network delivery and development...

Date: 07 March 2014 Version: 0.16 An executive agency of the Department for Transport

Network Delivery and Development Directorate

NDD Portfolio Control Framework Handbook

Version 0.16

Document Control

Revision History

Version Date Description Author

0.10 09 Feb 2014 First draft issue for review (re-numbered from v1.0) NDD AMO

0.11 21 Feb 2014 Second draft issue for information NDD AMO

0.12 26 Feb 2014 Third draft issue for review NDD AMO

0.13 28 Feb 2014 Fourth draft, for approval NDD AMO

0.14 03 Mar 2014 Review comments incorporated. Fifth draft, for approval NDD AMO

0.15 06 Mar 2014 Updates including initial feedback from regions NDD AMO

0.16 07 Mar 2014 Updates to finalise for issue NDD AMO

Reviewer List

Name Role

Imrul Hassan Project Sponsor

Approvals

Name Signature Title Date of Issue Version

Matt Sweeting NDD Divisional Director 10 Mar 2014 0.16

The original format of this document is copyright to the Highways Agency.

Document Title Network Delivery and Development Directorate: Portfolio Control Framework Handbook

Author NDD AMO

Owner Matt Sweeting

Distribution Divisional Directors, Regional Teams, Providers

Document Status Draft

Version 0.16

Acronyms and abbreviations

ADT Asset Development Team

ASC Asset Support Contract

BCR Benefit-Cost Ratio

CPT Contract and Performance Team

DfT Department for Transport

DMRB Design Manual for Roads and Bridges

EA Equality Act 2010

EI Economic Indicator

FYF Full Year Forecast

HA Highways Agency

HAB Highways Agency Board

HAPMS Highways Agency Pavement Management System

ICF Investment Control Framework

MAC Managing Agency Contract

NDD Network Delivery and Development Directorate

NDD PCF NDD Portfolio Control Framework

NetServ Network Services Directorate

NPO National Portfolio Office

PDS Project Development Support

PEAT Project Economic Appraisal Tool

PIN Project Identification Number

POPE Post Opening Project Evaluation

RACI Responsible, Accountable, Consulted and Informed

RBS Route-Based Strategy

RCPT Regional Contract and Performance Team

RDD Regional Development Director

Version 0.16 Page ii

RFT Regional Finance Team

RIS Roads Investment Strategy

RPB Regional Programme Board

RPO Regional Programme Office

RSA Road Safety Audit

SAR Scheme Appraisal Report

SDT Service Delivery Team

SfM System for Managing

SoFA Statement of Funds Available

SWEEP Software for the Whole-Life Economic Evaluation of Pavement

VE Value Engineering

VfM Value for Money

VMP Value Management Process

WebTAG Web-based Transport Analysis Guidance

WLC Whole Life Cost

YTD Year to date

Version 0.16 Page iii

Contents Page No

About this handbook 1

About the portfolio control framework 2

Regional programmes, projects and schemes 5

The programme lifecycle 7

Key decision points 8

Lifecycle Stages 9

Products and product matrix 27

Production, consultation and sign-off 28

How stages are delivered 29

Assurance and governance 30

Roles and responsibilities 31

Version 0.16 Page iv

Annexes Page No

A Portfolio Control Framework Process Map A1

B Product Matrix A2

C RACI Chart A3

D Value Management Process A6

E Contacts list A34

F Glossary A38

G References A48

Version 0.16 Page 1 of 84

About this handbook

This Network Delivery & Development Directorate Portfolio Control Framework (NDD PCF) sets out how we manage and deliver asset renewal and improvements across the strategic road network through Regional programmes of work. It is designed to ensure that we maintain the capability of the asset to meet our customers’ aspirations in a cost efficient and timely manner, and also ensure the long-term sustainability of the network asset for the future.

This handbook provides an overview of the portfolio control framework; the development and management of Regional programmes and the key things you need to know in order to use the framework to manage projects and deliver schemes.

This manual is for use by those involved in the development and delivery of renewal and improvement works:

National Portfolio Office (NPO)*;

Regional Programme Office (RPO) *;

Contract and performance teams;

Asset development teams; and

Service delivery teams.

* The NPO and RPO may not be established at the time of issue.

However, the function of the NPO may be carried out within the

Asset Management Office, and the function of the RPO may be

carried out within the ADT in the interim.

The benefits of this portfolio management framework include:

Rationalising and simplifying the documents which define NDD’s approach to asset management;

Direct links between the Agency’s strategic objectives and Regional programmes of renewal and improvement works;

Allocation of renewal and improvement budgets founded on asset need;

Development of solutions aligned to needs and based on consideration of whole life cost;

The separation of need and solution allows a more holistic view to be taken of the best way of maintaining and improving the network; and,

Devolved responsibility to Regions for delivery of work programmes allowing efficiencies to be realised, including a more streamlined approach to value management of schemes.

This handbook provides overview of the framework and should be read in conjunction with its supporting annexes which provide detail of the techniques and methods.

Note that the NDD PCF replaces the Programme Development and Management Manual (PDMM) and Value Management Requirements (VMR) and that any references in the contract to those documents should be read as a reference to the NDD PCF.


About the portfolio control framework

Overview The Portfolio Control Framework is an approach to managing NDD’s investments to maintain and improve the motorway and trunk road network. It is designed to allow NDD’s Regional teams and their Providers (or other Delivery Partners) to take direct responsibility for allocating Regional budgets to programmes and projects.

The framework comprises:

A standard programme and project lifecycle;

Standard deliverables (products);

Control processes; and

Governance arrangements.

The framework should be used by everyone involved in preparing projects and schemes, including Network Services (NetServ) and NDD’s Providers.

The framework is based around a rolling five-year programme of identifying network needs and implementing programmes of projects to meet these needs.

It is important to understand that programme and project management occurs at a Regional level. The Region agrees overall budgets and high level output targets (the Regional Promise) with the NDD Director; and is then responsible for the delivery of those outputs using a programme of works combining the best value combination of maintenance, improvement and renewal activities.

Key Definitions Scheme

A scheme is a discrete set of work activities that involves asset renewal, replacement or improvement on a limited section of the network. Schemes deliver the preferred value for money solutions to defined asset needs.

Renewal Scheme

A scheme whereby an existing asset is renewed, replaced or repaired in order to restore the performance (condition) of the asset.

Improvement Scheme

A scheme leading to an enhancement in the performance of a network asset or an addition to the network.

Project

A project is a temporary management structure and delivery mechanism for a single scheme, or preferably a collection of similar schemes. Schemes can be collected into projects where the schemes relate to a similar asset class and/or location such that they can be priced, managed and delivered under a single management structure. A project might involve planning and design of multiple interventions on the network, for example to renew bridge parapets at several discrete worksites, each with their own traffic management, local stakeholders etc. but a common specification and sub-contractor. . Target costs and work packages are produced at project level.


Programme

Programmes are the collection of all projects managed by a Region to provide the required asset performance and outputs as set out in the agreed programme objectives. Each Region will set up and manage a five-year rolling programme of work. They will ensure that need identification, development of solutions and delivery of schemes is a sequential process that maintains alignment to the programme objectives.

Investment approval is at programme level although all schemes, and hence projects, require justification and appraisal for value for money.

Portfolio

The national portfolio includes the set of Regional rolling programmes managed by NDD.

Core Principles of the Framework The framework is intended to provide the Regions the capacity to manage their renewal and improvement workload as efficiently as possible, whilst ensuring that their output is aligned with national strategic objectives. There are a number of core principles which have been used to define how the framework operates.

The Programme Lifecycle

The programmes of renewal and improvement works within each Region follow a standard lifecycle, divided into stages.

Asset needs are identified against the strategic objectives of the Agency.

Options for the renewal or improvement of assets are developed and reviewed.

Projects are developed to deliver schemes and implement these solutions.

Projects are collections of schemes which individually and collectively deliver best value for money options.

The lifecycle and its associated stages is described in more detail later on in this handbook. The stages align with key decision points for development and delivery of the Regional programmes. There is a clear process for moving between stages.

Processes

Processes are specified to ensure that the framework is implemented in a consistent manner across all Regions, programmes and projects and that everyone involved in implementing the framework can plan ahead with a clear understanding of whom is required to do what and when. A diagram of the overall process is included as Annex A to this handbook.


Framework Deliverables

The framework focuses on what needs to be delivered within each stage of the lifecycle.

Whilst the physical work to the network produced through the implementation of schemes is termed output, all other deliverables required at any stage of the cycle are called products. For example a SAR and as-constructed record drawings are products of the framework.

There are clearly defined roles and responsibilities for product production, sign off and consultation.

The product matrix (Annex B) indicates which products are needed and at what stage(s) of the programme lifecycle they need to be produced.

Governance

The portfolio control framework exists within the context of governance arrangements defined by the Investment Control Framework for all schemes and the Investment Appraisal Framework for improvement schemes. Governance is provided in the first instance by the Regional Programme Boards (RPBs).

The approach to governance is explained in detail later within this handbook.


Regional programmes, projects and schemes

Programme Phases Each Regional programme is managed by the Regional Programme Office (RPO) with oversight and governance by the Regional Programme Board (RPB). Terms of Reference for the RPB are on SHARE.

This framework splits programme implementation into three phases as shown below.

The phases and associated seven stages are detailed in the process diagram at Annex A and described in more detail within this handbook.

Needs Phase

The objectives for the Regional programme are defined by the NPO, aligning the Agency’s strategic objectives with the asset capability to determine the quantum of work required. A Statement of Funds Available (SoFA) for each Region is determined using an allocation formula.

RPO compares the actual performance of the network assets with the Regional objectives, to identify the ‘technical gap’ i.e. the amount of work that is required to meet the Regional objectives.

The three programme phases for NDD scheme implementation

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The Regions then select priority areas of work and distribute the Regional funds available between work types. Consideration should be made to adopting a combination of reactive and proactive (preventative) renewals to achieve the Regional objectives.

A ‘Regional Promise’ between the NDD Director and the Regional Divisional Directors is agreed. This defines Regional outputs in terms of: performance; work volumes; risk; and funding available to deliver these outputs.

Solutions Phase

For the asset needs identified, optioneering is carried out to review the available solutions and a preferred option chosen. Optioneering will include an evaluation of the strategic approach (i.e. reactive or proactive) to be taken to particular types of renewal or to particular parts of the network, as well as scheme level intervention options. The Value Management Process (VMP) enables schemes to be reviewed and informs the choice on the best value for money option.

During optioneering, schemes should be packaged into projects retaining flexibility in approach to delivery, minimising disruption to users and promoting further cost savings through delivery efficiency; for example, the sharing of traffic management over one or more schemes, i.e. a resurfacing and a barrier replacement scheme).

Projects are prepared and presented to the RPB for delivery sign-off and are authorised to commence.

Delivery Phase

Once final approval is provided by the RPB, detailed design, scheduling and delivery of projects proceeds. Project delivery is managed and monitored by the Region. At completion of construction, asset records are updated and the project closed out.

Lessons learned are reviewed at project and programme level. Programme outcomes may be reviewed at portfolio level by the NPO.

Programme Principles The following principles govern the activities within each programme:

It is essential to keep identification of need for renewal or improvement separate from identification of solutions;

Entry into the solutions phase is only possible following the agreement of the Regional Promise;

Entry into the delivery phase is only possible following RPB sign-off of the detailed delivery plan for a project produced at the end of the solutions phase;

Detailed feedback on actual outturn cost is obtained at the end of the delivery phase to enable the accuracy of cost estimating to be improved; and

The responsibility for aligning project output with strategic business objectives lies with the Regions.


