NHS Trust Development Authority

Capital Regime and Investment Business Case Approvals Guidance for NHS Trusts

NHS Trust Development Authority

Capital Regime and Investment Business Case Approvals Guidance for NHS Trusts

Table of contents

Table of Contents Page No.

Section 1 Context ................................................................................................ 1

Overarching principles ....................................................................... 1

Section 2 Capital regime and funding sources ................................................. 1

Background ......................................................................................... 1

Capital planning general principles .................................................. 2

Capital investment funding sources general principles .................. 2

Internally generated cash ................................................................... 3

External financing ............................................................................... 3

NHS Trust Limits Guidance – Capital Resource Limits (CRL), External Financing Limits (EFL) and Net Borrowing Requirements (NBR) ...........................................................................

5

Retaining cash at year-end ................................................................ 9

NHS Trust Capital Investment Loans ................................................ 10

Planning for Capital Investment Loans ............................................. 11

Loan term ............................................................................................ 12

Loan facility agreement and interest rate ......................................... 12

Drawing of loan ................................................................................... 13

Repayments of interest and principal ............................................... 13

Failure to meet repayments ............................................................... 13

Overpayments ..................................................................................... 13

Effect on PDC dividend payments .................................................... 14

Full and final settlement ..................................................................... 14

Section 3 Delegated limits for Capital Investment and Property Transactions ....................................................................................... 14

Section 4 Capital Investment and Property Transactions Business Case Approvals Process ............................................................................. 16

NHS TDA Business Case Approval Process .................................... 19

Timetable for capital investment and property transaction business cases ................................................................................... 21

Section 5 Capital planning and reporting requirements .................................. 22

Planning documentation .................................................................... 22

Section 6 General and other issues ................................................................... 23

Health Gateway Reviews .................................................................... 23

Post project evaluation ...................................................................... 25

Major Projects Authority .................................................................... 26

Appendix 1 Delegated limits for Capital Investment definitions and further technical guidance.............................................................................. 27

Appendix 2 Business Case Checklist (Version 1: 18 January 2013) .................. 30

1 of 46

1. Context

Overarching principles

1.1 The NHS Trust Development Authority (NHS TDA) has a single ambition: to support NHS Trusts to deliver high quality, sustainable services in the communities they serve. That commitment will help to ensure that patients who rely on hospital services, community services, ambulance services and mental health care currently provided by NHS Trusts up and down the country will be able to demand the same high quality services that are now common place in the NHS.

1.2 Accessing capital will be key to improving services and infrastructure for NHS Trusts, particularly for those NHS Trusts where access to capital has been limited in the past. The following guidance attempts to set out overarching guidance relating to:

• capital regime and capital funding sources;

• delegated limits for capital investment and property transactions;

• capital investment and property transactions business case approvals process;

• capital planning and reporting requirements.

1.3 The overall style of the financial regime for NHS Trusts will, wherever possible, reflect the NHS Foundation Trust (FT) regime in order to both capture the financial incentives offered by the FT regime and to help NHS Trusts achieve the transition to FT status. Where ever possible the principle of earned autonomy will apply as it would if a NHS Trust were a FT. The regime used by the NHS TDA captures a number of the key freedoms of the FT regime, but retains elements of NHS TDA control (e.g. spending limits) as deemed appropriate for existing NHS Trusts.

2. Capital regime and funding sources

Background

2.1 The NHS TDA capital regime is based upon bottom up capital planning and makes available a variety of types of financing including interest bearing loans as the primary source of additional financing for capital investment.

2.2 The regime incorporates elements of existing Department of Health (DH) guidance and has been developed within the principles set out in ‘Managing Public Money’ published by HM Treasury in May 2012. In particular issues on the drawing down and use of cash can be found at http://www.hm-treasury.gov.uk/psr_mpm_index.htm. In accordance with NHS legislation it also includes NHS TDA specific guidance around capital business case approvals, delegated limits and the capital planning and monitoring process.

2 of 46

2.3 This section of the guidance consolidates and builds on existing guidance on capital investment issued by the DH.

2.4 This guidance will replace all previous guidance relating to NHS Trusts put in place by the DH or Strategic Health Authority clusters with effect from 1 April 2013. Capital planning general principles

2.5 NHS Trust capital planning will continue to be a locally driven process and NHS Trusts, more than ever, will be required to draw up capital investment plans and associated capital cash management plans in line with the requirements of their local population, the NHS Trusts own local investment priorities and affordability.

2.6 Capital plans will need to be agreed with the NHS TDA. In agreeing NHS Trust plans, the NHS TDA will ensure that they are affordable, achievable, and in line with local and strategic priorities. Specifically, the NHS TDA will:

• undertake an analysis of capital cash management plans to ensure that they are in accordance with guidance set out in this document and the NHS TDA planning framework and any further new and relevant guidance issued;

• review requests for loans (and Public Dividend Capital (PDC) in exceptional circumstances).

2.7 The NHS TDA will work with the DH to perform a final review of affordability against the overall NHS capital programme and the total available capital resource. Should capital plans exceed available resources then the NHS TDA will work with NHS Trusts to prioritise and tailor plans accordingly.

Capital investment funding sources general principles

2.8 Under the NHS Trust capital regime, the following general principles for funding capital investments in NHS Trusts apply:

• NHS Trusts may retain internally generated cash over year end for re-investment in future years subject to the constraints set out below in paragraph 2.9;

• the primary source of funding after internally generated cash will be interest bearing loans;

• PDC will be available in a limited and rapidly reducing number of exceptional cases and this should not be included within NHS Trust plans unless a NHS Trust has prior agreement with the NHS TDA;

• NHS Trusts must not draw PDC in advance of need i.e. where the NHS Trust has flexibility to use its own internally generated capital it should ensure that this is used before exceptional PDC capital is drawn.

