New maintenance cost indexes will boost efficiency

Highways Reporters

A new way of working for the highways maintenance industry has been launched with new indexes to track costs and improve efficiency.

HTMA, (Highways Term Maintenance Association), CECA (Civil Engineering Contractors Association) and BCIS (Building Cost Information Services of the Royal Institute of Chartered Surveyors) have collaborated to develop a set of new price adjustment indices specifically for term contracts in the highways maintenance industry.

Cheshire West and Shropshire are the first to adopt the mechanism within their new contracts being issued later this month.

The three organisations have worked together to produce a monthly highway maintenance term contract indexation mechanism that effectively tracks costs to achieve: lowest priced bids, fair allocation of risk between client and supplier, and accurate cost profiling.

Steve Ashley, chair of the HTMA procurement working group, said: “There was a need to develop the long-standing Baxter Indices so that price adjustments truly reflect actual cost variations incurred during the life of long term highway maintenance contracts.

“The industry as a whole has experienced intense periods of cost volatility and it is in interest of all parties to reflect true costs in order to promote and encourage flexibility, forward planning and efficiency”.

Alasdair Reisner, Director of External Affairs at CECA explained: “The last oil price shock in 2008 provided stark evidence that current approaches to inflation adjustment on long-term highways maintenance contracts were not up to the task.

"We have welcomed the chance to work with HTMA and BCIS to develop a new approach that will hopefully lead to a fairer approach for both clients and suppliers, ensuring that the industry is better prepared for future cost volatility.”

Kevin Carrol, Network Manager at Cheshire West and Chester Council, said: “These new indices will help to track actual costs more accurately and help us to achieve better efficiencies within the procurement process for our contracts.

"They will allow us to apply the appropriate proportions for price adjustments for different types of work being carried out, whether it be routine maintenance, renewals and construction, professional services, surfacing and patching, surface dressing, road markings, street lighting or vehicle maintenance.”

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