MUNICIPAL ENGINEERING

Ian Mann
Group Manager – Engineering & Infrastructure
Knox City Council
January 2003

EXECUTIVE SUMMARY

This report provides an overview of the experiences and information gathered during my participation in the 2002 International Study Tour to Canada, United States of America and England to study “Managing Risk whilst Managing Assets”.

There are a number of key observations emanating from the study tour which could be applied within Australian Local Government organisations:

· Professional officers must be kept up-to-date with new technology, maintenance practices, safety standards, driver behaviour standards, new road rules and other intelligence which relates to road safety, and use that knowledge to understand and address safety issues in the field.

· Councils must have systems in place to collect and disseminate key information across the organisation to all relevant staff within the organisation to ensure “prior knowledge” is used to the best effect.

· Councils should develop strong policy positions in regard to asset maintenance, service standards and response times having regard to its community needs and its own capacity to resource implementation of the policy.

· Policies should not be overly ambitious and must be able to be implemented.

· Councillors and Council officers must work within the policy framework. If the policy is not implemented or followed, its credibility will be challenged in law.

· Councils should undertake regular inspections of their assets for risk management purposes. Councils who understand the condition of their assets and have prioritised upgrade programs to address any hazardous situations in accordance with their adopted policies, will be in a stronger position should an injury occur which prompts legal action against the Council.

· Councils must have in place comprehensive information management systems which collect and record data relating to inspection programs, customer complaints, maintenance programs, repair orders, safety audits and other information related to the management of the asset. This information becomes vital when assessing claims for damages against Council and in the defence against legal action.

· Always investigate reported hazards and feed the outcomes back to relevant staff as information to be included in future safety audit programs.

· Councils should adopt a culture of always providing a prompt response once a hazard has been identified, either by staff or a member of the community. It is not acceptable to leave dangerous situations unattended.

· With the emergence of “No Win, No Fee” legal firms, Councils should strongly defend all damages claims unless it is clear that Council caused the fault which lead to the injury. As an industry, Local Government needs to take a strong stand to make it difficult for litigation to occur. Evidence was presented in England that Councils that allowed themselves to become soft targets for litigation attracted a significantly higher percentage of claims.

This report presents the findings of an international study tour which I participated in during 2002. My objective was to investigate risk management practices being undertaken by Councils as they managed their assets.

In addition, four days were spent in Kansas City attending the 2002 American Public Works Association Annual Congress.

This report summarises information gathered through discussions with senior officers from the abovementioned authorities and observations made during the tour.

It focuses on the strategies, processes and practices the organisations have put in place to minimise their risk as they manage the infrastructure on behalf of their communities. This report does not attempt to evaluate their asset management practices. It provides insights into how these organisations prepare and respond in an environment where some sections of their communities are demanding higher standards from them, and prepared to litigate against them, if those standards are not met and an injury results.

The City of Richmond was incorporated on 10 November 1879 and achieved City Designation on 3 December 1990. It has a land area of 129 square kilometres and a population of 156,000. The City of Richmond is located on the western waterfront area of the Greater Vancouver Metropolitan area and has an estimated commercial sector which generates in excess of 100,000 jobs. Forty nine percent of Richmond’s land base is zoned agricultural.

This strategy is guided by Canadian case law and is designed to reduce the risk of litigation to the municipality.

Of these three key risk management principles, policy definition carries the most weight in law.

When considering cases involved in litigation Canadian law will consider a Council’s policy position and how the administration implements the policy. The court recognises Councils do not have unlimited funds to do everything the community demands of it, so will look to Council policy to judge if the Council has acted appropriately.

If the Council policy was developed considering community expectations, balancing the various needs against available funds and was “reasonable”, then the policy would carry significant weight as a benchmark against which the Council’s actions were judged in the court of law.

Providing the administration followed the policy guidelines then the Council would have some protection against successful litigation. If they did not, the Council would have significant difficulty defending its actions.

The City of Richmond management practices to support this risk management approach are currently being reassessed.

Across their road and footpath network they currently have an administration process where that they do not undertake pro-active safety inspections. They have the view that this would increase their exposure to successful litigation as it could be shown that either they knew of the risk before an injury occurred or that they were negligent in their duty by not conducting the inspections to a sufficiently high standard.

