Get streetwise or be ready to pay the penalty
The latest rules concerning the Traffic Management Act come into effect later this year. Leadent's Tracey Devlin takes a look at some of the implications that companies can expect to see.
The Act enhances the 1991 New Roads and Street Works Act (NRSWA) and amends the 1992 Street Works Regulation, and will have a major impact on how utility companies manage their street works operations.
Against a backdrop of increasing congestion the government has looked at the extent to which this is exacerbated by utility companies, who each year dig as many as four million holes in Britain's one million miles of road. The resulting Traffic Management Act (TMA) endows local authorities with considerably greater powers to coordinate and potentially penalise utilities for disruptive street works.
Of course no one is denying that much of the work utilities do is essential - however, there is undoubtedly room for greater operational efficiency.
The TMA has been described as a 'sleeping giant' in terms of its practical implications for utility organisations. On the surface, TMA seems a straightforward, well-minded, social and environmental proposition, albeit an inconvenient one for organisations to implement.
However, when further inspected, the different aspects of TMA from noticing to permit schemes, and the implications this has for people, processes and systems begin to loom large. A situation not helped by the dramatic headlines often associated with TMA, or by the fact that many of the new regulations are still in consultation.
Although the Act was passed in 2004, and some parts are already in place, delays in publishing technical guidelines have forced some local authorities and utility organisations to postpone the introduction of new systems. Without codes of practice for the supporting systems, these organisations cannot be sure that their technology will meet all the necessary requirements.
The guidelines will be published early this year, with the regulations coming into force by late 2007.
The Act devolves responsibility for avoiding congestion into the hands of the local authorities and with these new responsibilities come new powers, which undoubtedly will have a significant impact on water providers.
The forthcoming legislation is in line with two of the government's key policies. The first is increasingly devolved government, which focuses upon granting local authorities greater powers, and the second is a road and environment policy that appears to be increasingly focused on punitive measures to avoid congestion.
The most significant impact of the new Act is that local authorities can now address non-compliance without resorting to court action. Local authorities will be able to issue utilities with a fixed penalty notice (FPN).
While, in isolation, the new penalties of £120 appears quite affordable they may, however, be issued for a myriad of different offences, ranging from failing to give advance notice of works, starting work before the agreed date and failing to cancel an advance notice to failing to comply with closing notice requirements.
The expense soon becomes clear when looking at the results of a survey Leadent commissioned on the 'TMA Readiness' of 13 of the UK's major water companies, including nine of the ten combined water and waste companies.
The results showed that respondents estimated the annual financial impact of being non-compliant with TMA to be between £1M and £20M with 46% estimating the potential risk to be in excess of £5M.
For water companies specifically, there is a potential delay to the delivery of key regulatory requirements including:
- Demand for underground space has never been
- Leakage reductions, relief from sewer flooding, and provision of new mains and supplies
- Significant additional costs associated with permits which will be passed through to customers
- Significant additional staffing required to manage the permit schemes
- Significant system and process change necessary to meet the requirements of permits, processing and payments handling for FPNs, the extension of notices for non-excavation activity and the enforced use of GIS and electronic noticing
- Additional contractor costs due to loss of productivity and management of risk associated with TMA regulations.
The increased powers do not stop there; highway authorities will also have the ability to restrict utility companies from conducting what is deemed to be 'non-essential' work.
To prepare against this means staggering amounts of reorganisation for many utilities, with, in some cases, up to 1,200 employees facing retraining. The fact is there is no simple solution to the problem; the only way to avoid the cost implications of non-compliance will be through a process of weeding out bad practice and educating staff.
In our experience, this is no easy task, particularly when you consider that many utilities currently admit they regularly run at 25% non-compliance.
Aside from the very real need to take the TMA seriously from a cost avoidance perspective, there are opportunities to address existing internal inefficiencies. The TMA may provide organisations with a great opportunity to re-engineer internal systems and processes to deliver real business benefits, in addition to achieving compliance.
Consequently, many water and waste companies have not, according to our recent survey, stuck their heads entirely in the sand. Eighty-five per cent of companies have already instigated a formal TMA project. That said, there is definite scope for improvement as only 39% have appointed a dedicated TMA project manager.
Similarly, 46% of those questioned believed the executive priority their companies gave to TMA preparation should be higher. What is needed is a structured implementation plan to realise the benefits the Act could bring.
As with any initiative of this type, success starts with gaining an understanding of the key issues, and their scope, which can be translated into actionable plans.
Leadent, a management consultancy with a history of working with utility organisations, has produced the TMA guide with the purpose of answering the "What do I need to know?" question. The guide attempts to distil and simplify the key facts, highlighting the objectives and scope of the Act, the key changes it represents for utility companies and aims to provide guidance on implementation considerations.
To support the implementation of TMA, we have developed the 'TMA Navigator', a roadmap of key actions that must be taken to enable utility companies to be properly prepared for the introduction and operation of TMA.
The navigator works by analysing key questions such as 'What business processes and systems are affected and how?' or 'What are the financial risks/obligations/liabilities?' and 'Are they mine or shared with contractors?'
Additionally, it contains a diagnostic that can be used, not only to assess how
prepared they are, but also as an ongoing measurement of effectiveness.
In all matters of change it helps to remember what we have identified as the seven key points in identifying an organisations readiness and ability to make lasting change:
- Clear strategy - the project destination
- Defined plan - how to get to the destination
- Available resources - are the means available to get to the destination
- Skills and capabilities - are the necessary skills available to deliver the project
- Readiness to act - peoples' motivation
- Measures/communications - how the team feels about its performance and progress.
We often find that initiatives are de-railed by an overly pessimistic management that listens to every complaint of the vociferous minority of 'grumblers' found in every large organisation.
On the other hand, however, problems can arise when an excessively zealous leadership pushes through change without listening to the thoughts of others.
In particular, we often find that those lower down the company hierarchy tend to be ignored by management, despite often being able to offer valuable advice on how particular initiatives may work on a day to day basis.
As is so often the case, balance and perspective are required, along with the ability to be a good listener. With this in mind it is possible for the TMA to be, if not quite a blessing in disguise then at least a driving force for positive change.
We do not deny that in the short term the sentiments of one of the survey's respondents who commented "TMA will be expensive to implement and run, whether done well or badly..." undoubtedly will ring true. We are, however, convinced the Act offers water and waste providers the impetus to thoroughly review their systems and processes, not just in the field of non-compliance but in performance and practice generally.
The end result could be long-term improvements that could not only offset the costs of TMA but actually increase profits across the board, a definite change for the better.
Tracey Devlin is head of the Public Sector Division at Leadent.
T: 01869 332132.