Contact: Alan Mills, ext 6930 email: [email protected]

1. Summary

1.1 This report identifies the advantages and benefits to the County Council of working closer together with the street lighting Contractor Southern Electric Contracting Limited (SEC), and proposed changes to bring this about.

2. Corporate Strategy

2.1 This report supports Aim 5 of the Corporate Strategy (Improving Services) by working together with the Street Lighting Contractor to improve the efficiency and effectiveness of the working arrangements.

3. Background

3.1 The Term Maintenance contract for street lighting maintenance for the period 2002 to 2007 plus three possible yearly extensions was awarded to SEC following a competitive tendering process in January 2002.

3.2 The contract is for the maintenance of illuminated street furniture and associated electrical apparatus. The stock comprises some 144,000 lighting units including street lights, illuminated signs and bollards. The service provides for routine maintenance and repairs and replacing/upgrading life-expired lighting columns with an annual value of approx £4.8 million.

3.3 At the time of tender the existing highway management structure had street lighting agents who were locally responsible for maintenance management in the existing District and Borough Councils. There were nine agencies and three directly-controlled areas. The overall management control was through the street lighting section based in Winchester.

3.4 The contract documents allowed for evolution using a partnering arrangement, with each party "working together" for mutual benefits. This was to augment the re-organisation of the Highways Management structure following the termination of the agency arrangements which occurred after the tendering process, thereby bringing improved efficiencies to the service delivery.

3.5 The intended partnering strategy has not been implemented fully, and therefore the advantages of the agency reorganisation have not been fully realised. County Council Engineers have been simply substituted into some of the highway units and sub-units, effectively mirroring the original set-up and continuing the inefficiencies.

3.6 The key objectives of "working together" as identified in the contract documents are to:

(i) develop a common culture between the parties;

(ii) share in the management of the services to be delivered;

(iii) develop a seamless delivery of the services;

(iv) develop a team culture between staff;

(v) provide joint leadership and motivation;

(vi) encourage innovation in problem solving; and

(vii) embrace the development of Best Value for service delivery in stakeholders.

4. Achievements So Far

4.1 During the first year of the contract representatives of the County Council and the Contractor met to look at inefficiencies and to put forward suggestions as to what joint management initiatives could be developed. Four initial suggestions were put forward relating to joint management structures.

4.2 In August 2003 a partnering workshop was convened and staff from both the County Council and the Contractor attended. A mission statement was produced "To provide effective, sustainable lighting for Hampshire through an enlightened partnership". All attendees signed a charter agreeing to the partnering mission to move forward to achieve set goals.

4.3 Following this and as part of the goals set, a Partnering Board was established and a Partnering Champion appointed. A working group was formed using representative of both organisations along with clear terms of references.

4.4 In line with the key objectives the working group was tasked to look at the following:

(i) a cohesive management structure and to show what benefits this would bring;

(ii) the current methodology of the existing operations and to radically rethink what changes could be made to increase efficiency, reduce travel, improve standards and maintain sustainability;

(iii) to identify economies, where financial savings could be reinvested in infrastructure improvements; and

(iv) to embrace Best Value.

4.5 The Department of Trade and Industry provided external funding through the "Constructing Excellence" initiative to engage Dr Richard O'Connor to assist with detailed analysis of each element of the service delivery.

4.6 The working group with Dr O'Connor identified a number of issues that significantly affected the efficient operation of the contract and if changed could clearly bring mutual benefits. These inefficiencies include:

(i) duplication of visits to identify and agree work requirements;

(ii) duplication of auditing by both organisations;

(iii) planned maintenance visits considered to be too regular when currently each unit is effectively visited every three years by a repair team and inspected by a patrol 19 times a year;

(iv) too many site visits when installing new units;

(v) inherent inefficiencies through Client/Contractor not being co-located;

(vi) numerous meetings and consequently too much travelling between offices through Client/Contractor not being co-located;

(vii) excessive phone calls between Client/Contractor by not being co-located; and

(viii) a "them and us" approach to service delivery.

5. Proposal Associated with "Working Together"

5.1 There are currently 13 members of County Council staff responsible for the comprehensive range of duties to deliver street lighting services in Hampshire. Of these, seven are located in Winchester headquarters, five in the Highway Units and Sub-Units and one already co-located in the Contractor's main office at Cosham. The location of the five staff in the Highway Units and Sub-Units, in fulfilling their maintenance duties, contributes to many of the inefficiencies identified in paragraph 4.6.

5.2 Members of the public who wish to make defect reports use either the freephone fault reporting service or telephone direct to the Highway Units or Sub-Units. There is also a facility to email defect reports or general queries in addition to conventional correspondence. All of these defect reports or queries are then actioned by the appropriate County Council staff member.

5.3 It is proposed that, to substantially improve upon the efficiency of the maintenance duties, the three staff members currently located in the Highway Units and Sub-Units be co-located, with one manager from Winchester headquarters, to the Contractor's main office. There will also be a requirement to recruit one administration assistant as this post is currently vacant.

