Birmingham Council cuts KPIs to simplify £2.7bn highways deal

Birmingham City Council has cut hundreds of KPIs during a restructuring of its troubled £2.7bn highways PFI contract.

The tender process for a new contractor for the revamped 12-year deal will start in February.

Birmingham originally signed a 25-year, £2.7bn highways management and maintenance contract back in 2010 with Amey.

But the contractor became embroiled in a lengthy performance dispute with the council which ended in March 2020 with Amey paying £215m to terminate its involvement in the PFI deal.

Kier stepped in as interim contractor while the council and Birmingham Highways Limited – the special purpose vehicle owned by Equitix and PIP Infrastructure Investments – have been working to restructure the contract.

The new contract will cover the remaining 12 years of the initial agreement, from April 2023 to June 2035.

It will be a bespoke deal similar in length to a standard long-term maintenance contract, with operational terms and a performance regime that enables it to be “brought up to date to better reflect current industry standards which have changed over the past decade.”

Birmingham said: “The new contract has been structured to provide better governance of the project and more balanced risk between the Council, the SPV and the future contractor.

“A key element of this is a reduction in key performance indicators from over 600 to around 28 as well as prioritisation of deliverables, addressing both areas which routinely plagued the previous contractor Amey during its tenure as subcontractor.”

Prospective bidders will go through a competitive and transparent tendering process which is due to begin in February 2022, following the supplier day in January.

The process will be conducted over a period of nine months and be structured to provide bidders with sufficient time to undertake due diligence.

During the interim period, an updated Management Information System (MIS) was implemented to collect data from across the road network to provide a greater understanding of current conditions and areas for improvement.

Bidders will be provided with access to this information via a data room, which includes a database of assets and will allow bids to be informed by bidders’ due diligence and analysis.

The data room will include new information about the current status of the road network from improved data collection and analysis, including full network surveys of carriageway conditions that have been undertaken by independent surveyors.

This information will be shared with bidders during the tendering process, providing them with the most detailed understanding of the status of the network to date and provide greater clarity over what can be delivered over the term period.

The contract covers capital works and maintenance of more than 2,500km of roadways and 5,000km of footways across the UK’s largest authority and second largest city, as well as 846 structures, three tunnels, 94,000 street lighting columns, 76,000 highway trees and the city’s traffic control system.

Kevin Hicks, Assistant Director for Highways and Infrastructure of Birmingham City Council, said: “Extensive work has been put in over the last two years by all of the project parties and with the close support of the DfT in order to establish a workable and deliverable contract framework.

“Many lessons have been learned from the first 10 years of the project and with the insight we have gained from the industry through previous engagement exercises believe that we have an attractive prospect for the market.”

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