Department of Health: The Paddington Health Campus Scheme

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summary8 While the Campus partners were rightly committed toovercoming obstacles, we believe the failure to have a criticalchallenge led to wasted and misdirected effort and expense.The Strategic Health Authority should have either requiredthat the Campus partners draw up a new OBC in early 2003or cancelled the Campus scheme. Cancelling the scheme atthat point would have freed resources and organisations todevelop other schemes. Developing a new OBC would, webelieve, have led sooner to the robust assessment of whetherthe partners could afford to build the scheme and address the:nnnmore than doubling of the forecast capital cost;absence of adequate land, in the light of planningconstraints; andlack of available funds to build the scheme.9 A further two years were spent exploring a variety ofalternative schemes. In 2003 the Campus partners, stronglyencouraged by the Strategic Health Authority, developedOutline and Full Business Cases to acquire The Point buildingbeside St Mary’s hospital in 2003. From Summer 2004onwards the Campus partners developed a new OBC forthe whole scheme, at the request of the Chief Secretary tothe Treasury. In the event, in May 2005 the Campus partnerscould not agree a revised OBC.Summary of key findingsThe scheme partners underestimated the risksto the scheme10 The Campus scheme faced a number of significantrisks, due in part to its intrinsic complexity and thetimescale over which it was being planned. The timescaleitself led to additional risks due to the impact on designassumptions of new national policies for the NHSintroduced while the scheme was being developed. Theserisks included project risks, in particular the mismatchbetween the size of the scheme and the land and fundingavailable, and the impact of ‘consumerism’ guidelines onspace in new hospital building schemes. There were alsopolicy risks because of the change in the structure of theNHS, with the creation of Strategic Health Authorities andPrimary Care Trusts, and the implications for this schemeof Payment by Results and patient choice that could nothave been foreseen by the Campus partners.11 The Department of Health (the Department) iscurrently reviewing how the commissioning of majorcapital schemes through PFI can be reconciled withlong-term affordability and policies on choice, Paymentby Results and the movement of care away from acutehospitals to the primary care sector.12 Any one set of the above project or policy riskswould have been challenging. However, the layering ofrisks upon risks without adequate mitigation or an effectiverisk management strategy made the scheme particularlyvulnerable and reduced its chances of success.13 The Campus partners failed to address some of therequirements of the Department’s Capital Investment Manualin developing an OBC. For example, they did not draw upa risk register as part of the 2000 OBC or carry out a formalreappraisal of the 2000 OBC when its estimated capital costincreased by more than 10 per cent. Whilst the Campuspartners drew up ‘snapshot’ risk registers on three occasions(summer 2001, autumn 2003 and autumn 2004), in summerand autumn 2004 the Project Director made a deliberatedecision not to embed risk management processes in thescheme as the scheme did not have sufficient resources orcapacity to do so at the same time as drawing up a newOBC. As a result, the lack of structured and integrated riskmanagement processes was a key contributor to the Campuspartners’ collective inability to realise fully and act earlier onthe threats to the viability of the scheme.14 The biggest single constraint throughout the lifeof the scheme, was that the NHS failed to identify anadequate land requirement before securing the originalOBC approval in 2000. As the Campus partners developedthe scheme, their land requirements became clearer andnew schemes emerged which had different land and spacerequirements. It was over two years after the 2000 OBCwas approved that the Campus partners realised they didnot own enough land to make the Campus work withinWestminster City Council’s planning policy. They thereforeneeded to acquire additional land.15 From early 2003 on, the Campus partners explored anumber of complex ways of addressing the scheme’s spacerequirements but without any satisfactory resolution. Thisincluded, in early 2005, exploring an offer from WestminsterCity Council to assemble a land package suitable for thescheme as required by the December 2004 OBC, althoughwithout any written parameters but ultimately subject toapproval by Trust Boards.The Paddington Health Campus scheme
