To ask the Scottish Executive how it will ensure that the contract for the new Southern General Hospital is delivered on time and on budget, given the track record of the successful bidder with Wembley Stadium, which was reportedly two years late and millions over budget.
Brookfield''s track record reflects hundreds of projects world-wide delivered on time and on budget.
NHS Greater Glasgow and Clyde have put in place appropriate governance arrangements for such an important and complex project. The New South Glasgow Hospitals and Laboratory Project Executive Board (NSGHLPEB) has delegated authority to make executive decisions on critical points in the project programme. The role of the board is to oversee the overall progress of the project to ensure project objectives are achieved. The board meets monthly or more frequently depending upon the needs of the project and will report into the Acute Services Review Programme Board. It is accountable for the planning and delivery of all procurement, financial and technical measures required to deliver the identified investment and services that fall within the scope of the whole project. This will ensure there is appropriate progress on:
Procurement:
Procurement Plan and timetable,
Procurement Administration,
Bid evaluation process and administration,
Procurement budget control,
Risk Management,
Change control administration.
Finance:
Negotiating commercial issues,
Draft Contracts/Final Contracts,
Report on issues affecting affordability,
Examine financing proposals and make recommendations to the ASRPB,
Develop and report Value for Money (VfM) proposals,
Cost Control.
Technical:
Technical Output Specs,
Bid Evaluation Process,
Test technical viability of solutions,
All planning issues,
All changes to contract/design/specification,
Construction and Commissioning,
Financial Risk Management,
Adherence to Standing Financial Instructions.
From the outset, the importance of cost and programme was recognised by the board and their advisors and the selection of the procurement route and form of contract were based upon the ability to minimise the risks of over run. The form of contract being utilised; NEC 3 Option C, is an industry standard form which is promoted for use by the Office of Government Commerce and is also the main stay of NHSScotland''s Frameworks Scotland national construction framework.
The NEC3 Contract is centred on collaborative working practices, but also contains a maximum price within which the contractor must deliver the board''s requirements. This contract provides for an incentivised pain/gain share approach, whereby the performance of the contractor in many respects including time and cost is incentivised to deliver within cost and on time parameters. Management of the works is focused on programme delivery with a requirement on the contractor to provide detailed monthly updates and early warning notices on any cost or programme implications. Details of the NEC3 contract can be found at http://www.neccontract.com/
The treatment of risk in the project is also important and has been, and will continue to be, addressed and managed in several interconnected ways.
Overarching the process has been an active risk register that has highlighted and categorised risks to the scheme, provided owners for risks and noted actions and mitigation where relevant.
Regular Project Team meetings reviewed the risk register as a live management tool, as well as discussing, organising, planning and managing the procurement of the scheme, with the Project Team reporting into the overall management and governance structure put in place by the board as covered earlier.
Prior to issue of the tender package to bidders, and an aspect of the overall governance and risk review and assessment of the procurement, stringent validation of the readiness to go to market and assessment of the scheme by third parties was carried out and completed.
The procurement process and engagement with bidders addressed risk in the Competitive Dialogue period and up to bid submission in several ways, including:
Discussing and evolving risk registers with each bidder at the Commercial Dialogue as well as preparing a master risk register that identifies the owner (Board or Contractor) project risks (e.g. Planning, Ground Conditions etc);
Identification of responsibility for physical and technical matters (and therefore risks) through the Contract Data (Employer''s Requirements), and
Incorporation and identification of the rights and obligations of the parties in relation to risk included in the Contract.
As the project moves forwards into the design development and construction phase there are a number of activities that support proactive risk management of the process. These include:
The continuation of the governance structure established by the board to manage and oversee the project;
Separate, but parallel risk registers covering
- Board Retained Risk
- Contractor Risk.
Regular Project Team meetings, including review and updating the project risk registers;
The use of a contract and process that provides for an Early Warning approach to risk, this allows potential risks (of whatever nature) to be highlighted, tabled, discussed, managed and resolved by the parties which will either avoid their occurrence or manage and mitigate the event that has occurred;
The clarity provided with regard to the risk profile of both the Board and the Contractor due to the establishment and agreement of the risk registers relating to project risks (e.g. Planning, Ground Conditions etc);
A partnership approach, not only in the use of the Early Warning system, but in the establishment of a joint executive team to liaise and manage matters that are escalated;
Live monitoring and review of the construction programme as a management tool as a feature of the contract;
An incentivised contract with an established commercial position with regard to pain/gain mechanisms between the board and the contractor.
