Frameworks Scotland
Introduction
NHS Grampian has a significant capital programme over the next ten years. In the past capital projects have been procured mainly through the traditional method which involves the appointment of a design team, the design of the facilities, detailed specification and the issue of tenders for construction to major construction companies. A notable exception to this is the procurement of the new Dental School which has been undertaken through a two stage procurement process.
Over the past year Health Facilities Scotland has put in place a national framework to support NHS Boards in the development of major capital projects. This process – Frameworks Scotland – will apply a “partnering” methodology (similar to the process used for the Dental School), and the creation of principal supply chain partners (PSCPs) and professional services contracts (PSCs) to provide a complete service. Health Facilities Scotland are expected to complete the Frameworks Scotland appointment process during November 2008 and it is for Health Boards to make use of the framework as required to deliver major projects.
Aim
This paper summarises the Frameworks Scotland process and proposes its application to major projects included in NHS Grampian’s capital programme.
Discussion
1 Annex 1 to this paper summarises the Framework Scotland in question and answer format. Annex 2 summarises the process applied to the selection of PCSPs and PSCs.
2 Health Facilities Scotland has completed a procurement process that has resulted in the appointment of five principal supply chain partners (PSCPs) and a range of professional services contracts (PSCs). The PSCPs are consortia which provide a full range of services to support the planning, specification and implementation of major capital projects including construction, health planning and project management. The PSC contracts have been awarded to professional consultants providing health planning, project management, cost management and other services that can be used by NHS Boards to deal with a range of issues, and to supplement internal resources in the development of major capital projects.
3 The Scottish Government has advised that, whilst the adoption of Frameworks Scotland by NHS Board is not mandatory, specific reasons for not adopting the approach would have to be given should the Framework not be selected by a Board.
4 NHS Grampian has a significant capital programme with a range of high value projects over the next ten years. There are major challenges associated with the delivery of this programme within agreed timescales and significant resource will have to be applied to ensure success regardless of the approach adopted.
5 Similar approaches – Procure 21 and Delivering for Health – have been in place in England and Wales respectively for some years. Independent advice received indicates that this has been successful and of benefit to NHS organisations.
6 An external view on the advantages and disadvantages of using the framework has been sought and this is summarised in annex 3. The main benefit anticipated is the application of a broad based and experienced team which can support option appraisals, business case preparation, detailed design, construction and post project evaluation. There is also an expectation that the PSCPs appointed to take forward early projects will be motivated to be successful as this will determine whether a PSCP obtains further work from NHS Boards.
7 The procurement process adopted by Health Facilities Scotland required potential partners to submit rates for profit and overheads. The costing of a specific project would be undertaken on an open book basis but it will be necessary for a NHS Board to put in place a team to ensure that the costing is monitored and that the project ultimately provides good value for money.
8 The current NHS Grampian capital plan has been reviewed to assess the suitability of projects for the Framework based on the potential capital values. The following projects would be appropriate in terms of value:
· Emergency Care Centre
· Cancer Centre
· Ambulatory Care Project
· Aberdeen Health Village – To full Business Caser completion only
· Dr Gray’s Hospital
· Forres Hospital/Health Centre
· Capital funded primary care projects – Whinhill/Foresterhill Medical Centres
9 The above projects are at different stages of development but it is possible to use the Framework at any stage in the development of a project from completion of Initial Agreement
10 The most immediate project which would benefit from the application of the framework is the Emergency Care Centre. This project is at an advanced stage and the use of the Framework would avoid the need to undertake a competitive tendering exercise for the construction phase.
Recommendation
11 The Frameworks Scotland as a procurement process was approved at the meeting of the Asset Investment Group on the 23 November.
12 The NHS Grampian Health Board is requested :
(a) to note the benefits of providing large/complex projects through the Frameworks Scotland procurement process to meet our challenging capital programme.
(b) to approve the use of Frameworks Scotland to assist in the timely delivery of appropriate projects within the Capital Plan.
G Smith
Head of Service Development
November 2008
Annex 1
Introduction
The procurement process for the Frameworks Scotland initiative was formally launched in January 2008 following Scottish Government approval of the Project Initiation Document and associated budget proposal on the 21st December 2007.
NHSScotland proposes to appoint a number of Principal Supply Chain Partners (PSCPs) to undertake Capital Projects on behalf of NHS Boards and Special Health Boards throughout Scotland. The framework will be a strategic and flexible partnering approach to procurement of publicly funded construction work and will complement other procurement initiatives in development such as HUB. The PSCP must therefore clearly demonstrate their willingness and capability to undertake capital projects in all areas of Scotland.
The PSCP may be engaged to undertake a variety of duties including service strategies, estate strategies, business planning, developing the brief, design development and construction works. In addition to the construction phase of a project, the PSCP can be appointed at various stages in the capital project planning process from the Initial Agreement stage, Outline Business Case stage or up to the Full Business Case stage. Ideally the PSCP is appointed early in the process, typically between IA and OBC approval.
A framework for professional services will also sit alongside the main PSCP framework to allow the NHS Boards to appoint technical advisors. This will help fulfil the roles of Project Manager, Supervisor and Cost Advisors (all required under the proposed NEC form of Contract), CDM Co-ordinators and Healthcare Planners.
At this time, the framework process is at tender stage. Tenders will be returned on 31st July 2008 and following this there will be a detailed evaluation period. PSCPs and PSCs will be appointed to the frameworks in late autumn 2008.