3 of 46

Internally generated cash

2.9 NHS Trusts are able to use the following sources of internally generated cash to fund investment:

• unspent capital cash brought forward from previous years (unspent depreciation and receipts from asset disposals);

• cash associated with the charge for depreciation in the current financial year (excluding any IFRIC 12 related depreciation);

• receipts from asset disposals (up to delegated limits);

• income and expenditure surplus (both in year and cash brought forward from earlier years);

• cash released from movement in debtor/creditor balances (although NHS Trusts must take account of Better Payment Practice Code).

External financing

Grants and donations

2.10 NHS Trusts may receive grants or donations from third parties for the purpose of capital investment. Donations and grants should be included in the cost of a scheme when deciding if a business case needs external approval and an NHS Trust will still require the business case to be signed off by the NHS TDA if the overall capital investment value (including the amount of the donation and/or grant) is outside of the NHS Trusts delegated limit.

Loans

2.11 The primary source of cash for capital investment, in addition to that financed from internal sources, is through interest bearing capital loans accessed through the NHS TDA with final approval being required by the DH. These loans should be identified in the NHS Trusts financial plans and agreed with the NHS TDA who will subsequently agree them with the DH.

2.12 Loans are considered using the Prudential Borrowing Assessment (PBA) and the NHS Trusts Long Term Financial Model (LTFM). The PBA enables the terms of a prospective loan and the projected financial position of the NHS Trust to be considered across a five year period and in this way reviews the impact and affordability of debt service on a NHS Trusts income and expenditure and cashflow projections. PBAs should also be consistent with the LTFM of the NHS Trust, where these are available, which is expected to be in most cases.

2.13 Further details of capital investment loans and how they are accessed can be found in the NHS financing document.

4 of 46

Exceptional Public Dividend Capital (PDC)

2.14 Under the capital regime the primary source of additional capital is through loans, however, in exceptional circumstances, the NHS TDA may approach the DH to provide financing in the form of PDC.

2.15 Unlike loans, PDC has no fixed repayment period, but the NHS TDA (in conjunction with the DH) can require PDC repayments e.g. for excess capital receipts. PDC does not attract a charge directly but the assets purchased attract a capital charge (currently 3.5% per annum) on their net book value (NBV) (under a loans regime the value of the asset will be offset by the outstanding principal value of the loan).

2.16 The NHS TDA will consider and put forward cases for exceptional PDC to the DH where a NHS Trust has failed a PBA and/or where a major capital scheme or restructuring forms part of the financial recovery of the NHS Trust or where the proposal is demonstrated to be of benefit to the wider health economy.

2.17 Any requests for exceptional PDC should be agreed with the NHS TDA before they are included in a NHS Trusts plans. NHS Trusts will be asked to provide further supporting evidence to the NHS TDA before exceptional PDC can be agreed and the NHS TDA will review these requests on a case by case basis.

2.18 The NHS TDA will review the policy on providing exceptional PDC on an annual basis.

2.19 In exceptional circumstances the NHS TDA will consider part loan and part exceptional PDC solutions where major capital schemes are part of the financial recovery of the NHS Trust.

Central programmes

2.20 Central programme capital has been available historically to NHS Trusts to provide support for central initiatives supported by the DH and there may be opportunities for NHS Trusts to access central programme capital going forward.

2.21 If central programme capital is allocated NHS Trusts will receive Capital Resource Limit (CRL) cover for any central programme budget allocations. In addition, PDC will be provided to NHS Trusts for central programme budgets where internally generated capital cash as identified in paragraph 2.9 is already fully committed.

2.22 NHS Trusts should not draw down PDC when internally generated capital cash will be available during the year. If there is an in-year timing difference between the need to incur expenditure covered by a central programme and the availability of internally generated capital cash, the NHS TDA will consider supporting a case for providing temporary PDC.

5 of 46

2.23 It remains the case that any PDC drawn and unspent in one year will need to be repaid (or offset against any new allocation of PDC) in the following year. PDC will not be considered as spent until internal sources of capital cash (depreciation and asset disposals including carry forward) have been fully utilised. The level of repayment required will be calculated annually on the basis of final account.

2.24 Central programme budgets provide funding only for the year in which they are allocated. If a scheme slips there can be no guarantee that funding or CRL cover will be made available in subsequent years.

2.25 NHS Trusts should identify any such slippage in central programmes as part of the planning round. Affordability will be assessed alongside other priorities.

Other sources of capital funding

2.26 NHS Trusts are able to pursue Private Finance Initiative (PFI and PF2, the governments new approach to private finance initiative) and Local Improvement Financial Trust (LIFT) financing solutions in line with the capital business case approvals process and delegated limits described within this document.

NHS Trust Limits Guidance – Capital Resource Limits (CRL), External Financing Limits (EFL) and Net Borrowing Requirements (NBR)

General

2.27 This section gives further guidance and background on NHS Trust limits.

2.28 The EFL encompasses cash provided by DH (PDC and loans), planned internally generated cash, and cash from external sources (e.g. finance leases). The NBR sets a sub-limit within the EFL, and relates to the cash available from DH, and it is this measure that is now used to manage the issue and repayment of cash to and from NHS Trusts.

Capital Resource Limits (CRL)

2.29 The CRL controls the amount of capital expenditure a NHS Trust may incur in a year. NHS Trusts require CRL to cover all capital expenditure and must not incur expenditure in excess of this limit.

2.30 Each NHS Trust will be allocated an initial CRL based on planned capital expenditure. This will change during the year if additional capital resources are allocated. Additionally, NHS Trusts credit the carrying value of asset disposals to CRLs which allows them to use the proceeds of such disposals to incur capital expenditure.

