Risk in planning major healthcare facilities - Paddington Heath Campus Failure

October 1, 2008

Michael Dallas, head of value and risk management, Davis Langdon LLP

Michael Dallas outlines the risk management thinking needed for large NHS building projects, taking on board lessons from the failed Paddington Health Campus scheme.

Davis Langdon LLP was involved in the early stages - after the submission of the original outline business case (OBC) in 2000 - of the Paddington Health Campus scheme, which was subject of a National Audit Office (NAO) report in May this year.^[1]

Our aim was to raise the level of risk management to embrace the pre-contract issues facing a project of this complexity and magnitude, which included:

• clinical risks (not at operational level, but to provide facilities that were fit for purpose clinically);
• political risks (of changes in policy within which the scheme and, indeed, the NHS, operate); and
• stakeholder risks (of combining three high-profile NHS trusts into a single entity).

We constructed a "dashboard” to illustrate risks at this stage, drawn from 10 workshops with different work streams across the project.

Unfortunately, as the NAO report states, the project team "made a deliberate decision not to embed risk management processes in the scheme as the scheme did not have sufficient resources or capacity to do so at the same time as drawing up a new OBC."

This decision ran counter to the Office of Government Commerce's recommendation that up to 1-3% of capital investment in such projects should be invested in the management of risk.^[2]

The point of relating this story is to try to demonstrate that conventional approaches to managing risks in major, complex projects have their limitations. Major healthcare capital projects are complicated, since they must accommodate a complex array of activities, and they involve numerous stakeholders that may not all share the same aims.

They are complicated still further by complex procurement approaches - such as the private finance initiative (PFI) - and constantly changing NHS policy. The latter makes forward planning particularly uncertain.

The ultimate purpose of any healthcare construction project is to provide facilities within which the specialists can deliver superior services to their customers (the public).

To fulfil this, facilities must, above all, work effectively in a clinical sense - for example, they should be easy to use by doctors and other staff, simple to maintain and clean, and comforting to patients and their visitors.

Clinical risk

Poor facilities account for a small fraction of clinical problems. The vast majority are caused by human or other operational failures.

If facilities are blamed, it is often a case of "a bad workman blames his tools”. The NHS already has tried-and-tested procedures for, in effect, "validating” healthcare facilities.

These include:

• hospital technical memoranda - for operational issues;
• hospital building notes - for special standards and functions; and
• a capital investment manual - for managing the procurement of the facilities.

The main problem is that these are seldom applied in a rigorous and auditable manner. Reason given for this are generally lack of time and money.

However, it is a little-recognised fact that a mere 5% improvement in operational efficiency, enabled by applying the existing NHS guidelines mentioned above, will recoup the entire capital cost of the facility within three years.

Political risk

The second major area of risk within healthcare projects includes politics and change. Most construction professionals can deliver a facility that meets clients' and end-users' expectations, provided they are given a clear brief and are not subjected to constant change. Regrettably, the delivery of healthcare facilities has become something of a political and financial football, and change is common.

Small changes in operational requirements can result in significant claims for additional costs by the facility provider.

And, if any service provider is likely to change, the NHS must be the prime candidate, if it is to stay abreast of the latest healthcare developments.

Worse is the very real risk of political change or interference.

Because healthcare facilities are expensive and complex, ministers seem tempted to change the rules continuously.

One month funds may be available for a particular purpose, the next they are not. Against this backdrop, the political and environmental risks of any healthcare project are huge.

Stakeholder risk

Once upon a time, construction projects had a client, a design team and a builder (the end-user did not feature!).

Healthcare projects do not fit this simplistic model.

For Example, it may be unclear whether the client is the NHS trust, the public or the clinical staff, and whether the design team is the trust or its professional consultants.

Major healthcare projects also face the double challenge of aligning internal stakeholders' requirements as well as gaining the active support of their external stakeholders.

The NAO report identifies a number of challenges faced by the parties involved in the Paddington scheme.

Overarching everything, though, is the requirement for strong, dedicated and professional management. This requires single-point accountability and strong leadership.

A broad approach to risk management is essential for today's large and complex projects. Deployed early on in the life of a project, it will maximise the changes of success^[3]

References