The Guide. Issue 1.0 December 2008

Transcription

1 The Guide Issue 1.0 December 2008

2 Contents Contents...2 Introduction...4 What is the purpose of the Frameworks Scotland Guide?...6 Recognised success and benefits...6 What role does Health Facilities Scotland play?...7 Range of services under Frameworks Scotland...8 What is Frameworks Scotland?...9 Range of services provided by PSCPs...9 Role of the HFS Capital Projects Advisor...10 Benefits of Frameworks Scotland...11 Section Using the Frameworks Scotland Guide...13 Structure of the guide...14 When to select a PSCP...15 Route to success factors...17 Section checklist...18 Section Team Selection...19 Introduction...19 How to establish the Frameworks Scotland team...19 Recruitment...22 Roles and responsibilities...23 Section checklist...26 Section 3.0 Scheme Launch...27 Introduction...27 Launch Workshop...27 Project Team...28 Integrated Team...30 Developing a joint action plan...31 Section checklist...32 Section 4.0 Scheme Development...33 Introduction...33 Project development...33 Potential PSCP entry points / Use of Frameworks Scotland...34 Use of the Contract (NEC3, Option C)...35 Structure of the contract:...35 Improvements to the contract:...36 Roles and responsibilities under the NEC contract:...37 Agreeing the Target Price...37 Section checklist:...41 Issue 1.0: December 2008 Page 2 of 52

3 Section 5.0 Construction and Handover...42 Introduction...42 Managing the construction stage...42 Use of the Contract (NEC3, Option C)...43 Cost Control...43 Target Price...44 Managing the gain share...45 Open-book audit...46 Section checklist...47 Section Evaluation...48 Introduction...48 Post Project Evaluation Benchmarking Toolkit...48 Updated Target Price...48 Review workshops...48 Sharing lessons learned...49 Section checklist...50 Appendix 1: Glossary of terms...51 Disclaimer The contents of this document are provided by way of general guidance only at the time of its publication. Any party making any use thereof or placing any reliance thereon shall do so only upon exercise of that party s own judgement as to the adequacy of the contents in the particular circumstances of its use and application. No warranty is given as to the accuracy, relevance or completeness of the contents of this document and Health Facilities Scotland a Division of NHS National Services Scotland shall have no responsibility for any errors in or omissions therefrom, or any use made of, or reliance placed upon, any of the contents of this document. Issue 1.0: December 2008 Page 3 of 52

4 Introduction Frameworks Scotland is a strategic and flexible partnering / collaboration approach to the procurement of publicly funded construction work and complements other procurement initiatives for the delivery of health facilities in Scotland. The Framework is suitable for a combination of new build and refurbishment work within an estimated annual NHSScotland capital expenditure of million. There is a Framework covering Principal Supply Chain Partners (PSCPs) and also frameworks for Professional Services Contracts (PSCs) covering the required disciplines for the form of contract Project Manager, Supervisor and Cost Advisor and additionally also for CDM Co-ordinator and Healthcare Planner. The frameworks have been established to achieve the following key benefits: earlier and faster delivery of projects; certainty of time, cost and quality; value for money; well designed buildings procured within a positive collaborative working environment. The Framework also complements the current partnership between the Scottish Government Health Directorates and Architecture and Design Scotland in promoting Design Champions at NHS Board level to enhance design quality and standards throughout the procurement process. The frameworks embrace the principles of collaborative working to ensure that teams within and between the public and private sectors work together effectively. This approach is designed to deliver ongoing tangible performance improvements due to repeat work being undertaken by the supply chains. PSCPs may be engaged to undertake a variety of duties including service strategies, estate strategies, business planning, developing the brief, in addition to design development and construction works. In addition to the construction phase of a project, the PSCP can be appointed at various stages in the capital project planning process from the Initial Agreement stage, Outline Business Case stage or up to the Full Business Case stage. Most benefit is obtained through early engagement. This guide has been developed by Health Facilities Scotland for use on the Frameworks Scotland initiative. This guide has been prepared with reference to procedures in the ProCure 21 Guide. Issue 1.0: December 2008 Page 4 of 52

5 Drivers for Change Common Theme Response: Frameworks Scotland Egan Principles Greater end user/stakeholder involvement Involvement of end users/stakeholders throughout Controlled and consistent approaches to procurement Standardised and regulated process Consistent involvement of the supply chain Accredited supply chains used consistently NHS Plan The concept of an "integrated team" - potentially employed on multiple projects Integrated teams - ability to use on repeat projects based upon proven delivery Best Client Use of "modern" forms of contract Appropriate use of incentives and risk management NEC3 New Engineering and Construction Contract (Option C) adopted Joint risk management, open-book and gain share potential Greater predictability in terms of time and cost Joint Target setting and programming Achieving Excellence in Construction targets Consideration of Whole Life Costs Part of the business case process and build up of the Target Price Continuous improvement against established KPI's Establish KPI's and focus on delivering continuous improvement Figure 1: Key drivers behind Frameworks Scotland Issue 1.0: December 2008 Page 5 of 52

6 This guide should be used in conjunction with other guidance as referenced together with the tools that are being developed for use by NHS Boards on Frameworks Scotland projects. The Health Facilities Scotland web site should also be referred to. This guide together with reference tools and process guidance will continue to be developed throughout the duration of the Frameworks. For related general information, please also refer to the Frameworks Scotland Questions and Answers publication. What is the purpose of the Frameworks Scotland Guide? The Guide is intended for all those involved in the procurement of Frameworks Scotland projects generally and scheme contracts specifically, namely: NHS Clients; Professional Advisors including PSCs; Principal Supply Chain Partners (PSCPs); Principal Supply Chain Members (PSCMs). NHS Clients new to Frameworks Scotland will find the guide of particular use in gaining an appreciation of: What Frameworks Scotland is and its advantages; What the differences are to traditional tender procurement; Key Stages; What is expected of them. The guide sets out clearly for all: Frameworks Scotland Principles; Frameworks Scotland process in detail; Activities required at each stage and who is responsible for them; Details of tools and techniques which can be used to achieve objectives. Recognised success and benefits: Similar frameworks have been running in England and Wales. ProCure 21 (P21) in England has nearly 300 projects registered amounting to over 2bn. Around 200 projects have been completed worth over 590m. ProCure 21 is recommended by HM Treasury but is not mandatory. Designed for Life in Wales is mandatory, though there is a minimum project threshold of 6m. Both of these frameworks are compliant with OGC Common Minimum Standards. Key benefits summarised from P21 and Designed for Life: Issue 1.0: December 2008 Page 6 of 52