2.31 CRLs can be allocated to NHS Trusts in two ways:

• as part of initial limits where a NHS Trusts initial CRL is based on agreed plans. This will include all expenditure financed from internally generated sources excluding disposals, capital grants and donations.

6 of 46

• CRL will be allocated in-year for additional expenditure as agreed with the NHS TDA e.g. as financing through loans or PDC is agreed or through the allocation of central programme budgets.

2.32 NHS Trusts must not overspend against CRL. This is a regulatory and departmental duty. In addition, significant under spending would be considered as an indicator of poor financial planning. Forecast under-spends should be identified and flagged to the NHS TDA during the year and no later than Q2. The NHS TDA in conjunction with the DH may adjust CRLs accordingly.

2.33 There is no carry forward of underspends of CRL. CRL will be set each year for NHS Trusts based on agreed spending plans for that year.

External Financing Limit (EFL)

2.34 EFL is a control on net cash flows of NHS Trusts. It sets a limit on the level of cash that a NHS Trust may either:

• draw from either external sources or its own cash reserves – positive EFL;

• repay to external sources or increase cash reserves - negative EFL.

External Financing Requirement (EFR)

2.35 In essence, the External Financing Requirement (EFR) is the difference between the cash a NHS Trust plans to spend in a year and what it can generate through its operations. EFR can be positive or negative. A positive EFR indicates a net requirement for cash and a negative EFR indicates that a NHS Trust plans to spend less cash overall than it will generate.

2.36 EFL performance is measured against the EFR as discussed below.

EFL performance

2.37 EFL performance is measured by comparing EFL against EFR for the full year.

2.38 If the EFR exceeds the EFL this is an EFL overshoot. NHS Trusts must not overshoot their EFL. This is a regulatory and departmental duty.

2.39 Undershooting the EFL (i.e. the EFR is lower that the EFL) should be avoided but is considered less serious, however significant undershoots may be considered as an indication of weak financial planning.

EFL at plan

2.40 At plan stage, the EFL is set to equal the EFR.

2.41 EFLs may be positive or negative. A negative EFL does not indicate that a NHS Trust must make a PDC repayment; rather it indicates that the NHS Trust is generating a net inflow of cash from operating/investing activities.

7 of 46

2.42 Equally a positive EFL does not indicate that a NHS Trust is eligible for PDC, simply that it has a net cash requirement which may be met through its own reserves, loans or PDC.

2.43 PDC repayments and allocations will be identified and actioned through adjustments to the net borrowing requirement PDC (NBR PDCs). This is explained in paragraphs 2.54 to 2.56.

Initial limits

2.44 Initial EFLs are set based on EFR from agreed plan, but excluding spend on capital which requires external financing in the form of capital investment loans or PDC. EFL is allocated alongside CRL when these elements of financing are agreed.

2.45 Further adjustments to initial EFLs will only be made where there is an impact on the EFR.

EFL under/over shoots

2.46 In simple terms an EFL under or over shoot will occur where there is a variation from plan that affects the external financing requirement (e.g. any changes in net cashflow for operating activities or investing activities). If a NHS Trust believes these may result in an EFL overshoot they should speak to the NHS TDA.

Changes to EFL

2.47 EFLs may need to change during the year. This may be either because of central allocations made for capital investment (see above) or because of changes in local circumstances. Changes to EFL need to be notified to the NHS TDA and can only be actioned by the DH. Where a NHS Trust believes it will overshoot its EFL it should first consider whether this could be managed locally and contact the NHS TDA to discuss options. The NHS TDA may then need to discuss the EFL adjustment with the DH. DH will not normally consider requests to change EFL where NHS Trusts believe they will undershoot.

2.48 Initial limits and any subsequent changes to limits will be identified through monthly limits reports to NHS Trusts.

EFL variations examples

2.49 Example 1 - Working capital:

• a NHS Trust suffers a reduced cash flow in-year from operating activities (i.e. reduced income or increased cost). This will result in an increased EFR and with no adjustment this could result in an EFL overshoot. A NHS Trust then has the following two options to consider:

* if the NHS Trust has sufficient in-year surplus or cash reserves from previous years, then the cash shortfall could be covered from the NHS Trusts own cash reserves. However, an EFL overshoot would still occur. In such cases, NHS Trusts will need

8 of 46

to come to the NHS TDA to request an EFL adjustment. The requirement for such an EFL adjustment would be considered as indication of a worsening of financial position and so would flag a performance issue to the NHS TDA. Subject to this review an EFL adjustment would then be forwarded to the DH by the NHS TDA;

* the NHS Trust could apply for a working capital loan to address the cash shortfall. An application for an unplanned loan could be made to the NHS TDA and would flag there was a performance issue that needed to be addressed. If the loan were approved the EFL would be adjusted accordingly.

2.50 Example 2 - Capital investment:

• a NHS Trust fails to obtain capital financing in the form of PDC. This may result in the following:

∗ the investment may not happen. As the initial EFL will not include this investment pending agreement of PDC then there is no variation from EFL;

∗ the NHS Trust may take a capital investment loan to cover the shortfall in PDC. EFL will be allocated alongside the loan;

∗ the NHS Trust uses cash from other sources (e.g. in-year revenue or reserves) to finance the expenditure. This would result in an EFL overshoot if the EFL is not adjusted. In this situation the NHS Trust should make a case to the NHS TDA for additional EFL cover.

2.51 These are two examples of how EFL variations may occur in-year and actions that could be taken. There may be other circumstances in which EFL variations may occur and NHS Trusts need to contact the NHS TDA if that is the case.

