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Highways assets hold significant investment but with maintenance risk.  Managing this within strict budget constraints is an increasing burden for highway authorities nationally and internationally. To achieve the corporate strategy objectives and receive elected member and public support there is a need to seek and maximise efficiencies within the service, striving for best value within its Asset Management regime, communicating to key stakeholders how funds are targeting the right assets at the right time.

Central Government funding to Local Authorities is reducing exponentially year by year and is changing how we manage the whole life of the highway assets. To manage this need proactively authorities need to develop innovative processes to improve efficiencies. Following HMEP guidance (Highways Maintenance Efficiency Programme) to encourage collaboration with Service providers, contractors and in particular neighbouring authorities that can share the same need can promote performance improvements through a share of resource, skills and innovations. This can improve buying power within the highway marketplace and reduce costs significantly.

Each authority is now required to bid for additional maintenance incentive funds that can add to the ever decreasing centrally funded grant.  The following business case looks at the need to develop and promote Asset Management throughout this authority and highlights existing areas for improvement.

Source: Department for Transport (DFT) analysis

The above chart gives the current maintenance funding issues this authority faces, with the peaks illustrating events seen in 2013 (extreme cold weather events) and 2014 (exceptional rainfall and flooding) that caused unforeseen damage to the road network, requiring emergency funding (The Pot Hole Challenge Fund), to address the damage. In one sense this was providing the resource to action the worst first at that point, but required authorities to prove their efficiency processes of how they would use the funding innovatively, showing long term best value.

2. Business Case:

OFFICER REPORT TO EXECUTIVE

Asset Management Maintenance Funding

   7th March 2016

     Key Issues/ Decision:

Following the self-assessment process the Local Authority aims to improve investment for future asset maintenance funding in its highway asset to bring the authority to band 2 by 2017 and band 3 by 2018.

In December 2014, the Secretary of State for Transport announced that £6 billion will be made available between 2015/16 and 2020/21 for local highways maintenance capital funding. From this funding, £578 million has been set aside for an Incentive Fund scheme.  

The bands illustrated above show the importance of getting to band 3 by 18/19. To be in Band 1 by 2020/21 speaks for itself. The reality is the need to show improvement which is the onus of the self-assessment process to reward local authorities that are managing their asset as efficiently as possible, getting best value from the funding awarded. The precursor to this was the Pot Hole Challenge Fund a £168M fund that provided emergency funding for severe weather damaged highway assets within authorities nationally. Its ethos was that “Prevention is better than cure” following an efficient asset management regime to show once an asset has been reconstructed, it is treated at correct intervals to extend its whole life economically, with the efficiency of pot hole repairs covering larger areas to reduce repeat visits to the same area. To successfully bid authorities had to prove efficiencies and innovations which leads us to the incentive funding.

Each local highway authority in England (excluding London) is now invited to complete a self-assessment questionnaire, in order to establish the share of the incentive fund they will be eligible for in 2016/17.

Local authorities are not competing with each other for funding, but are demonstrating that efficiency measures are being pursued in order to receive their full share of the funding.

 Business Case:

Background:

1. In 2014 the authority began a five year corporate strategy with key priorities of:

• Health and Welfare

• Residents satisfaction

• Economic Growth

2. Investment decisions have been driven by political priorities, resulting:

• “Worst first” maintenance prioritising reactive repairs and ignoring long term investment.

• Drainage maintenance priority implemented due to severe weather events to action flood damage, claims and keeping the county moving (Corporate strategy)

• Inconsistent Asset Data has concentrated on Carriageway data and neglected other assets that has serious long term cost implications where prevention maintenance has been minimal.

3. Currently £22m is spent per annum on maintenance:

• £16m Carriageways

• £1.5m Footways

• £1.5m Structures

• £2m Drainage

• £0.5m Safety Barriers

• £0.5m Traffic Systems

4. In the self-assessment trial, the authority rated itself as Band 1.

5. In the Spending review it was announced that the authority’s government grant would be substantially lower than anticipated in 16/17, meaning the authority will not be able to top up the maintenance block grant with its own capital.