7 Time Significant time incentives. Savings in tendering time and on-site time offer the chance for NHS Organisations to open facilities and receive patients at least six months quicker than traditional tendering timescales. Cost An increased cost certainty compared with previous NHSScotland projects. Using tools such as the Target Price, Open-Book Accounting and a centralised VAT recovery service, NHS Organisations are given the tools to deliver their projects on budget. Quality Projects are setting world-class standards in building design, materials, finishes, clinical planning and equipment. Early involvement of the supply-chain and key stakeholders enhances quality of design and construction. Contract Uses a collaborative contract with a partnering ethos that reflects best practice in the construction industry. It facilitates pro-active relationships, jointly incentivises both parties and encourages long term relationships. Training Training for all clients and supply-chains. The NHS Organisations can be infrequent clients and need to make sure they have the skills and experience to deliver successful projects. Performance Review A standard set of KPIs is used to constantly review and measure performance. What role does Health Facilities Scotland play? Health Facilities Scotland (HFS) is the Framework Manager and has been responsible for the development of the Frameworks to date, in association with NHS Boards and the Scottish Government Health Directorates, through the pretender stages, tender and implementation. HFS will provide the following support: Project advice from Capital Projects Advisors Support in selection of PSCP or PSC Consultants Overall management of the PSCP Framework Management of the PSC Frameworks for Project Managers, Supervisors, Cost Advisors, CDM Co-ordinators, and Healthcare Planners Dedicated central team to administer the programme Issue 1.0: December 2008 Page 7 of 52

8 Technical advice on the Scheme Contracts and other aspects of the Framework Performance Management of the PSCPs MOTs and Audits for PSCPs and PSCs Impartial Advice Guidance tools VAT recovery advice Range of services under Frameworks Scotland In line with the frameworks in England and Wales, Frameworks Scotland will not just be a construction solution. A key benefit is the diverse range of management and construction services it can offer. The Principal Supply Chain Partners (PSCPs) act as solution providers and can offer a wide and diverse range of services. There are frameworks for the following Professional Services Contracts (PSC): Project Manager (PM) Project Supervisor (PS) Cost Advisor (CA) CDM Co-ordinator (CDM) Healthcare Planner (HCP) The above services can be utilised by NHS Clients to support their in-house project teams, particularly providing expertise from the PM, PS and CA frameworks in respect of the NEC3 form of contract. The CDM Framework will allow NHS clients to appoint suitably qualified and experienced CDM Co-ordinators to fulfil their obligations in respect of the Construction (Design and Management) Regulations The HCP Framework provides the facility for NHS Boards to appoint Healthcare Planners to advise on all aspects of the development of a clinical strategy, from Local Delivery Plan level through to detail briefing information if required. Issue 1.0: December 2008 Page 8 of 52

9 What is Frameworks Scotland? Frameworks Scotland is a procurement process similar to those which already have a significant and proven track record in both England and Wales that can be adopted by NHS Clients in Scotland to deliver a wide variety of construction related services for new build and refurbishment projects. Frameworks Scotland provides NHS Clients with the ability to readily appoint accredited Principal Supply Chain Partners (PSCPs) alongside a pre-agreed commercial arrangement. This enables the team to immediately focus on the needs of the NHS Client rather than be involved in a protracted advertisement, selection and appointment process. The PSCPs are very different to traditional contracting organisations as their supply chains contain a wealth of expertise from construction professionals through to specialist members of the supply chain. This provides NHS Clients with the unique opportunity of engaging the PSCP to undertake a wide variety of duties from service strategies, estates strategies, business planning, developing the brief and design development through to major and minor construction works. Frameworks Scotland is based upon a framework agreement (4 years with provision for a 2 year extension) between National Services Scotland (NSS) and a number of framework partners and is operational across Scotland. Using the Selection Procedure, NHS clients may select any one of the PSCPs based on their performance and track record established during the Frameworks tendering process. Complementary to the PSCP Framework are the five PSC Consultant frameworks, outlined previously, which provide relevant advisory services for NHS Clients to call off as required for projects: Range of services provided by PSCPs Frameworks Scotland can respond to challenges within NHSScotland e.g. changes in clinical need/ practice. Relevant support can be through the PSC Framework by using the available Healthcare Planning expertise for example, or by the engagement of the PSCPs to provide similar input if that is the preferred way forward. Frameworks Scotland offers a great deal of flexibility in terms of the level of service provided depending on when the PSCP becomes involved. Their input can vary from assisting the NHS Client with its overall strategy to that of developing a detailed design. Based on the projects objectives, constraints and level of complexity a key consideration will be how early to engage with the PSCP. The following table outlines the range of potential services available under Frameworks Scotland: Issue 1.0: December 2008 Page 9 of 52

10 Stage Pre-IA (Initial Agreement) IA (Initial Agreement) OBC (Outline Business Case) FBC (Full Business Case) Strategic Advice Planning Service/Estate strategies Business Planning Added Value Assistance with Strategy High level affordability reviews Outline programming Option identification and evaluation Sustainability Development of functional brief Affordability reviews Outline Programming Option Appraisals Outline Planning Approval High level risk register Sustainability Whole life cycle costing Detailed design development of preferred option Cost verification leading to agreed Target Price Detailed programming VAT savings (as a result of a Customs and Excise agreement) can be reinvested in the project Detailed and cost/time valued risk register Planning Approval Sustainability Whole life cycle costing Commissioning Table 1: Added value of Frameworks Scotland at various stages of project development Role of the HFS Capital Projects Advisor The Frameworks Scotland Capital Projects Advisor provides a source of guidance to the NHS Client throughout the process. As a member of the Frameworks Scotland team they will assist the NHS Client in establishing the most appropriate application of both PSC and PSCP input. As overall Frameworks Manager, Health Facilities Scotland should be consulted at the earliest stages of project planning to ensure that Capital Projects Advisors are available, if and when required, to assist the development of a robust strategy which is informed by the views of both the NHS Client and the wider experience of the HFS Frameworks team. The Capital Projects Advisors will also be able to feedback at relevant PSCP and PSC performance reviews. Issue 1.0: December 2008 Page 10 of 52