Net Borrowing Requirements (NBR)

2.52 The NBR is the level of cash that a NHS Trust may draw from or must repay to DH.

2.53 There are two separate elements to NBR: NBR PDC and NBR loans that determine the level of PDC and loan principal to be drawn or repaid respectively. These limits are managed separately.

Initial limits

2.54 Both NBR PDC and NBR loans are set to zero in initial limits. This reflects the rules on NHS Trust cash management where NHS Trusts are allowed to retain unspent capital cash. While it is expected that some NHS Trusts will have excess capital cash, a negative NBR will not be set as this would incorrectly indicate the requirement for a repayment.

9 of 46

2.55 All subsequent transactions (excluding the issue and repayment of temporary PDC) will be reflected in changes to NHS Trust limits. For example:

• allocation of PDC associated with a capital central programme will result in a positive NBR PDC limit adjustment;

• drawing against an agreed working capital or capital investment loan will result in a positive NBR limit adjustment;

• repayments against a working capital or capital investment loan will result in a negative NBR loan adjustment.

2.56 In the case of NBR PDC, adjustments to limits will impact a NHS Trusts net borrowing capacity. There is a limit of PDC against which a NHS Trust may draw. This limit will equal the NBR plus any repayments of PDC, less any advances already taken. If this results in a negative borrowing capacity then a repayment is required, if it is positive then the NHS Trust may draw PDC.

Drawing cash in excess of need

2.57 Any allocation of NBR PDC for capital investment will be dependent on a NHS Trust demonstrating in its capital cash management plan that it has fully consumed all internally generated capital cash (i.e. from depreciation and assets disposals) for the current year plus any unspent capital cash from earlier years. All such internal capital cash must be consumed before any allocation of NBR PDC will be actioned. This will be agreed as part of the planning process.

2.58 If capital expenditure slips then this is likely to reduce the eligibility for PDC as internal capital cash is freed up. In such cases, NHS Trusts should under draw PDC appropriate to the level of slippage.

2.59 If NHS Trusts overdraw PDC in a given year e.g. draw more PDC than is required to finance capital spending after all other internal capital cash is used, then they will be required to repay the overdrawn PDC as soon as possible and no later than in the following financial year.

Retaining cash at year-end

2.60 To allow NHS Trusts to operate properly, similar flexibilities to FTs on retaining cash from one year to the next will continue. NHS Trusts are able to:

• retain revenue cash generated through revenue surpluses for revenue spending in future years (subject to compliance with statutory breakeven duty) or capital investment;

• unspent cash associated with the charge for depreciation may be retained for capital investment only;

• retain capital receipts to finance capital investment in future years. Where the sums are immaterial, NHS Trusts will be able to retain the cash locally. Where the sums are material NHS Trusts need to refer to

10 of 46

delegated limits for approval and approach the NHS TDA where amounts exceed delegated approval levels. Where amounts exceed delegated approval limits the NHS TDA/DH will take a PDC repayment and CRL reduction in the year of the disposal, and re-provide equivalent PDC and CRL for planned capital investment within the current three year allocation/settlement period where internally generated capital cash is fully utilised.

2.61 Cash balances must be retained in NHS Trust Citibank accounts, not commercial accounts, and NHS Trusts must ensure that investment rules are followed.

2.62 These guidelines maintain a degree of equity with the FT regime in ensuring that the benefit of the capital receipt is not lost to the NHS Trust, whilst ensuring that the spending power is not lost to other parts of the NHS in the intervening period. This will allow NHS Trusts to plan their capital investment in a similar way to FTs.

2.63 NHS Trusts should not draw down PDC unless there is a need for financing above internally generated capital cash (including that from earlier years). Any PDC drawn and unspent in a particular year will need to be repaid. PDC will not be considered as spent until internal sources of capital cash (depreciation and asset disposals) have been fully utilised. Similarly, proceeds from asset disposals will only be considered as being spent once depreciation has been fully utilised.

NHS Trust Capital Investment Loans

2.64 This section gives further guidance and background on NHS Capital Investment Loans (CILs). NHS Trusts are now able to retain cash generated through operations (principally depreciation) for reinvestment, and, subject to demonstration of ability to service debt as assessed by the PBA set out in paragraph 2.12, they can borrow to finance further capital investment. CILs form an important part of the NHS Trust capital regime going forward:

• National Loan Fund (NLF) interest rates are used (paragraph 2.78).

• loans are made at a fixed rate of interest for the loan period;

• repayments are made twice yearly and are made up of equal instalments of principal (paragraphs 2.86 to 2.88).

2.65 A CIL facility can accommodate multiple drawdowns within a spending review period to match staged progress of a capital programme.

2.66 Repayments of principal can be made from capital or revenue cash but need to be identified in a NHS Trusts capital cash management plan as submitted to the NHS TDA. This means that both the cash received from an asset sale and cash associated with the charge for depreciation can be used for repayments.

2.67 The NHS TDA will fulfil the assurance role in the approval of CILs and, working with NHS Trusts, will provide assurance that:

11 of 46

• the loan is required to fund capital expenditure;

• the loan is affordable in terms of cash to meet principal repayments;

• the loan is affordable in terms of revenue to cover interest charges and additional running costs;

• an appropriate term for the loan has been chosen, taking account of the life of the asset(s) the loan is to fund;

• the NHS Trusts plans for this year and beyond take into account the impact of the repayments of this loan on the financing available to fund future capital expenditure.

