MEMORANDUM BY THE DEPARTMENT OF HEALTH
(CONT.)
LONG TERM
CAPITAL PROJECTS
AND PFI
COMMENTARY FOR
PROJECTS WITH
SIGNIFICANT DISCREPANCIES[1]
BETWEEN ORIGINAL
AND CURRENT
ESTIMATE INFORMATION
2. SUNDERLAND
SCHEME 3
Time Performance—The time overrun
of 60 per cent is mainly due to the termination of the original
Design Team Architect's commission because of non-performance
during the Pre-Contract Design Stage. This resulted in the re-appointment
of a new Architect and an associated need to review the whole
scheme design and costs and establish a new Design Team integrated
Programme. The identification and management of the problem demonstrates
the NHS commitment to tackling such issues.
3. BRISTOL ROYAL
FOR SICK
CHILDREN
Time Performance—The contract start
date (Phase 1) was delayed three months to June 1997 because of
an extended tender process, value engineering and design changes.
Phase 2 did not commence until July 1998 (following the completion
of Phase 1 in January 1998) due to the need to extend the design/approvals
process to reflect changes and developments in the services to
be provided, which required new design and planning/statutory
approvals.
The original completion date for Phase 2 was
May 2000 which has now been extended to July 2000 due to inclement
weather and further design changes.
Cost Performance—A cost overrun
of 20.5 per cent is currently forecast, the original estimate
of expenditure of £21.93 million increasing to the current
estimate of £26.42 million. The majority of this increase
was as a result of service enhancements promoted by the Health
Authority and which are supported by additional funding.
4. NEW POSSIBILITIES
NHS TRUST
Cost Performance—A substantial
cost saving of around 20 per cent is currently reported on this
scheme due to the reduced content of a resource base and reduced
land acquisition costs. However, the scheme is at an early stage
and there is the possibility that the final cost saving may be
different.
4.8(ii) Could the Department provide details
of PFI projects with a capital value of £10 million or over,
approved since 1992, including their current status?
5. All projects with a capital value of
£10 million or over are shown on the tables in answer to
question 4.8(iii).
4.8(iii) Could the Department provide tables
showing the planned and actual annual contribution to capital
from PFI, and the forecast level of investment generated by schemes
over £10 million, plus an aggregate of those below £10
million, between 1997-98 and 2002-03? What revenue or transitional
support is being given to support the Scheme? Could the
Department provide further details of locally agreed arrangements
to provide revenue or transitional support to schemes?
6. The information requested is provided
in the attached tables. Part 2 of the question regarding revenue
support for schemes is answered after the tables.
Notes to the tables:
(i) PFI deals provide a fully serviced hospital
facility. Capital costs are not identified separately and figures
are for costed contracts rather than for separate components.
Figures given are NHS estimates. The value of schemes that have
not reached financial close are liable to change.
(ii) Total estimated capital cost to the
private sector includes the cost of land, construction, equipment
and professional fees, but excludes VAT, rolled up interest and
financing costs such as bank arrangements fees, bank due diligence
fees, banks' lawyers fees and third party equity costs. As PFI
procures a service rather than the underlying asset, capital values
shown are necessarily estimates.
(iii) The phasing of capital expenditure
by the private sector is generally not available. The spend profile
has been determined using a standard formula, below, or a best
estimate, to spread the total capital cost to the private sector
over the estimated construction period:
| Size of Scheme £m
| Yr 1% of capital cost | Yr 2% of capital cost
| Yr 3% of capital cost | Yr 4% of capital cost
| Yr 5% of capital cost | Yr 6% of capital cost
|
| Under 10 | 50% | 50%
| | | |
|
| 11 to 50 | 10% | 65%
| 25% | | |
|
| 51 to 100 | 10% | 25%
| 45% | 20% | |
|
| 101-200 | 10% | 15%
| 30% | 30% | 15%
| |
| 200+ | 10% | 15%
| 25% | 20% | 20%
| 10% |
(iv) The information does not provide details of schemes
below £10 million.
(v) These figures may not sum due to rounding.
1
Significant discrepancies are defined as a change of +/-- 10 per
cent on the original estimate. Back
| 