• As a result of this and of being in Band 1 capital in 16/17 will reduce from £22m to £15m.

• The Capital programme has been produced and members notified of which schemes were to be undertaken.

• Local Elections are in May 2017 and highways is high on the agenda and therefore an investment in highway assets is essential.

Current Situation – Asset Management strategy

Within the self-assessment if an authority declares itself in Band 1 for the following questions it is automatically awarded Band 1 status whatever other evidence they declare, which is the case for this authority. (Evidence in Portfolio 1 shows how Surrey County Council (SCC) are within Band 2):

• Question1. An Asset Management regime is in place,

• Question2. Communication plan is in place.

• Question5. Lifecycle Plan in place for highway assets, (The onus is on carriageway assets to achieve Band 2, with lifecycle planning in place for all assets to achieve band 3).

(LO1, 2, 3) A Lifecycle plan is not in place for all the authority’s highway assets, with the recent onus on carriageway and drainage works, the only available condition data (predominantly carriageway and structures)  is inconsistent and therefore contains shortfalls in compliance, due to asset maintenance targeting ‘worst first’ rather than ‘lifetime cost’ scenarios. This has moved the authority automatically into band 1. Referring to portfolio 1 (Q5) the example of Surrey County Council shows that they had similar initial issues, but due to their lifecycle plan for carriageways being further advanced it was re-assessed to Band 2.

This authority’s Asset Strategy has shown a deficiency with managing all assets efficiently with insufficient lifecycle analysis for all major assets. In this authority due to low investment footways have deteriorated considerably, and Safety barriers and traffic systems have had minimum reactive maintenance and are in need of renewal in many cases, which could lead to potential liability and claim issues if investment is not increased.  

Some of these shortfalls can be attributed to the lack of funding, with carriageways taking the highest priority and the statutory need due to unforeseen damage caused by recent severe weather events. However within this authority this has been compounded by the inefficiency and balance of maintenance, with poor, inconsistent and unreliable data potentially reducing any whole life cost saving, due to missing intervention timescales with preventative maintenance. If assets are not managed efficiently, even the £16million carriageway works could have been targeted incorrectly leading to future costs that could have been avoided.

All data is based on risk assessment analysis from inspection and condition analysis (See Appendix 4) creating reactive “emergency works” to future planned works for all assets from carriageways, structures to trees. Liability as a highway authority (Sec 41 from Highways Act) has potential to not only increase cost of claims but cost lives.

An effective communication strategy is essential to keep the support of its key stakeholders and is a driver in many of the questions within the incentive funding criteria. This authority has shown shortfalls in regards to this and this will be addressed within the following business case.

The issues raised above show the importance of and how Asset strategy is linked with the authority’s corporate strategy message. To achieve excellence in Health and Welfare (Maintaining the highway), Residents satisfaction (communication strategy and delivery), and Economic Growth improvements (Targeting funding of strategic economic highway routes). These improvements are vital to target needs of our local communities and will be addressed within this document.

Risks with current Asset approach: (LO1, LO2, LO3)

Initially it is important to look at the self-assessment requirements (Portfolio 1) and what staying in Band 1 actually means for the authority.

The main factor is the significantly reduced budget where capital in 16/17 will reduce from £22m to £15m. That would only provide minimal maintenance, and could draw the authority into a scenario of minimal investment and an increasing curve of deterioration, where even though you are still following an Asset Management plan the level of investment is not enough to prevent some assets deteriorating exponentially.

Financial

One approach prior to the self-assessment with limited and reducing budgets may have been to do nothing. In other words keep using what money the authority has to just cover the statutory duty (Sec 41. Highways Act to maintain the highway at public expense) to keep the highway safe to agreed authority safety criteria. This option long term increases risk substantially, as the highway asset will continue to deteriorate to a point where it is beyond cost effective preventative maintenance, with the only option to resurface or replace an asset (Structure, drainage systems etc.) at significant cost or worst case prohibit access.