The programme lifecycle

Outline The programme lifecycle begins when strategic objectives and budget are made available. The lifecycle breaks down the three phases - needs, solutions and delivery - and seven stages as shown below.

Delivery of the programme of works must progress through every stage of the lifecycle. Within each stage there is at least one activity and sometimes more than one.

The stages and associated activities are all shown in more detail in the process diagram in Annex A. The following pages describe each stage individually, along with the activities and their associated inputs, outputs and objectives.

Regional Programmes are managed by Regional Programme Boards (RPB). Terms of Reference for the RPB are on SHARE.

High-level Schedule The Regional programmes and their lifecycle are planned and delivered on a rolling five-year basis.

The development of individual programmes begins with the establishment of programme-level objectives.

Within the programmes, needs are identified on a on a continuous basis. Each year, needs are collated, sifted and prioritised in order to help establish the forward programmes for each of years 1 to 5, updated annually

The option identification and option selection stages within the solutions phase are intended to provide a 2-year forward plan of schemes for entry into the delivery phase.

Once the ‘bank’ of schemes that have passed through the solutions phase is in place and is maintained, scheme delivery can also take place on a continuous basis.

The programme lifecycle




Key decision points

The boundaries between the stages reflect the significant decision points in the delivery and development of the NDD portfolio of Regional programmes.

At each decision point, records should be maintained to record the decisions taken, and to translate those decisions into downstream activities.

The key decision points within the NDD PCF framework


Lifecycle Stages

Stage 0: Set Portfolio Objectives

The primary purpose of this stage is to agree and publish the objectives for the national portfolio. The agreement of objectives defines the contribution that maintenance and renewals make to the overall delivery of the Agency. The objectives are reviewed at the start of every financial year as part of the overall business planning process within the Agency.

Define Portfolio Objectives (Activity 1)

Consideration is also taken of current government priorities and any lessons learnt from the previous programme management and development round.

The process requires the review of the requirements included in the Roads Investment Strategy (RIS) and Statement of Funds Available (SoFA). Requirements are transferred into overall objectives for the national portfolio and the compatibility with Route-Based Strategies (RBSs) is also considered.

The following documents may also provide direction to the setting of the portfolio objectives:

DfT Business Plan;

HA Business Plan;

NDD Management Plan;

Asset management policy and strategy; and

DfT Performance Specification.

In the review and development of these strategic objectives, clarifications may be sought for any specific Agency requirements from, for example, ministerial requirements.


The output from Activity 1 is to have agreed objectives for the portfolio of regional programmes, providing the direction for developing the five-year Regional programmes.

Hold Point 1 - Agree Portfolio Objectives (Activity 2)

The Portfolio Objectives are agreed and signed off together with the overall national budget covering capital and resource for renewals and improvements.

The objectives will be communicated to the Regions by the NPO. This will occur prior to the start of the Regional programme development cycle.


Stage 1: Assess Need

The primary purpose of this stage is to identify the network asset needs based upon the portfolio objectives and allow allocation of regional programme budgets to address the identified need. The mechanism aims to ensure effective allocation of asset development funding.

Define Programme Objective and Regional SoFA (Activity 3)

Regional programme objectives are prescribed based upon the Portfolio objectives.

Regional programme objectives may be defined in terms of required asset condition over the programme period together with indicative volumes of work output that are required.

Existing asset data (inventory, condition and performance) and traffic data or demand forecasts will be reviewed to develop the Regional programme objectives.

The Regional SoFA and regional programme objectives are communicated to the Regions and may include specific information on:

Required asset performance levels over the programme period

Expected minimum standards or tolerances to be achieved, in addition to the base engineering standards for assets.

These requirements may be set out in the Regional Programme Objectives Statement which translates the Portfolio Objectives into a regional context and provides details of the programme period to be planned.

The agreed national budget is disaggregated to indicative regional programme budgets using a ‘top-down’ needs based Allocation Formula. The indicative Regional SoFA is provided with the Regional Programme Objectives Statement, split into the required budget areas in accordance with the prevailing financial system.


Review Asset Performance (Activity 4)

The Regions review the Regional SoFA, Portfolio Objectives Statement and any additional objectives provided; e.g. a Regional Programme Objectives Statement.

The programme objectives provide indicators of the specific asset performance requirements and are used to identify the current need of the network asset. They also consider the asset need across the five-year programme period to ensure the asset performance objectives are maintained throughout the period.

Asset needs on the network are identified by comparing network condition information (gathered through routine inspections, surveys, etc.) with engineering standards (designed to maintain a safe and serviceable network) and Agency objectives as defined in the Regional Programme Objectives Statement.

Regional network assessments, prepared by the Regional Intelligence Unit, may also complement and challenge the data provided by Providers when reviewing asset need.

Decision support tools can also be used to model future asset needs and identify any trends.

The initial identification of need also is informed by the Provider’s watchman role and review of network traffic demands.

Any queries relating to lump sum and cost reimbursable activities by Managing Agency Contracts (MAC) and the Asset Support Contracts (ASC) should be directed to the relevant NDD Contract and Performance team.


Cycle Improvement Schemes

In the UK less than 2% of journeys are made by cycling which is far lower than other European countries such as the Netherlands (27%), Denmark (19%) and Germany (10%). In August 2013 the Prime Minister clearly set out the Governments intentions to improve cycle facilities to put Britain on a level-footing with these countries.

NDD have a role to play in these ambitious plans in ensuring that cycling provision is considered at the outset and built into all new improvement schemes, and that bespoke schemes are developed and delivered to make a road environment that will encourage cycling as a form of transport. DfT have announced that £15m will be made available to the Highways Agency for cycling schemes in 2015/16. Bids are therefore required to identify schemes that will promote connectivity, improve safety and aid the economy by providing cycling links, for 2015/16 and future years.

Following the announcement of the Cycle Ambition Bids and Local Transport Funds, local authorities will be delivering significant networks and routes specifically aimed at improving cycling facilities. The Strategic Road Network often forms a barrier for cyclists due to them being prohibited from using motorways, or preferring not to use busy trunk roads or having difficulty crossing our roads. It is therefore important that NDD liaise with local stakeholders, who understand local cycle travel needs to identify locations where we can assist them in achieving their cycling ambitions.

Guidance on the identification of cycle schemes is available from your Regional Intelligence Unit; a guidance document is available to help to explain the process which they will go through with you.

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Stage 2: Prioritise Need

The primary purpose of this step is to reach an agreement over the outputs to be delivered by each Regional programme and finalise the funding available to deliver those outputs. The agreement is documented – a Regional Programme Plan - and forms part of the ‘Regional Promise’.

Prioritise Required Work (Activity 5)

As part of an on-going process involving the Provider, the needs for asset improvement and renewal will be prioritised. This process, whilst on-going and independent of the development of the regional promise, informs the review of allocation budgets and development of the regional programme.

Programmes are developed based on the following criteria:

Consideration of whether an intervention is required and when;

Ability to deliver in the designated programme year; and

Projects that are already ‘Committed’ (i.e. project is funded and works have started).

It is important to note that the cost estimates produced as part of this activity will be high level estimates only at this stage, with appropriate allowances for optimism bias.

Risk review is also important at this stage. If the constrained programme includes significant residual asset risks, these shall be communicated and risk management strategies discussed.


Investment Categories

The following provides a brief overview of the nature of work delivered by NDD within each programme investment category.

Renewals

The periodic renewal of specific sections of the asset base as it reaches the end of its serviceable life or as part of an agreed maintenance strategy. This description of the asset base includes the technology asset.

Improvements

This activity includes investigation, project development and delivery of improvement schemes up to £10m individual value. Improvements are directly aimed at supporting outcomes in respect of environment, safety, economy and severance, providing local benefits to local communities.

Technology Improvements

This activity is primarily focused on the improvement of the Agency’s technology asset, to improve service to the road user.

Apportion Funding-in-principle (Activity 6)

The assessment of asset need and initial programme planning activity is reviewed.

In particular the review will focus on the alignment between the Regional SoFA and programme objectives, and the review of asset need.

To understand the volume of work required to achieve the stated objectives the following are reviewed:

Regional Programme Objectives Statement;

Existing asset data in Agency asset management information systems;

Existing Provider asset management information systems;

Pre-existing list of network needs; and

Regional Network Assessments.

The work undertaken in Activities 4 and 5 may also be drawn on to inform funding allocation. Estimation of the work quantities and required level of expenditure is used to refine the Regional programme budget.


In order to best achieve the Regional programme objectives, it is envisaged that programme costs will be used to refine the budget, alongside contract rates rather than bottom up labour, plant and materials estimates.

Work is prioritised and distributed over the five-year programme period considering agreed maintenance strategies, needs and financial constraints. The work quantities and programme defined by this review form a constrained workbank.

The following information may be used to identify the approach:

The list of network needs that have been identified (from Activity 4);

Regional Programme Objectives Statement (from Activity 3);

Regional SoFA (from Activity 3); and

Outputs from any tools and decision support aids which can help to inform the approach.

The final Regional Programme Plan (forming part of the Regional Promise) is provided to the NPO for review and sign-off.


Network Performance Review (Activity 7)

A review of the Regional Programme Plan is carried out by the NPO to ensure that the aggregate requirement remain within the NDD SoFA and will deliver the overall portfolio objectives. This may prompt a re-allocation of funding between Regions if necessary and discussion on any ‘national’ asset management issues e.g. Thaumasite.

The outputs from each Region’s Programme Plan (funding required, work output, asset improvement) are aggregated to produce an indicative national output. This is reviewed against the Portfolio Objectives Statement agreed at Hold Point 1.

Following the network level review of each Regional programme and any reallocation of funding between Regions considered necessary to better align the Regional programmes to national needs, a ‘Regional Promise’ is concluded. This finalises each Region’s funding and high-level output targets for the forthcoming cycle.

It is important to note that this promise does not contain a list of specific projects or schemes that a Region may have identified in Activity 4 and 5. Although a list of specific needs evolved from Activity 4 may form the basis for agreeing the high level output targets of the Region, the Region is free to manage the preparation and progression of schemes and projects as they best see fit to meet the high level objectives.

Hold Point 2 – Agree Programme Requirement and ‘Regional Promise’ (Activity 8)

The Regional Programmes are agreed and signed off together with their overall budget covering renewals and improvements.

The agreed allocation and Regional programme objectives are communicated to the Regions.

Programme metrics – to monitor the progress of the regional programmes - will are established and subsequently monitored by the RPO.

Authority for the delivery of the Regional programme is transferred to the Regional Programme Board.

Investment approval is devolved to the Regional Programme Board.


Stage 3: Option Identification With an agreed Regional programme established including work quantities and asset outputs, the process of developing projects and schemes commences.

Work is carried out at Regional level to determine the most appropriate projects to meet the outputs agreed in the Regional Promise. Generally this will involve identifying options associated with the types of work and in line with the agreed maintenance strategies. Where options investigation indicates that the maintenance approach may not provide acceptable value, the Regional Programme Board is able to review and revise the approach. It is at this stage that projects will be outlined and technical solutions delivered by schemes defined in sufficient detail to progress optioneering.

Value management provides a technical review of proposed treatment options and generates a value management score for the preferred treatment option at scheme level. This score is one of the main criteria used by the Region to prioritise schemes and develop projects to deliver renewals and improvements.

Value management scores for various renewal and improvement schemes are based on different criteria and are not currently directly comparable. Consequently, separate regional rolling workstreams are developed for renewal of roads projects, renewal of structures projects, renewal of technology projects, improvement schemes and technology improvements.

Agreed VM scores are those resulting from applying the Value Management Process. Further details of the VMP including scoring guidance are contained in Annex D.


