Department of Health: The Paddington Health Campus Scheme

part two2.1 This part of the report focuses on the risks faced bythe Campus partners in delivering the scheme outlined inthe 2000 OBC and the way in which the Campus partnersattempted to manage those risks.There were complex intrinsicproject, organisational and policyrisks for the Campus scheme2.2 The Campus scheme, like other major capitalschemes faced multiple layers of risk: intrinsic projectrisk, organisational risk and policy risk. However thescale and complexity of the scheme meant that theserisks were exacerbated by the ways in which the Campuspartners chose to address them. In addition, the schemewas based on the 2000 OBC which the 2004 JointReview (Appendix 2) found was produced at speed andcontained a number of errors and omissions such that itwas not deliverable at the price within the OBC.Intrinsic project risk2.3 These are risks faced by any major capitalinvestment. The only NHS-specific risks relate to theclinical content. All capital investments must managethese risks. Many struggle unsuccessfully to balance time,cost and quality. None will succeed without good risk,project and programme management.2.4 A major project risk affecting affordability is thatof the history of cost escalation for large NHS schemes.All large NHS capital investments (schemes above£75 million) cost significantly more than their initialOBCs. For major schemes either in planning or buildstage, the average cost increase above the original OBCis 117 per cent (Figure 3 overleaf). In the case of theCampus scheme it was late 2002 before the Campuspartners realised, for the first time, that, because of theinadequate 2000 OBC, the likely full costs of deliveringthe scheme had more than doubled to £786 million(excluding optimism bias).2.5 In the case of the Campus scheme, the 2000 OBComitted any material cost relating to how St Mary’shospital would be kept operational while the newhospitals were built on the St Mary’s site – the decantstrategy. The original OBC allowed £1 million for this.The Campus partners’ 2003 estimate was for £80 millionfor what was, by then, a completely different schemebecause the Campus’s space requirements grew duringits development.The Paddington Health Campus scheme15