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Winning construction work: Health

ProCure 21+ and LIFT schemes provide the next opportunities for contractors to work on medium sized NHS health projects.

More than 100 hospitals have been built under the NHS’s funding strategy published in 2000 – the NHS Plan. Last year it spent £5.5 billion, using a mixture of PFI and public money. Although the scheme will end in 2010, substantial funding increases for the sector by the government are planned for the next three years.

According to Glenigan, investment could go up to £7.5 billion by 2010/2011, although NHS trusts have struggled to invest all the available funds in the last five years. And in the last 12 months there was only one major hospital scheme completed, a £130 million PPP scheme in Kirkcaldy, Fife.

Glenigan’s latest health report suggests that the fall in planning approvals meant that there was a 32 per cent drop in project starts between November 2008 and February 2009.

So the picture is mixed and with a general election looming, firm plans are unlikely until a new or continuing government is in place. While the rate of major projects is slowing, there is still £3.6 billion worth of large public and private healthcare projects forecast to start between now and the end of 2010.

And contractors and their supply chains are chomping at the bit to get involved with ProCure21+, the NHS’s publicly-funded procurement scheme which is set to replace ProCure 21, (P21) finishing in September 2010. The OJEU notice is due this June so main contractors will be getting their supply chains together now.

A place on the ProCure 21+ framework will give firms the chance to work on community hospitals, primary care centres and outpatient units as part of a framework, with projects worth up to about £15 million.

The total value of the pie is to be confirmed as individual NHS organisations will decide for themselves the extent of construction works needed, but more than £3 billion of projects were delivered under ProCure21. The length of the framework is likely to be four years, but the OJEU will confirm this.  

NHS ProCure 21 – A Partnering Framework

By Andrew Walsh, partner at law firm Shadbolt.

ProCure21 is a fast-track procurement method for publicly funded NHS capital schemes, used to deliver community hospitals, primary care centres and acute services such as cardiac care, oncology and outpatient units. It stands alongside, the Private Finance Initiative (PFI) and Local Improvement Finance Trust (LIFT) initiatives to deliver NHS facilities.

To date more than 200 schemes have been completed with a combined value estimated at £3.47 billion. Government statistics indicate that 97 per cent of schemes have been completed on or before time and 89 per cent to budget.

It is aimed at delivering fixed price design and construction contracts to the highest standards in the shortest possible time. An NHS Trust can select a Principal Supply Chain Partner (PSCP) from the Procure 21 framework without having to go through the OJEU tendering requirements. The selection process takes three weeks on average.

Aside from the underlying source of funding, the significant difference (and many would point to this as a major advantage) between P21 schemes and those procured under PFI or LIFT is the collaborative, input driven approach to design development and the output-led approach taken by the other procurement methods.

Other advantages claimed for P21 are time certainty resulting from joint programming, shared savings flowing from cost transparency and free VAT recovery advice, best value for money through co-development of a product specifically tailored to the client’s needs, best practice and an optimum environment achieved through learning from similar schemes, collaborative working and joint risk management.

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