The City does however undertaken regular inspections of its asset base for life cycle costing purposes within its asset management program.

The Council maintains a very clear and strong delineation in this aspect on advice from its legal department to minimise litigation risk.

The Council operates a very efficient complaints response system to ensure that any dangerous situations are investigated and actioned, either through repair or make safe as a matter of urgency. The Council policy identifies that a response must be initiated within 24 hours. The site is investigated, corrective action taken as appropriate, either immediately or the site fenced off and warning signs put in place until it can be repaired.

In addition, the administration ensures a comprehensive and complete documented audit trail of action taken in response to each notification is created and maintained. They advise that this is the best defence against successful litigation as this can be presented before the courts and will show that Council has acted swiftly and appropriately to all identified community safety hazards.

This process is the City of Richmond’s traditional process and is clearly reactive and designed to restrict successful litigation.

The Parks department is developing a more pro-active approach collaborating with the Council’s insurance company. In playgrounds and BMX parks, the staff are undertaking monthly safety and risk audits. From these inspections, maintenance is undertaken to make the areas safe. This process has the support of the insurance company and has reduced claims in these areas of the Council’s operation. Through this process the Council has identified over $1.0 million worth of upgrades which are required and have a planned implementation approach over a ten year period. Once again, as the Council has a planned approach and is operating within a policy framework, it has a good defence should litigation result in this area of its operation.

To support its risk management approach, the Council critically reviews all claims made against it and strongly defends any claim it does not think it is liable for no matter what the settlement amount may be.

The City of Surrey is located south of the Greater Vancouver area at the southern region of British Colombia. It is partly urban, partly rural, extending from the Greater Vancouver area, south to the United States border. It is the fastest growing municipal district in Canada, has an area of 325 square kilometres and a population of approximately 360,000.

The administration is currently operating in a financial environment where the Council has not increased its tax base for 5 years and is not expected to increase it under the current political arrangements. As a rapidly growing municipality, they have an increasing asset base and residents who have expectations which are increasing in both the environmental and service delivery areas.

The City of Surrey recognises that whilst it cannot eliminate risk, it must do its best to manage the risk. The Council has both Risk Managers and a Legal Department within its organisation.

The organisation functions such that each service unit/activity area is responsible for its own risk management. The legal department and risk managers are available to support the units in their operational activities. This organisational approach has ensured that management of risk is spread across the organisation and has become part of the corporate culture.

To continually reinforce the need to manage risk both from a litigation perspective and for public safety, the Council has an extensive internal communication program. New risk exposures are communicated immediately throughout the organisation, a quarterly employee newsletter is produced, trends are reported to the various departments and trends and results are reported through the Council’s annual report.

Further reinforcement across the organisation results from the claims handling process. As part of the process, claims are discussed with the front line employees, the immediate supervisors and the divisional manager. Everybody who has a direct impact in considering a risk reduction strategy is involved in the claims settlement process.

Backing up these processes and cultural reinforcement strategies is a well structured customer service system. The Council has developed well founded policies regarding response times, intervention levels and document control. These, coupled with a sound knowledge of the condition of the Municipality’s assets, place the Council in a strong position to defend any litigation action.

The City undertakes regular inspections of its assets for safety and risk as well as condition.

· Quarterly – road shoulders, catch basins/ditches, signs, potholes/ruts, road markings, bridge decks/guardrails and sight lines.

The City of Surrey approved a Claims Management Policy in 1997. This stated that it would settle claims based solely on legal liability. Councillors and staff must refer all potential claims directly to the Risk Manager without discussing the specifics or responsibility with the claimant. The Risk Management Department and the Legal Department work closely together to then resolve the claim.

Following this process, the City of Surrey have only paid 15% of claims that were reported during the past ten years. To assist in settlement of claims, the Council has delegated authorities for settlement. These are:

The City of Redmond is located in the Greater Seattle area of Washington State and is the home of Microsoft and Nintendo. It has an area of 19 square miles and a population of approximately 50,000.

Public liability risk has always been present in the USA system. Some States in the US have caps on the amount of payout associated with risk issues, for example Colorado has $150,000 maximum payout. The State of Washington, which the City of Redmond is a municipality, has no cap. As with Australia, Councils can find themselves co-defendants in litigation and, similar to Australia, if a Council is found partially liable and the co-defendant cannot pay, then the Council may end up paying 100% of the costs awarded to the claimant.

