Birmingham City Council has approved a direct award to Kier to continue maintenance of the city's road network in an interim arrangement valued at £120 million excluding VAT (equivalent to £144 million including VAT).
What the contract covers and its timescale
The short-term deal will extend existing services provided through Birmingham Highways Limited and keep maintenance and associated operational work running until 31 July 2028, with the council holding an option to extend by a further nine months to 30 April 2029 dependent on funding and contractor performance. The novation of the contract from Birmingham Highways Limited to the council will take place shortly before the current contract expires on 31 July 2026, after which the authority will vary the agreement to implement the extension from 1 August 2026.
Why an interim arrangement was needed
The council says the extension is necessary following the Department for Transport's decision to withdraw support for continued funding of Birmingham's highways private finance initiative (PFI) project. As a result, the authority has paused immediate procurement of a long-term replacement and put in place this interim contract to ensure ongoing delivery of statutory highway maintenance and to avoid disruption to services.
- Contractor: Kier (via Birmingham Highways Limited)
- Value: £120m (ex VAT) / £144m (inc VAT)
- Initial extension period: 1 Aug 2026–31 Jul 2028
- Optional further extension: up to 30 Apr 2029 (subject to funding and performance)
- Award procedure: direct award; decision recorded on 21 July 2026
Local impact and practical implications
The arrangement is intended to maintain day-to-day repairs, safety-critical works and routine operational activities on the city’s highways while the council develops a longer-term procurement strategy. For residents and road users this should mean continuity of pothole repairs, traffic signal maintenance and other standard highways functions without interruption during the transition away from the PFI-backed model.
The council has indicated the formal contract will be signed no earlier than 31 July, allowing for the administrative novation from Birmingham Highways Limited to the authority in advance of the extension taking effect.
Contract details at a glance
| Item | Detail |
|---|---|
| Contractor | Kier (via Birmingham Highways Limited) |
| Value (ex VAT) | £120,000,000 |
| Value (inc VAT) | £144,000,000 |
| Initial extension | 1 Aug 2026 – 31 Jul 2028 |
| Optional extension | Up to 9 months (to 30 Apr 2029) subject to funding and performance |
| Award date | 21 July 2026 |
This interim award follows a formal procurement decision published on the government find-a-tender service. The council’s stated aim is to ensure statutory obligations for road safety and maintenance are met while it reviews and seeks a sustainable long-term contractual solution following the withdrawal of Department for Transport support for the previous PFI arrangement.
Residents seeking updates on highway works should consult Birmingham City Council's highways pages for notices of planned carriageway and pavement works, or for information on reporting defects such as potholes and damaged signage.