Planning for Capital Investment Loans

2.68 Where a NHS Trust has long term financial plans contained in a LTFM, which is expected to be in most cases, it is anticipated that LTFMs will include planned CILs. In addition loan applications for planned loans (of all types) should be included within NHS Trust planning forms (Trust Financial Management System) submitted to the NHS TDA in January to early April of each financial year. A central database of all planned loans will be collated from NHS Trust plan submissions and will be used to inform negotiations with the DH around loan requirements for forthcoming financial years. NHS Trusts should not automatically assume that loans will be approved and therefore should not incur expenditure in advance of loan approval. If loans for the NHS Trust sector exceed DH funding availability the NHS TDA will work with DH to review affordability. The NHS TDA will manage NHS Trust loans within the overall affordability envelope.

2.69 Unplanned loan requests that emerge in-year will need to be discussed with the NHS TDA Corporate Finance Team and Business Support as to how NHS Trusts should proceed and as to whether these loans can be afforded within the overall funding envelope given that they will not have been flagged at plan stage. The NHS TDA Corporate Finance Team will advise as to whether these loans should be included in a Trusts Financial Management System (TFMS) returns.

2.70 Should it become clear at the time of planning for the future financial year that the NHS Trust is going to need additional cash to service their forthcoming capital plan, then the NHS Trust should apply for a CIL to address the shortfall. NHS Trusts should discuss the need for a CIL with the NHS TDA to establish support.

2.71 Where this support is given, the NHS Trust should identify the loan requirement in both the cashflow statement and capital cash management plan within their annual financial plan.

2.72 The NHS TDA will consider the affordability of the loan against the available PBA of the individual NHS Trust and the total capital resource available for all NHS Trusts that year. Prudential borrowing limits will be issued annually to NHS Trusts.

12 of 46

2.73 Successful applications will be notified by the DH to the NHS TDA who will contact the appropriate NHS Trust. A loan facility agreement will then need to be duly completed and authorised before the process can be completed as set out in paragraph 2.77 below.

2.74 A positive adjustment will then be made to the NHS Trusts NBR loan, the CRL and the EFL. This gives the NHS Trust the authority to draw down from the DH and spend the resource.

Loan term

2.75 The term of the loan will need to be agreed between the NHS TDA and NHS Trust. This will determine the interest rate and enable the loan agreement to be pre-populated. (Note: provisional repayment schedules can be requested to aid this decision if required). As a general rule the loan term for capital loans cannot exceed the useful economic life of the underlying asset or investment.

2.76 Once set in the agreement, the loan term cannot be changed other than where an overpayment settles the loan in full. Final repayment dates are either 15 September or 15 March each year.

Loan facility agreement and interest rate

2.77 The loan facility agreement is a legal document produced by the DH, which is populated jointly by the DH, NHS TDA and the NHS Trust seeking the CIL. It details the specifics of the loan, including the amount, the draw date, and interest rate applied to the facility. It is normally released for full population from the DH three weeks ahead of the anticipated loan being let.

2.78 The interest rate is set at the prevailing NLF rate for the day the loan facility agreement is being issued. The rate used is the Equal Instalment of Principal (EIP) rate of the Public Works Loan Board (PWLB), specific for the term of the loan. The daily NLF interest rates are available on the UK Debt Management office website at the following link:

http://www.dmo.gov.uk/documentview.aspx?docname=/PWLB/currentRates.pdf&p

2.79 Within the schedules of the agreement is a business case that must be completed by the NHS Trust and submitted to the NHS TDA. For the agreement to be considered complete, it must also have a copy of the resolution of the Board of Directors of the borrowing NHS Trust and the original pen to paper signature (in blue ink) of the NHS Trust Chief Executive or Director of Finance representing the borrower’s agreement to the loan.

2.80 It is recommended that these sensitive documents be sent by special delivery.

2.81 After examination, a duly completed loan agreement will be authorised by DH. Should any errors or omissions be identified then the NHS TDA will contact the NHS Trust immediately to resolve.

13 of 46

2.82 Two copies of the completed and verified loan agreement will be sent to the NHS TDA by special delivery within two weeks of the drawdown date. One will be retained by the NHS TDA, the other will be forwarded on to the NHS Trust.

Drawing of loan

2.83 NHS Trusts will be able to draw CIL’s on a monthly basis with effect from 1 April 2013. On a monthly basis these are likely to be on the working day closest to the 15th of the month.

2.84 However, if there is a need for funding between these dates then the NHS Trust should contact the NHS TDA in order to discuss the possibility of a Temporary Borrowing Limit (TBL). The process for accessing a TBL can be found in the NHS TDA financing guidance.

2.85 A Drawdown Request Form L2 (or forms where multiple drawdowns are a feature of the loan) is contained in the loan facility agreement, and, once completed, provides the DH Cash team with the authority to fund the NHS Trusts Citibank account.

Repayments of interest and principal

2.86 Repayments of principal and interest against the CIL are collected twice yearly, 15 September and 15 March (or the next working day). The scheduled repayment of interest is calculated daily on the reducing balance.

2.87 The first repayment falls due at the 15 September where loans are drawn in March or July, and 15 March, where they are drawn September or December.

2.88 Amounts of loan principal and interest to be recovered can be derived from the repayment schedule contained in the loan agreement. These repayments will be taken directly from NHS Trust Citibank accounts by Internal Direct Debit (IDD). However, the NHS Trusts will be reminded of the amounts to be debited from their Citibank account in the week before the payment is taken.

Failure to meet repayments

2.89 As set out in The NHS in England: The Operating Framework for 2009/10, defaulting on the terms of an existing loan, most probably by a NHS Trust moving into deficit and so not being able to make planned repayments from generated surpluses will be referred immediately to the NHS TDA.

Overpayments

2.90 The NHS Trust as borrower may, if it gives the lender (DH) not less than 14 days notice, prepay the whole or any part of any loan (being a minimum amount of £250,000), on the September repayment date of any financial year. Overpayments on the March repayment date in any financial year will only be permitted at the discretion of the DH agreed through the NHS TDA with notice being given no later than the submission of Quarter 2 TFMS forms for that financial year.