Decide Procurement Route (Activity 9)

The Regional Programme Board has flexibility to decide on the most appropriate procurement route for the work within their programme.

It is anticipated that much of the work will be allocated to the incumbent Providers who are set up to deliver these services. In certain circumstances however, the Regional Programme Board may choose to use other contract arrangements that are available to the Agency in order to best deliver the required activity. In making this decision the RPB should consider capability, capacity and performance of the supply chain and the type and quantity of work required in a period.

For Managed Works, ICF1 is completed at this stage. ICF guidance can be found here.

The results of this review are instructions to Providers to proceed with options development. This review may also inform the development of projects and influence how schemes are appraised in the following optioneering stages.

Optioneering (Activity 10)

Outline design work is carried out to inform option selection under instruction from the Regional Programme Board.

Value management technical workshops should be held as part of the optioneering process (refer to Annex D). The number of workshops, their scope, attendees and timing should be determined by the Regions in order to ensure workshops bring added value to the process.

Outline design options typically form part of an options report and whole life cycle cost discussion. Schemes that are selected by this process are passed forward to option development.

Environmental Considerations

In locations of environmental sensitivity it will be necessary for schemes to be supported by an Environmental Assessment Report. A brief summary and cross-reference to any reported information should be sufficient for the purposes of option evaluation.

Prior to option evaluation, Providers should complete the Environmental Checklist for all schemes http://share/Share/LLISAPI.dll/properties/23855392 . This is to ensure that all sustainability and environmental considerations have been taken into account so that these can be discussed at technical and subsequent workshops.

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Options Development (Activity 11)

The purpose of Activity 11 is to determine the suitability of intervention options and to assess their use of at specific sites. Similar schemes may be grouped and assessed together. This process will inform the development of projects – the delivery of multiple schemes.

The possible intervention options developed in Activity 10 will be assessed at project or scheme level as appropriate to the need. Options should be assessed on the basis of broad value for money criteria. Records of the decision making process must be maintained by the RPO and a Scheme Appraisal Report (SAR) form submitted for each scheme or group of similar schemes where the need and solution can be accurately assessed on a single SAR form.

Value Management scoring should be used to support the decision making process, although other forms of scheme appraisal and justification may be considered depending on the scheme. The Regional Programme Board will be responsible for being able to evidence appropriate scheme justification and appraisal has been carried out.

All schemes must be assessed in accordance with GD04/12. For further advice on this, contact the NetServ Safety Risk Governance team (see Contacts List in Annex E).

Programme development support (PDS) technical surveys funding

The requirement for additional technical surveys to support options development may arise from Activity 11. The RPB is responsible for allocating funding to progress PDS works as necessary from its programme budget.

For Managing Agent Contracts (MACs), requests for funding should be made to the RPB for programme development support (PDS) technical survey activities. For Asset Support Contracts (ASCs), PDS and its application are defined in the ASC contract documents.


Stage 4: Option Selection Based on the results of Stage 3, preferred options for scheme are selected and the overall project business cases signed off.

The solutions developed may be reviewed at a strategic level to check network sustainability and ensure alignment with national portfolio objectives. This review will also facilitate innovation across Regions and sharing of best practice. This review, however, does not delay progress of the project as its recommendations are purely advisory in nature and it is not mandatory for the Regions to comply with them.

Select Preferred Option (Activity 12)

The most favourable options for a scheme will be selected through VM consensus workshops and decisions recorded on SAR forms.

Scheme are bundled into projects – based on the earlier decisions and informed by the outcome of the optioneering. In the general case the SAR form or collection of SAR forms comprises to form the business case for the project. At this point the project definitions are agreed and, project management systems are established and records entered in System for Managing (SfM).

The RPO is responsible for ensuring that records of all decisions made are recorded electronically (including scans of any hard copy documentation) and filed on SHARE.

For Managed Works, ICF2 is completed at this stage. ICF guidance can be found here.



Network Sustainability Review (Activity 13)

A network sustainability review may be undertaken by the NPO to ensure the solutions remain aligned with national portfolio objectives and to enable inter-Regional sharing of best practice.

This approach allows the sharing of ‘standard solutions’ / ‘issues’ ‘innovation’ and typical costs.

This review does not constitute any form of approval and is not a hold point in the lifecycle.

The review may provide challenge and comment on the Regions’ programmes to ensure they are robust and will provide the desired level of assurance.

Hold Point – Agree Solution (Activity 14)

Defined projects are agreed and approved by the RPB.

Signed business cases comprising one or more SAR forms are presented for approval to proceed with the project.

The Regional Programme office will carry out a Region wide review of the proposed projects to ensure they are aligned with the Regional Programme Objectives Statement. They are then approved and entered into a forward programme for design and delivery. From this point forwards change control is required to modify projects that have been agreed and commissioned.

For Managed Works, ICF3 is completed at this stage. For Provider Works a combined ICF1/2/3 is completed at this stage. ICF guidance can be found here.



Stage 5: Design and Project Planning The primary purpose of this step is to deliver the agreed projects to programme and budget. The following sections and activities describe the approach to be taken to managing individual projects within the programme, including change control.

Monitor project delivery and programme change control

Regional teams work with their Regional finance teams to perpetually review the year-to-date (YTD) expenditure; the full year forecast (FYF) and the whole project costs of their projects.

The delivery of all projects within funded programmes is formally reviewed by Regional teams and Regional directors as part of the regular (monthly) business reporting and decision making process in each Region.

Only projects approved at Hold Point 3 can proceed to be delivered. If new projects are subsequently identified for promotion to the programme, approval will need to be sought for inclusion in the programme. Conversely, it is equally important that projects that can no longer be delivered are notified, in order that their removal from the Regional Programme is approved and impact understood. This results in an auditable trail of changes to the Regional programme being maintained through a formal change control process, and reporting of programme delivery reflecting the current agreed programme.

Change control templates and guidance on previously implemented change control processes are available.





For all new projects requiring approval associated with entry to the Regional programme through the formal change control process, the asset delivery team will need to provide project information, including fully signed SARs to the Regional Programme Board, who will recommend decisions for formal approval at the monthly NDD Regional Programme Governance Board meeting. The Board will provide a response about whether the project is approved for entry to, or removal from, the Regional programme.

The Regional team updates SfM in accordance with approved changes, such as addition or removal of forecast from the PIN.

Detailed Design (Activity 15)

Agreed solutions will be entered into the forward programme for detailed design. This activity will be managed in accordance with the contract requirements of the relevant Provider.

Design of specific work activities /specific assets is carried out, ensuring value engineering continues into the specifics of project development

This activity will result in schemes being developed to a point where they are ready for construction including all relevant health and safety, environment and legal requirements associated with the design.

Project Delivery Planning (Activity 16)

Allows planning and scheduling / procurement efficiencies to be realised.

The delivery of schemes is planned and scheduled to optimise the use of resources and road space.

The aim of this activity is to gain efficiencies in the timing and implementation of projects, for example through carrying out two or more schemes under the same traffic management regime.

Target costs are developed and agreed if relevant to the chosen procurement route.

Note: The value management process assesses and scores the preferred option for a scheme. It is essential that the type of treatment and extent of the works are not changed during the delivery phase. If either of these changes fundamentally, the RPB should reassure themselves that the scheme remains a valid and worthwhile investment.


Stage 6: Construction, Commissioning and Handover Projects are constructed, and put into use.

Construction (Activity 17)

Once preceding activities are completed, construction of the schemes occurs. Delivery is in accordance with the governing contract, as is measurement of the outcomes.

It is essential that information on outputs and production costs are adequately captured to feed into future planning cycles.

The procedures for managing this activity are detailed in the governing contract.

Project delivery metrics are tracked as part of the delivery process.

Commission and Handover (Activity 18)

Project outputs should be signed off and all required asset data updates are made. The Region should insist that asset data updates are linked to scheme delivery and not wait until projects are completed, especially where a number of schemes are included in a single project and that project extends over a significant period of time.

Outputs include:

Critical operation and maintenance manuals/records;

Health and Safety file with as-built drawings and records;

Asset records updated; and

Post Completion Review.


Stage 7: Closeout The primary purpose of this step is to ensure projects and programmes are reviewed to ensure they contributed as expected to the Region’s output objectives. Lessons learnt are captured and used to continuously improve programme and project delivery.

Lessons Learned (Activity 19)

Periodic review of completed projects will occur to capture lessons learnt for feedback to other participants.

This will enable a culture of continuous improvement.

This process of capturing lessons is a continuous exercise and the RPO should establish a learning log in which to record this. At Regional level a lessons learnt report and continual improvement plan should be produced annually and feed into the next programme cycle.

Benefits Review (Activity 20)

A benefits review of the national portfolio will also be carried out at the end of every year to ensure that the outputs and costs of the regional programmes remain aligned with the targets agreed under the ‘Regional Promise’.

Where discrepancies are detected these are discussed with the Regional programme office to identify likely causes and any lessons learned carried forward to the following year’s cycle.

At the end of this step, an annual programme statement will be prepared that will include the following:

A delivery report covering the in-year delivery of the Year 1 programme; and,

Lessons learnt log with planned improvements for future programmes.


Products and product matrix

Products

The Portfolio Control Framework focuses on what needs to be delivered at each stage of the project.

The deliverables which are produced are called ‘products’. They are the things we need to produce in order to plan, manage and process projects.

Each product has a standard definition that specifies the products:

Purpose;

Content;

Quality Criteria; and

Roles and Responsibilities.

For some products we may also include a mandatory process; templates; supporting topic information or guidance and links to other resources on the intranet and internet.

Many product definitions have been developed in line with current DfT and Highways Agency best practise process, guidance and standards. Where this is the case we will also link to these documents either from this handbook or from supporting annexes.

The physical work which takes place on the network as part of the delivery phase is known as output.

Production, Consultation, Sign-off

All products in the Portfolio Control Framework have a defined set of roles and responsibilities associated with them. These roles and responsibilities define who:

Produces the product;

Is accountable for production and signs it off;

Must be consulted during production; and

The product must be distributed to.

Product Matrix

The product matrix at Annex B defines which products are needed and when. For each stage of the lifecycle the matrix specifies if the product is:

Produced for the first time in the lifecycle;

Updated with new information but no new analysis takes place;

Refined whereby further analysis takes place to reflect project developments. For example, a scheme cost estimate is progressively refined as it progresses through the lifecycle; or

Reviewed, to determine if updates or refinements are required. Generally it is not expected that an action is required.


Production, consultation and sign-off

The table below provides further detail of the responsibilities for production, accountability, consultation and distribution.

Production

Generally, the person producing the product is free to choose how the product is produced provided it meets the criteria set out in the product definition.

Accountability

Every product has one single point of accountability and therefore one single sign-off.

The person signing off the product is accountable for the product being suitable, accurate and quality assured, including for design-related products meeting technical standards and construction products meeting specifications.

Consultation

Consultation must take place as part of product development and evidence of consultation must be retained. There are two types of consultation:

For technical/operational approval

The product cannot be signed off as complete unless it has been approved by identified consultees.

For comment

Comments do not necessarily have to be acted upon. Whether comments are taken into account is the decision of the person accountable for the product.

Distribution

The product is distributed once it has been signed off.

Evidence of distribution must be retained.

Anyone who is consulted in the production of a product must be given a copy of the finished product.


How Stages are delivered

The plan-do-review cycle is at the heart of how each stage in the process is delivered. This is also sometimes referred to as the plan-do-check-act cycle. It provides a structure that if followed, encourages a right first time approach.

Plan: before the Stage

Identify which products need to be produced during the stage for example by completing a product checklist.

Ensure that the relevant system such as IT systems, quality systems or record management systems are in place and functioning correctly.