Like the Canadian system, the American legal system recognised that Councils do not have unlimited funds and must make choices in the way the funds are allocated. The City of Redmond through its political and budget process has made comparative choices between services it provides and as to how much money is allocated to each. When considering its allocation to asset maintenance, risk management is a factor considered.

Council has established policies which define standards for asset maintenance within the community. Funding allocations should be sufficient to ensure that the policies can be implemented. If the standards that have been established are reasonable then they hold strong credibility in law.

By working within the policy framework of Council, its risk from litigation is reduced. If the administration move outside this policy position or the politicians instruct action outside the policy, then the credibility of policy in defending action is substantially reduced.

The City of Redmond has regular asset surveys conducted for both life cycle and risk management purposes. When risks are identified, they are prioritised and placed into a maintenance program. This prioritisation is undertaken having due regard to Council’s policy position.

The City of Redmond has a high net worth population which is drawn upon by the Council to create a strong revenue base. They place an emphasis on high community safety standards as a priority as well as sound asset maintenance and rehabilitation.

The Council also has a well-developed customer response and tracking system to record when complaints are lodged, actions taken and responses made. They strongly defend any litigation action against them and a key to a successful defence is having a fully documented audit trail of actions taken to repair any defect in the field.

The legal system in America is a little different to that in Australia, however as law becomes more internationalised, American precedence is starting to be drawn upon in Australia. During the visit to the City of Redmond, I had the opportunity to discuss risk management with the Senior Council officer responsible for the provision of engineering services and physical infrastructure. During those discussions, he indicated that he had been personally named as co-defendant with Councils forty to fifty times in litigation action and has been personally sued on seven occasions. This action directed at him personally was as a result of him holding the senior engineering position within Council. The legal profession regard the position as having influence over the way Council undertakes maintenance repairs in the field and therefore a party to any litigation action.

In all cases to date, action has been unsuccessful. He indicated that his best defence is to operate to the highest professional standards and work within Council’s policy position.

The City of Kirkland is located within the Greater Seattle area, has an area of 10.5 square miles and a population of 46,000 people. It is the sixth most densely populated area in the State of Washington and has approximately 145 miles of road and 108 miles of footpaths.

Risk Management

The City of Kirkland has no asset management system, has chosen no regular inspection regime for its asset base and manages its risk through a complaint-based system. It is reactive. However, once a complaint is lodged, it responds expeditiously to those complaints.

It has no formal Council adopted policies and no formal stance on intervention level. They have adopted the strategy that if they do not know of a problem, then they do not have to fix it. The City relies on a reactive approach where once a problem is identified or reported, it responds quickly to solve the issue. It keeps very good records and can locate an audit trail to defend its processes on any issue associated with risk within its municipality.

The City of Independence is located on the eastern side of Kansas City in Missouri. It has a population of 113,000 people, an area of 78 square kilometres. It has approximately 532 miles of streets to maintain, 38 bridges, 42 traffic signals and 30,000 street signs. Approximately fifty percent of the municipality is zoned for agricultural use.

The Council uses recognised standards for the provision of infrastructure. The City has developed codes which follow Engineering Guidelines, many of which are developed by the American Public Works Association. There is consistency in these codes across the group of Councils which make up the Greater Kansas City area. The standards have been developed from the National Standards as developed by the United States Department of Transport.

The Council has only recently purchased a pavement management system and is developing an inventory of its assets. Prior to the computerised system, they had a paper based system.

The City Independence undertake a regular condition and risk inspection program of their assets. They use a customer request and response system to manage their citizens’ requests for service. This system has full audit capabilities and its information is used to validate Council’s action in the event of litigation.

The City Council recognises the duty of care for its community and that the City should correct the faults.

The City Council introduces Ordinances to define responsibility, set standards and determine response times across its services. If the service has been undertaken in accordance with the Ordinance, then the Council has a strong legal defence should litigation occur.

The Council has its own law department which defends litigation action against the Council. Generally the Council is responsible for an injury if it results from:

Legal cases are fact driven so the Council places great importance on having detailed information relating to when instances are reported/observed, how long to repair, what was done and when an area was declared safe.