In other words a cost vs risk scenario where budget is compared against the amount of claims rather than engineered highway investment decisions. This would not follow the lifecycle or efficient use of the budget short or long term, and would keep the authority in the Band 1 with the reduced funding scenario.

The diagram below illustrates performance of an asset and the need for a preventative maintenance process:

 

Worst First Vs Lifetime Costs analysis (LO1,2,3)

“Worst first” can potentially work up to a point on the maintenance intervention levels but will only delay reconstruction, not prevent it. This sets up the fine balance between a reactive, not proactive approach, causing higher costs for maintenance in future due to a lack of preventative maintenance. Reactive costs such as pot-hole repairs, which often result in repeat visit costs, traffic management, disruption and potential claims just adds additional costs to an authority and/ or the service provider, seriously draining revenue funds that are already at a premium.

With Revenue funding for highways reducing year by year the need to make sure revenue impacts are reduced quickly will be essential to improve the performance. This authority will therefore require a strict new asset management regime, looking at the long term “whole life” of all its assets, not just the short term solutions.

Political issues

As this year’s programme has already been advertised, reducing the list of works could cause substantial issues in regards to reputation and perception of how the highway is managed, potentially perceived as broken promises on what was to be delivered.

Elected members have an integral role in the management of the authorities asset and the risk of losing support from the public and the members in turn can affect budgets, staff structures, management and procurement (where our contractor partners performance and reputation is linked with the authority, particularly in regards to potential renewal of a contracts).

The only way to overcome this is with a stringent Asset regime, and a communication plan to engage and explain the reasoning behind why some roads are completed and some (which to the public eye that look worse) are not being maintained.

One issue with this has been political pressure to carry out works chosen by elected members who can add pressure to add a scheme for their own needs. The proposal will be to engage and educate members on why schemes are chosen, following the same criteria on all asset led programmes will make this conversation more subjective as opposed to confrontational.  

Efficiency (LO1, LO2, LO3)

Efficiency has been highlighted as a major risk against budget reduction for this authority. This can only be achieved by utilising a stringent asset management strategy, which records and monitors network condition so intervention levels can be achieved. However when reconstruction schemes can be fully budgeted for the correct scheme is selected, and therefore the authority can justify why a scheme is being chosen for engineering reasons  backed up by condition data and priority need (SCANNER, CVI, ref Appendix 4).

The table below illustrates within the road class, the projected costs of preventative maintenance to get the full projected life of a carriageway. Once a carriageway is reconstructed it shows the need for preventative maintenance to get the whole life anticipated cost benefits and follows the rules of the HMEP (toolkits that help manage the highway asset so budgets can be used to maximum efficiency), and the pot-hole challenge  fund ethos of “prevention is better than cure”. Similar models are available for each asset (Structures, drainage etc.).

Following reconstruction a surface treatment can be used twice before reconstruction is required. Therefore as below evidence from SCC predicts a need of £9.12Milion spend per year to counteract deterioration of the carriageway assets alone. With funding at this level in recent years treating the right asset at the right time (lifecycle planning), optimising the right preventative treatment, and updating and monitoring asset records is essential.

Publicity and End user satisfaction - Poor communication Plan

Another reason for the poor performance in the self-assessment was down to a limited engagement with elected members, the public and business. This has heightened a poor perception of the highway authority adding pressure on justifying where and what the budget is spent on.

Members have now raised issues with how the highway asset is managed and works are delivered. This will need be addressed and will be discussed with a new strategy proposed.

Local and national press have criticised highway maintenance management and poor communication, which has increased poor perception of the team within the authority internally and externally.

Q12 self-assessment (portfolio 1) refers to customer surveys and this feedback will be addressed.

Actions required to achieve Band 2 by 2017 and Band 3 by 2018 including: (LO2,4,5)

• Changes required to governance

• Asset Commissioning and communication strategy

• Communication Strategy

• Indicative costs

• Training

• Resource and collaboration

• Asset Data Management

• Lifecycle planning

Changes required to governance and decision making process

A restructure of the highway model to make sure the authority is an Asset driven decision maker, providing justification for actions vs budget, cost vs risk. A model will be looked at in regards to an Asset Commissioning and Delivery Model and is proposed below.