Justify the reasons for not producing any products required by the framework during the stage.

Develop a plan for the production of the products.

Review and agree the plan with appropriate entities. These may vary for each stage.

Do: during the Stage

Manage the stage against the plan.

Produce the products.

Consult on the products.

Obtain product sign-offs.

Record actions and store documents and data properly, for example in SHARE.

Review: at the end of the Stage

Review the delivery of products against the plan and account for any variance

Review time and cost against plan.

Follow hold point and stage gates as identified in the framework or associate delivery plans, such as Provider’s quality plans.

Obtain necessary authorisations.


Assurance and governance

Governance

Governance of projects is provided through:

Assurance at portfolio, programme and project level; and

Defined roles and responsibilities.

Assurance

Assurance provides the basic framework of controls that assure:

The portfolio is being managed and controlled as directed by the NDD Director;

Basic standards are being followed; and

Individual programmes and products within the portfolio are well-managed.

The project assurance controls within the portfolio control framework are:

Regular reporting;

Exception reporting and re-authorisation;

Regional Programme Board Terms of Reference (insert SHARE link);

The ICF process, operating at programme level;

Sign-off of products as they are produced; and

Hold points, as identified in the portfolio lifecycle, programme controls or project quality plans.

Reporting

Regular reporting

The NPO defines and maintains a schedule of regular reports that must be completed according to the schedule. The RPO is responsible for completing the reports on time.

Portfolio-level exception reporting

The NPO must produce an exception report if during any phase of the lifecycle if it becomes apparent that the strategic business objectives will not be met by the portfolio. The exception report must be submitted to the NDD Director.

Programme-level exception reporting

RPOs must produce an exception report if:

During the Solutions or Delivery phases of the lifecycle the expected programme outputs are considered unlikely to be met.

The exception report must be submitted to the NPO.

Project-level exception reporting

Providers must submit an exception report if during the delivery phase of the Project lifecycle the expected cost, programme or quality outcome of any individual project is forecast to be outside the tolerances agreed with the RPO.


Roles and responsibilities

Overview Responsibility for portfolio development and management lies primarily with the Network Delivery and Development Directorate (NDD).

The NDD Network Portfolio Office (NPO) remains responsible for the underlying value management processes in NDD.

Network Services Directorate (NetServ) is responsible for providing technical assurance of the value management scoring.

NDD Regional Programme Offices (RPOs) are responsible for the identification of need, development, management and prioritisation of schemes and the delivery of Regional programmes.

The NPO is responsible for defining objectives and agreeing budgets with Regional teams, overseeing the national programme development and management process, ensuring inter-Regional consistency and assessing value for money.

All the above participants have a collective responsibility to ensure the portfolio provides value for money and ensure this can be evidenced at each stage in the portfolio lifecycle.

The roles and responsibilities of key participants in each of the programme delivery and management processes are detailed in the RACI chart (Annex C).

More detail on specific roles and responsibilities follows.

NDD Director

The NDD Director has overall accountability for NDD’s portfolio, including fiduciary responsibility, and specifically:

Approving the framework for decision making;

Approving provisional and final regional programme outputs and budgets;

Reviewing and signing-off delivery of planned regional programmes;

Approving a national asset management plan as required;

Justifying spend to the Highways Agency Board (HAB) and the Department for Transport (DfT);

Setting policy and strategy for medium-term investment planning;

Approving objectives for the national programme; and

Approving the NDD national programme closeout report.


National Portfolio Office

The NPO is responsible for:

Setting standards and policy relating to programme development and delivery;

Providing guidance on the programme development process;

Reviewing and improving the programme development process to ensure it delivers the Agency’s objectives;

Maintaining a record of outputs from the value management process;

Agreeing Regional programme outputs;

Disaggregating and allocating the national budget to areas;

Monitoring (forecast) spend, performance and delivered outputs against budget and programmes;

Providing regular performance and value for money reports relating to planned and delivered programmes;

Compiling the national asset management plan as required;

Management of the formal change control process;

Reviewing and improving the value management process to ensure it delivers the outcomes the Agency requires;

Acting as client for the value management process; and

Providing secretariat support to the NDD Programme Governance Board.

Regional Directors

Regional Directors have responsibility within their Region for the identification of need, developing solutions (i.e. schemes) to address risk, network safety issues and serviceability. Specifically:

Prioritising projects and schemes;

Reviewing and approving Regional programmes;

Signing off their Region’s commitment to deliver the final approved programmes and budgets (i.e. the ‘Regional Promise’);

Reviewing and endorsing proposed changes to the delivery of Regional programmes; and

Ensuring delivery and performance of the programme to the NPO.


Regional Programme Office Staff

RPO staff support their divisional director and are responsible for:

Identifying local priorities to ensure the network is safe and serviceable;

Assembling various schemes into projects where appropriate to do so;

Developing the five-year rolling programme of projects;

Ensure appropriate data and information are analysed to evidence projects;

Ensuring that project information is maintained in SfM;

Applying value management processes to review proposed projects and allocate value management scores, as endorsed by NetServ;

Preparing the Regional programme plans;

Monthly review of programme delivery and expenditure, including over-programming;

Maintaining a regional asset risk register;

Confirming ability to deliver planned area programmes;

Ensuring compliance with the programme development process by Providers;

Managing delivery and changes to programmes through the change control process;

Ensuring Agency objectives are met by area programmes;

Developing five-year programmes for their Region, including justification for project selection;

Reviewing provisional programmes and budget allocations;

Confirming ability to deliver planned Regional programmes; and

Monitoring project delivery, updating milestone dates and spend against budget and programme in SfM.


Regional Contract and Performance Teams

Are responsible for:

Identifying the most suitable procurement method for projects;

Ensuring robust contract management and audit arrangements are in place;

Ensuring supplier performance is reliably / effectively measured and reported;

Ensuring commercial risks are identified and managed appropriately; and

Promoting a culture of continuous improvement and efficiency savings in programme delivery.

Providers, Delivery Partners & Other 3rd Party Suppliers


Working with Agency RPO and NetServ to identify projects - based on need and ability to deliver;

Providing robust data and information to take proposed projects through the value management process, justifying the technical solution and proposed spend;

Supporting the Regional asset development and service delivery teams in the development of five-year programmes of work;

Support to the preparation of the area asset management plans; and

Delivery of the agreed programmes.

Network Services (NetServ)

NetServ is responsible for:

Providing technical advice during the value management process, particularly relating to technical solution and scoring;

Ensuring consistent application of the value management scoring across Regions;

Continuous improvement of the value management technical guidance and scoring methodology; and

Advising on the preparation of asset specific, area and national asset management plans.

Regional & Central Finance Teams


Providing financial guidance on the setting up of PINs within SfM;

Providing access to SfM to amend the ‘Status’ field from ‘Pre-bid’ through the various stages to ‘Funded’;

Providing financial support in the compliance with the Investment Control Framework (ICF);

Assisting with budget profiling in SfM;

Setting budgets;

Provide on-going financial advice, guidance and support to the Regional teams to review the year-to-date expenditure, the full-year forecast and the whole project costs of the projects within their Region; and

Financial reporting.


Annex A - Portfolio Control Framework process map

The 20 activities described in this handbook are distributed between the seven stages and three phases as shown in the adjacent process map.

In addition those activities which relate to projects, programmes and the portfolio are indicated by the groupings boxes with dashed borders.


Annex B Product matrix

Stage Input Products Output Products

0 DfT Performance Specification

HA Business Plan

NDD Management Plan

Asset management policy and strategy

DfT Business Plan

Portfolio Objectives Statement

1 Portfolio Objectives Statement

Regional Programme Objectives Statement

Regional Statement of Funds Available

2 Regional Programme Objectives Statement

Statement of Regional Funds Available

Regional Programme Plan

Regional Asset Risk Register

Regional Promise

3 Agreed Regional Promise

Agreed procurement route

Outline projects aligned to needs

Initial SARs

4 Initial SARs

Project options statement

Final SAR(s) for all schemes within the project

5 Approved project sign off Project design details

Project target price

6 Project design details

Change controls documents (as applicable)

As-built details

Updated asset data

7 As-built details

Updated asset data

Review of project delivery

Programme Benefit Review


Annex C RACI charts

The following RACI chart over 2 pages assigns responsibilities in relation to the 20 Activities in the overall process


The following RACI chart assigns responsibilities in relation to the value management process.


Annex D Value Management Process

D1 Introduction The Value Management Process (VMP) supports the needs and solutions phases of the NDD Regional programmes. Its function is to:

Record information relating to needs of the network across a region or at specific locations;

Developing a number of options for technical solutions to best address those needs;

Scoring the solution through value management;

Selecting by consensus the most appropriate/beneficial solution; and

Transferring schemes from the solutions to delivery phase for their design and construction.

The drivers for implementing the VMP are:

Demonstrating that investments are made in the right areas;

Ensuring that the right solutions are being put forwards; and

Making sure we are getting value for money.

The VMP provides a consistent technical review of proposed treatment options and generates a Value Management Score (VMS) which can be used to prioritise schemes, promoting those that address the greatest needs of the network, maximising value for money, making best use of available funds and prolonging the life of the asset by intervention at the most appropriate time.

In order to prioritise Renewal and Improvement work, each scheme should be assessed by implementing VMP. Asset-specific guidance for this is referenced in D4. The recommended outcome is that each scheme is assessed and a VMS assigned to it at the solutions stage. Scores should be revisited as schemes progress into projects for design and construction, should any element of it materially change. This is to make sure the solution still address the need and does so in a way that maximises value for money to the Agency.

The VMP should be seen as part of a continuous five-year rolling programme of allocation of funding, identification of network needs, prioritisation of those needs, assigning of scores and the delivery of projects that have been approved for inclusion in the Regional programmes.

Audience

This Annex to the NDD PCF handbook should be used by:

The Agency’s Delivery Partners, Providers and Regional ADTs and SDTs involved in the development and delivery of asset Improvements and Renewals;

Network Services Directorate (NetServ) in providing technical assurance on the needs and solutions proposed; and

The Asset Management Office (AMO) who own the overall process and who work with all stakeholders to continually improve the process.


D2 Contract Lump Sum Duties All schemes put forward as solutions to identified needs must demonstrate they are not part of Lump Sum duties as defined by the respective contracts.

Each party involved in the VMP has an obligation to make sure only valid schemes are proposed. If a scheme looks like it should be addressed under Lump Sum requirements, or the need exists because it appears that Lump Sum duties have historically not been fulfilled then each party, including the Provider, should look to challenge the validity of the scheme. Input from the RCPT should be sought where required.

D3 Responsibilities The responsibility for appraising schemes lies primarily with the ADTs within NDD, and Providers.

A RACI (Responsible, Accountable, Consulted and Informed) chart specific to the VMP is included in Annex F.

More detail on responsibilities is provided in section D8 of this annex.

D4 Value Management of Schemes The VMP is different for Improvements and Renewals.

Improvements

The Provider assesses the potential benefits of undertaking an Improvement and identifies any stakeholder issues surrounding the existing problems and the potential options for improvements.

Renewals

The Provider uses their engineering knowledge to assess the identified needs in terms of the consequences of asset failure and increased replacement costs if the project is deferred.

As part of the approach to renewals, due consideration should be given to the following three classes of treatment option:

Do Nothing Option – the option where no renewal scheme is anticipated within the current five-year programme.

Do Minimum Option – The ‘must do’ renewal activities that are required to keep the asset safely open for one full financial year beyond the year in which option appraisal takes place, in the event that Do Something Options are not funded.

Do Something Option – typically a preferred option that has a higher capital cost but satisfies the need at minimum whole life cost.


