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Down the Paddington pan

AGENDA

There can be no doubt that the Paddington Health Campus is one almighty mess, with costs spiralling massively out of control. Jon Fletcher finds out where the money has gone

EVER since the Government first approved plans for a new super-hospital in Paddington four years ago, criticism of the project has snowballed.

Richard Barnes, a non-executive director with the North West London Strategic Health Authority, has called the deal 'an absolute scandal' and an 'undeliverable project'He should know - the SHA is responsible for the three hospitals that will be merged into the new hospital, to be known as the Paddington Health Campus.

Then, at the beginning of September, a scathing Government review tore the scheme wide open, revealing a chain of staggering errors.

But despite the flak, the project continues to limp on.

The Paddington saga is about much more than construction.The health of millions of people from across north-west London and beyond is at stake, not to mention a pile of public cash.

The figures are breathtaking. Estimates of the capital value of the scheme have, at times, topped £1 billion. Planning and procuring a project of this size isn't cheap and by March 2004 the PHC had racked up consultancy bills of over £6.2 million. Project bosses say this is in keeping with other schemes of similar size but critics claim that when the Government review sent the plans back to the drawing board, most of this investment went down the drain.

Consultancy fees are the tip of the iceberg. An internal PHC document dated July 2004 revealed that the cost of maintaining current facilities at just one of the existing hospitals until 2011, the earliest date they can be transferred to Paddington, could hit £25 million.This is a delay, the document states, of 'five more years than the Trust expected when it entered into the PHC partnership' Then there's inflation.The Government review estimated that the scheme's original capital value of £360 million would today be £460 million, almost a third as much again.When they look at their new debts, managers at the finished hospital may find themselves ruminating on the cost of four wasted years.

In a debate on the health campus in the House of Commons in March, MP John Randall warned: 'Seldom has so little been done by so many at such great cost to the public purse.'

Six months on, his comments may still be ringing in the ears of the project team. So what went wrong?

Many of the problems at Paddington stemmed from a massive miscalculation. PHC project managers hugely underestimated the amount of space the new hospital would need.

In part this was due to new NHS rules on 'consumerism'- the minimum standards of care a patient can expect during their hospital stay. But the Government report into the PHC also highlighted basic errors such as 'omission of facilities management space' By the time the men in suits had redone their sums, the project had ballooned from 139,000 sq m to 218,000 sq m, causing Graham King, Westminster's head of city planning to warn: 'The current proposal raises serious concerns that throw into question the suitability of the site for the scale of development being proposed.'

The new calculations revealed a 17.5 per cent shortfall in space and the project team desperately needed to find additional land.

The future of the scheme now depends on the acquisition of a plot of land on the opposite side of the canal to the original site. The land is currently owned by property firm Chelsfield and any deal will have to tread a fine line between commercial gain for the developer and value for money for the public purse.

Farrell and Partners, the architecture practice that drew up the master plan for the commercial development of Paddington Basin in the mid 1990s, has been appointed by project bosses to work up plans around the potential land deal.Their proposals include a 22-storey building and tunnels linking the north and south sides of the canal.

But a source close to the plans admitted last week that they are 'quite a radical option'while a leading PFI contractor labelled the scheme 'completely barking' The inclusion of a high-rise block radically alters the rules when it comes to planning. Project director Nigel Hodson recently acknowledged: 'We will have to bolster the planning application considerably so that it looks like a detailed application in terms of external appearance.'

Working up plans to this level of detail is likely to push back any advertisement for a private sector partner and may make the scheme less appealing to contractors.Because design is crucial to managing risk in PFI, potential bidders will have major concerns about buying into plans developed by a third party.

But there are far bigger questions for contractors.The Government review lambasted the management of the scheme and was particularly critical of the role of the Project Board. And an interim report in November 2003 urged the project team to appoint 'a heavyweight' project manager to ensure that progress was 'rigorously and aggressively maintained' John Wilkinson, the MP who called for the investigation, said its findings 'revealed a tale of managerial incompetence and lack of control of staggering proportions' Failings highlighted in the report included an absurdly low construction contingency - 3 per cent rather than the usual 12-14 per cent - and 'no sensible allowances' for the costs of decanting.This, despite the fact that the early proposals envisaged construction taking place on the existing St Mary's Hospital site while existing services were maintained.

And major question marks over funding still remain. Because the Royal Brompton and Harefield Hospitals provide specialist services, their income comes from a large number of other health groups, known as commissioners, that refer patients on for treatment.The Government report noted: 'It has not been possible for the Trust to secure pledges of support from all commissioners.'

Recent reports have put the resulting cash shortfall as high as 20 per cent.The project board claims this will not affect the viability of the deal.Banks may not feel the same way. As one construction boss recently said: 'I don't think anybody's convinced that it's a real project.'

The worst part of all this is the lack of accountability.

PHC officials claim they have consolidated the project management under a joint project board and are: 'seeking to increase the investment in skills and resources following the recommendations of the independent review' This is good news but the fact remains that, despite huge mistakes at massive cost to the taxpayer, none of the major figures at the head of the scheme have been taken to task.

This is not a question of blood-letting or finger-pointing. Contractors are now faced with forging a partnership with an organisation at which the competence of the key decision makers is in serious doubt.The private sector, and the general public, must be given reason to put their faith in the PHC.

Asked whether anyone would take responsibility for the mistakes listed in the Government review, project bosses replied: 'We are working together to address the recommendations made in the report.'

In the words of one health campaigner: 'Heads should roll.'