Although the Council does not have a comprehensive asset management plan, it does have reasonable understanding of its asset condition. It does regular inspections for condition and risk but is still very dependant upon its residents advising them of hazardous situations. When a hazard is identified, they have a requirement to respond and make safe within twenty four hours. As well as recording the initial complaint, the customer request system tracks the progress of the Council’s repair and provides an audit capability if Council is called upon to defend its actions should an injury have occurred at that location.

The main road responsibility in the United Kingdom rests with the four countries:

There are 270,000 kilometres of local roads in England and 10,000 kilometres of motorways. The English Government has a duty to maintain the motorways. The local roads are generally maintained by Councils.

The Department of Transport, in its role as a highway agency, sets the standards for the trunk roads.

To maintain the 270,000 kilometres of local roads, there are 169 road authorities. These are usually Shire Councils, municipal districts or unitary authorities.

These highway authorities have no nationally accepted standard so they can determine their own standard. Generally this is guided by common law determined by the courts.

In 1989, the English Government legislated to remove non-feasance protection from highway authorities across England. Since that time, highway authorities have been managing risk in an environment of common law actions.

Recently, the English Government has produced a document “Delivering Best Value in Highway Maintenance”. This provides guidance to Councils as to the issues they need to consider when setting standards for their local road network.

· To encourage the development, adoption and regular review of policies for highway maintenance, consistent with the wider principles of integrated transport, sustainability and Best Value.

· To encourage a focus on the needs of users and the community, and their active involvement in the development and review of policies, priorities and programs.

· To encourage harmonisation of highway maintenance practice and standards where this is consistent with users’ expectations, whilst retaining reasonable diversity consistent with local choice.

· To encourage the adoption of an efficient and consistent approach in the collection, processing and recording of highway inventory, highway condition and status information for the purpose of both local and national needs assessment, management and performance monitoring.

· To encourage the adoption and regular review of a risk management regime in the determination of local technical and operational standards.

The recommendations within the code of practice are not mandatory on authorities although it is becoming accepted practice across a number of the English highway authorities.

The English Government has committed significant funds towards improving road conditions across England. It commissioned a national road condition survey. The first survey two years ago, found local roads to be in the worst condition they had been in for 30 years and were projected to continue to deteriorate to unsustainable levels.

The Government determined that it would stop this deterioration by 2004 and set a target to tackle the backlog and have it completed by 2011. The Government has allocated $31 billion over ten years to meet this commitment. The national road survey will be conducted every two years to measure progress towards improving the road network.

To receive a share of this funding, Councils must commit to the Best Value principles. As part of this program they must develop and implement a five-year continuous improvement plan. This plan is subject to inspection by the English Government’s Audit Commission and must be reviewed every five years.

The British Government has also moved to ensure that the roads are fully accounted for within the balance sheet of Councils and that each Council must have introduced full depreciation for their road network by 2006.

The Government has committed to developing an objective method to allocate road maintenance funds to Councils to be sure the highest priority needs are funded first.

Risk management is becoming a big issue for Councils in England due to two new concepts emerging in English Law.

Foreseeability. There is an increasing responsibility for organisations and professionals who manage highways to be up-to-date in the areas of new technology, hazard identification, safety standards, road maintenance practices, driver behaviour, new road rules and anything else that impacts on the safety of the road to its users. This concept in law can weaken a Council’s defence if it could reasonably have foreseen that harm would occur given the facts and circumstances. An example is if the Council, through its technical staff, should have reasonably known that a particular circumstance was hazardous and an injury occurred, then the Council could be held liable. Hazards caused by poor design, improper installations, poor work practices or ineffectual maintenance fit into this situation.

Prior Knowledge. This concept at law expects that if someone in the organisation either knew or should have known about a particular circumstance, then the organisation is deemed to have known. To an organisation, this includes the sum of corporate knowledge. That is, organisations such as Councils now need mechanisms to collect and disseminate information which enters the organisation to staff who may have a need to know that information. A practical example would be if a staff member receives information from a member of the public that a certain area is unsafe. If that information is not passed onto the relevant person to arrange its repair then the Council could be liable if an accident occurred as the organisation knew of the hazard and had not effected repairs.