Treatment Options

The funding of Do Minimum options will only be considered if the Do Something option is not funded. In the event that a scheme progresses on the basis of the Do Minimum treatment option, the need and associated treatment options should be reassessed within 12 months of treatment being completed. This is because the purpose of the Do Minimum option is not to provide a long maintenance-free period; it is to enable the asset to remain in service without compromising safety in the short term, after which a Do Something treatment should be carried out in the following year. Undertaking repeat Do Minimum treatments on the same asset is also unlikely to give overall value for money even if each individual treatment on their own would appear to do so.

SAR - Scheme Appraisal Workbooks

The primary output from the VMP is a Scheme Appraisal Report (SAR).

An Improvement SAR workbook exists for Improvement schemes. A Renewal SAR workbook exists which contains individual worksheets that make up the SARs for the different asset types. There is also a generic Renewal SAR for those renewal schemes that do not fit any of the pre-defined asset categories within the Renewal SAR workbook.

For Improvements, the latest workbook should be sourced from TAME.

For Renewals, the SAR workbook contained within this following SHARE link should be used.

The Do Something option should be promoted as the Provider’s preferred option.

http://share/Share/livelink.exe?func=ll&objaction=overview&objid=23959386



Assessing Improvement Schemes

The Provider undertakes the following specific activities:

Agrees the proposed appraisal methodology with the ADT Leader for all projects;

Undertakes the appraisal of all projects in accordance with the agreed methodology;

Completes a SAR for all projects which contains the results of the project appraisal. The type of SAR used should be that specified for Conception stage in the Improvement and Technology Improvement Schemes Justification and Appraisal guidance; and

Submits any information requested by the ADT Leader in relation to the completed appraisal work and the SAR, including project drawings, in accordance with an agreed submission date.

NetServ specialists in the TAME and Environment Groups should be consulted on appraisal methodologies, or to act on behalf of the ADT Leader in agreeing methodologies with the Provider, particularly in relation to projects over £250k for which they will be responsible for assessing and certifying.

Assessing Renewals

The Provider undertakes the following specific activities:

Produces an initial SAR and initial VM Score for the preferred option;

Produces preliminary evidence of defects/conditions in support of the projects;

Estimates an approximate cost to fix the problem/issue for the different proposed options;

Produces an initial project risk register; and

Submits the above information to the ADT Leader in accordance with an agreed submission date.

Scheme Justification and Appraisal

The preferred mechanism for scheme justification and appraisal is complex. Therefore a supporting document describes in detail how a SAR should be completed and how related value management activities should be undertaken.

Improvement Scheme Justification and Appraisal – for network and technology improvement schemes

Road Scheme Justification and Appraisal - for renewal schemes affecting pavements; geotechnical assets; drainage; lighting; vehicle restraint systems; tunnels; traffic signals; fences & barriers; road markings & studs; traffic signs; and technology.

Structure Scheme Justification and Appraisal - the categories that are assessed under value management for structures are different depending on asset type.






The Economic Indicator

All schemes are assessed against value for money criteria by use of an Economic Indicator (EI). The EI compares the works cost and whole life cost (WLC) of the Do Minimum and Do Something options. Broadly speaking it assesses the WLC savings of undertaking the Do Something option instead of the Do Minimum. See Section D9 for details of the calculation.

For Pavements the tool that is used to generate the EI is SWEEP.

For all other assets the tool is the Project Economic Appraisal Tool (PEAT).

Small Works Renewal Projects

Small works are all Renewals schemes will all-inclusive costs not exceeding £100k. The VMP for small works is aligned with the requirements for both Roads and Structures renewals projects and the same SAR workbook and scoring requirements apply with the exception of:

Small works do not require a technical workshop;

Value for money for small works pavement schemes should be assessed as per the pavements chapter in the roads justification and appraisal guidance 2; and

For all other assets, calculate the EI score using the ‘EI light’ functionality in PEAT.

Optimism Bias

An optimism bias is incorporated into the VMS methodology. The applicable percentages are incorporated into the SWEEP and PEAT tools for the purpose of whole life cost modelling. Additional risk costs should not be included in the whole life cost analyses.

Safety Risk Assessments

Standard GD04/12 is the standard for safety risk assessment on the strategic road network.

All Schemes must be assessed in accordance with GD04/12. The NetServ Safety Risk Governance team can offer advice on the assessment process.

Environmental Considerations

In locations of environmental sensitivity it will be necessary for projects to be supported by an Environmental Assessment Report. A brief summary and cross-reference to any reported information should be sufficient for the purposes of any value management workshop.

Prior to workshops, Providers should attempt to review the Environmental Checklist for all projects. This is to ensure that all sustainability and environmental considerations have been taken into account so that these can be discussed at the workshops. The Checklist can be found on SHARE.




D5 Workshops Workshops are the suggested mechanism for discussing and agreeing the appraisal methodologies for Improvement schemes, or the technical solutions for Renewals.

In order to be effective it is important that the right type of workshop is prepared for and arranged, at the right time, with appropriate leadership, leading to effective outcomes and recorded agreements. There are four types of workshop:

Technical Workshops

Technical workshops will be held at which the ADT, supported by NetServ, will consider the Provider’s options to address the network need and agree on the preferred option for each outlined project.

Pre-scoring Workshops

These may be required to further discuss projects and assess level of evidence. They will allow the ADT or NetServ to ask for further information before the project can be scored at a consensus workshop. VMS may be attributed to SARs on a provisional basis.

Consensus Workshops – Improvements

These workshops are concerned with improving the value for money offered by Improvement projects. Where this is possible the SAR will automatically generate a revised VM Score.

Consensus Workshops – Renewals

These workshops review the provisional scores attributed to SARs at pre-scoring workshops and finalise these scores, to the satisfaction of all parties. The related SAR must then be signed off by the relevant approvers. If a single workshop event discusses technical aspects, pre-scoring evidence and consensus for different schemes it is important for the agenda to reflect this and for the scope of discussion around each individual scheme to follow that agenda.

Technical workshops should be held for all Renewal schemes. Pre-scoring workshops are optional. Improvement schemes do not normally require technical or pre-scoring workshops.

Consensus must be reached for all schemes. For schemes less than £500k, prior agreement much be reached between the Provider, ADT and NetServ as to which schemes should be discussed at the workshop and which can be dealt with by electronic communication between the parties to achieve consensus.

The Provider and ADT should attend all workshops. Invitations must also be extended to local NetServ representatives for each asset type. NetServ will normally attend where the workshop includes projects that they have been involved with. In the case of Improvements, this will include all projects over £250k and any below this threshold where NetServ has undertaken the checking and certification role.


D6 More on Workshops The AMO should ensure that at least one workshop from each Area is attended by them each year. As part of this process, the AMO should provide feedback on performance to ADTs (in terms of how the workshop process is managed), and identify any ADT training needs in relation to the VMP.

Workshop Inputs

At consensus workshops for Improvements, the Provider will table date-stamped photographs, a drawing showing a feasibility of the proposed layout, a summary of the appraisal work and the results of the SAR assessment including the VMS. These are minimum requirements and other information should be provided where necessary to explain and justify the scheme.

At Renewals workshops, information required will be as per the relevant guidance on scheme justification and appraisal. It will include such things as:

Completed Renewal SARs (also from previous years if the project has been previously submitted);

Location plan showing the location of the project and any adjacent works affecting that part of the network, planned within the period covered by the current programme;

Photographs, referenced to location and dated, showing the defects clearly and in sufficient quantity that the project is supposed to address;

SWEEP/PEAT details, including breakdown of costs entered into PEAT or PEAT Light as single amounts (see Appendix B);

Data from any mobile mapping/LiDAR surveys;

Details of any relevant traffic management, accident and access issues;

Details of the likely impact on road users of the options considered;

Completed risk register; and

Brief details of any adjacent projects, either other Renewals or Improvements.


Workshop Document Management

To ensure that that all parties involved in VM Workshops receive the relevant information in a consistent way, the Provider should use the Supply Chain Portal (SCP) to upload the relevant documentation for each scheme, in the folder structure provided, at least 10 days prior to the workshops or by an earlier agreed submission date. The Provider should notify all parties when this has been done. However some hard copy information or CDs may still be required by various reviewers, particularly NetServ specialists, and should be provided to the same time limit, if required. This SCP approach is seen as a more effective way of managing a significant number of documents consistently and must be used nationally. All parties can access and review the information at the same time.

It is the responsibility of the Provider to upload the documentation to the SCP. The Provider must make sure the documents are ‘checked in’ when first uploaded. Unless the documents are checked in they will not be visible to other users. Please refer to the Home Page of the SCP for further information and guidance on how to do this.

The requirements to add documentation to the SCP in a timely manner also apply to projects below £500k for NetServ to sample.

The regional ADT can cancel workshops if the required documentation is not provided at least 10 working days prior to a VM Workshop (or by an earlier agreed submission date).

If any new users require access to the VM Documentation home page and the relevant folders on the SCP, please email the owner of that page.

Once the provisional programme has been compiled, the ADT is responsible for transferring SARs and supporting documentation from the SCP to SHARE.

For consistency, the Provider should use the sampling spreadsheet (found via the SHARE link below; ADTs should forward as an attachment) to populate and upload all the supporting documentation to the SCP before sending the complete list of projects to NetServ and copying in the AMO. Based on the programme submitted, NetServ will select the sample of projects to review the proposed technical solution with a minimum of 50% of Renewals projects being sampled and signed off below the threshold value of £500k.

SAR sampling spreadsheet on SHARE.

http://share/Share/llisapi.dll/overview/22326665?func=ll&objaction=overview&objid=22326665


Workshop Outputs

It is important to capture information about VM workshops so that they and the wider VMP can be continuously improved. This should include what worked well within a workshop, what didn’t, who attended, what could be improved to the workshop format and what could be improved.

To this end the AMO have developed a VM Workshop Feedback Form. Attendees can use this form as it is or adapt it to their needs as they see fit.

All feedback, whether on the VM Workshop Feedback Form or otherwise, should be submitted to the AMO for review and consideration of potential improvements.

A summary regional report should also be submitted to the relevant NDD RDD.




D7 SAR Approvals Thresholds apply to the signing-off of SARs. The detail is contained within the guidance to scheme justification and appraisal and may be revised from time to time. The thresholds current at the date of publication of this handbook are reproduced in the adjacent table.

The latest version of this guidance should always be referred to for the latest thresholds.

It is not necessary SARs to be printed and physically signed. Approval can be recorded by entering names on the Excel document, provided supporting records such as emails or notes of workshops record that approval has been given, and the VMS to which each approval refers. Additional comments can be inserted to capture any issues relating to specific projects. This will remove the need for repeated printing, copying, scanning and emailing. The final ‘master’ versions of the SARs can be retained in Excel format, stored electronically.

NetServ is responsible for signing off a minimum of 50% of SARs for schemes with all inclusive costs less than £500k. ADTs, working with the Provider, should supply NetServ with the whole list of schemes and all supporting documentation in advance of planned workshops.

Scheme type and cost

Required SAR Approvals

Improvement Schemes WebTAG Appraisable and Non-Appraisable ≥ £250k

Four approvals:

1. The Provider

2. The Project Sponsor

3. The ADT Leader

4. Appropriate NetServ representatives ie TAME ACO and Environment Group)

Renewals ≥ £500k

Four approvals:

1. The Provider

2. An ADT representative

3. Appropriate NetServ representative.

4. The ADT Leader

NetServ should review and sign off all schemes at this threshold

Renewals ˂ £500k (including those below £100k)

Three approvals:

1. The Provider

2. An ADT representative

3. The ADT Leader

NetServ should review and sign off minimum 50% of schemes at this threshold


D8 Roles and Responsibilities Roles and responsibilities associated with the VMP are detailed in the following table and have been summarised into the RACI chart in Annex C.