summary16 The Comptroller and Auditor General has expressedhis concern that the need to have transactions off balancesheets was inappropriately distorting decision making. 2This was a contributing issue in the struggle to develop anaffordable Campus scheme as the Campus partners believedthat the Department would not accept any OBC if the OBCor supporting land deal was on balance sheet. However,the Campus partners’ December 2004 OBC was supportedby an embryonic land deal which, at that stage, was onbalance sheet. The Department did not have the resourcesat that time to fund such a deal and the NHS Trusts couldnot afford to put it on their own balance sheets. The landdeal supporting the OBC had to be developed and improvedto reflect this view and other matters relating to the overallaffordability of the deal.17 All Campus partners agreed that the scheme had tobe affordable within local NHS resources. In early 2003they had a gap of £53 million between available revenueand the expected running costs of the scheme. Although allparties agreed that the December 2004 OBC was affordableunder the existing funding regime, they also recognisedthat short-term support would be required to support theland deal. However they could not agree that the May 2005Addendum to the OBC was affordable. Constantly changingforecasts of revenue, based on evolving Departmentalguidance, and the cost of the land deal also underminedthe confidence of the North West London Strategic HealthAuthority and Royal Brompton and Harefield NHS Trust.Concern over whether the scheme was affordable was oneof the reasons the Royal Brompton and Harefield NHSTrust Board was unable to recommend the final OBC to theStrategic Health Authority for approval.The way in which the scheme partnersorganised and carried through the schemedid not maximise their chances of success18 When it entered the Campus scheme in 2000, theRoyal Brompton and Harefield NHS Trust set out, as apre-condition, that a merger with St Mary’s NHS Trust wasnot an option. It was concerned that a merger between thetwo Trusts would undermine its capacity to provide thevery different patterns of service it delivered to patients.St Mary’s set no such condition. Whilst the NHS CapitalInvestment Manual assumes a single sponsor for capitalinvestment projects, the then London Regional Officeof the NHS sanctioned the joint arrangements whenapproving the OBC. The Department believed a mergerwas desirable and inevitable once contracts for theCampus scheme had been signed, but did not press fora merger because it recognised that such a request at thestart of the scheme would have brought it to a halt.19 Although there were three Campus partners, thescheme did not have a single sponsor or single AccountableOfficer. In 2004 the Department stated that the ChiefExecutives of St Mary’s and Royal Brompton and HarefieldNHS Trusts and the Rector of Imperial College were eachAccountable Officers for expenditure incurred by their ownorganisations on the scheme. The Campus partners thoughtthere were two (or three) Senior Responsible Owners andthe Chief Executive of St Mary's considered he was theAccountable Officer for the scheme. At the time, therewas no resolution on who, if anyone, was the AccountableOfficer for the scheme.20 The Committee of Public Accounts has expressedconcern in the past on the risks to capital investmentschemes of complex partnership arrangements 3 , and hasrecommended that capital projects should have clearaccountability arrangements and a single project sponsor.The lack of clear leadership and authority for decisionmaking was one of the factors that undermined thescheme’s progress.2 Public Accounts Commission, Twelfth Report of Session 2003-04.3 Committee of Public Accounts The English National Stadium Project at Wembley, Eighth Report 2003-04, HC 254; The Millennium Dome, Fourteenth Report2001-02, HC 516; The Cancellation of the Benefits Payment Card Project, Third Report 2001-02, HC 358; Department of Health: Cost Over-runs, FundingProblems and Delays on Guy’s Hospital Phase III Development, Twenty-eighth Report 1998-99, HC 289.The Paddington Health Campus scheme
Page 1 and 2: department of healthThe Paddington
Page 3 and 4: DEPARTMENT of healthThe Paddington
Page 5: Part 3The Campus partners were unab
Page 10 and 11: summary21 Ultimately, in addition t
Page 12 and 13: part onePart oneThere was a strong
Page 14 and 15: part oneThere were strong clinical
Page 16 and 17: part twoPart TwoThe way the Campus
Page 18 and 19: part two2.6 Securing planning permi
Page 20 and 21: part twoRisk management2.14 The NHS
Page 22 and 23: part two2.28 Public support for the
Page 24 and 25: part three3.1 The Royal Brompton an
Page 26 and 27: part three3.12 The PDCL negotiator
Page 28 and 29: part three3.24 All Campus partners
Page 30 and 31: part threeThe changing proposals fo
Page 32 and 33: part three6A comparison of capital
Page 34 and 35: part fourAccountability for the sch
Page 36 and 37: part four4.8 Some of the advice and
Page 38 and 39: part five5.1 Both NHS Trusts contin
Page 40 and 41: glossaryLondon Regional OfficeMemor
Page 42 and 43: appendix oneAppendix oneChronology
Page 44 and 45: appendix one2004 (continued)JulyChi
Page 46 and 47: appendix two7 It was the view of th
Page 48 and 49: appendix fourAppendix fourThe oppor
Page 50 and 51: appendix fiveDepartment of Health:

Department of Health: The Paddington Health Campus Scheme

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