Asset Commissioning Model and Communication Strategy: (LO5)

To manage the Asset management plan, budget and deliver the efficiencies required for the incentive funding a commissioning team is proposed as set out by the HMEP commissioning model. This will provide budget delivery and performance efficiency improvements and will provide data for the communication strategy.

The proposed model below illustrates these needs and how we should implement, prioritise and action. (Adapted from Lincolnshire County Council Commissioning model).

Additional Commissioning model delivery provides:

Communication Strategy (See example A22, CSE and Engagement in evidence Portfolio 3).

A new plan will be set out for works delivery with a customer stakeholder engagement plan (CSEP) where scheme delivery communication is managed consistently and monitored for the “customer experience”.

In recent years elected members have lost trust in how Asset Management and our contractor partner have selected and delivered works and as such workshops will be planned with members showing the new strategy plan and budget demands. The aim is to illustrate how to achieve best value and the benefits of Asset data and lean service delivery.

The previous table of commissioning reflects the priorities to our stakeholders and staff so they are aware of Asset Management Strategy and engaged in its development. The following should also be incorporated into the communication plan.

• Member management: engaging elected members with any changes to programmes and delivery.

• Advertising success within the authority, and nationally.

• Showing progress of repairing the right asset at the right time.

• National performance indicators: through PMS (Pavement Management systems).

• NHT (National Highways and Transport) surveys gives national statistics on how highway users perceive how well authorities are performing and that the service they are given is satisfactory or improving. This can be utilised as part of asset management reports, and can be a good measure of improvement needs (Q12 self-assessment).

Below is the recent NHT results from SCC, showing a marked improvement since increased investment in its highway assets in 2013.

in

Source: NHT SCC survey

• http://youchoose.esd.org.uk/SurreyCC : This helps illustrate to members and the public the balance and restrictions on budgets, and how changing priorities will affect one asset to another e.g. spending all money on carriageways will cause other assets to deteriorate faster.

Within (Portfolio 1) the maintenance funding questions the “You Choose” toolkit has been utilised to enable different scenarios to be run across the core assets highlighting budget pressures and what service levels could be achieved.   

 

Screenshot from online calculation tool.

Customer Engagement:

The “customer” is an important element of the self-assessment process and is a driver for us to move up to band 2 and then to 3 within 2 years.

Initially we need to identify all the key stakeholders and show how progress has been made with clear reasons behind decisions and how they affect them.  

As shown in Portfolio 3 with SCC’s communication plan an onus is put on the customer in regards to engaging the right people at the right time and gathering feedback so as to show continual improvement. SCC has also gone through a Customer Service Excellence award and accreditation in 2014 which can only be maintained by showing that any low scored areas have been worked on and improved.

Technology affects how people communicate changes so there is potential for more interaction with social media within the authority’s website. This potentially reduces caller numbers, complaints.

Indicative costs, staff and training.(LO5)

With a potential “worst case” capital budget of £15million,  reaching Band 2 by 17/18 and band 3 by 2018/19 is vital for this authority to deliver its highway services and produce an effective long term asset plan:

A proposed budget plan is shown below targeting asset condition data, based on a potential £20millon budget for 17/18. However the aim is for a 5 year programme to be agreed to manage all key assets throughout the authority in an efficient coordinated approach.

• £8million Carriageways reconstruction with drainage budgeted from resilience and local funds.

• £3m Carriageway Surface Treatment – targeting lifecycle schemes for preventative maintenance.

• £4m additional funding for footway construction over 2years and surface treatment from lifecycle planning.

• £2m Structures, targeting additional maintenance and investment in new software (potentially Bridge Station) for condition and maintenance data.

• £1.5m Traffic systems investment in maintenance and new live data condition.

• £1.5m Safety Barriers – Additional maintenance and update of servicing records monitored for legal and safety compliance.

• £5-10 million potential bids (LEP) Carriageway, drainage, structures. On strategic routes within the authority which will add to economic corporate needs.