Party Responsibility Details

Provider Project appraisal

and VM workshops

Value manages the schemes in accordance with the requirements of the VMR document

Improvements: Consults with and obtains the prior agreement of the Agency ADT Leader to the proposed appraisal methodology for all projects

Completes, prepares, maintains, updates and reviews all relevant SARs and supporting worksheets at each relevant project stage, including providing such SARs by an agreed date with the ADT Leader

SARs and supporting information should be submitted on or before a date agreed with the ADT Leader.

Improvements: SARs and supporting information for Improvement projects will need to be checked and certified before being value managed at a consensus workshop. The following considerations therefore apply in relation to Improvement projects: o Documents must be submitted in sufficient time to allow for checking

and certification o Submission dates must have regard to the time required for consultation

with NetServ TAME and Environment Groups where this is required o The time required for NetServ consultation will depend upon the number

of SARs being submitted and the complexity of the appraisal work undertaken

Adds SARs and supporting documentation to the HA Supply Chain Portal in accordance with the requirements set out in Section D6 of this document.



Provider Cont’d

Project appraisal and VM workshops

Treats the relevant SAR as an official record and keeps a copy on the Health and Safety File

Challenges works which look like they should be addressed under Lump Sum requirements, or the need exists because it appears that Lump Sum duties have historically not been fulfilled.

For Pavement asset projects, evaluates the SWEEP generated Do Minimum treatments before producing Provider’s own User Do Minimum treatments in SWEEP

Provides SWEEP and PEAT reports as required in the VMR. Ensures the person who undertakes the SWEEP analyses and prepares these reports is properly trained by the Agency’s HAPMS training team

Agrees all proposed treatments for all maintenance options at the technical workshops to ensure effective use of resources before undertaking WLC analyses (SWEEP and PEAT)

All SARs to be signed off must be submitted not more than 10 working days after the relevant scoring workshop has taken place

Takes minutes of VM workshops and distributes to all parties within 5 working days of the meeting

During the period of the project design, keeps records of the changes to each project in terms of impacts and benefits achieved, changes of the projects scope, VE exercises, detailed environmental studies, resubmits projects for re-scoring where the effect of changes is material, records all changes and revised scores on relevant SARs

At the end of project construction, records weather condition, as-built construction data, changes in operation, any disbenefits/benefits as a result of the changes during construction, and re-scores if necessary (i.e. if there are any significant changes to the original project proposal)



NetServ Owner of the

scheme justification and appraisal guidance that supports the VMP.

It owns and is responsible for developing and improving, when required, the annexes in accordance with standards and policy changes.

NetServ should review:

The technical specifications supporting the VM process

The scoring against each asset type in the scheme justification and appraisal guidance, and the criteria for weighting the scoring within each category

The Improvements and Renewals SAR templates.

Use of the SWEEP and PEAT systems



NetServ Supports the

proposed projects by qualifying and checking the recommended technical solutions

Acts as asset specialist providing technical advice during the VM process on project identification and development and on technical solutions

Improvements: Advises on appraisal methodologies, or acts on behalf of the ADT Leader in agreeing methodologies with the Provider (but still in accordance with the VMR). Ensures the appraisal is sufficient in its extent and accuracy and that the documentation has been completed correctly. In particular, that all projects have been appraised in accordance with relevant appraisal methodologies (e.g. DMRB and WebTAG)

Where applicable, provides advice on the application of EA requirements to the VM process

Advises on the treatment options for all projects when developing a maintenance strategy

Advises on the application of the WLC analysis process and VE

Provides advice on the completion of Environmental Assessment Reports

NetServ’s involvement is mandatory for any projects requiring technical approval as defined by BD2 in volume 1 of the DMRB and/or projects requiring certification as defined by HD22 in volume 4 of the DMRB



NetServ Attends and

supports all relevant VM workshops to ensure technical application of the process to all projects, and assure the consistency and validity of the scores

Assists the ADT in reviewing and challenging project information such that it conforms with Agency requirements and standards.

Renewals: Attends all VM Renewal workshops where the value of the project is £500k or above and signs off the relevant SAR and associated scores to ensure technical application of the process, agree/approve the technical need/solution and provide NDD with the necessary assurance that scores are being applied correctly and consistently

Renewals: For Renewal projects below £500k (including projects below £100k) signs off a minimum of 50% of SARs and associated scores, to ensure technical application of the process, agree/approve the technical need/solution and provide NDD with the necessary assurance that scores are being applied correctly and consistently. They should attend as many workshops addressing projects below £500k as they can.

Improvements: For Improvement projects, checks and certifies project appraisals for projects costing over £250k and which have impacts as per the Improvement and Technology Improvements Scheme Justification and Appraisal guidance and ensures that the views of all relevant groups within NetServ are consulted

Improvements: Challenges the sustainability of each project. How well do Improvement projects stand up to long-term economic, environmental and social impacts? Will the project still be viable in 10-15 years’ time? What will the BCR be in 10 years’ time? Will emerging technology render this project obsolete in 15 years’ time while the asset itself is designed to last 30 years? Is there an alternative design solution that will protect the Agency’s reputation as a result of changes in policy relating to budgets, technology and social trends? Should Improvement projects be designing for a 15-year life expectancy along with significantly reduced costs instead of a 30-year life expectancy (or 20 years instead of 60 years).



ADT Project appraisal

and VM workshops

Organises and chairs VM workshops

Ensures that the Provider utilises SWEEP and PEAT in appraisals as required

Ensures that the Provider prepares, maintains, updates and reviews the relevant SARs at each relevant project stage

Approves SARs


Challenges (and rejects) Pavement projects brought to VM workshops mainly due to thin surface course defects if it is within the ‘5 years surfacing integrity performance guarantee’ period from the time it was laid (Interim Advice Notes 157/11 and 154/12).

Adds SARs and supporting documentation to the HA Supply Chain Portal and SHARE in accordance with the requirements set out in Section 3.5 of this document.

Ensures that the Provider during the period of project design (Stage 2 (Annex 20)), keeps records of the changes to each project in terms of impacts and benefits achieved, change of scope/extent, VE exercises, detailed environmental studies, etc; resubmits projects for re-scoring where the effect of changes is material; records all changes and revised scores on the relevant SAR

Ensures that the Provider at the end of project construction (Stage 3 (Annex 20)), records weather condition, as-built construction data, changes in operation, any impact/benefits as a result of the changes, etc, during construction, and re-scores

Ensures that the Provider carries out its project development and VM workshop requirements



ADT Cont’d Project appraisal

and VM workshops

Provides AMO with dates of the VM Workshops for their Area, as soon as they are confirmed and thereafter notify AMO of any changes to those dates

Cancel workshops if the required documentation is not provided 10 working days prior to the VM Workshop.

At a workshop, instructs the Provider to undertake further work, as required, to be submitted by the Provider on or before a date to be agreed with the ADT Leader. VM of the revised submission need not however wait for the next workshop, but can be done at a project specific VM meeting between the Provider, ADT and NetServ

Improvements: Agrees with the Provider, the proposed appraisal methodology

Improvements: checks and certifies project appraisals reported in SARs for projects costing under £250k

Improvements: Consults NetServ in relation to projects costing over £250k, NetServ consultation is optional for projects under £250k, but is encouraged in circumstances where the project appraisal is based upon modelling or other specialist appraisal techniques



AMO Manages the

deployment of the VM process in each region and seeks advice from NetServ as necessary

Owns the VM process as described in the VMR main document

Attend as many workshops as possible, and ensure that at least one workshop from each Area is covered each year. As part of this process, the AMO should provide feedback on performance to ADTs, and identify any ADT training needs in relation to VM.


Undertakes periodic review of – and improvements to – the VMR document and publishes subsequent updated versions

Responsible for audit/review of the VM process

Responsible for developing and undertaking appropriate checks on benefits realisation

CPT Encouraged to review costs and attend VM workshops

Encouraged to review the costs associated with the identified schemes and the approved design costs for those, challenging costs where necessary.

Encouraged to provide input on whether the proposed work should be undertaken as part of Lump Sum duties or the need exists because it appears that Lump Sum duties have historically not been fulfilled.

Encouraged to attend at least one technical and one scoring workshop covering projects with different threshold values for their Area. Their responsibility is to explain and discuss the underlying contract agreements (for example, what lump sum costs and frequency/extent/quality of work for asset type has been accepted in the contract) with the Provider and challenge/agree project budget costs (Annex 20) including contract unit rates used in sample schemes which are presented for each of the schemes.



RFT Encouraged to

review costs of overall programme, advice on FBS Governance and attend VM workshops

The Regional Finance Team should attend at least one scoring workshop covering projects with different threshold values for the Area. Their responsibility is to challenge the Provider on cost effectiveness of the whole programme, for example, merging schemes which are adjacent to each other as a single project that will result in cost saving on mobilisation.

SDT Responsible for seeing the value managed project from the end of the identification stage through design and construction.

Ensures value managed schemes are delivered effectively through design and construction, making changes to the SAR and reviewing project viability as appropriate

Ensures VE is completed in an effective fashion

Ensures correct and appropriate liaison with NetServ takes place when designing and constructing

Ensures close liaison with the ADT on schemes which may impact on the environment and/or require access to land not owned by the Agency (to enable quick access to land to complete the intervention)


D9 The Economic Indicator tool

Purpose

The purpose of this Section is to explain the use of the Economic Indicator (EI) which should be adopted for all renewals projects.

The EI has been defined to help answer the question: “How should the Agency spend its renewals funds this year, if it cannot fund all Do Something scenarios?” The formulation and option definitions are based on this assumption.

Definitions of Options

For the value of an EI to be consistent and comparable across different asset types, it is important that clear, unambiguous definitions and terminology are used for the various components of the EI. The VMR Glossary gives the definition of various relevant terms which are repeated and expanded here for clarity:

Lump Sum Duties Only option. Not a costed option, but the impact on the road user of following this strategy must be described. This is important as it ensures that the comparison of various renewals treatment options (Do Minimum or Do Something options – see below) starts from a consistent basis. The impact is described in concise terms:

o Road closed. If no renewals funding is provided, the road section under evaluation will need to be closed during next programme year as it will fall below an acceptable operating standard

o Capacity restricted. If no renewals funding is provided, traffic on the road section under evaluation will need to be restricted (either lane closure or speed reduction)

o Road remains operational. If no renewals funding is provided, it will still be possible to operate the road section to an accepted standard for the road user, by carrying out contracted Lump Sum duties

Do Minimum option. The ‘must do’ Renewal activities required to keep the asset safely open for one more year, in the event that Do Something options are not funded, after which the minimum whole life cost option may apply.

Funding of the Do Minimum option will be provided in Year 1 of the programme only if the Do Something option is not funded. The project will then need to be resubmitted for review in the following year if further funding is being sought.


Note: The purpose of the Do Minimum option is not to provide a long maintenance free period. It is to enable the asset to remain in service without compromising safety for one further year, after which a Do Something treatment could be carried out in the following year. Therefore the Do Minimum option can be thought of as the deferment of a Do Something option for one year.

Do Something option. Typically a preferred, more expensive Renewal option that addresses the identified needs at minimum whole of life cost.

In some cases, two genuine alternatives to the Lump Sum Duties option will not be possible:

If the Lump Sum Duties Only option enables the road section to remain operational, then there is no Do Minimum option in Year 1 as there are no ‘must do’ activities for which additional renewals funding is required. In such cases, Do Minimum option is ‘do nothing’ with zero cost. However a Do Something option may be justified to reduce whole of life costs (i.e. preventive maintenance).