11 Benefits of Frameworks Scotland Frameworks Scotland embraces the principles of collaborative working ensuring that teams work together effectively. It also encourages the early involvement of the PSCP and its supply chain to ensure that the design, cost and programme are all achievable and represent best value for the NHS Client. As the framework participants are already appointed to the framework, OJEU (European procurement) procedures do not need to be repeated. This saves NHS Clients both time and money. Under ProCure 21 in England, NHS clients that have supported P21 have enabled the programme to win a number of accolades since the commencement of the national framework in October 2003: Winner of the Most Admired Public Sector Client (Construction Clients Convention, 2005); Runner up at the Construction Client of the Year (Building Magazine Awards, 2005); Runner up at the Constructing Excellence Best Practice Awards (2005). The key benefits of Frameworks Scotland may be summarised as follows: Fast Track Start A short PSCP selection process avoiding significant time and cost; Availability of experienced support through the PSC Frameworks. Shared Savings A transparent pricing structure; Potential to generate and share cost savings. Distils the best of earlier projects The application of Best Practice techniques throughout the process; A process that brings learning from other similar projects. Best VFM A process that addresses design quality issues (aesthetics, Whole Life Cost and the needs of end users); A product that is entirely tailored to the needs of the NHS client developed through detailed consultation. Issue 1.0: December 2008 Page 11 of 52

12 Target Price Certainty Agreed Target Price; Pre-agreed rates for professional advisors either through PSC or PSCP; Pre-agreed overhead and profit level for PSCPs; Pre-agreed VAT recovery rules with HM Revenue and Customs. Time Certainty Joint programming with the PSCP is an integral part of the contract. Optimum Project Environment Pre-defined PSCP overhead and profit levels established through the Frameworks tendering process; Joint risk management; Pro-active rather than reactive approach to problems; PSCP incentives Gain share and potential of future work; Collaborative working. No OJEU Process Time and cost saving. Issue 1.0: December 2008 Page 12 of 52

13 Section Using the Frameworks Scotland Guide Structure of the Guide When to select a PSCP Route to success factors The Frameworks Scotland guide follows the timeline of a project. You can either start at the beginning or pick out particular sections when required for reference. The guide should not be read in isolation and the references provided in the flow diagram below should also be used. Figure 2 Structure of Guidance and supporting information Issue 1.0: December 2008 Page 13 of 52

14 Structure of the guide The structure of the Frameworks Scotland Guide reflects the life cycle of a Frameworks Scotland project the sequential stages that an NHS Client will need to undertake when adopting the Frameworks Scotland process. Application of Frameworks Scotland Critical success factors Establishing the NHS Client Frameworks Scotland team How to select a PSCP Roles and responsibilities Launch workshop Establishing the project team Developing a joint action plan Project Development Management Techniques Use of the Contract Agreeing the Target Price Managing the delivery phase Use of the Contract Management techniques Post Project Evaluation Sharing lessons learned Figure 3: Application of Frameworks Scotland Issue 1.0: December 2008 Page 14 of 52

15 The application of Frameworks Scotland will vary from project to project. A key advantage is the inherent flexibility within the process. NHS Clients can choose to engage the services of the PSCP (and thus begin the process) at any of the following stages: Pre-IA; IA; OBC, or; FBC. When to select a PSCP It is recognised that at the time of Frameworks Scotland launch, projects will be at various stages of development, including those about to commence procurement following OBC approval. The appropriate time to engage a PSCP will depend on the dynamics of the project. Figure 4 illustrates the potential benefits that can be realised by NHS Clients through early PSCP appointment. It is important to note that there is no requirement for consultants to be exclusive to one PSCP or to the PSC Framework either. Potential conflicts therefore have to be managed through both the appointment of PSCs and PSCPs. It is acceptable for a consultant to advise an NHS Board on one project but be involved with a PSCP on another different project. It is not, however, acceptable for a consultant to act for an NHS Client and be involved with a PSCP on the same project. Figure 4: Increased benefit of early PSCP appointment Issue 1.0: December 2008 Page 15 of 52

16 As fundamental decisions about the project are taken (e.g. site, footprint of the building, room adjacencies, components etc) the commitment to construction cost rises. To go back and change an earlier decision becomes more costly. Conversely, the potential to reduce cost diminishes. Obtaining absolute clarity of the brief (and avoiding over-designed elements of the building), employing best practice from other projects, adopting the latest construction techniques and products (e.g. off site fabrication/modularisation) all become more difficult to implement if the PSCP is introduced too late into the process. As the NHS Client manages the extent of use of the PSCP during the IA, OBC and FBC stages then many NHS Clients find that controlled and timely input from the PSCP at early stages adds most value. NHS Clients need to manage the input from PSCPs to ensure that only services that add value are provided. The timing of the PSCP appointment will have a fundamental influence on the benefits derived from Frameworks Scotland. Frameworks Scotland Capital Projects Advisors can provide advice on the most appropriate stage to appoint the PSCP for a given project. The format of the following example matrix may be of use to NHS Clients to help stimulate thoughts and ideas about the most appropriate time for selection: Potential engagement of the PSCP: Potential added value Time Factors Quality Factors Cost Factors Other Pre-IA IA OBC FBC Table 2: Matrix of factors for establishing the most appropriate stage to select the PSCP For example, if there are no potential added value items noted at IA stage, it may suggest that the most appropriate stage to appoint the PSCP is at OBC. Issue 1.0: December 2008 Page 16 of 52

17 Route to success factors Having established the most appropriate point to select the PSCP (and engage the Frameworks Scotland process) it is also important to appreciate the potential success factors in the use of Frameworks Scotland. The route to success factors of Frameworks Scotland form the chapters of this guide. It is important that each stage is comprehensively addressed in order that the full potential of Frameworks Scotland is attained. Preparing a high level scope of works Selecting suitable and experienced professional advisors Selecting a suitable PSCP Ensuring that roles, responsibilities and communication links are clear Ensuring that the ethos and skills are appropriate Defining the scope of the works Launching the Framework project (formal workshop) Ensuring that user/ clinical input is obtained Establishing a project team (structure and working protocols) Developing a joint action plan up to signing of the Contract Engaging with the HFS team Clear actions and parameters for the team to work within Appropriate and timely use of framework tools Appropriate use of the Contract (NEC3, ECC Option C) Equitable allocation of risk and agreement of the Target Cost Engaging with the HFS team Clear roles and responsibilities Ongoing (appropriate use) of the Contract (NEC3, ECC Option C) Ongoing and appropriate application of framework tools Reviewing progress at regular intervals Capturing lessons learned and implementing change Sharing lessons learned for future projects Role of HFS team Figure 5: Route to success factors of Frameworks Scotland Issue 1.0: December 2008 Page 17 of 52

18 Section checklist This section should have resulted in the following outcomes/ actions: 1 Dialogue/ consultation with the HFS Capital Projects Advisor 2 A clear understanding of how Frameworks Scotland will be applied Issue 1.0: December 2008 Page 18 of 52