1. Why change the traditional approach to construction procurement?
There is overwhelming evidence that the traditional approach to construction procurement fails to satisfy clients and does not generate the efficiency improvements delivered in most other industries. This has a negative effect on the international competitiveness of the UK and uses resources that could be better utilised elsewhere in the economy. In NHSScotland this means using available capital and revenue resources more effectively, delivering better outcomes and making best use of client side skills and capacity.
2. The new approach talks about partnering. What does this mean?
Partnering is about better working relationships with contractors and suppliers to deliver better outcomes for all concerned. For the NHS in Scotland it will mean identifying and working with a selected group of supply chains for a period. It requires genuine commitment from all levels of all the organisations involved, including the client, and a clear understanding by all parties of what is expected. This approach has already proved successful for the NHS in England (ProCure 21), Wales (Designed for Life) and in Northern Ireland (Performance Related Partnering - PRP).
3. What are the benefits of establishing long-term frameworks of integrated supply chain partners?
The benefits are that the supply chains better understand the needs of the clients, and can offer continuous quality improvements in exchange for stronger working relationships. Partnering reduces the adversarial attitudes that make projects more difficult to deliver and get right. Partnering arrangements reduce waste (process and product), promote quality and with lessons learnt on one project being applied to another.
A process of continuous improvement will be established based on a set of key performance indicators that are important to the needs of the NHS in Scotland.
4. What are the key performance indicators commonly chosen?
These can differ between sectors but reduction in capital/life cycle costs, reduction in defects, improved predictability of costs and programme, reduction in project duration, improvement in client satisfaction and reductions in the number of site accidents tend to be important for all clients. For the NHS in Scotland the issue of sustainability will also be a prominent factor.
5. Are there any short-term benefits?
Once the Principal Supply Chain Partners are selected, the need to follow costly and time consuming EU procurement processes for each separate scheme is removed. For a typical hospital project, 3-6 months could be saved on the programme together with many of the associated costs.
6. What other benefits are likely to accrue to the Service through the introduction of integrated supply chain partners?
The early involvement of an integrated supply chain supporting the local NHS Board will ensure that the design development work is far more robust than tends to be the case with the current system. This should improve the quality of decision-making and control risks in a better managed environment.
7. What are integrated supply chains?
In the healthcare field an integrated team brings together the architect, mechanical and electrical engineers, structural engineer, quantity surveyor, main contractor, major sub contractors and health planners as Principal Supply Chain Members and is lead by a Principal Supply Chain Partner as the “contracting” partner to the framework agreement. The partnership is also likely to establish relationships with other specialist subcontractors and suppliers.
8. On what basis are Principal Supply Chain Partners appointed to the framework?
Principal Supply Chain Partners are appointed on the basis of economically most advantageous not lowest price. Principal Supply Chain Partners will be required to demonstrate that they have the capacity, skills and experience to work in a collaborative way.
9. How long do the frameworks last?
The frameworks will last 4 years with an option to extend up to another 2 years.
10. What happens if the Principal Supply Chain Partner fails to perform?
Failure to demonstrate continuous improvement against key performance indicators will lead to the partner being removed from the framework.
11. How does the local NHS Board select the Principal Supply Chain Partner?
The appointment is based on key criteria established by the NHS Board and a proposed process is currently being finalised. Guidance will be provided by Health Facilities Scotland to support Boards with this responsibility.
12. How can we demonstrate value for money?
Selection to the framework and the individual projects is through competition. This includes cost and also a broad range of other factors such as expertise, resource capability, track record, ability to work flexibly and innovate and the quality of the Principal Supply Chain Partner’s integrated processes and control systems. Partners will also need to demonstrate their commitment to the partnering ethos. It is through the analysis and evaluation of these factors and the ongoing control and monitoring of the Principal Supply Chain Partners that
value for money can be demonstrated. The UK and Scottish Government support and promote this approach, as do HM Treasury and the Office of Government Commerce (OGC).
13. I’ve heard about Procure21 used in the NHS in England and Designed for Life in Wales. Is this the same thing?
The Procure21 and Designed for Life models have been developed for the NHS in England and Wales respectively and respond to particular requirements in respect of geography, project pipeline and market capability. The construction turnover and market conditions in England and Wales are different to Scotland and consequently there are particular differences that will be inherent in the final model, associated processes and number of supply chain partners.
14. Can we use the experience gained through the introduction of Procure21 and Designed for Life to help us develop our model?
Yes. The NHS in England has invested huge sums of money in developing tools to support Procure21 and these have been further developed in Wales for Designed for Life. Many of these tools are equally applicable to the model to be introduced in Scotland. The Department of Health and Welsh Health Estates have provided invaluable support and advice during the early stages of the work undertaken in Scotland and are prepared to continue to offer their support as the project develops. Health Facilities Scotland sits on a national group that meets regularly to ensure that wider lessons learned are shared for the benefit of all.
15. Have other procurement models been reviewed?
Yes. Health Estates in Northern Ireland has developed a model known as Performance Related Partnering. The early results from the PRP model appear to be very good and the model has been reviewed. The model does, however, require significant central support at a level beyond that which can be realistically delivered in Scotland without a major growth in resources at Health Facilities Scotland.. The Frameworks Scotland Development Team did not believe that such a development was a realistic option. We will however continue to liaise with our colleagues in NI Health Estates and apply any lessons learnt.
Health Facilities Scotland has also liaised with other public sector bodies involved in partnering projects and has also taken advice from advisors who have been involved in both public and private sector framework and partnering contract initiatives.
16. How many Principal Supply Chain Partners are required for the NHS in Scotland?
It is anticipated that three to five PSCPs will be required to service the whole of Scotland. This is currently undergoing review in conjunction with the tender and tender evaluation process and it is likely that a final decision will be made within one month prior to award of contracts.