5.4 The remaining two staff members will stay located in either a Highway Unit or Sub-Unit, acting in an Area Liaison role, where they will action the defect reports and general queries and act as the customer focal point for parish, town and district street lighting issues.

5.5 There will be six members of staff remaining at Winchester headquarters who will fulfil all the other duties currently undertaken by the office, including design, energy, probity and audit of the contract, and Member liaison.

5.6 The success of this proposal will also be affected by the location of the operational centre. SEC's current depot is in Cosham but it has been recognised that the ideal location should be along the M27 corridor, preferably between Fareham and Eastleigh. However, the joint operational centre could still operate from Cosham but not to the projected optimum efficiency. An upgrade data-communications link has recently been installed at this operational centre at a cost of approximately £20,000.

6. Evaluation of the Proposal

6.1 The main advantage of the proposal is that the inherent inefficiencies identified will either be eliminated or substantially reduced.

6.2 There will be an improvement in the overall service delivery due to the work analysis and co-location.

6.3 There will be reduced County Council overheads arising from the deletion of one Assistant Engineer post. The savings are estimated to be in the region of £30,000 per annum.

6.4 A further £60,000 savings are predicted by assimilating some of the Engineering Consultancy activities within the County Council contract management. There will also be estimated fuel savings of £3,000 per year as a result of staff not needing to travel to numerous meetings with the Contractor. Carbon dioxide emissions will fall as a direct result.

6.5 The stakeholders of Hampshire will benefit through improved service delivery at no extra cost.

6.6 Through one single organisation and one Charter, people will feel positive and motivated, eliminating the "them and us" culture and developing mutual trust between colleagues.

6.7 SEC's current losses will be minimised. This will encourage the company to continue the contract for the remaining contract term.

6.8 This is also an opportunity to trial a management system that could be incorporated into future contracts.

6.9 There will be a one-off cost involved in the `setting up' stage of between £5,000 to £30,000, depending on location. Also there will be a contribution of £25,000 per annum towards accommodating County Council staff in the joint location, which may not be fully recoverable by compensating savings in the area offices.

6.10 An accommodation exit strategy needs to be agreed in the event of the contract not being reviewed.

7. Contract Changes

7.1 To achieve the "advantages" of this proposal the following change to the Conditions of Contract and two changes to the methodology (including rationale) of the working practices are required.

Change to Condition of Contract

7.2 The contract requirement is for works to be completed to key performance indicators (KPIs) set in calendar days. It is proposed that works now be completed to KPIs set in working days. The target days will be adjusted to reduce the impact on the service delivery as follows:

(i) KPI 1 - Reactive Maintenance, five calendar days changed to three working days;

(ii) KPI 2 - Ordered Works, ten calendar days to eight working days (no excavations); and

(iii) KPI 2 - Ordered Works, 25 calendar days to 20 working days (with excavations).

7.3 This will bring the Hampshire Maintenance Contract in line with other similar Local Authority contracts. It will also reduce the risk of injury to children who tend to gather around the Contractor's vehicles when not at school during weekend working. The KPI targets can readily be adjusted to compensate for completion times and retain the high standards being achieved.

Change to Methodologies of Working Practices

1. Revise the electrical testing programme

7.4 At the time of tendering the requirement for electrical testing was to ensure that every unit was tested at least once every six years and programmed accordingly. Under Best Value practices and minimising the number of visits needed to each column during the contract period, it is recommended that the electrical testing is now carried out each time the column is visited for a repair. Where no repair takes place the unit will be tested at the existing programmed six year test visit, ensuring that the county's contractual requirement for electrical test and inspection remains unaltered. This will ensure corporate strategies are met by minimising the number of site visits.

2. Revise the methodology for planned maintenance activities

7.5 The specification under clause 2.3 requires that each lighting unit is subject to planned maintenance every two years. The bulk lamp change programme will remain unaltered at generally every four years and will determine the minimum frequency of planned maintenance visits. This will ensure that each unit will have a scheduled planned maintenance visit each time the lamp is changed.

7.6 Approximately 40,000 units are also visited by repair electricians each year. It is proposed that at the repair visit the maintenance under clause 2.3 will also be undertaken. Any unit which has not been attended within the two year period will be identified and attended under a separate programme. This will ensure that the contract requirements are fully met and will reduce the number of separate visits to columns. This will support the corporate strategy of stewardship of the environment.

8. Conclusion

8.1 The advantages offered by the proposal are significant. There is now a unique opportunity for the County Council to move forward in the provision of street lighting maintenance, with all parties, including the stakeholders of Hampshire, enjoying the benefits of this proposal.

8.2 The changes to the Contract are minimal. They can be authorised by the "Engineer" within the provision of standing orders.

8.3 It is intended that, subject to the outcome of the formal consultation processes with staff, the appointment of staff to the new structure should be undertaken as soon as possible.

Recommendation

That the Committee comments on the "Working Together" Proposal.

9095/AABM