19 Section Team Selection Establishing the NHS Client Frameworks Scotland team How to select a PSCP Roles and responsibilities Introduction Getting the right team around you is one of the most important parts of a project. The degree to which you are able to work together will determine your success. This chapter identifies the key roles on the project team and their responsibilities. It also gives detailed guidance on the PSCP selection process. How to establish the Frameworks Scotland team Team ethos under Frameworks Scotland Frameworks Scotland embraces the principles of collaborative working. This requires a team approach from the outset and timely inclusion of all key stakeholders from the NHS Client and any external advisors. There are a number of roles that are a vital ingredient in the successful implementation and delivery of Frameworks Scotland projects: Project Directors Project Managers Cost Advisors Supervisors HFS Capital Projects Advisors Frameworks Scotland creates the right environment and commercial backdrop for successful collaborative working. However, without the timely input of these key roles, projects will not reach their full potential. These roles need the appropriate skills, experience and attitudes. They make the difference between a highly successful Frameworks Scotland project and one that achieves partial success. Frameworks Scotland cannot run itself it requires commitment, leadership and good team working. Issue 1.0: December 2008 Page 19 of 52

20 Health Facilities Scotland team Health Facilities Scotland is represented by the Capital Projects Advisors in the Frameworks Scotland team. They will not be directly involved in scheme management. Their role is to manage the strategic direction of the Framework e.g. ensure appropriate support is provided to the NHS Clients, co-ordinate and provide training, collate and review performance data and ensure best practice is shared throughout Scotland and the rest of the UK. Project Director The designated Project Director leads the whole process from the outset of the project. They are accountable directly to the Board and provide the strategic direction, leadership and ensure that the business case reflects the views of all stakeholders. They should initiate contact with Frameworks Scotland Capital Projects Advisors as early in the project development as possible. The Project Director should build a team around them with suitable skills and experience for the scale and complexity of the project. The Project Director should hand over the delivery function for the latter project stages to the Project Manager (although this role could be carried out by the Project Director on smaller projects). Capital Projects Advisors The Frameworks Scotland Capital Projects Advisors typically provide the next level of input to the project. Their role is to implement the principles of Frameworks Scotland they provide a free service as part of the Frameworks Scotland team. It is important that they are engaged at the outset of the project and remain as a source of guidance and support throughout. They will support NHS Clients in the implementation and ongoing application of the required Frameworks Scotland principles and procedures. Their input will be minimal during construction but they will be interested in capturing any lessons learned at the end of the project (when the Review Workshop is undertaken). The following disciplines are also available on the PSC Frameworks; Project Manager The Project Manager takes over the delivery function for a scheme from the Project Director. This should be timed so that they gain an appreciation of the project s strategic intent and can begin to integrate with the team. The Project Manager is a named individual within the NEC3 contract used under Frameworks Scotland and assumes a number of defined duties. The Project Manager should report to the Project Director and manage the project within the business case parameters of time, quality and cost. The Project Manager should act as a single point of contact for all stakeholders within the project. This is illustrated in Figure 6. Issue 1.0: December 2008 Page 20 of 52

21 Figure 6: Project Manager input The Project Manager should facilitate all communication, changes in the scope of work and manage all issues relevant to the project. He or she is the single point of contact for both the client side and the supply side (i.e. the supply chain). On some projects (typically those that are lower in value or complexity) the Project Director and Project Manager roles may be undertaken by the same individual. On the larger, higher value projects the roles may be separated. Both the Project Director and Project Manager will need to add value to the Frameworks Scotland process by applying a variety of management techniques (e.g. Value Management, Risk Management and the principles of collaborative working). Many of these techniques may be new to healthcare projects in Scotland and may therefore require additional training or external support at key stages. Cost Advisors Cost Advisors provide an important support role to the Project Director and Project Manager throughout the life of the project. At the IA, OBC and FBC stages the Cost Advisors will be assisting in the compilation of the business case. They also play a key role at FBC stage when the Target Price is formulated and agreed. This requires an in depth understanding of the Frameworks Scotland process for setting Target Price and of the PSCP s cost plan leading to the target total for the Prices. During construction the Cost Advisor, assisting the Project Manager, will be undertaking open book audits, advising on payments and controlling expenditure. A collaborative approach and detailed understanding of Frameworks Scotland are both vital attributes of a successful Cost Advisor who will need to work closely with the PSCP. The Cost Advisor will also contribute to the preparation, development and Issue 1.0: December 2008 Page 21 of 52

22 maintenance of the scheme specific contract documentation through the IA, OBC and FBC stages of a scheme. Supervisors The Supervisor is also a named role under NEC3 and can be an in-house Board person or an external Advisor. His or her role is defined in NEC3 in terms of the actions and decisions that he or she has to take. Essentially, the role is to check that the works are constructed in accordance with the contract. It is a similar role to that of a resident engineer or supervising architect who may be assisted by an inspector or clerk of works. The most significant contractual duty of the Supervisor is to issue the Defects Certificate which signifies the end of most of the obligations of the Parties to the NEC3 contract. CDM Co-ordinators The role of the CDM Co-ordinator is an important one on any project and experienced Co-ordinators are available for rapid appointments off the framework to enable NHS Organisations to meet their obligations under the CDM Regulations Healthcare Planners The role of the Healthcare Planner is also an important one and again there is availability of well qualified and experienced consultants on the Framework. NHS Boards can utilise this support on a call off basis. Recruitment It is possible that some NHS Clients may not have sufficient in-house resource to manage Frameworks Scotland projects or perhaps are lacking experience in certain areas. Large projects may require a full time appointment to ensure that they are effectively managed. Three broad options are available and require careful consideration: Provide training for internal staff refer also to Health Facilities Scotland web site for details of training courses including electronic versions of previously run courses Recruit new full-time members of staff with relevant experience Outsource to an external organisation The PSC Frameworks provide services to be procured on a call-off basis Issue 1.0: December 2008 Page 22 of 52