Some legal firms are seeking this information under Freedom of Information as part of their investigation prior to commencing legal proceeding against Councils.

As well these two common law concepts, highway authorities in England have to work within the Highways Act 1980.

The Authority who are for the time being the highway authority for a highway maintainable at the public expense are under a duty .….... to maintain the highway.

In an action against a highway authority in respect of damage resulting from their failure to maintain a highway maintainable at the public expense it is a defence (without prejudice to any other defence or the application of the law relating to contributory negligence) to prove that the authority had taken such care as in all the circumstances was reasonably required to secure that the part of the highway to which the action relates was not dangerous for traffic.

This Act clearly places the responsibility for maintenance and safety of the local road network on the highway authorities which are usually the local Councils.

The Transport Research Laboratories have their main research facility at Crowthorne in England. They are a not for profit internationally recognised research organisation which provides advice and solutions for all issues relating to land transport.

During the visit to TRL, the group had the opportunity to meet with Mr Paul Forman, Head of the Investigations and Risk Management Group, who provided an insight into cause and affect of accidents on roads based on the organisation’s research findings.

He indicated that England has the lowest casualty rate of accidents in the world at ten per day. The government is still looking for ways to reduce the accident rate even further.

Research undertaken at TRL has shown that the contributory factors in accidents are:

These figures have resulted from investigations of accidents with a wide range of severities.

There is some joint responsibility between the contributing figures so the figures do not add up to 100%. The analysis has been undertaken a number of times over the past 10 years and on each occasion the relative percentages have remained the same although the reasons may change.

In the event of an accident and/or injury on the local road network, this research clearly shows that the road environment over which the highway authority has control, can be a contributor to the accident. This places the highway authority at risk of litigation or legal prosecution.

Following the investigation of an accident where a death or serious injury has occurred, an organisation or an individual may be charged with gross negligence. It is expected that legislation will soon be introduced into the English Parliament to define the unlawful act of corporate killing. Road deaths with contributory negligence may now be treated as unlawful killing.

This has sent shock waves through highway authorities as the actions of a highway authority may soon be investigated as part of a road death. Under this proposed legislation, the highway authority could be charged for unlawful killing in the criminal courts.

Councillors and senior officers have a duty to manage the Council’s risk exposure in this emerging legal environment.

Municipalities are vulnerable in these circumstances as they must show that they have taken reasonable measures to minimise the risk by having a safe road environment. The legal process puts a lot of emphasis on this. To protect themselves from litigation and to manage the risk, municipalities must have risk management plans, have appropriate record keeping and sound audit trails in place.

If the audit trail is in place and the Council can show that it has acted reasonably within the English legal system, it is likely that the liability may be reduced.

TRL suggest that a defence be structured around a defendable maintenance strategy. The strategy should be based on:

Expectations may be high within the community and may exceed available finance. It was recommended that funding be allocated through a rational prioritisation process giving consideration to all facts known to the Council at the time.

When introducing a risk management plan to an organisation, it must be consistently applied across the organisation.

When discussing the removal of the non-feasance defence, which had previously been available to Australia highway authorities, the TRL representative was of the view that a community should not reintroduce statutory immunity. It was his view that it is only through legal pressure that highway authorities will continue to strive to improve the safety of the road network.

It is clearly evident that Councils need to have a system in place to manage the road network for:

This Council is one of the inner-metropolitan Councils within the Greater London area. It covers an area of 6 square miles and has a population of 166,000. It was one of a handful of Councils to be judged 'excellent' by the English Government’s Audit Commission in its first national assessment of local authorities' overall performance (published Thursday 12 December 2002) and the only Council to achieve a score of 48 out of 48.

The Council has a strong risk management focus and has comprehensive processes in place to manage risk. The Council does not show its assets in its balance sheet and does not currently depreciate its assets. It does not have a long term asset management plan.

The Council has adopted the Best Value Code of Practice in relation to asset management and is endeavouring to implement its recommendations.

The Council has no legal staff on its payroll as the Engineering Department manage operational components of asset and risk management.

Approximately 150 claims are made against the Borough each year, of which 10-15 get to court.