14 of 46

2.91 The overpayment of principal will be credited against the outstanding principal balance of the CIL and the remaining scheduled repayments will be revised down to accommodate this change. Please note that overpayments do not alter the outstanding term of a loan unless such an overpayment results in full and final settlement of the loan. A new repayment schedule will be made available to the NHS Trust, reflecting the new repayments.

2.92 NHS Trusts may not repay loans simply to obtain a lower loan rate i.e. if the loan rate falls NHS Trust may not take a further loan at the lower rate simply to repay the existing loan.

Effect on PDC dividend payments

2.93 PDC dividend payments are calculated upon average net relevant assets, and therefore a capital investment loan as a liability to the NHS Trust will reduce the PDC dividend payable each year by 3.5% of the average principal outstanding.

Full and final settlement

2.94 Once the loan has been settled in full, either by reaching the end of the term or via a final overpayment, then the NHS TDA and NHS Trust will receive written notification from DH that the debt has been settled in full.

3. Delegated Limits for Capital Investment and Property Transactions

3.1 The delegated limits for capital investment and property transaction approvals

in the NHS have previously been set by the DH (as described in Delegated Limits for Capital Investment published by the DH in December 2010). The setting of delegated limits post 1 April 2013 will become the responsibility of the NHS TDA, in addition to the subsequent approval of NHS Trust capital business cases up to the value delegated to the NHS TDA by the DH.

3.2 The levels of authorisation for NHS Trust capital investment and property

transactions contained within this guidance provide clarity on the levels of delegated authority NHS Trusts and the NHS TDA will have post 1 April 2013 and the process for scrutiny that needs to be applied to capital investment and property transactions prior to authorisation.

3.3 NHS Trusts will have delegated authority to approve capital investment business cases with a financial value for the proposed capital investment or property transaction up to a value of £5 million or 3% of turnover whichever is the lower. Turnover will be measured based upon the turnover of a NHS Trust within its financial accounts for the previous financial year. The NHS TDA Director of Finance will have delegated authority to approve business cases between £5 million, or 3% of turnover whichever is the lower, and up to a value of £10 million. Decisions regarding approval of business cases for capital investment and property transactions over a threshold of £10 million and up to a threshold of £25 million for NHS Trusts will be made by the NHS TDA Capital Investment Group. Decisions regarding approval of business cases for capital investment and property transactions over a threshold of

15 of 46

£25 million for NHS Trusts will be made by the NHS TDA Capital Investment Group and will require full approval by the NHS TDA Board.

3.4 The NHS TDA will have powers of approval for NHS capital business cases up to a £50 million limit delegated by the DH to the NHS TDA. Any capital business cases over £50 million will require a further stage of approval by the DH before submission to HM Treasury.

3.5 The authorisation levels for NHS Trusts are summarised in table 1 below:

Table 1: NHS Trust and NHS TDA Delegated Limits

Financial Value of the Capital Investment or Property

Transaction Approving Person or Group

Up to £5 million or 3% of turnover whichever is the lower1 NHS Trust Board

Between £5 million, or 3% of turnover whichever is the lower, and £10 million

NHS TDA Director of Finance

£10 million to £25 million NHS TDA Capital Investment Group

£25 million to £50 million NHS TDA Capital Investment Group and NHS TDA Board

Over £50 million NHS TDA Capital Investment Group and NHS TDA Board and DH

3.6 Irrespective of the delegated limits set out in this paper the relevant NHS TDA

Director of Delivery and Development, or the NHS TDA Director of Finance may refer any NHS Trust capital investment scheme or property transaction proposal deemed to be novel and contentious, regardless of size, to the NHS TDA Capital Investment Group or NHS TDA Board for a view and/or approval decision.

3.7 NHS Trusts reporting a year end deficit in its most recent audited accounts, forecasting an outturn deficit for the financial year or with an in-year deficit should note that at the discretion of the appropriate NHS TDA Director of Delivery and Development or the NHS TDA Director of Finance a NHS Trusts delegated limits can be lowered. Where this is the case all schemes over £500k in value will need agreement to proceed from the relevant Director of Delivery and Development. Where this applies NHS Trusts will be notified in writing by the NHS TDA.

3.8 For I.T., leased equipment and leased property, the limits apply to whole life costs, not capital cost. For leased property, the limits apply to the whole-life cost of the transaction, rather than just capital cost.

1 Turnover will be measured using the NHS Trusts previous years financial accounts turnover figure.

16 of 46

3.9 Where two or more schemes have similar timelines and strategic rationales

and it makes sense to batch them together to achieve best value for money due to economies of scale, it is recommended that they are batched together. In these circumstances, the business case approval process should not be circumvented by progressing schemes singly.

3.10 Further definitions and technical guidance regarding delegated limits is

contained within Appendix 1.

4. Capital Investment and Property Transactions Business Case Approvals Process

4.1 The NHS TDA recognises that accessing capital will be key to improving services and infrastructure for some NHS Trusts, particularly, where access to capital has been limited in the past. The process described within this part of the document attempts to provide a balance between allowing NHS Trusts, through their delegated limits, the freedom to manage their own capital investment up to an agreed limit and ensuring that there is sufficient governance and assurance around the approval of capital investments. Achieving sufficient assurance and governance at the same time as enabling investment to develop NHS Trusts in a sustainable way will be an extremely important strand of the NHS TDA work going forward.

