efficiency gains equivalent to 7.5% of the 2004/5 baseline should be achieved.

The fundamental message is about doing things better, not public spending cuts. It is about providing improved public services more directly related to the needs and aspirations of the service recipient, but in such a way that real cash savings are achieved which can then be reinvested to support priority front-line activities.

1.2 Facilitating Change

The Gershon Report highlighted a number of potential benefits that would result from change agent activities and from the resulting improved procurement and project delivery practices. Although Gershon related these to all aspects of procurement they apply particularly to highways procurement. These benefits include:

• Delivering better contracts and supply chain agreements
• Shaping the market -
  • a better understanding of forward plans and overall demand
  • influencing - the supply chain to develop their capabilities and capacity to meet this demand
• Understanding how client and customer behaviour drives supply costs
• Ensuring quality and value from existing contracts and driving improvements from new contracts
• Raising the levels of professionalism and expertise applied to procurement activities
• Identifying 'clustering' of organisations and activities to better match up to the supply market and to optimise economic factors
• Developing and designing pilot solutions e.g. new forms of contract and shared transactional services
• Promoting and marketing 'best value' contracts
• Monitoring and benchmarking performance
• Sharing knowledge, experience, successes and learning.

As well as seeking to achieve these benefi ts in relation to its own highway programme, the Highways Agency will work with local authorities and suppliers to deliver the overall efficiency targets. Section 4 outlines ways in which the industry as a whole might work collectively to achieve targeted efficiencies.