23 A number of factors will determine the decision, examples include: Required speed of appointment (time) Level of skill/ knowledge required (quality), Financial resource (cost) How to select a PSCP Guidance has been developed on how to select a PSCP from the Frameworks Scotland framework - the process is straightforward and can be as short as 3 weeks. The guide provides step by step advice at each stage. Standard selection criteria should be used by the NHS Client in their evaluation. The criteria includes: Criteria [Note: The ranking and weighting within the defined ranges to be at the discretion of the Board s Panel]. Proposed personnel for the scheme Experience relevant to the scheme Proposed supply chain for the scheme Programme Approach to the scheme Performance of the PSCP in relation to other schemes (without limitation) performance against the KPI s and performance under this agreement or Scheme Contracts N/A for early projects Weighted Score Framework range % Framework range % Framework range % Framework range % Framework range % Framework range % Applicable fees and rates of PSCP as set out in this Agreement Framework range % Roles and responsibilities NHS Client Team In order to achieve the full potential of Frameworks Scotland it is vital that all members of the NHS Client team play an active part in the process at key stages. They also need to be aware how Frameworks Scotland may affect them, the input they will need to provide and key areas of responsibility. This section describes the roles and responsibilities of: Senior personnel within the NHS Client Clinicians and end users Issue 1.0: December 2008 Page 23 of 52

24 Capital Planning and Estates Staff Professional Advisors Chief Executives, Finance Directors What do senior NHS personnel need to provide and ensure happens? Ensure that realistic aspirations, budgets and timescales are set Ensure that the right resource and expertise exists and is available to represent the NHS client Ensure that they are engaged in all key decisions Engage a VAT recovery process prior to construction Agree financial order limits and associated standing financial instructions Consider training to ensure that all key staff have the appropriate levels of awareness and skills further guidance can be provided by the Frameworks Scotland Capital Projects Advisor Ensure that the Estates department has adequate resource and skills in place ideally with an accredited Project Director Ensure that clinical staff and stakeholders are engaged at an early stage in the process without this the design will be unable to incorporate their requirements Clinicians / End Users What do clinicians/end users need to provide and ensure happens? Assist with clinical and service strategies Allocate time to the design development process Attend workshops and meetings to ensure that the facility is fit for purpose Ensure that all appropriate clinical staff, end users, stakeholders and patient user groups are involved during the design development phase Provide ongoing input during construction and at hand over of the project to ensure that the process is not disruptive and meets expectations If the project is complex (in terms of serving a number of stakeholders and/ or clinicians) then it may be useful to identify a lead clinician to act as a focal point for decision making Project Directors The role of the Project Director is recognised as being vital to the success of Frameworks Scotland. Effective Project Directors will not only need to lead the process and ensure that the project complements NHS Client strategy they will also need to add value to the design process. Issue 1.0: December 2008 Page 24 of 52

25 What do Capital Planning Estates need to provide and ensure happens? Learn about the specific mechanisms of Frameworks Scotland. It requires close working with the PSCP and supply chain Understand the skills and techniques that need to be applied under Frameworks Scotland The Professional Advisors, PSCP and supply chain all need to be managed to ensure that only value adding activities are undertaken Engagement of the Frameworks Scotland Capital Projects Advisor from the outset a service that guides NHS clients through Frameworks Scotland Consider internal training/ joint training with the PSCP and supply chain to ensure that all key staff have the appropriate levels of awareness and skills further guidance can be provided by the Frameworks Scotland Capital Projects Advisors Ensure that senior personnel are aware of the impact e.g. cash flow on the Finance Directorate and more proactive involvement of user groups Ensure appropriate Professional Advisors are appointed that can demonstrate experience, understanding and the willingness to work in this type of collaborative environment A number of key appointments will need to be made Project Director, Project Manager, Supervisor, CDM Co-ordinator and Cost Advisor Ensure that all personnel are clear about their roles and responsibilities Professional Advisors What do professional advisors need to provide and ensure happens? Learn about the specific mechanisms of the Frameworks Scotland initiative Understand the skills and techniques that need to be applied under Frameworks Scotland Consider training to ensure that all key staff have the appropriate levels of awareness and skills e.g. Project Manager competency in administering requirements of the scheme contract process and NEC3 procedures; Cost Advisor knowledge of cost forecasting, risk management and Target Price setting process further guidance can be provided by the Frameworks Scotland Capital Projects Advisors Frameworks Scotland requires a collaborative culture and for all Professional Advisors to adhere to these principals Issue 1.0: December 2008 Page 25 of 52

26 Section checklist This section should have resulted in the following outcomes/ actions: 1 Further consultation with the HFS Capital Projects Advisor (if required) 2 A debrief to Senior NHS staff, clinicians/ end users 3 The appointment of a Project Director 4 The appointment of a Project Manager 5 The appointment of a Cost Advisor 6 The appointment of a Supervisor 7 The appointment of the PSCP 8 The appointment of the CDM co-ordinator 9 The appointment of a Healthcare Planner (if required) 10 Training (as and if appropriate) Issue 1.0: December 2008 Page 26 of 52

27 Section 3.0 Scheme Launch Launch workshop Establishing the project team Developing a joint action plan Note: NHS Clients may have Project Governance / Procedures which should be implemented for Projects / Works Programmes. The following section is an example of structures which have been adopted under Procure 21 in England and NHS Clients may wish to consider this type of approach on projects. Introduction This section initially explains the purpose and outcomes of the Launch workshop. This is a one day event which brings together all key parties and stakeholders within the project. The Launch workshop serves as a formal start to the project and, very importantly, the relationship between all those involved in its development and delivery. Launch workshop The Launch Workshop is a formal launch to the project. All parties involved in the project are involved in a one day workshop. The workshop allows the team to build relationships and develop mutual objectives for the project. Outcomes of the workshop, recorded in a workshop report, typically include: Team structure Defined project objectives Charter Communication strategy Meeting structure and dates Relevant actions plans A clear understanding of the clinical need/ drivers The workshop can be organised with the help of the Frameworks Scotland Capital Project Advisor who is able to suggest a facilitator for the event. Issue 1.0: December 2008 Page 27 of 52

28 Typical attendees include- Project Director, Project Manager, Cost Advisor, estates staff, clinicians, patient user groups, executive board members, the PSCP, second tier supply chain members, specialist sub-contractors/ suppliers and construction professionals. The Launch workshop serves as an important event in the life cycle of the Frameworks Scotland project it promotes development of working relationships/ protocols and, very importantly, helps to ensure that close and effective working relationships are forged. Project Team A collaborative approach allows traditional barriers between organisations to be broken down and enables teams to work more effectively and a Project Team should be structured to encourage this. Careful consideration should be given to the composition of the team. On similar projects the co-location of the client and PSCP teams has been achieved and facilitates greater integration of the respective teams. The following generic (Principals and Core Group) structure is indicative and NHS Clients should tailor their requirements for each Frameworks Scotland project: Figure 7: Integrated Team structure Principals Group Issue 1.0: December 2008 Page 28 of 52