4.2 More specifically the NHS TDA will require assurance that a capital investment business case has been through an appropriate level of scrutiny and governance within the NHS Trust proposing the investment, before the case is submitted to the NHS TDA. The NHS TDA will ask for NHS Trusts to demonstrate that: • the investment proposal is consistent with the NHS Trusts clinical

strategy and supports the provision of high quality care;

• the investment proposal demonstrates a high level of engagement with clinical staff and the use of appropriate staff and patient feedback;

• the quality, safety, productivity, affordability, value for money and workforce implications associated with the investment proposal are robust, well thought through and described within the business case;

• there is a clear and credible approach to enhancing the delivery of patient care and performance standards;

• issues relating to the sustainability of the wider local health economy have been addressed and the proposed solution adequately assists the health economy in managing present and future issues.

• the NHS Trust has the resource and capacity to deliver the investment programme within a realistic timeframe.

17 of 46

4.3 The NHS TDA will require evidence that the proposed scheme has had an appropriate level of NHS Trust Board scrutiny before the capital investment business case is reviewed by the NHS TDA.

4.4 The NHS TDA will be keen to assess innovative business cases which demonstrate a NHS Trust has put patients at the centre of their investment proposal with the aim of delivering the highest standards of NHS care.

4.5 In addition, the NHS TDA will seek assurance that a NHS Trust has subjected the business case to an appropriate governance and clinical engagement process and that the proposed investment is affordable and represents good value for money to the taxpayer.

4.6 This section of the guidance details the levels of documentation required at key stages of the business case development and will ensure that an appropriate level of scrutiny is put in place as part of the review process.

4.7 All cases, at each key stage, for example, Strategic Outline Case (SOC), Outline Business Case (OBC), PFI/ PF2 Appointment Business Case (ABC), Full Business Case (FBC), PFI/ PF2 Confirming Business Case (CBC) (for the purposes of this document PFI/ PF2 includes LIFT) are required to be produced using the standard five case model and will be reviewed using the appropriate business case checklist.

4.8 It is good practice for NHS Trusts to produce a SOC for significant business cases for their own governance and assurance purposes. It will not be necessary for NHS Trusts to submit SOCs to the NHS TDA, unless specifically requested to do so, for business cases with a capital financial value of under £10 million. SOCs will, however, be required from NHS Trusts for business cases with a capital value over £10 million.

4.9 As a minimum the NHS TDA will expect to have a SOC, an OBC and FBC (or

equivalent for PFI/PF2 preferred solutions i.e. ABC, CBC, LIFT (Stage 1 and 2) etc.) submitted for all business cases with a value that exceeds £10 million. In addition NHS Trusts will need to complete the generic business case checklist contained within Appendix 2 and this will need to be submitted with each OBC and FBC version of the business case submitted to the NHS TDA for all business cases over the NHS Trusts own delegated limits and up to the NHS TDA’s delegated limit of £50 million. For all major schemes in excess of £50m, that also require DH sign off, there are four separate DH checklists that will be required for each stage of the business case process (OBC – public funded/ PFI/ PF2 checklist, PFI/ PF2 ABC checklist, PFI/ PF2 CBC checklist and FBC – Public Funded checklist). For copies of business case checklists for schemes over £50 million NHS Trusts will need to contact the NHS TDA.

4.10 Business cases submitted to the NHS TDA must have been approved by the

relevant NHS Trust Board and the NHS Trust must submit a copy of the Board minute recording approval.

4.11 Business cases submitted to the NHS TDA by NHS Trusts must be congruent

with the NHS Trusts Integrated Business Plan (IBP) and LTFM and this will be tested as part of the business case review.

18 of 46

Table 2: Business Case Key Stage Documentation

Financial Value of the Capital Investment or Property

Transaction Key Stage Documentation

Up to £5 million or 3% of turnover whichever is the lower

NHS Trust internal governance process

Between £5 million, or 3% of turnover whichever is the lower, and £10 million

OBC and FBC required

£10 million to £25 million SOC, OBC and FBC required (or

SOC, ABC, CBC or LIFT stage 1 and 2 equivalent for PFI/PF2 or LIFT)

£25 million to £50 million SOC, OBC and FBC required (or

SOC, ABC, CBC or LIFT stage 1 and 2 equivalent for PFI/ PF2 or LIFT)

Over £50 million SOC, OBC and FBC required (or

SOC, ABC, CBC or LIFT stage 1 and 2 equivalent for PFI/ PF2 or LIFT)

4.12 Detailed guidance for NHS Trusts on the production of business cases using

the 5 case model can be found on the Treasury website at the following weblink: http://www.hm-treasury.gov.uk/d/greenbook_toolkitguide170707.pdf Table 3: Primary expectations for key stage documents

Key Stage Document Outline Expectation

Strategic Outline Case (SOC)

• Strategic rationale and benefits of the investment are clearly set out and demonstrate underlying health need for the investment;

• Description of the current service, understanding of best practice and the consequences of the ‘Do Nothing’ option;

• Confirmation that one or more deliverable and affordable solutions exist to deliver the strategic objective before cost is incurred preparing an OBC;

• Proposed timetable for the business case is set out including when the NHS TDA can expect to receive the business case;

• Indicative financial value of investment is included; • Project management arrangements for the business case

are outlined; • Intended procurement methodology is set out.

19 of 46

Key Stage Document Outline Expectation

Outline Business Case (OBC)2

• Five case business case model is used covering strategic, economic, financial, commercial and management cases;

• Executive summary is clear regarding recommended solution;

• Strategic context, rationale and benefits of the investment are clearly set out and demonstrate underlying health need for the investment;

• Options for appraisal are formulated and described in sufficient detail;

• Benefit criteria against which options are to be evaluated has been developed and leads to a clear preferred option;

• Criteria has been provided to measure success of the development;

• Overall impact, financial and non financial (including full Quality Impact Assessments), has been assessed and evaluated;

• Clear statement of affordability and funding sources is provided for capital and revenue;

• Operational considerations covering dependencies, assumptions and any risks to operational delivery.