Additional budget need:

• A market assessment of products and technological availability, potentially £1million plus to develop and implement new software solutions and staff for asset data and commissioning, such as Yotta Horizons (Visual Asset Management Tool holding all data to develop Asset planning solutions), and developing existing use of PMS to show improvement on condition, risk data.

• Finance for a new communication plan and development of staff to achieve a Customer Service Excellence Award can be accommodated within existing staffing cost.

Training:

Investment is required to develop competence within key staff with essential experience, knowledge and the skills to provide consistent reliable data for Asset management. Particularly for inspections on condition data (See Appendix 4) utilising CVI (Course visual investigation), DVI (Detailed Visual Investigation) and interpretation of SCANNER, SCRIM, core data as this is only as good as the team that create it.

Training should not cost the authority significantly and can be absorbed with employee time utilising E leaning tools such as the HMEP E-Learning toolkit, toolbox talks and internal/ external performance workshops, shadow working for junior staff. It is essential however that staff have the correct qualifications, accreditation as a minimum and this should be monitored and recorded annually.

Resource and collaboration (LO4, 5)

The resource to develop staff, should be driven by a collaborative highway procurement model, such as a Term Partnering contract that promotes the sharing of ideas and innovations, focusing on process improvements to deliver works efficiently.

Framework agreements with local firms should be considered for cyclic works to promote direct collaboration and potential cost savings.

Alliance Contracts can provide collaborative agreements, a good example of this would be SCC’s Alliance on its 5 year major maintenance plan (Project Horizon), “By developing a longer term programme, the supply chain was given greater security of work and as a result the council was able to negotiate volume discounts to achieve more work within the same budget envelope”.

Collaboration is covered in the self-assessment (Q.21) to show the authority is working with within a shared service arrangement with one or more local authorities or contractor on highway maintenance and service delivery.

Collaboration is essential in establishing buying power, combining resources with neighbouring authorities (SE7 Model) and will allow our authority to:

• Compete with other highway agencies such as Highways England,

• Allowing for negotiation of reduced rates for materials

• A share of staff resource

• A share of  innovation

• This collaboration can include “Benchmarking Clubs” where authorities compare ideas, process improvements and procurement options. A recent example is innovations in treating tar disposal (within Surrey County Council) that will save over 50% of prohibitive waste costs and can be shared with other authorities to reduce costs.

Asset Data Management (L01, LO2, LO4)

Data management is the foundation of any Asset Management plan. It needs accuracy, accessibility and reliability. Poor data leads to missed intervention timescales and opportunities adding to costs.  This authority has focused on carriageways above other highway assets, but with poor data the carriageways could still deteriorate faster over the next 10 years unless efficiency with lifecycle, preventative trigger dates can be managed. (See Appendix 4 for condition data).

“The principle of good data management” is encompassed by the Inter-Governmental Group of Geographic Information. This guide shows the importance and statutory need for an authority and illustrates the importance of Data Management focusing on key relevant legislation such as • The Freedom of Information (FOI) Act 2001 • The Environmental Information Regulations2 • The Human Rights Act 1983 • The Data Protection Act 1984 • The Public Records Act 1985.

This authority going forward will look to the benefits of good data management as critically analysed below:

As specified in HMEP this authority needs to manage its data in a consistent, reliable, cost effective way to show improvements for additional incentive funding, targeting Asset:

• Numbers

• Locations

• Performance

• Financial Value

• Public Opinion on how we manage our Asset.

This data should provide the limits of the asset and maintenance liability and therefore risk.

In addition we should include the following and as an authority to encompass:

• Public surveys (feedback & satisfaction of service)

• National data benchmarked and assessed

• Traffic surveys for correct priority need

• Carriageway condition surveys

• Bridge inspections

• Street Lighting maintenance records

Network condition data as illustrated in portfolio 2 shows condition data for Surrey County Council’s network. Based on a five year major maintenance budget of £100million. From 2013 it has shown significant network condition improvement, with sufficient investment to reduce backlogs and overall condition within 3 years as shown below:

Fig Source: SCC Network condition Red: Condition data (Scanner showing poor areas), Amber areas showing areas of deterioration.