29 The Principals Group typically consists of: The Project Director, A senior director from the PSCP (e.g. Framework Director), and; A senior clinician/ end user. Core Group A Core Group typically consists of: The Project Manager (representing the NHS Client), The Contractor (representing the supply chain), and; A clinician/ end user (directly affected by the works). The Principals Group, focussed on strategic issues, will receive regular updates from the Core Group (typically monthly) and make overall decisions about how best to manage the relationship. The Core Group are focussed on delivery and the day-to-day management of the contract. They will be constantly reviewing the programme, cost projections and ensuring that their decisions are well founded. They should be supported by a number of Task Teams who perform functional duties e.g. design development, end users, commercial management, commissioning and infection control. Task Teams The Task Teams provide technical support and opinion to the Core Group and should provide update reports on a monthly basis. The Core Group, in turn, reports overall progress to the Principals Group. The reporting from Core Group to Principals Group should focus on strategic issues (the main focus of the Principals Group) and raise any key risks to overall delivery e.g. lack of funds or time. The names of the groups may vary or be altered but the mechanism should remain the same. Project Board The dotted line to the Project Board (or NHS Client Board) shows how some NHS Clients can develop this further and may still require a further tier consisting solely of NHS Client representatives. Issue 1.0: December 2008 Page 29 of 52

30 Integrated Team Key features of the collaborative working integration within the team can include: A team structure which facilitates collaborative working More effective decision making A defined communication plan e.g. rolling plan of meetings (with standard agendas) Ability to make decisions at all levels Clear roles and responsibilities This team approach also helps support the use of the Contract (NEC3, Option C) dealing with Early Warnings and agreeing the impact of Compensation Events in a timely manner. On larger/ more complex Frameworks Scotland projects it may prove beneficial to appoint a Clinical lead to represent a number of clinicians/ end users. This helps serve as a single point of contact and ensures that decisions are channelled through a key individual as opposed to piecemeal consultation. The clinical lead will be responsible for ensuring that adequate consultation does occur. It is suggested that the team structure should be discussed at the Launch workshop which allows all members of the team to comment and agree on its structure. Situations where the PSCP has been awarded more than one contract could mean that more than one Core Group is in existence. On such projects the Principals Group would remain focussed on the achievement of strategic objectives and manage a number of Core Groups. This is illustrated in Figure 8. Figure 8: Multiple project structure: The Task Teams may still be aligned to a single Core Group or may, to maximise resource, provide technical support across a number of Core Groups. Issue 1.0: December 2008 Page 30 of 52

31 The focus of the Principals Group should shift from one of managing a single Core Group to managing multiple Core Groups. Issues such as the sharing of best practice and consistency of service will feature more heavily on multiple Frameworks Scotland projects. Developing a joint action plan As an outcome of the Launch workshop (or as a development shortly afterwards) the integrated team should form a joint action plan. The purpose of this joint action plan is to take the team from the current position to the point where the Contract (NEC3, Option C) can be signed. This should be as soon as practically possible. Once in place, the joint action plan can be monitored. Progress should be reported by the Core Group to the Principals Group. If there are risks or slippages in the joint action plan then remedial actions will be required. It is important that the team deliver this short term action plan and move into the project development phase as soon as practically possible. Issue 1.0: December 2008 Page 31 of 52

32 Section checklist This section should have resulted in the following outcomes/ actions: 1 Further consultation with the HFS Capital Projects Advisor (if required) 2 Successful completion of the Frameworks Scotland Launch Workshop 3 An established project team 4 The development of a joint action plan leading up to an agreed contract signing date Issue 1.0: December 2008 Page 32 of 52

33 Section 4.0 Scheme Development Project Development Use of the Contract Agreeing the Target Price Introduction Scheme development using the Frameworks Scotland process should be contained within a relatively short timescale compared to traditional tendering. Any potential programme benefits will be affected by the timing of a PSCP introduction to the project. Irrespective of entry point scheme development is a critical stage in any project. The Frameworks Scotland process provides for the agreement and recording of detailed action plans. These are incorporated into the Contract (NEC3, Option C) by means of detailed requirements in the Works Information and establishing a realistic programme for execution the Accepted Programme. These form the cornerstone of project management for each phase. The style of Frameworks Scotland and the scheme contract promotes the use of particular project management techniques. These are also applied to formulate the Target Price. The Target Price needs to be validated to ensure that costs are in line with expected norms and represent value for money. Project development A key benefit of Frameworks Scotland is its flexibility an NHS Client may engage the process at any stage within the business planning stages. The extent of project development with the PSCP will therefore depend on when the NHS client has selected the PSCP. This could range from Pre-IA or as late as following OBC approval. The timing of PSCP selection should be determined at the outset of the process. It is important to note that the NHS Client will still need to conform to the recognised approval stages for managing capital projects the Scottish Capital Investment Manual (SCIM) including relevant supplementary guidance - and OGC Gateway Approval guidance should be used where applicable. Issue 1.0: December 2008 Page 33 of 52

34 Potential PSCP entry points / Use of Frameworks Scotland In summary, the approval stages are illustrated as follows: Initial Agreement (IA) Outline Business Case (OBC) Full Business Case (FBC) Appointed Stakeholder approval Prerequisites: Project Director NHS Board Approvals SGHD Approvals if relevant Project Team Clinical Working Groups Outline Planning Approval Levels of delegated authority Project Initiation Document (PID) Constituents: Strategic context Preferred option Full review of previous business cases Health Service need Formulation of options Affordability Cost effectiveness Value for money Improvement in service quality Detailed specification of the functional contents Risk management strategy Project management approach Timetable Flexibility Benefits realisation plan A robust Estates strategy Robustness Financially viable A plan for evaluation of the project Estates strategy Design proposals Figure 9: Summary of NHSScotland approval stages The Frameworks Scotland aim is that the design is developed by the PSCP in collaboration and ongoing consultation with the NHS Client. This ensures that the design, cost and programme are all agreed as early as possible in the project delivery process. It also provides the NHS Client with a high level of predictability as to the Completion Date, out-turn cost and confidence that the design meets the clinical needs that initiated the project. Issue 1.0: December 2008 Page 34 of 52