If the Lump Sum Duties Option results in the road section being closed or its capacity restricted, then a Do Minimum option is required by definition. However, if there is only one solution that is appropriate for the renewal, then there is effectively no further Do Something alternative. However, it is expected such cases will be rare and will need to be rigorously justified.

For the avoidance of doubt, the diagram on the following page shows the above definitions in terms of a decision process.


Will LSDO option maintain

existing capacity?

Will further investment now

save future costs?

Yes

Do Something option modelled.

Do Minimum will be ‘do nothing’

(only LSDO works) with zero cost

in Year 1, minimum WLC strategy

from Year 2

Yes

What is the minimum work

required to keep the asset safely

open for one more year?

What is the work that will minimise

the WLC of maintaining the asset?

Do

Minimum

Do

Something

Renewals funding

request needed

No

No Renewals

funding request

needed

No

Flow chart for identifying option labels


Definition of Economic Indicator

The Economic Indicator is defined as:

Economic Indicator

= Saving (in whole life cost) for Do Something over the Do Minimum

Additional Agency cost in Year 1 for Do Something*

This can be expressed as:

Economic Indicator

= (WLCDoMin - WLCDoSom)

(WorksDoSom* – WorksDoMin)

where WLCDoMin = Whole life cost of the Do Minimum option (over 60 years)

WLCDoSom = Whole life cost of the Do Something option (over 60 years)

WorksDoSom = Works cost of the Do Something option*

WorksDoMin = Works cost of the Do Minimum option (for 1 year)

The whole life costs are the present value costs over the analysis period (60 years) and works costs are the present value of the treatment costs for which the renewals bid is made. Whole life costs consider Agency costs which are incurred under the various budget heads by which the Agency funds activity on the network (i.e. not just the renewal costs, but also the operating costs that are paid for through ASC contracts and any other costs of operation (e.g. energy consumption for electrical installations)).

* The WorksDoSom cost is the works cost for the first Do Something intervention. Although the Do Something option may span more than one year, the total cost of the Do Something intervention should be recorded in Year 1 in PEAT.


For the avoidance of doubt, the costs should be as close as possible to ‘open book’ contract costs, for any costs estimated to be incurred beyond current contract obligations. For costs incurred under current contractual obligations, the cost is that charged to the Agency.

Other significant indirect costs of impacts, specifically safety and environmental costs, are more difficult to differentiate and monetise rigorously for each project option (for this reason, their assessment is captured in the separate criteria which contribute to the overall Value Management score). The approach is consistent with Treasury Green Book, DfT and WebTAG guidance.

The discount value adopted is as specified by the Treasury Green Book.

Use of EI tools

For pavements projects, the SWEEP tool should be used to calculate the EI. For all other asset types, the PEAT tool should be used to calculate the EI.

For projects greater than £100k, PEAT should be used.

For small projects (less than or equal to £100k) the PEAT Light tool should be used. This requires less robust assessment of cost items. The tool can also be used to test ideas at option investigation project for any other assets as appropriate.

If an existing bottom-up process exists to estimate project costs then it is acceptable to use this for the Do Minimum and Do Something works costs – enter these amounts into PEAT or PEAT Light as one amount rather than breaking down into components and treatments.

Future year costs should still be entered into PEAT or PEAT Light as per the user guidance, i.e. broken down into components and treatments, detailed traffic management costs, recurring costs, etc.


An audit trail must be available for all costs. So for example if a Do Something cost is entered into PEAT because a commercial process already exists to estimate that cost, then details of that estimate must be available for VM workshops or on request. Similarly any amounts entered into PEAT Light must also be justifiable and available for VM workshops or on request.

For details on access to the tools and the associated guidance for their use, please refer to the below link.


Use of EI in the Value Management Score

The Economic Indicator is used to support calculation of the Value for Money (VfM) score for each asset type.

This is used in accordance with the following transformation table:

EI to VfM Transformation

EI score VfM Score

> 20 100

7-20 80-100

1-7 50-80

0.3-1 30-50

0.1-0.3 10-30

0-0.1 0-10

0

No PEAT/SWEEP report submitted

or

Do Minimum is not accepted

< 0 0



D10 Adjusting for optimism bias in NDD projects

Purpose 1. The purpose of this Section is to help staff and providers understand the concept of optimism bias and

how to make suitable adjustments for it in estimating and budgets. The guidance is applicable to all projects carried out by NDD.

Introduction 2. In January 2003, Her Majesty’s Treasury introduced a new Green Book concerning appraisal and

evaluation in Central Government. The book altered a number of aspects of appraisal and evaluation across Government which were implemented within the Department for Transport (DfT) and its Agencies.

3. Four changes affecting appraisal and evaluation in the Highways Agency were introduced: The use of a discount rate of 3.5% plus a 3% discount rate after 30 years; The introduction of factors to consider optimism bias within the project appraisal; The greater use of risk assessment procedures as opposed to contingencies, within the estimation

of project costs; and Alterations to the Appraisal Summary Table and associated documents (including the Transport

Economic Efficiency table) in respect of the economy objective. 4. Since 2003 Her Majesty’s Treasury have introduced further supplementary guidance concerning

Optimism Bias, but the responsibility for assessing the level of addition, lies with individual departments and agencies.

5. This guidance sets out revised additions for Optimism Bias applicable from the issue of revised Value Management Requirements version VMR v3.

6. This guidance applies to NDD projects only. Following the Nichols review, Major Projects changed their estimating processes to exclude the need for Optimism Bias additions.


Optimism Bias 7. “Optimism Bias” is the term used to describe the demonstrated systematic tendency for practitioners

to under-estimate the costs of projects, the time taken to implement them and the benefits received from them. The “Green Book - Appraisal and Evaluation in Central Government” recognises Optimism Bias explicitly and incorporates it into the appraisal process. Factors for Optimism Bias are set out in tables in this guidance and should be applied to all highway project cost estimates.

8. Risk and optimism bias are closely linked and it is recognised that good risk management as practiced under Prince2 or APM methodologies will reduce Optimism Bias.

Methodology for Assessing Optimism Bias 9. A risk assessment should be undertaken and an appropriate risk allowance included in the estimated

cost of the project in accordance with the Operational Guidance Manual with additions for optimism bias (OB) added in accordance with the following Table.

TABLE 1 – Adjustments for Optimism Bias

Project Type Stage of Preparation Optimism Bias Addition on project cost estimate (%)

Risk assessment done

Risk assessment not done

All Improvement Schemes and Technology Improvements (<£15m)

Conception/Bid (Identification) 5 10

Works commitment/Tender invitation (Design, Construction)

0 N/A

Renewal of Roads Study 10 10

Design 5 N/A

Construction 0 N/A

Renewal of Structures Study 10 10

Design 5 N/A

Construction 0 N/A

Renewals of Technology Study 10 25

Design 5 N/A

Construction 0 N/A


Note – Stage descriptions in brackets are from Annex 20 Scheme Development in ASCs

Based on the VM Requirements Manual Version 3

These additions assume that a risk assessment has been completed as a requirement of the Operational Guidance Manual.

These additions assume that a risk assessment has not been completed at the Identification or Study stages

For Roads and Structures Renewals it is assumed that no risk assessment is carried out at the Study Stage. Where a risk assessment has been completed and quantified, the risk allowance only is added with no addition for Optimism Bias.

At the discretion of the individuals at the Value Management workshop the option to continue with a reduced Optimism Bias percentage into the Design Stage is allowed for renewals projects, but only where a risk assessment has been completed but no risk amount quantified, and the decision must be clearly identified with sound reasons discussed and recorded.

No Optimism Bias is added beyond the Design Stage. At this point all risks to successful project delivery should have been identified, recorded in a risk register and assessed for cost and time impacts on the budget and project schedule.


Annex E Contacts List

Value Management Contacts in post at the time of publication of the NDD PCF Handbook are listed in this section.

For Improvements Schemes

Name Location Telephone Number

Nick Corby Bedford 0123 479 6067

For Roads Renewal Schemes (Delivery):


Alex Tam Dorking 0130 687 8153

For Structures Renewal Schemes:


Lionel Brown Dorking 0130 687 8236

For Technology Schemes:


Sukhvinder Ubhi Bristol 0117 372 8225

NetServ Geotechnical Specialists

Areas covered Asset specialists Contact Details

VM Focal Point Jan Marsden Dorking

Support David Patterson Bristol

NetServ Drainage Specialists


VM Focal Point Mike Whitehead Bedford

Support Santi Santhalingam Bedford


NetServ Pavements Specialists

Areas covered Pavements asset specialists Contact Details

VM Focal Point Alex Tam Dorking

Team Leader Ramesh Sinhal Bedford

South West Alex Tam Dorking

South East Alex Tam Dorking

East Arash Khojinian Bedford

Areas 7 and 12 Louise Caudwell Leeds

Area 9 Ramesh Sinhal

Naziya Sheikh

Bedford

Birmingham

North West Roger Fairclough Manchester

Area 14 Donald Burton Bedford

NetServ VRS Specialists


VM Focal Point Neville Haneef Dorking

Support Daniel Ruth

Phil Owen

Birmingham

Birmingham

NetServ Lighting & Traffic Signals Specialists


VM Focal Point Stuart Beale Bristol

South West Nick Fairfax-Francklin Bristol

South East John Slip Bristol

East Simon Langley Bristol

Midlands Simon Langley Bristol

North West Simon Langley Bristol

Yorkshire & North East Simon Langley Bristol


NetServ Road Markings and Studs Specialists


VM Focal Point Matthew Youell Leeds

NetServ Traffic Signs Specialists


VM Focal Point Graham Harper Manchester

NetServ Tunnel Equipment Specialists


VM Focal Point Lionel Brown Dorking

Support Tony Aloysius Dorking

NetServ Structures Specialists


VM Focal Point Lionel Brown Dorking

South West Mark Maynard Bristol

South East Said El-Belbol Dorking

East Colin George Bedford

Midlands Peter Hill Birmingham

North West Andy White Manchester

Yorkshire & North East Stephen Dennis Leeds

NetServ Technology Specialists


VM Focal Point Colin Bird Bristol

Support Sukhvinder Ubhi Bristol


NetServ TAME Group


VM Focal Point Russell Martin Dorking

Areas 1 & 2 Nick Corby Bedford

Area 3 Mike Jones Dorking

Area 4 & 6 Russell Martin Dorking

Area 5 Louise Wootton Dorking

Area 7 & 8 Craig Drury Bedford

Area 9 Peter Grant Manchester

Area 10 & 13 Richard Steinberger Manchester

Area 12 & 14 Paul McKee Manchester

NetServ Environment Group


VM Focal Point Henry Penner Dorking

South Environment Support Centre –South [email protected]

North & Midlands Environment Support Centre – North & Midlands

[email protected]

South West David Hinde (Area 1) Stuart Wilson (Area 2)

Exeter Bristol

South East Philippa Lewis Dorking

M25 Henry Penner Dorking

East No Cover -

Midlands Matt Winter (Area 7) Peter Groutage (Area 9)

Birmingham

North West Richard Bernhardt, Sheena Crombie Manchester

Yorkshire & North East

Richard Bernhardt, Sheena Crombie Manchester

mailto:[email protected]




Annex F Glossary

The following Glossary currently covers terms that are used within the Value management Process, including those found in the guides to scheme justification and appraisal, or are in common usage across the processes outlined in the NDD PCF Handbook.

