Contact: Chris Roberts, ext 6865

1. Summary

1.1 The following decision is sought:

That the highways maintenance budget for the financial year 2002/03 be allocated as set out in the appendices attached to this report.

2. Reason

2.1 To allocate budgets to budget holders to enable highway maintenance work programmes to be implemented for the year 2002/03.

3. Other Options Considered and Rejected

3.1 None.

4. Conflicts of Interest Declared by the Decision Maker or a Member or Officer consulted - Not applicable.

5. Dispensation granted by the Standards Committee - Not applicable.

6. Reason(s) for the Matter being dealt with if Urgent - Not applicable.

Approved by: Date:

Councillor K B Estlin

7. Introduction

7.1 This report presents details of the proposed highways maintenance programme for 2002/03, totalling £38.9 million. It considers the allocation of both the highways maintenance revenue budget of £18.8 million and the capital structural maintenance provision of £20.1 million.

8. Background

8.1 On 25 January 2002 proposals for the 2002/03 revenue budget and the capital programme 2002/03 to 2005/06 were approved.

8.2 The overall revenue budget provision for highways maintenance during 2002/03 is £18,783,000. This sum includes a sum of £453,000 towards the cost of inflation during 2002/03, together with a sum of £80,000 carried forward from the 2001/02 budget to help fund the new IT system for the highways term maintenance contract.

8.3 The total capital programme provision for 2002/03 to cover the structural maintenance of principal roads, non-principal roads and bridges is £20,112,000. This sum is lower, by £2 million, than the original provision for capital maintenance in 2001/02 because that year's allocation was boosted by resources which were transferred from the transportation element of the capital programme. This transfer was made in order to help achieve an overall transportation spending performance in line with the capital programme provision.

8.4 The total budget available in 2002/03 for capital maintenance includes a sum of £200,000 to cover the estimated impact of the introduction of the aggregates tax on all the capital maintenance work to be carried out during the year. This tax, which is levied on each tonne of new aggregates used on highway maintenance, is paid by the contractor and will have been reflected in the new prices received. An addition to the cash limit has been made to cover this.

8.5 The recommended allocation of the maintenance budget for 2002/03 reflects the impact of the prices which will be paid in the new term maintenance contract which begins on 1 May 2002. This has required the transfer of resources between different elements of highway maintenance work to reflect the prices for work quantities under the new contract, including the proposed transfer of £100,000 from the locally resourced provision for capital structural maintenance to the highways maintenance revenue budget. This is discussed further in section 9 below.

8.6 The implementation of the highways management 'blueprint' also has an impact on the allocation of the highways maintenance budget between the various budget holders. The allocation detailed in the attached appendices reflects the current timescales which have been proposed for the establishment of the new highways sub-units and removal of agency powers for the management of the highway from the districts.

9. New Term Maintenance Contract

9.1 Details of the outcome of the tendering process for the new county-wide term maintenance contract for county roads, covering the period 2002 to 2007 (extendable to 2010), were reported to the Executive Member for Environment on 15 January 2002. The report recommended that the term maintenance contract be awarded to Raynesway Construction Southern Limited, with a start date of 1 May 2002.

9.2 The report also made reference to the work which was being undertaken to assess the impact of the retendering on the highways maintenance budget, which accounts for 90% of the total turnover of the contract. It was proposed that the outcome of this exercise be reported to a future meeting of the Executive Member, when the allocation of the 2002/03 highways maintenance programme would also be considered.

9.3 The work to evaluate the impact of the new term maintenance contract on the budget has now been completed. This exercise initially calculated the overall cost of implementing the estimated volumes of work in the 2002/03 highways maintenance budget, using the prices within the new county-wide contract. The ensuing figure was then compared with an assessment of expenditure that would have been incurred under the existing highways maintenance contracts, including those managed by the district council highways agencies, for the same quantities of work.

9.4 Overall, estimated cost reductions of £478,000 (2.4%) per annum on the total highways maintenance budget (both revenue budget and capital programme funded) have been obtained from the retendering process, compared to the equivalent cost of undertaking the same quantities of work under the current maintenance contracts.

9.5 In addition, the replacement of the former agency districts works contracts with the new county-wide term maintenance contract has streamlined certain administrative processes, enabling these efficiency improvements to be incorporated within the staffing structures being implemented under the new network management 'blueprint' arrangements.

