Medical advances, improved technology and increasing outpatient numbers have transformed the construction challenge - so the decade-old NHS estate guidance needs some radical updating

Richard Steer 2014

As we head towards an election next year and each party stakes its claim for moving us from recession to recovery, there will be the usual glory grabbing by all parties. This will be based on what they will claim was their prescient, far-sighted vision and unqualified support for huge infrastructure initiatives like HS2, Crossrail or the soon-to-be-unveiled energy building programme.

What will not be so evident in their proclamations of success will be respective governments’ management and control of the NHS estate. To put this all into perspective, the NHS is still one of the largest employers in Europe with more than 1.3 million staff, and has a real estate portfolio of around £70bn. The numbers of different types of property are staggering. The organisation includes more than 8,000 GP practices and 2,300 hospitals alone. More than 1 million people are processed through these buildings every 36 hours. The client organisations include 211 clinical commissioning groups, 160 acute trusts, 56 mental health trusts, 34 community providers and 10 ambulance trusts.

The government used to run all of these buildings through the NHS Estates organisation, set up to bring some sanity to what could be a construction planning nightmare. This was aided and abetted by an NHS guidance document called the Estatecode, which started being drafted in the early 2000s and ended up being published between 2005-07.

In 2014, however, both the institutional architecture - through the formation of NHS Property Services - and the construction challenge has changed beyond all recognition. But the guidance hasn’t. So nearly 10 years on since the guidance was issued, many are questioning whether it is time for a radical re-think and re-engineering of the Estatecode, specifically an element of the guide entitled the “exemplar Estates Strategy”.

In 2005, the budget for the NHS was around £76bn and planned expenditure now is almost £110bn. Due to medical advances and increasing development of medical technology, the total number of outpatient attendances in 2012/13 was just over 75.4 million, an increase of more than 1 million on the previous year. With patients spending less time in hospital, we essentially have too much capacity, as a lot of the buildings are in the wrong place, and the cost models upon which NHS buildings used to be built need to be re-evaluated in line with the creation of a new code.

The reality is the NHS is burdened with outdated guidance on the development of estate strategy - the whole process is dysfunctional

Sir Malcolm Grant, chairman of NHS England, presented his thoughts on the NHS Estate at the Cambridge University Land Society conference a couple of months ago, stating the NHS was sitting on a massive surplus of redundant land and poorly performing building stock. He rightly flagged the inefficiency in both capital deployment and embedded operating costs.

The reality is the NHS is burdened with outdated guidance on the development of estate strategy which isn’t aligned to government business case guidance, meaning the whole process is dysfunctional. Hence projects could be delayed or get bounced. The nuts and bolts of creating a service-aligned, co-commissioner-led, affordable, sustainable and commercially focused NHS estate needs to be developed and adopted.

Having spoken to experts, I’d suggest the code is updated with a new approach that has five criteria employed to ensure that the life-cycle costings of the building is reviewed as the key guidance element for the creation or refurbishing of buildings.

The new criteria should be designed to future-proof investment based on today’s need, not the needs of a previous decade - the outdated guidance was adopted when the NHS was expanding and modernising, whereas now the NHS is reforming its service delivery platforms by shrinking space and concentrating services, something not previously envisioned. A new process-driven methodology would be employed when deciding what, where and how something is built for the NHS.

Initially there would be strategic case review which makes the case for change. It looks at affordable options, capacity issues and capability to deliver what’s needed. The specifier then moves to the creation of an outline business case. This includes value-for-money solutions, procurement path, funding options and affordability. Once this has all been sanity checked, then a full business case is prepared. This is the final technical document which covers affordability, agreed procurement process, contract details, delivery plan and benefits realisation. Through this whole process, five specific case criteria are applied. Does the project make strategic sense? Is it economically viable? Does the commercial plan stack up? How are the financial considerations being managed? Finally, how is the construction and delivery plan being controlled and to what timeline? Some might argue that this is not rocket science, it is just good, modern management practice.

The built environment draws down about 12% of the entire NHS budget and as an industry it is surely part of our role to advise the client on the best way to plan, execute and deliver. We are not governed by politics but by the need to get the job done on time, to budget, meeting - and hopefully exceeding - the brief from the client. Let’s see who is brave enough to put that in their manifesto next May.

Richard Steer is chairman of Gleeds Worldwide