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Highways Agency Statement in response to NAO Report on National Roads Telecommunications Project (NRTS)
4th April - Highways Agency Statement in response to NAO Report on National Roads Telecommunications Project (NRTS)
This is a successful PPP (Public Private Partnership), which completed its construction phase on time and to budget in October 07, and which is now delivering effectively in the operations and maintenance phase.
This was a leading edge PPP in terms of the nature of the assets to be constructed and maintained and the services to be delivered; as such, great care was taken in developing the scope and strategy for delivery, and the procurement approach, and then ensuring that this new innovative approach was effectively enabled through a robust contractual framework with controlled transfer of risk.
During this development phase, the scope and rationale was significantly changed from just replacement of a very old and outdated communications system into a complete process for providing extensions and upgrades over the whole of the Agency’s transmission network throughout a 10½ year contract. This change was made to reflect and support the parallel development of the strategy for implementing Regional Control Centres and the Traffic Officer Service. This, together with the increased focus on effectively controlling and transferring new types of risk through the contract, resulted in a longer development phase, with Agency contract development costs reaching £15m (for a £490m contract).
The Agency constructed a Public Sector Comparator by estimating how much it would take to do the work and adding its estimate of the risks the contractor would be taking on. At each stage of the procurement process, the Agency compared the preferred bidder's bid for the contract with the Public Sector Comparator, in line with Treasury guidance. This indicative comparison showed the PFI approach to deliver better value for money compared with the traditional approach to procurement.
The delivery of this work has been and will continue to be very well suited to the PFI type of delivery mechanism, as the nature of the technological risks in both constructing the assets and ensuring the service availability of the resulting newly installed communications infrastructure, mean that they can be far better controlled by specialist expertise from the Private Sector.
Issued by the Highways Agency press office.
Media enquiries including out of hours should be made to the Highways Agency National Press Office on 0207 081 7443.
