Government told to overhaul major project procurement in wake of Paddington fiasco

The report into the collapsed Paddington PFI hospital has drawn up 43 recommendations that should be adhered to for future hospital schemes costing in excess of £100m.

It concedes that the Paddington scheme had “some unique and uncommon features” but said its brief was to “ensure that appropriate lessons are learned”. The report adds that special rules also need to apply for projects over £500m such as extra work carried out on risk management and scope of works.

The 43 recommendations cover:

• Government and Department of Health leadership and policy, including making a government minister responsible for large schemes
• Proper tools offered by the Department of Health for project teams, including how to properly account for schemes and affordability definitions
• Local management of schemes to include proper consideration of public consultation and clinical needs
• Clarity of who is sponsoring the schemes and proper lines of communication and authority within the different bodies involved
• Programme governance and delivery – proper accountability, importance of change management, benchmarking
• Management of land and planning issues

Auditor general Sir John Bourn said in a letter this week that he had written to the Department of Health “recommending that it takes this report very seriously and publicly responds to it”. “We believe that it is essential to have the department’s measured consideration so that other NHS organisations can apply appropriate lessons,” he added.

The report begins by claiming that the project had “weak foundations, flowing from an inadequate and incomplete outline business case” and the fact that it lacked a single project sponsor.

It castigates the lack of clarity due to the myriad partners behind the project, which included the North West London Strategic Health Authority, the Department of Health, two NHS Trusts (St Mary’s and the Royal Brompton & Harefield) and Imperial College. “There was no formal and detailed scheme of accountabilities and responsibilities,” the report said.

It also found a key warning signal was a “red” Gateway review into the project carried out by the government in November 2003. Of 30 recommendations made by the review, five were not addressed in a timely fashion, 12 did not achieve the right outcome and 11 were not addressed. The review said: “We remain convinced that not completing actions on the recommendations in the timeframe set out in the Gateway report had a material impact on the project and its carried-forward risks.”

One such omission was the failure to carry out a ground survey of the St Mary’s site, where the new hospital was planned, which brought “uncertainty as to the possible land uses and the potential for such risk to be priced into any PFI deal.”

The report also found that the project team itself was woefully under-funded. The model used to calculate the resources for the team was based on the project’s original value of £360m, rather than its eventual value of £800m.

It also concluded that there was a mentality among the team last year that “the vision was always worth one more try” when a new option of a land deal with a private landowner emerged.