Term/Abbreviation Definition

AADT Annual Average Daily Traffic - It is the total volume of vehicle traffic of a highway or road for a year divided by 365 days

ADMM Asset Data Management Manual

ADT Asset Development Team

All inclusive costs

Costs which are formulated and submitted as the Request-for-Funding in the forward programme to carry out works which include Do Something, Do Something (Holding Works) or Do Minimum treatments. The all inclusive costs cover design costs (e.g. detailed design, environmental impacts studies, etc), works/construction costs, cost of traffic management, and supervision costs. The costs for Project Development Support (PDS) works, such as coring, studies, investigations, etc, should be excluded.

AMM Area Management Memo

AMO Asset Management Office

AMOR

Asset Maintenance and Operational Requirements (AMOR) - the HA's mandatory requirements for the delivery of routine maintenance and operational service within the Asset Support Contract (ASC). It is the replacement for the HA's current Routine and Winter Service Code and Network Management Manual (RWSC and NMM).

AMP Asset Management Plan.

AQMAs Air Quality Measures



ASC Asset Support Contract

BA Advice Note – Bridges and Structures

BCR Benefit-Cost Ratio

BD Standard – Bridges and Structures

Benefit-Cost Ratio

The Benefit-Cost Ratio (BCR) is defined as the Present Value Benefit (PVB) divided by the Present Value Cost (PVC) where the PVC is the total discounted scheme cost and the PVB is defined as the summation of the discounted monetised benefits and dis-benefits accrued during the life of the scheme.

BS British Standard

Change Control process

The method by which projects > £100k are either added or dropped from the programme. See the NDD PCF Handbook.

CHE Chief Highway Engineer

c/pSAC Candidate or Proposed Special Area of Conservation

CPT Contract and Performance Team

DBFO ‘Design, Build, Finance, Operate’ contracts under PFI

DDA Disability Discrimination Act (replaced by the Equality Act 2010)

Defra Department of Environment Food and Rural Affairs

DfT Department for Transport

DMRB Design Manual for Roads and Bridges



Do Minimum option

The ‘must do’ Renewal activities required to keep the asset safely open for one more year, in the event that Do Something options are not funded, after which the minimum whole life cost option may apply.

Funding of the Do Minimum option will be provided in Year 1 of the programme only if the Do Something option is not funded. The project will then need to be resubmitted for review in the following year if further funding is being sought.

Note: The purpose of the Do Minimum option is not to provide a long maintenance free period. It is to enable the asset to remain in service without compromising safety for one further year, after which a Do Something treatment could be carried out in the following year. Therefore the Do Minimum option can be thought of as the deferment of a Do Something option for one year.

Example of the ‘absolutely minimum maintenance’ means that if work is not carried out to repair the hazard on the carriageway, it will result in closure of the carriageway section or emergency repairs.

A Do Minimum project is applicable only when all Lump Sum options have been exhausted

Do Nothing option An option where no Renewal project is required

Do Something option

Typically a preferred, more expensive Renewal option that addresses the identified needs at minimum whole of life cost. Do Something means a maintenance option that will address a combination of defects such as serviceability, structural integrity and safety within the proposed project. In this context, a full Do Something treatment would be expected to rectify the majority of defects within the project length such that further Renewals maintenance would not be required for many years. For pavement projects this period would be expected to be the lifetime of the surfacing and for non-pavement assets the design life of the treatments

EA Equality Act 2010, which replaced the DDA

EI Economic Indicator



Forward programme

The 5-year forward programme, derived from the national programme development and management process (see the PDMM). The term can apply to the national programme or that given to a region or Area

Funding The amount of money that is allocated to the proposed project

FYF Full Year Forecast

HA Highways Agency

HAB Highways Agency Board

HADDMS Highways Agency Drainage Data Management System

HAGDMS Highways Agency Geotechnical Data Management System

HAMIS Highways Agency Management Information System

HAPMS Highways Agency Pavement Management System

HAST Highways Agency Support Team for HAPMS

HAWRAT Highways Agency Water Risk Assessment Tool

IAN HA Interim Advice Note

ICF Investment Control Framework

MAC Managing Agent Contract

MCZ Marine Conservation Zones

MPA Marine Protection Areas

NAMP National Asset Management Plan

NATA New Approach to Appraisals



NDD Network Delivery and Development Directorate

NDD PCF NDD Portfolio Control Framework

NDD VM Forward Plan

The document follows the NDD Value Management Strategy and puts in place the timescales and milestones required to fulfil this strategy

NDD VM Strategy The document describes the strategy for the operation of VM within NDD, including all its associated activities from project identification to national prioritisation

NetServ Network Services Directorate

NMM Network Management Manual – replaced by AMOR in ASC

NNR National Nature Reserves

NoD Notice of Determination

NPO National Portfolio Office

NPV Net Present Value

OB Optimism Bias

PAR Project Appraisal Report, replaced by Scheme Appraisal report - SAR

PDMM Programme Development Management Manual. This document details the steps that need to be undertaken prior to VM workshops and the examinations that will be undertaken following funding

PDS Project Development Support – As defined in Service Provider contracts

PEAT Project Economic Appraisal Tool (the EI tool)

PIN Project Identification Number

POPE Post-Opening Project Evaluation, used to evaluate Improvement projects in terms



of whether they delivered the benefits they were designed to deliver

Preferred option A maintenance option that may or may not deliver minimum whole life costs but one that is fully justified by the Provider on operational or other needs

Present Value Benefit

Present Value Benefit (PVB) is defined as the summation of the discounted monetised benefits and dis-benefits accrued during the life of the project

Present Value Cost Present Value Cost (PVC) is defined as the total discounted project cost

Preventative maintenance

Maintenance work that is not essential now but may be justified on economic grounds. Preventative work is optional in that it is only recommended at the present time but which will reduce the essential work arising prematurely at a future date

Project A temporary management structure and delivery mechanism for a single scheme, or preferably a collection of similar schemes

Provider Any Service Provider responsible for maintenance on the HA network, including MACs, TechMACs, ASCs, RTMCs and DBFOs. See relevant contracts for details

PVB Present Value Benefit

PVC Present Value Cost


RACI Responsible, Accountable, Consultant and Informed

RBS Route-Based Strategy


RDD Regional Development Director

RFT Regional Finance Team



RIS Roads Investment Strategy

RMMS Routine Maintenance Management System

RoD Record of Determination

RPB Regional Programme Board

RPO Regional Programme Office

RSA Road Safety Audit

RTMC Regional Technology Maintenance Contract, responsible for undertaking technology Lump Sum maintenance and reporting to the ASC

RWSC Routine and Winter Service Code – Replaced by AMOR in ASC.

SAC Special Area of Conservation

SAR Scheme Appraisal Report

Scheme A discrete set of work activities that involves asset renewal, replacement or improvement on a limited section of the network

SCI Sustainable Consumption Institute

SCRIM Sideway-force Coefficient Routine Investigation Machines - measures the skid resistance of the pavement.

SDT Service Delivery Team

SfM System for Managing, the Highways Agency’s cost management system

Small Works Small Works means Renewal projects with all inclusive cost up to and including £100k.

SMIS Structures Management Information System



SoFA Statement of Funds Available

SP Service Provider also referred to as Provider

SPA Special Protection Area

SRN Strategic Road Network

Structures Options Report

The VM process considers the priority of specific needs to attract funding, which then require development into structural solutions. Where there are a number of possible alternative solutions identified, a Structures Options Report is to be prepared to determine which solution achieves best value, taking into account aspects such as capital cost, whole life cost, safety, sustainability, aesthetics, public utilities, buildability and effects on the road user. The format of the Options Report shall be agreed with the TAA before submission.

It is recognised that for many Small Works projects a best value solution can readily be identified without the need for a formal Structures Options Report. Therefore, where considered appropriate by the TAA, such proposals will be considered and agreed through correspondence.

Following agreement of the preferred option and allocation of funding for detailed design, the design principles proposed for the agreed solution will then be set out in an Approval in Principle, as defined by BD2. When accepted the design or assessment may then commence

SSSI Sites of Special Scientific Interest

SWEEP Software for the Whole-life Economic Evaluation of Pavements (within HAPMS)

TechMAC Managing Agent Contract responsible for technical assets

TMMM Technology Management and Maintenance Manual



TRACS TRAffic-speed Condition Survey- scans using laser sensors to measure conditions of a road surface while travelling at traffic speed

Value engineering Is the application of sound engineering principles to maximise the efficiency of a given design over its design life. Value engineering should include the application of whole life costing

Value for Money Optimum combination of whole life costs and quality to meet the user’s requirements

Value Management Is a structured group decision process to establish, review, confirm and control projects at key stages during their development to deliver optimum value, consistent with required performance, quality, timing and cost

VE Value Engineering

VfM Value for Money

VM Value Management

VMP Value Management process

VMS Value Management Score

VM thresholds NDD policy will from time to time set value thresholds for the application of VM. These thresholds determine the value of projects at or above which the full VM process will be applied

VRS Vehicle Restraint System

WebTAG Web-based Transport Analysis Guidance



WLC

Whole Life Cost - An analysis procedure to establish an economic benefit of a proposed treatment – this is to compare the on-going maintenance costs of the proposed Do Something option with the Do Minimum option of a defined asset over a perceived period of time.

YTD Year To Date


Annex G References

The following list is of documents referred to within the VMP and associated Scheme Justification and Appraisal guidance documents.

Asset Management Operational Requirements (AMOR) (the replacement for the Highways Agency's Routine and Winter Service Code and Network Management Manual (RWSC and NMM)) Strategic Roads 2010. A Framework for Implementation.

Changes to the Department for Transport’s guidance on the present value year, the values of travel time and the appraisal period in cost benefit analysis of transport projects, CHEM 144/05.

Design Manual for Roads and Bridges

Inspection and Maintenance of Road Markings and Road Studs on Motorways and All-Purpose Trunk Roads, Design Standard TD26/07

Inspection and Maintenance of Traffic Signs on Motorway and All-Purpose Trunk Roads, Design Standard TD25/01

Maintenance of Highway Geotechnical Assets, Design Standard HD41/03

Managing Geotechnical Risk, Design Standard HD22/08

Requirement for Road Restraint Systems, Design Standard TD19/06

Trunk roads and trunk road motorways inspection and maintenance of road lighting, Design Standard TD23/99

Environmental Implications of Maintenance Operations, Advice on, AMM14/03/2000.

Environmental Strategic Plan, HA

Flood risk management, AMM 122/10

Forward Planning Guidance 2004 (or update), AMM 44/03.

The Institution of Lighting Engineers (2007). Technical Report 22. Managing a vital asset: lighting supports.

10 Year National Roads Strategy, HA

NDD Value Management Contacts List

NDD Value Management Forward Plan


NDD Value Management Strategy

NDD Value Management Q&A Library

Network Management Manual

New Green Book on Appraisal and Evaluation in Central Government, HM Treasury’s, CHEM 121/03

Priority drainage assets, AMM 130/10.

NDD Programme Development and Management Manual

Programme Objectives Guide

Routine and Winter Service Code

Skid Resistance Policy, Guidance for HA Service Providers on Implementing the .., IAN 98/07: HD 28

Strategic Plan for Accessibility, HA

Strategic Plan for Maintenance, HA.

Strategic Plan for Operating the Network, HA.

Strategic Plan for Safety, HA

Supply Chain Portal

Sustainable Development Plan 2012-15

Value for Money Manual, HA

Value Management of Local Network Management Schemes ‘Appraisal and Scoring Of Schemes Involving Accessibility and/or ‘DDA’ Improvements’ (February 2009), Interim Update to Supplement March 2007 Guidance

Value Management Thresholds, 2010, AMM 134/10.

Note: This list is not a complete set of documents relevant to the VM of Roads Renewals maintenance. It is the responsibility of the Provider, NDD and NetServ representatives to take into account all Agency Standards and procedures.