This data needs to capture the asset valuation, deterioration modelling, lifecycle planning and financial management – See Data Evidence portfolio 2.

Whole of Government Accounts (WGA):

As part of WGA authorities need to show value of their assets, which in turn is dependent on the accuracy and reliability of the data.

Following CIPFA-Code of Practice of Transport Infrastructure assets need to calculate the value of its highway assets by calculating deprivation costs of the assets by Gross replacement costs and depreciated replacement costs.

Lifecycle Planning: (LO1, 2, 3)

Our long term methodology for the asset plan needs to be based 25 years into the life of all highway assets. To achieve this, asset management needs to include risk and time based forecasts, which in turn will encompass the whole life costing. (See Portfolio 2 Asset Data)

There needs to be lifecycle planning for each major asset within this authority, (utilising HMEP toolkits) adding better long term value by analysing the financial need required. The authority needs to use the HMEP toolkit which utilises realistic scenarios based on case studies, national asset data comparison in order to identify the best return from investment. These lifecycle plans are used to support investment decisions, and should be regularly monitored.

This is forecasting the future and the expected depreciation and deterioration of an asset through known quantities of condition data, material types etc. For example a standard carriageway constructed of a Stone Mastic Asphalt (SMA) surface course has a life expectancy of 10 years but is known to show deterioration from Year 7 to 8 and therefore needs preventative maintenance (such as a surface treatment) to extend the life by a further 5 to 10 years.

Therefore from an asset management perspective lifecycle planning demonstrates “how funding and performance requirements are achieved through appropriate maintenance strategies with the objective to minimise expenditure, while providing the required performance over a specified period of time.”

(Source: HMEP – lifecycle deterioration, intervention and treatment)

Source: HMEP Lifecycle toolkit

Referring to Asset data in portfolio 2 the following questions establish the lifecycle requirements for the highway asset:

• Funding required to meet performance objectives

• With insufficient funding what impact this would have on the asset.

• What is the funding required to keep the asset in a satisfactory condition as illustrated below, showing forecast cost analysis to eradicate Red and Amber condition roads.

• A lifecycle plan in place to deliver a minimum whole life cost.

The importance with lifecycle planning for the authority in the future is to demonstrate how the performance is achieved with available budgets and that this analysis is applied to all highway assets, targeting preventative rather than reactive works and long term planning to achieve real savings.

Following recommendation 6 and 7 from The Road Liaison Group and HMEP Asset management guidance as follows:

Our main data is held within a pavement management system (PMS) which compiles and reports on inspection data (Appendix 4). This in turn is used to report on condition of the network and is compared nationally for key indicators against all other local authorities.

Showing continual improvements to process and condition is vital aspect to the new Maintenance funding bidding process, particularly once you get to Band 2 and 3 showing enough improvement to remain in the band until 2020/21.

Benefits from reaching Band 2 and Band 3(LO5)

To reach band 2 in the first instance and show progression to Band 3 will give financial reward, but as these funds may still not provide the funding required to maintain assets, the benefits we need to show are how the budget is spent efficiently over the whole highway network and that the Asset Management Plan is aligned with Corporate goals to deliver the over-all message of value for money from this Authority. This can provide good news stories for the authority and support from members.

Achieving corporate goals:

• Address resident’s concerns – by following a strict asset management regime and action the carriageways based on network priority and condition, to justify decisions.

• By engaging with customers (road users and residents) on highway maintenance plans openly and clearly via the authority website, letter drops, and press will help show that even on a small budget it is being spent wisely. The aim is unlikely to please all but showing successes and beneficial works can only improve perception and increase support for the authority.

• Target limited resource – with the expectation of Band 3 funding statistics in Data shown in portfolio 2 the authority (SCC example) would need in excess of £20million on carriageways alone to keep improving condition on current costs. The need therefore is to make efficiency savings utilising lean processes and encompassing a share of resources and a share of risk from the contractor or other partners.

South East Authority Corporate goals illustrated above.