9.6 It is interesting to note that all of the above cost reductions have arisen against work quantities that would, in the past, have been sourced through the individual works contracts formerly under the control of the district council highways agencies. These cost reductions are estimated at £603,000 per annum and have been partially offset by higher estimated expenditure totalling £125,000 on work quantities in the existing directly controlled areas. This outcome clearly illustrates the economies of scale benefits that have arisen following the earlier decision to proceed with one county-wide term maintenance contract.

9.7 However, the estimated savings from lower prices will be almost entirely offset by the higher expenditure that will arise under the new contract following the introduction of performance specifications, which have been included for certain types of maintenance work on the principal roads network. These performance specifications will lead to enhanced standards of maintenance, estimated to cost an additional £419,000 during the first year of the new contract, for white lining, safety fencing, sign cleansing and the repair of minor structural defects.

9.8 The net position is therefore a saving of £59,000 (0.3%) per annum, taking into account both price variations and the additional cost of the performance specifications within the contract. However, it should be noted that this reduction has not fallen evenly over all categories of work within the total highways maintenance budget. Some individual prices have risen whilst others have fallen. It is estimated that the cost of routine maintenance work being funded from within the highways maintenance revenue budget will increase by £158,000 per annum, whilst savings of £217,000 will accrue on the capital structural maintenance budgets.

9.9 The highways maintenance works allocations to budget holders for 2002/03 set out in this report make allowance for the estimated impact on work volumes and quantities of the new prices payable under the county-wide term maintenance contract. Budget allocations for the various highways units and budget holders are therefore being set at a level which would enable current highways maintenance policies and priorities to be maintained.

9.10 However as explained in the above paragraph, price differentials arising from the term contract retendering have not fallen evenly over all categories of maintenance work. It is therefore necessary to make a transfer of £100,000 from the locally resourced provision for capital structural repairs to the revenue budget, in order to provide adequate funding levels for the various routine highways maintenance activities.

10. Proposed Allocation of the 2002/03 Highways Maintenance Budget

10.1 The total sum available for highways maintenance is allocated to a number of budget holders for spending and control purposes. The proposed allocations for 2002/03 are summarised in the attached appendices. In the course of the year further adjustments to the allocations may be necessary, to reflect changing priorities and demands and to ensure proper management of the available resources.

10.2 The allocations reflect an assessment of the likely timescales for the establishment of the new management structures which have been outlined in the highways management `blueprint'. It may be necessary to amend the allocations as the implementation dates are confirmed.

11. Highways Maintenance Revenue Budget (£18.9 million)

11.1 The budget allocations within ordinary maintenance, namely routine maintenance, aids to movement and environmental, have been maintained at a level to ensure that the safety of the highway network is preserved. The pricing of the new contract has resulted in elements of this work, particularly gulley cleansing, environmental maintenance and precautionary salting, becoming significantly more expensive, whilst other areas of work have reduced in price. It has been necessary therefore to move resources within the total budget allocations to reflect these price changes.

11.2 Additional resources have been provided to cover the anticipated growth in the provision of intelligent transport systems during the year. There will also be an enhanced programme aimed at dealing with the backlog of refurbishment to traffic signals.

Street Lighting

11.3 The award of the contract for the supply of unmetered electricity for street lighting, signs and traffic lights to Scottish and Southern Energy was approved by the Executive Member for Environment on 10 September 2001. The contract, which reflects a 95% brown/5% green energy mix, began on 1 April 2002. The annual cost is very close to the price which was paid for 100% brown energy during 2001/02. The contract, which is at a fixed price for two years, represents good value and achieves progress towards the County Council's target of achieving a 90% brown and 10% green energy mix by 2010.

11.4 The previous contract for the maintenance of street lighting equipment by David Webster Limited ended in March 2002. A new contract, based on price, quality and added value, has been awarded to Southern Electric Contracting and began on 1 April 2002. This contract will also now include the supply of labour and materials for the column replacement programme. An assessment of the cost of the new contract compared to the previous arrangements has been carried out. This indicates that the cost of the new contract, which is fixed in price for the first year, is marginally lower, by 0.8%, in comparison with the cost of the previous contract during 2001/02.

11.5 The retendering of both of these contracts for the supply of energy and the maintenance of lighting equipment has resulted in the receipt of competitive prices which are broadly equivalent to the funding provided in 2001/02. The provision within the inflation contingency for price rises during 2002/03 will not therefore be required on these areas of the budget. This has enabled this provision to be released to mitigate the excess costs being experienced in other areas of the highway maintenance revenue budget which have been referred to in paragraph 9.6.

