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Contractors combine to save costs in NHS standardisation drive

Exclusive: Contractors on the £4 billion ProCure21+ framework are working as a single team and with the Department of Health on “groundbreaking” standardisation plans for health capital projects, CN can reveal.

The DoH has tasked six P21+ suppliers with helping to meet the department’s 14.1 per cent savings target on their construction costs by 2014/15 through collaboration on standardisation, under plans due to be published in March.

CN understands that Balfour Beatty and Interserve are working in combination on mechanical and electrical sector savings, while the Vinci and Sir Robert McAlpine joint venture IHP is leading on re-usable design (see box).

Cost Reduction programme:

The six principal supply chain partners are Balfour Beatty, Interserve, Kier, Miller, Willmott Dixon and Integrated Health Projects, a joint venture between Vinci and Sir Robert McAlpine.

Each PSCP’s efforts are being directed towards a particular area in which they hold expertise.

CN understands that Balfour Beatty and Interserve are working on mechanical and electrical savings, with Miller and Integrated Health Projects collaborating on furniture, fixtures and electrical.

Integrated Health Projects is also leading on re-usable design, while Interserve is working on internal partitioning, with Willmott Dixon specialising in ceilings.

Kier and Balfour Beatty are also co-operating to standardise doors and ironmongery.

Head of ProCure21+ Peter Sellars is understood to be taking a lead on the project, keeping incontact with the contractors as they pool best practice.

The move towards greater standardisation includes components – such as doors, plasterboards, room divisions, ceilings and grab rails – and whole-room designs.

CN understands the savings from the cost reduction project could be as high as 25-30 per cent in some areas.

One contractor told CN: “[These] initiatives aren’t based around driving down supply chain costs – that’s already happened.

“It’s quite groundbreaking – there’s no competition in this – we’re working as a single team.”

The NHS is seeking to make £20bn in efficiency savings by 2015 in line with its quality, innovation, productivity and prevention programme.

Another contractor told CN: “The NHS team itself suggested we all come together and talk about it.

“Most contractors have framework agreements, if you like, with their supply chains – I think it was the next logical step.”

“There’s no sense in trying to reinvent the wheel every time.”

Peter Hardy, partner at Addleshaw Goddard

As part of the government’s bid to mandate building information modelling across the public sector by 2015/2016, clients and contractors could eventually pull down standard design solutions from a centralised database, reducing the need for the manufacture of bespoke products and components.

Davis Langdon director of health Jon Puddle said: “What the P21+ team are trying to do with the principal supply chain partners (PSCPs) is standardise individual rooms or room layouts, and look at standardising components so they can get best value out of buying and using the same component – not trying to replicate full-scale hospitals onto individual sites.”

He added that standardisation was being limited to functional rooms such as single bedrooms and components such as doors, and that the changes would also lead to “better, more effective and efficient clinical pathways”.

Mr Puddle said he didn’t think small, local suppliers would have to worry about losing work through the lack of bespoke provision, as principal supply chain partners already use local suppliers to undertake works.

CN understands that although the initial remit is for P21+ projects, there will be “no dictat” about whether to limit the savings to framework projects.

Though P21+ is the vehicle through which the standardisation is occurring, any trust will be able to access the databases and build on them.

When asked if this would lead to work gravitating away from the P21+ framework, one contractor said “the more we can offer to NHS clients, the more likely they are to use P21+, so the more likely we are to get work”.

Another construction professional close to the work told CN that the project was looking at procurement “fairly holistically”.

He said components coming off production lines and having to be made bespoke afterwards was adding “a whole cost of production” which could be removed if a greater degree of standardisation could be achieved across the NHS estate.

“They’ve got to save £20bn,” he continued, “and we’ve got a part to play that.”

The standardised products and designs are due to be unveiled at national presentations in March.

ProCure21+ is an England-wide framework with six contractors, or PSCPs, selected in 2010 for capital investment construction schemes until 2016.

It was intended to handle around £750m in contracts each year, an estimate which CN understands has been largely met.

In numbers:

  • 97 per cent of schemes on P21+’s predecessor, P21, were delivered to budget or below budget
  • Profits have been reduced by 20 per cent when compared with P21
  • £1bn-worth of work across 71 schemes had been registered by July
  • £4.2bn in projects were procured through the P21 framework, across 647 projects, over its lifetime
  • PSCPs are committed to working with NHS clients on cost benchmarking, standardisation and BIM implementation
  • More than 200 first tier SMEs are registered on the P21+ framework
  • P21+ is a procurement route for service planning, major works schemes, small works schemes, refurbishments, infrastructure upgrades and feasibility studies

Asked by CN whether some facilities needed specific designs and components, a contractor said there were “rigorous standards” in place throughout the project.

“That’s not an easy thing, we don’t underestimate the challenges,” he said.

“All the trusts are independent organisations, it’s not quite as straightforward as the schools where you’ve got somebody dictating at the centre.

“It’s about the DH doing its bit among all the other departments – we’re reasonably far advanced in terms of makings savings already against our targets.”

Contractors praised the system as “a good example of collaboration” that was “going very well” and were keen to stress the co-operative nature of the project, though they were conscious not to “be seen to colluding”.

Addleshaw Goddard partner Peter Hardy welcomed the initiative, calling it “very sensible” and “something that most of the industry would be really in favour of”.

“Given the way the NHS is split, with every trust doing things very differently, there’s a lot of bespoke design,” he said.

“I think there’s a lot of wasted time in design – there’s no sense in trying to reinvent the wheel every time; this should be advantageous both to health trusts and to developers.”

A DH spokeswoman said: “Having managed the ProCure21 framework for eight years, the department is in a unique position to work with the PSCPs on the P21+ framework.

“We will work together to set the strategy for the partners to deliver cost efficiency savings for the NHS.  

“All the chief executive officers of the PSCPs have confirmed they are all on board to drive these efficiency savings.

“It is essential that the NHS takes advantage of standardisation in terms of design and materials and products offered to it by the industry so it can realise these savings effectively.”

National Specialist Contractors’ Council chief executive Suzannah Nichol, in reacting to the initiative, told CN: “The localism agenda is for me a bit of a red herring – wherever I live I want a hospital or a school or a doctor’s surgery that delivers value, is clean, performs its job and provides the right environment.

“The risk is that you select a poor design and it appears everywhere or that it stifles innovation – but really we should know what works, provides value and is easy to maintain.”

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