Skanska gives up £34m a year county council highways contract
Ben Hatton Local Democracy Reporter
- Credit: ARCHANT
Cambridgeshire County Council is set to transfer its highways services contract from Skanska to Milestone Infrastructure Ltd.
The change comes after Skanska said a review by its parent company determined that would divest from its delivery arm which includes council highways services.
Liberal Democrat councillor Ian Manning told the county council’s highways and transport committee on Tuesday (March 9) that it appears the company’s “financial failings” are behind the change.
Skanska has been the county’s highways contractor since 2013, when it took over a contract with Atkins agreed in 2006, after the latter sold off its operational arm for delivery of its council highways contracts.
The county council agreed a further 10-year contract with Skanksa UK Ltd in 2017, with the option to extend for up to a further five-years.
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The council said the contract is valued at £900 million over the 15 years.
Skanska’s contract with the county council for highways maintenance and certain construction work covers 1,700 miles of carriageway and 1,400 miles of footways and cycleways, and includes maintaining the road surface and signs, verge trimming, and safety checks and maintenance.
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Skanska has sold its infrastructure services delivery arm to M Group Services Ltd, reportedly for £50 million.
M Group Services has created Milestone Infrastructure Ltd to carry out the contracts the company is intending to take on.
The council says it was notified by Skanska in 2020 that the parent company had reviewed its business model and decided to divest from the infrastructure services arm.
“I am nervous about the effective selling on of our contract by Skanska,” Conservative councillor Lynda Harford said, adding if we are going to have a transfer of this contract I was rather hoping that it would be affected for the better”.
Cllr Harford noted a number of maintenance issues she claimed had been raised but not addressed by Skanska.
Cllr Manning said: “This does look to me a like a private company’s financial difficultly – financial failings – resulting in a public cost for a public organisation, both in terms of officer time and the legal costs associated and I think we should all be rightly annoyed about that”.
Chair of the highways and transport committee, Conservative councillor Ian Bates, said: “We are not the only county council going through this process.
"There are other county councils who have contracts with Skanska and they are going through a similar process to use across the country – we are not unique, we are one of many”.
The council’s executive director for place and economy, Steve Cox, said: “Clearly we are looking to get and secure improvements in the service, as we would always want to do that.
"The process of a novation has not enabled that to be done directly, but what it is enabling is a resetting if you like of the relationship”.
The council is anticipating signing a novation agreement on March 17, and Milestone Infrastructure is expected to take over as the provider from April 1, subject to receiving no challenge from other interested parties, the risk of which is “anticipated to be very low”.
The council says M Group Services already delivers a wide range of infrastructure services within the energy, transport, telecommunications and water sectors in the UK and Ireland.
A council report says: “Milestone Infrastructure will work to the same principles of the standard accreditation for safety, environment and quality assurance.
The polices and processes will principally be those used by Skanska Infrastructure Services rebranded and amended where necessary for Milestone Infrastructure Ltd.”
It adds: “Assurance has been provided, by both Skanska and M Group that service delivery on the ground will be unaffected by the transfer of the contract to Milestone.
"This assurance is reinforced by the transfer of all existing staff delivering Cambridgeshire’s highway services contract to the new company. CCC will continue to hold Skanska and going forward, Milestone, to account for the successful delivery of the contract against the agreed key performance indicators.”
The highways committee agreed by a majority to approve the transfer, with seven councillors voting for and three abstaining.