Highway Systems Development

11.6 Allocations have been set aside to accommodate the cost of systems currently in development and to progress new systems during 2002/03. These include replacement ordering systems for the term maintenance contract and the street lighting maintenance contract.

12. Highways Maintenance Capital Programme (£20 million)

12.1 It is proposed that the overall provision for capital maintenance be allocated as follows:

(i) principal roads structural maintenance - £5.7 million;

(ii) non-principal roads structural maintenance - £12.0 million; and

(iii) structural maintenance of bridges - £2.3 million.

13. Principal Roads Structural Maintenance Budget (£5.7 million)

13.1 Works covered in this programme vary in scale significantly from minor structural repairs to major carriageway reconstruction projects. The larger schemes are managed centrally whilst the smaller schemes will be managed by the highway units and the remaining district council agencies. It is proposed that this budget be allocated under the following maintenance categories.

Major Maintenance

13.2 Only one major scheme can be programmed for 2002/03 with the funding available. This will be reconstruction work on the A334 in Botley between Woodhouse Lane and the B3354 Winchester Street, estimated cost £770,000. However, a provisional sum of £500,000 has also been set aside to fund all of the works which have been found necessary to complete the reconstruction scheme on the A36 at Totton. In addition £400,000 has been provided as a contribution to the A325 bus lane in Farnborough for reconstruction of the adjacent areas of the highway which would not have been covered by the bus lane scheme.

Special Maintenance and Resurfacing

13.3 Additional funding of £937,000 for this area of work compared to that programmed in 2001/02 is proposed. This will allow the ideal Highways Assessment and Maintenance Priorities (HAMP) intervention levels of 80 and 60 for Special Maintenance and Resurfacing respectively to be achieved. In consequence a significant reduction in the backlog of outstanding maintenance on the principal road network will also be achieved.

Surface Dressing

13.4 Surface dressing is an extremely cost effective way of prolonging the life of the carriageway, sealing cracks and restoring skid resistance. The ideal HAMP intervention level of 40 would require a programme of work amounting to £1,500,000 to be achieved. A budget of £900,000 is proposed which will allow a HAMP level of 50 to be supported, this compares to an intervention level of 55 in 2001/02.

14. Non-Principal Roads Structural Maintenance Budget (£12 million)

14.1 Although the starts value for the non-principal roads structural maintenance budget is less than the 2001/02 budget which was set at £14.4 million, it generally still allows for a similar or better HAMP intervention level to be achieved.

Special Maintenance and Resurfacing

14.2 The need for planned structural repairs to both the footway and carriageway continues. A significant proportion of the budget will be directed into footway structural repairs and to help restore the fabric of the footway. This area of the budget totalling £3.2 million will allow a HAMP intervention level of around 100, this is comparable with the level supported in 2001/02. However this is significantly below the National Code of Practice recommended intervention level of 80 which would require a programme level of £8.4 million. The proposed allocation for resurfacing of £1.4 million will allow the ideal HAMP rating intervention level of 60 to be achieved, as it was last year.

Surface Dressing

14.3 A `high performance' programme which covers the busier main roads amounting to £493,000 will allow the ideal HAMP level of 40 to be achieved. An allocation of £1,260,000 for the urban and minor roads will allow an intervention level of 60 to be achieved, this is an improvement on the 2001/02 level of 70. A budget of £450,000 is proposed for footway surface dressing which will allow an adequate programme to be implemented.

14.4 Although the funding for special maintenance and the surface dressing of minor roads does not allow the county to achieve the recommended intervention levels, the safety of the network is not compromised. However, in the long term this will result in less cost effective maintenance operations.

15. Structural Maintenance of Bridges (£2.3 million)

15.1 Funding totalling £2,270,000 has been allocated to bridge maintenance. It is planned to implement two major bridge strengthening schemes at Langstone and Bursledon at an estimated cost of £1,100,000. The remainder of the budget will fund two smaller strengthening schemes, a programme of structural maintenance, land assessments and a parapet/safety fence feasibility study.

16. Conclusion

16.1 The proposed budgets for surface dressing, special maintenance and resurfacing allow a similar or improved level of intervention to be achieved in 2002/03 compared to 2001/02. In addition it will be possible to support one major scheme and a significant programme of bridge maintenance.

7092/CR