The ProCure21+ Framework is provided by the Department of Health for the development, construction and refurbishment of NHS facilities. It can be engaged by a client as a fast-track capital procurement solution or for development of longer-term estate strategies and clinical planning exercises as well as maintenance and small works. ProCure21+ is responding to the Government Construction Strategy and working with the suppliers to the framework to deliver 14.1% savings for the NHS. ProCure21+ is being used by the NHS as a strategic tool to re-model the existing NHS estate to reduce costs and increase productivity toward meeting NHS QIPP targets.
Since the start of the original ProCure21 framework in 2003, over 600 schemes (collectively worth £3.5bn) have been completed, with consistent time and budget compliance of over 90%. Client satisfaction has also been consistently over 80% and there has been no litigation on any ProCure21 or ProCure21+ scheme – saving the NHS over £100m. This represents a step-change for public sector construction, where in 2001 only 26% of schemes were delivered on time, and 28% on budget, with 3% of the NHS Capital programme being spent on litigation.
Clients manage their own ProCure21+ schemes, but follow the proven ProCure21+ procurement process and contract template (based on the NEC3 Option C Contract). Both process and contract have been bespoked to mirror the NHS business case approval process, giving Clients the control mechanisms to ensure their scheme remains on budget at each stage, with break clauses (without penalty) throughout the design and development period. Clients can use the process and the partnership working relationship with their supply chain to drive as much value as they can – often creating long-term relationships with their ProCure21+ supply chains to deliver additional value on long-term objectives.
When a final design is agreed, costed and thoroughly market-tested, the client is given a Guaranteed Maximum Price (GMP) for the scheme. This limits the client’s liability to price increases, risk and poor performance. If the scheme is delivered below the budget, a gainshare mechanism shares the savings 50:50. Any overspend (that is not a client-instructed change) is borne 100% by the supply chain.
Every month, the supply chain must make a submission to the Department of Health and the client, offering updates on contractual status, time, budget and risk status. These are presented in a RAG format for client management board information.
The Department of Health provides performance management of the framework, audit services and assistance with issues where required, giving clients complete assurance that their schemes will be delivered on time and within budget.
The Department of Health has pre-tendered six Principal Supply Chain Partners (PSCPs) that can be mobilised very quickly without the client having to tender through OJEU. DH provides implementation support, guidance, training, performance management and audit services for ProCure21+ free of charge to the NHS. The supply chains offer a one-stop-shop solution and bring with them the experience and expertise of over 1,200 small- to medium-sized enterprises together with the flexibility to use local firms as the client wishes.
Value for Money
The ProCure21+ framework provides many tools for clients to use to ensure they get value for money:
- Re-negotiated competitive rates and margins, as agreed at the outset of the framework, typically representing a 20% reduction on ProCure21 rates. These rates were agreed in 2010 when market rates were at their lowest and they are fixed (given inflation adjustment) until the end of the framework. They are fair and sustainable.
- Use of the ProCure21+ ProjectShare system, allowing clients to use and share other NHS designs and scheme information royalty-free, potentially saving up to 25% of a GMP.
- Access to repeatable room designs, standardised components and modularisation used across the framework, offering optimum performance and cost savings.
- Availability of all scheme costs for benchmarking and cost targeting. 3% savings on every GMP are mandated for all ProCure21+ schemes.
- Use of the ProCure21+ VAT service, free to clients. This negates the use of external VAT recovery consultants, and has so far saved the NHS over £10m.
- Early validation of budget, and monthly reports to the client on progress and projected out-turn costs.
- Use of a jointly developed procurement strategy that allows the client to specify precisely how the scheme is market-tested and procured. Any subsequent cost reductions after agreement of GMP are returned to the client 100%.
- Time-bars for the notification of issues where (if not complied with) they may disallow claims for costs.
- A mandated risk process and tool that ensures risk is open, transparent and costed efficiently.
- Defect-Free Completion, whereby completion cannot be achieved before the client certificates the scheme as defect-free.
- Support from the Department of Health ProCure21+ Implementation Advisor team for impartial advice and guidance on issues before they potentially have an effect on out-turn costs and time.
Government Construction Strategy
The Government Construction Strategy was published by the Cabinet Office Efficiency Reform group in May 2011. 40% of the £110bn annual turnover of the Construction Industry comes from the public sector, and at present the NHS is the largest capital construction client in the country.
The Government Construction Strategy Board, in consultation with Government departments and the construction industry, have developed an action plan, to which all Government departments have signed up to deliver up to 20% savings in construction cost. ProCure21+ is compliant with the strategy and has agreed three streams of work with the Construction Strategy Board to save 14.1% by 2016:
- Cost Targets and Benchmarking – the supply-chains have been set a target of achieving 3% savings on every project. The Department of Health has put in place methodology to create and record cost-savings on every project when they are made at the time.
- Bulk Buying and Standardisation – the Principal Supply Chain Partners have identified key areas where products and designs may be standardised, bulk bought and specified as standard.
- Implementation of Building Information Modelling (BIM) on all ProCure21+ schemes.
There are some challenges that need to be addressed if the framework is to be successful in implementing the Construction Strategy work-streams and realising the potential benefits.
- Encouraging clients to engage with the framework and the supply-chains early enough in the design process. Where a scheme is presented with an almost complete design, the potential for savings is vastly reduced.
- Getting ‘buy-in’ from senior NHS managers, particularly in finance departments, to encourage greater visibility in decision-making and to understand where additional and perhaps unnecessary costs lie.
- Encouraging clients to share designs and other information. Under the ProCure21+ framework, clients have a royalty-free licence to use any existing designs developed under the framework. Therefore the Department of Health has developed ProjectShare, where designs and other information can be shared – potentially saving up to 25% of the GMP.