35 Project development and use of the Template Contract needs to conform with the relevant approval stages (IA, OBC, FBC). The PSCP s commercial rates and profit levels for these duties are predetermined as part of the framework agreement. As each Stage of the contract is agreed, the PSCP is then contracted to deliver the agreed list of deliverables in accordance with an agreed programme and within a given cost. Any risks or changes to this are tightly controlled by the contract procedures (explained in more detail in section 4.3). This is an important feature of the project development phase and provides the NHS Client with certainty of delivery. It is important that the team develops a joint action plan, broken down into the sequential stages, to ensure that project development is controlled and monitored. Close liaison with clinicians and end users is vital during project development. Frameworks Scotland, through the contract procedures and requirements identify this obligation and provides for milestone reviews and user group attendance at workshops and design policy meetings; all of which should be identified in the project programme. The contract is the NEC3 Engineering and Construction Contract, Option C: Target contract with activity schedule June 2005 (with amendments June 2006). This has been adopted for use as the basis of all Frameworks Scotland project specific contract documents. It is in general use in the construction industry by many major public and private sector clients. Use of the Contract (NEC3, Option C) A template contract has been prepared for use on Frameworks Scotland based on the options contained within the NEC3 Engineering and Construction Contract, Option C: Target contract with activity schedule June 2005 (with amendments June 2006). The template contract contains a number of proactive measures that support team working and project development. An overall contract is entered into at commencement of the PSCP s appointment following agreement of a Priced Activity Schedule and Accepted Programme. PSCP entry into each of the business case stages following appointment is controlled by a Price and programme submission for acceptance by the NHS Client (Employer) (IA, OBC, FBC and Construction - these are referred to as Stages 1 to 4 respectively). Structure of the contract: The NEC Contract is intended to be simple to administer: Issue 1.0: December 2008 Page 35 of 52

36 easy to understand; written in plain English, and; well structured. It is also recognised to be a stimulus to good project management and to assist in resolving problems effectively. It incorporates: Early Warning notices to enable avoidance and/or proactive and economic resolution of difficulties; a resource led programme which is updated and submitted for acceptance by the PSCP at least monthly; early agreement of variations (referred to as Compensation Events) by conforming to the contract time lines for submission and acceptance. The contract therefore supports the principles, culture and ethos of Frameworks Scotland. Improvements to the contract: A number of alterations have been made to the standard contract in order to tailor it to the requirements of Frameworks Scotland. Key alterations include: cash flow forecasts regularly updated by the PSCP and related to the programme (from the NHS Client s perspective providing a positive basis for finance planning); payment of accrued costs to the supply chain; gain share potential for Client and the PSCP (but overspend of the final target is funded by the PSCP); an improved definition of Defined Cost. Document Title Contract Template Works Information Template Site Information Template CAT Pro-formas Use A comprehensive template containing contract options relevant to Frameworks Scotland. This template provides guidance on how to complete the contract for each of the four stages (IA, OBC, FBC and Construction). Guidance on how to operate the contract, design responsibilities, acceptances, stage and Target Price procedures as well as recording the Employer s brief and PSCP responsibilities / project requirements. Guidance on how to include information relating to existing conditions and circumstances affecting the site etc. Useful pro-forma s to help administer the contract procedures in a standardized format. The pro-formas include pertinent reference to contract clauses. These avoid the need to draft numerous letters. Table 3: Summary of contract guidance Issue 1.0: December 2008 Page 36 of 52

37 Cost Advisors should be well versed in the application of the Contract (NEC3, Option C) and provide guidance on both its completion and use. Roles and responsibilities under the NEC contract: These are outlined in Section 2 and more detailed information relating to Scopes of Service, Duties and Appointment conditions is available from HFS. Agreeing the Target Price The Target Price is the agreed estimate of price between the NHS Client and the PSCP for the construction works. This section explains how the Target Price is agreed. The explanation is broken down into two halves: When the Target Price is agreed i.e. the timing How the Target Price is built i.e. the building blocks When to agree the Target Price The Target Price should be agreed under Frameworks Scotland as part of the Stage 3 duties i.e. at FBC. This is based on the premise that a more accurate Target Price will be established if it is based upon a substantially completed design. In addition to this, the construction works as defined under Stage 4 of the Contract should not commence until the Target Price is agreed and Stage 4 of the Contract is signed. Note: This does not prevent enabling works being undertaken as they can be defined as part of the Stage 3 duties. Good practice also suggests that a number of activities need to occur before the Target Price can be successfully agreed: The design needs to be signed off by the NHS Client; All innovation needs to be incorporated into the Target Price (this ensures that the NHS Client obtains value-for-money); The Target Price should be based upon a substantially completed design; Joint risk management needs to occur; The Target Price agreement should identify ownership of identified risks (e.g. ground conditions, elements of the design that cannot be readily defined by the NHS Client should be highlighted and treated accordingly); The Target Price should be verified by a detailed (and resourced) construction programme, resource balanced and compatible with the Activity Schedule. Issue 1.0: December 2008 Page 37 of 52

38 The NHS Client s business case figures are initially shared with the PSCP and worked on jointly. Over time, this hopefully confirms project cost as the design develops and risks are managed out. The overhead and profit levels of the PSCP and key supply chain members have already been agreed as part of the framework selection process. This allows the team to focus on the project in hand rather than deal with commercial issues. Formal techniques such as Value and Risk Management are employed at this stage and help define the brief for the project and allocate risk in an equitable manner. How to build up the Target Price Under Frameworks Scotland the Target Price should be built up on the basis of resource, cost and time. This is a new way of working for many NHS Clients and it is therefore advisable to employ Cost Advisors with appropriate experience. Issue 1.0: December 2008 Page 38 of 52

39 Figure 10: Building blocks of the Target Price Issue 1.0: December 2008 Page 39 of 52

40 The Target Price will therefore incorporate: Validated subcontract prices; All of the PSCP s own work (e.g. own operatives); Identified amounts in respect of PSCP risk and client risk as Provisional Amounts; The agreed Fee percentage (overhead and profit margins); The amounts due and incurred in Stages 1-3 (IA, OBC and FBC). The Target Price represents the maximum price that the NHS Client will pay for the works unless: The scope of work is increased or decreased, which may also affect the programme and target completion date; An event occurs that would entitle the PSCP to recompense as a Compensation Event; Client risk items have to be included; The price is, therefore, exclusive of client risk, professional fees borne by the client and fixtures and equipment not included in the works cost build up. Issue 1.0: December 2008 Page 40 of 52