As a result of the emerging trends in English common law, the Borough initiated a comprehensive and ongoing road safety audit program. As hazards are identified they are assessed, prioritised for improvement and actioned.

The Borough has developed a computer based records management system that records all information relating to field maintenance, public liability claims and repairs following customer complaints. This is used to support the legal defence of litigation.

The Council has identified that a planned approach is far better than a reactive approach as they have quantified that the instant response to repair is equal to six times the cost of a planned, programmed repair.

Bristol is located on the west coast of England, enjoying a frontage to the River Severn estuary. It has a population of 400,000 people.

Risk management at the Bristol City Council takes a far higher priority than asset management. The Council does not currently have a full inventory of its assets and those it has are not depreciated.

It is focussed as a highway authority on managing the road network to minimise risk to both itself and the public. Although maintenance is undertaken by private contractors who work on a schedule of rates contract, the Council has maintained control of its risk management processes. Council takes calls from the public, identifies what action is required and issues a work instruction to the contractor who repairs the defect. Subsequently reports of the repair are completed which are fed back into the data management system maintained by the Council.

All claims are lodged to the Engineering Department and assessed on a priority basis. Each decision is made following an assessment in regards to misfeasance, nonfeasance or malfeasance.

The Council has over 250 claims per year with most of the claims being property damage.

Council endeavours to achieve the requirements of Section 41 of the Highways Act which states that Council must keep the highway safe.

Bristol City Council follows the Code of Practice for Maintenance Management – Delivering Best Value and Highway Maintenance July 2001. They see this as the industry benchmark and they endeavour to work to its guiding principles.

The Oxfordshire County Council is a Council approximately 30-40km west of London, has an area of approximately 1,000 square kilometres and a population of 600,000 people. The City of Oxford, which is one of its main municipal areas has a student population of 100,000.

The Oxfordshire County Council recognises its legal obligations and manages the road network through a risk management process. It has prioritised work in accordance with the Best Value guidelines and all public requests are recorded and inspected immediately. The County Council operates a computerised work allocation system run through a call centre to manage and administer remedial work.

The County Council does not have a comprehensive asset database and so relies extensively on local knowledge to manage situations.

Their principal defence is to stick to the policies they have adopted and keep good records to ensure an audit trail is always present.

Advice from the Oxfordshire County Council is that municipalities must develop a strong policy which clearly indicates what will and will not be done against the Country Code. The policy must be endorsed by the Council and, once adopted, resources must be provided to implement the policy as the organisation will be held liable if the policy is not followed.

The study tour provided the opportunity to review how risk was managed across a representative group of Councils in three countries. Although they had varying qualities of asset management plans in place, they had a strong focus on risk management in the provision of road related services to their communities.

With globalisation, emerging trends in both legislative and common law in the other countries may find their way into the Australian environment so as an industry we need to be cognisant of these issues.

Changing trends in common law reflect community attitudes. It is now becoming accepted in English law and is an emerging trend in Canada and the USA, that municipalities through their professional staff are expected to create and maintain a safe environment for their communities. Whilst this is currently recognised as a social and political responsibility in Australia, I believe that it will only be a short time before, either through legislation or common law precedent, municipalities in Australia will face a similar legal situation. The recent loss of the non-feasance immunity previously enjoyed by road authorities is the first step along this path.

With the evidence in England that road condition cannot be discounted as a contributing factor to the cause of road accidents, Councils as road authorities must become far more pro-active in their management of the road network and the associated risks. With road deaths now being investigated as unlawful killings in England under criminal law and road toll reduction measures plateauing in Australia, governments who have previously looked to England for guidance may do so again.

To assist Australian Local Government organisations to meet this challenge, there are a number of key observations emanating from the study tour which could be applied:

· Professional officers must be kept up-to-date with new technology, maintenance practices, safety standards, driver behaviour standards, new road rules and other intelligence which relates to road safety and use that knowledge to understand and address safety issues in the field.

· Councillors and Council officers must work within the policy framework. If the policy is not implemented or followed, its credibility will be challenged in law.

· Always investigate reported hazards and feed the outcomes back to relevant staff as information to be included in future safety audit programs.

ACKNOWLEDGMENTS

The study tour would not have been a success without the support and co-operation of a number of people and organisations.