A Corporate strategy via Asset Strategy

Source: SCC Corporate vision within Highways and Transport

Other Benefits:

• Better maintained Asset-ability to plan further in advance to a leaner more efficient service allowing lifecycle analysis and prevention rather than reactive cure.

• Developing staff and technology within the service.

• The adoption of a longer term coordinated programmes of 5 years plus is proposed for coordinated asset network condition improvement. An example of this would be Project Horizon in Surrey where a £100million 5 year fund has developed;

• Long term planning, by being able to target the poor condition areas improving overall network condition but also lower priority roads that were using excessive revenue funds through constant repeat repairs.

• Innovations such as over 50% reductions in tar disposal (classified as hazardous waste) with our partner contractor which would not have occurred as quickly without the investment.

• Due to guaranteed funds over 5 years it allowed additional discounts for material.

• Member backing and Public satisfaction (Shown with NHT survey feedback).

Alternative Options: (LO4, 5)

The importance of getting to band 2 and then Band 3 is essential for this authority however this could still leave us with a potential funding deficit to maintain our Asset to its potential whole life cost and therefore to achieve our efficiency aims we also need to look at other options that can push this authority to a national leader.

Funding opportunities:

LEP (Local Enterprise partnership) bids See Portfolio evidence 4

In 2010 enterprise zones were setup with the Department for Communities and Local Government and the DFT creating £730 million nationally for a “Growing Places Fund”.

The fund is used by local enterprise partnerships to:

• Support infrastructure.

• Support local economic growth and regeneration in local communities.

• Utilise land and property assets to match the economic corporate plan, including job creation, supporting enterprise, and development of skills and technology.

This therefore encompasses our Authority’s corporate strategy.

(See Portfolio 4) Bids have focused on resilience for local areas preventing flooding by improving drainage and highway infrastructure making sure carriageways and structures on strategic routes are resilient and sustainable.

This fund is match funded from the authority’s capital budget with a contribution (15% for SCC) which can increase the area of highway work carried out significantly, which in Surrey’s case  show how ties with other authorities can create other funding opportunities (Within the Coast to Capital Wider Network).

Alternative funding streams – It could be controversial with road users but there is potential for charging motorists to use some bridges, or strategic routes. Within the south east in particular the burden on traffic feeding from Highways England roads to the local “A” road network can be extensive and funding for this additional traffic use may need to be considered.

Charging for services to business or other authorities – At this point Local Authorities are not permitted to show a profit against services, however if central Government Grants are reduced at the current rate this may need to be reconsidered. Such as utilising an existing highway laboratory to charge for testing for other authorities, material development for a profit.

Allowance to increase council tax following gap in central government funding – There is an allowance with member backing to increase council tax by a few percent but this needs to be communicated well and show realistic benefits to be supported.

Private Finance Initiative option.  (LO4): This procurement option could potentially alleviate some budget risk away from the authority with reduced upfront costs but long term issues after that period (say 25 years) could leave the authority in a poor situation long term if not managed well.

(LO4) Procurement options are always worth benchmarking for potential and with HMEP contract options, promoting collaborative contracts further we need to pursue potential cost share with contractor such as within an Alliance contract that can provide:

* Shared Risk

* Economies of scale (discounts on materials)

* Financial surety

* Shared Knowledge

* Reinvestment

* Lower cost model

* Resilience

* Opportunities for growth.

The supply chain can also potentially improve performance by extending warranties on works, the innovation of materials and methods of working that could be sold nationally. From the authority we will also look into Key performance Indicators (KPI) to manage contractor performance which may include penalties for performance issues. Or to change payment mechanisms to support or improve performance.

Restructure. The right staff within a local authority are vital for getting the best value out of highway delivery, however different procurement options can allow reductions in staff costs relying more on contractor delivery (Design and build, NEC type contracts).

(See Appendix 3 for payment mechanisms and contract critical analysis)

Selling off assets to private organisations or roads to residents or Seeking contributions from residents – There may be options for some areas of highway to be sold to private business or even residents, or if residents are requesting options within their road a contribution could be agreed by the authority.

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