41 Section checklist: This section should have resulted in the following outcomes/ actions: 1 Further consultation with the HFS Capital Projects Advisor (if required) 2 Compliance with the NHS approval Stages (IA, OBC and FBC) 3 The successful completion of appropriate Stages of the Contract (Stage 1/2/ 3) 4 Completion of risk management process (at OBC stage) 5 Appropriate Review Workshops 6 Appropriate use of the Contract (NEC3, Option C) in Stages An agreed Target Price Notes: 1. It is important that PSCPs and NHS Clients enter into contract at the relevant business case development stage (i.e. 1, 2, 3 or 4) as soon as practicable. The template documents give guidance on the process and timing. 2. The principles of the contract need to be complied with, and this should not be amended in any way by the NHS Client or PSCP / PSC, in order to maximise the benefits of Frameworks Scotland (e.g. early agreement of Compensation Events, use of the Early Warnings procedure and the provision of a detailed Programme). Unlike traditional contracts the use of the NEC3 contract does not infer an adversarial relationship rather a relationship that focuses on collaborative procedures and good practice. Issue 1.0: December 2008 Page 41 of 52

42 Section 5.0 Construction and Handover Frameworks Scotland - The Guide Managing the construction stage Use of the Contract Management techniques Introduction The construction stage (Stage 4 of the Contract) requires the maintenance of management techniques and procedures already outlined within the Frameworks Scotland Guide. The Contract (NEC3, Option C) will be used throughout the process. If the previous Stages (1-3) have been completed successfully then the parameters of project delivery should be clearly defined and measurable. The contract and contract templates contain detailed procedures for dealing with any likely risks and managing change. Managing the construction stage The Contract (NEC3, Option C) is used in the formulation of the Stage 4 (construction and delivery process) Target Price. This should in turn be based upon a substantially complete design, a detailed programme and a confirmed set of deliverables (Works Information). The parameters of the project should be clearly established and these should form the cornerstone of project management on the project. In practice, changes may be required to the Works Information deliverables, including the Contractor s design and ongoing consultation may be required with clinicians/ end users. Risks may also occur that had not been accounted for. Irrespective of the events that occur after signing the Stage 4 agreement (construction and delivery process), continued adherence to the Contract (NEC3, Option C) should remain the focus for the construction team. The risk management, programming and change management procedures will ensure that issues are dealt with in a timely and equitable manner. Effective use of the CAT (Contract Administration Toolkit) communication, instruction, submission and acceptance pro-forma will also ensure that an audit trail is maintained and that administration costs are kept to a minimum. Issue 1.0: December 2008 Page 42 of 52

43 Use of the Contract (NEC3, Option C) Frameworks Scotland - The Guide It is important to re-emphasise the ongoing use of the Contract (NEC3, Option C) during this stage. In addition to this, it is important to mention the following areas of project management which have direct relevance to the contract: Accepted programme; Cost control; Managing the gain share ; Open-book audit. Cost Control The Contract template (NEC3, Option C) has been specifically structured for Frameworks Scotland to provide a more predictable cash flow for the NHS Client (via Z clauses 7 and 8). The Target Price agreement is based on what is referred to as an Activity Schedule. This is a programme related price list of key activities/ items of work representing the amount of the Target Price. The Contract places great importance on having a detailed programme at the outset of the contract (clause 31.2) and for this to be maintained by the PSCP and updated each month for acceptance by the Project Manager throughout the life of the project. The Target Price (broken down into an Activity Schedule) may therefore be easily aligned to the detailed resource plan (further broken down into labour, plant and materials) and a cumulative value curve established (highlighted in blue on the diagram). The monthly updates record progress on site including any changes by Compensation Events and measures to contain delay. An example is provided in Figure 11. Issue 1.0: December 2008 Page 43 of 52

44 Target Price Figure 11: Cost control mechanism under Frameworks Scotland The Target price becomes particularly relevant if a gain share is predicted and the NHS Client wishes to reinvest in the project. The cumulative value is then plotted against the cumulative cost curve to track commercial progress (in this case predicting a gain share at Final Account stage). Under Frameworks Scotland if the cumulative cost exceeds the cumulative value then only the cumulative value is paid by the NHS Client (example given at Valuation 1). Conversely, if the cumulative cost is less than the cumulative value then only the cumulative cost is paid (example given at Valuation 8). In both cases the NHS Client pays the lesser of the two. It is important that an equitable breakdown and spend profile of the Target Price is agreed. If the breakdown is inaccurate then the PSCP will be disadvantaged and/or the NHS Client will have an unpredictable cash flow. A graphical representation of the finances (as outlined in Figure 11) will also prove invaluable to the team in order to help track and control expenditure. This becomes particularly relevant if a gain share is predicted and the NHS Client wishes to reinvest in the project. Issue 1.0: December 2008 Page 44 of 52

45 Managing the gain share The PSCP is paid Defined Cost plus Fee % (i.e. labour, plant, materials and subcontract work) but only up to the ceiling price of the Target Price. If savings are generated against the Target Price then these are shared on a 50/50 basis. There is provision in the contract so that the NHS Client may reinvest these savings back into the project e.g. to improve patient and staff facilities or furnishings. If the amount of savings exceeds 5% of the Target Price at completion the gain share is only calculated on the 5% saving e.g. 2.5% maximum gain share to the PSCP. The remaining saving reverts to the NHS Client. Figure 12 illustrates the relationship between the final Target Price and the audited final Price for Work Done. The Target Price will alter throughout the course of the contract to account for variations (Compensation Events). At final account stage the final Target Price is then compared against the audited cost (Final Price for the Work Done) and the gain share calculated. The amended Target Price (left hand column) is compared against the audited Defined Cost and Fee. The middle and far right hand columns represent two Final Account scenarios. The middle column reflects a gain share where Final Price is less than the Target Price any gain is shared on a 50/50 basis. If the cost exceeds the Target Price without compensation events (variations) then the PSCP absorbs any overspend (right hand column of Figure 12). Again, this would typically infer an inaccurate Target Price or inefficient working by the PSCP (e.g. having to correct defective work or inefficient management of resources) or an underestimation by the PSCP of his risks in the contract. Issue 1.0: December 2008 Page 45 of 52

46 Figure 12: Example final account Open-book audit A central audit of the PSCPs and PSCs has already been undertaken by the Frameworks Scotland team. This covers the organisation s internal company procedures. For further details of the Frameworks Scotland audit requirements contact HFS. Frameworks Scotland Audit Local NHS Client audits will still be required to ensure that the amounts paid to the PSCP are accurate. This is a role typically undertaken by the Cost Advisor on a monthly basis in support of the Project Manager s assessment and certificate for payment. The open book principles under Frameworks Scotland are not just restricted to the financial aspects the ethos is carried through to all areas of PSCP working e.g. subcontractor procurement and risk management. Issue 1.0: December 2008 Page 46 of 52