4.11 In March 2004, the contractors offered to introduce a number of the modifications and improvements tested in the final Joint Working Group time trials, which had identified some scope for reducing test times (see paragraph 4.4 and Appendix 5). These included:
• modification of existing testing equipment;
• supplying a number of additional lifts to alleviate waiting times that developed on test lanes; and
• amendments to improve the flow at the first stage of the test.
4.12 The contractors considered that these modifications would provide test times of between 20 and 22 minutes, depending on lane and manpower configuration. In making this offer, the contractors stated that they had already fulfilled all contractual obligations, and that completing this work was conditional upon them being relieved of all future liability in respect of additional capacity requirements.
4.13 DVTA estimates that the conditional offer made by the contractors could involve expenditure on their part of around £1 million. As it is not certain whether the contractors' offer would ensure an average test time of 18 minutes, we consider it unlikely to address the fundamental issue of future capacity for vehicle testing. Consequently if DVTA were to accept the offer, it would be taking back a large element of capacity risk, with the likelihood that it would have to commit significant additional expenditure to solve the problem.
4.14 As Figure 8 (below) indicates, shortly after the test time problem became apparent, DVTA estimated that a move to a 27-minute booking slot would result in total additional expenditure of between £26.8 million and £39.8 million. This would arise from the need to recruit extra staff, greater use of extended-day working and overtime, and the need to construct and equip additional testing facilities to provide the necessary additional capacity.
Figure 8: Summary of estimated maximum additional costs of 27-minute vehicle test
Background to additional expenditure | Estimated cost (£ million) | Estimated total cost (£ million) |
Additional staff costs (additional staff, overtime, extended-day working) | 1.3 - 2.3 | 16.9 - 29.9 |
Construction and equipping of additional testing facilities | n/a | 9.9 |
Total | 1.3 - 2.3 | 26.8 - 39.8 |
Source: Consultants' report commissioned by DVTA
4.15 These estimates were carried out as part of a review to determine whether the project continued to represent value for money (see paragraph 3.20) and were based on a 27-minute test, which was considered to be a 'worst-case scenario' (see paragraph 2.6). A subsequent improvement in actual test times has resulted in DVTA preparing its business plan forecasts for 2006-07 on the basis of a 24-minute test. On this basis, we estimate that the total additional costs are likely to be in the region of £33 million, composed of £26 million in manpower costs and £7 million related to the need to construct and equip further facilities to meet demand for testing. Such costs will be incurred unless future productivity improvements can be brought about by modifications to the testing methodology or equipment, or through changes to working practices.