• Self-assessment business case checklist is complete and returned.

Full Business Case (FBC)

• As OBC above with content updated or confirmed for final version of the business case;

• Executive summary is clear regarding recommended solution;

• Financial figures are confirmed and final; • Clear statement of affordability and funding sources is

provided for capital and revenue; • Outstanding issues from OBC stage review by NHS TDA

have been addressed; • Self-assessment business case checklist is complete and

returned.

NHS TDA Business Case Approval Process Directors of Delivery and Development and their teams 4.13 Directors of Delivery and Development and their teams will have a portfolio of

NHS Trusts and will perform the business case review and assurance process for capital investment and property transactions for business cases submitted by NHS Trusts within their portfolio. Directors of Delivery and Development will be supported by the Business Support team and Corporate Finance team in the review of capital business cases.

2 The generic business case checklist contained in Appendix 2 gives more details of the areas that need to be addressed as part of the OBC and FBC business cases.

20 of 46

4.14 Directors of Delivery and Development and their teams will scrutinise all relevant financial and non-financial aspects of a proposed project (both the project itself and how the project fits into the overall strategy of the organisation) to ensure that the best possible solution is selected for a given set of circumstances. The NHS TDA process will ensure that capital business cases are subject to an appropriate level of scrutiny and provide appropriate assurance regarding the investment proposal.

4.15 The NHS TDA generic business case checklist is contained within Appendix 2 to this paper and NHS Trusts will need to assure NHS TDA Directors of Delivery and Development and their teams that the checks contained within this list are satisfied to a level that allows the business case to proceed through the authorisation process. NHS Trusts will be required to perform a self-assessment of this checklist in the first instance and submit this self-assessment with all OBC and FBC versions of their business case. The checklist is intended as a guideline to assist in highlighting areas of business cases that the NHS TDA will be looking for as a minimum level of assurance. The checklist is not exhaustive, and therefore issues may arise in relation to individual business cases that require clarification over and above the business case checklist, and equally the generic checklist may contain areas that are more relevant to some business cases than others.

4.16 If a NHS Trust is submitting a business case relating to a recommended PFI/ PF2 the existing DH business case checklists will need to be completed by the NHS Trusts for review by the Director of Delivery and Development teams. There are four separate DH checklists (i.e. OBC checklist – public/ PFI/ PF2, PFI/PF2 ABC, PFI/ PF2 CBC, and FBC – public).

4.17 Only business cases supported by the Directors of Delivery and Development will be submitted to the NHS TDA Director of Finance and NHS TDA Capital Investment Group for approval.

Business Support and Corporate Finance Team 4.18 The Business Support and Corporate Finance Team will support the Directors

of Delivery and Development review the business case and will in particular review the following areas within the business case approvals process:

• perform the financial and affordability review of business cases in line with the financial position of the NHS Trust and in collaboration with Directors of Delivery and Development teams;

• ensure the business case is congruent with the NHS Trusts LTFM;

• ensure external funding sources assumed are realistic and achievable.

NHS TDA Capital Investment Group and NHS TDA Board

4.19 The NHS TDA Capital Investment Group and NHS TDA Board will review and approve business cases (including PFI/ PF2) for capital investment and property transactions in line with the delegated limits described within this paper (paragraph 3.5).

21 of 46

4.20 Approvals above the upper threshold for NHS TDA Board approvals, set at £50 million, will be required to follow the NHS TDA approval process and therefore will require NHS TDA Board approval before being referred to DH and HM Treasury for final authorisation to proceed.

4.21 NHS Trust business cases requiring NHS TDA Board approval will only go forward for a NHS TDA Board decision once they have been considered by and agreed with the NHS TDA Capital Investment Group.

Timetable for capital investment and property transaction business cases

4.22 For business cases above a NHS Trusts delegated limits but below £25 million the NHS TDA will be working on an eight week approval cycle from submission of the business case to the NHS TDA to the submission of the business case to the NHS TDA Capital Investment Group. The eight week review period will include the NHS TDA review, feedback and clarification period providing satisfactory responses are provided by NHS Trusts.

4.23 The eight week cycle is based upon business cases with a financial value below £25 million. If a business case has a financial value in excess of £25 million additional time will need to be added to a NHS Trusts timetable in order to secure NHS TDA Board approval and DH/HM Treasury approval where applicable (for business cases with a financial value over £50 million).

4.24 The above timetable is reliant upon the quality of business cases being satisfactory for NHS TDA review and upon NHS Trusts providing adequate responses within the timescales indicated. Where this is not the case the NHS TDA reserves the right to stop the business case review process ‘clock’ until satisfactory responses are provided by the NHS Trust and in these cases NHS Trusts need to be aware that the eight week review process will be extended.

4.25 Table 4 below summarises the delegated limits and business case documentation requirements with effect from 1 April 2013.

Table 4: Delegated limits and business case documentation requirements

Financial Value of the Capital

Investment or Property

Transaction

Approving Person or Group

Key Stage Documentation

Review Timescale

Up to £5 million or 3% of turnover whichever is the lower3

NHS Trust Board

NHS Trust internal

governance process

3 Turnover will be measured using the NHS Trusts previous years financial accounts turnover figure.

22 of 46

Financial Value of the Capital

Investment or Property

Transaction

Approving Person or Group

Key Stage Documentation

Review Timescale

Between £5 million, or 3% of turnover whichever is the lower, and £10 million

NHS TDA Director of Finance

OBC and FBC required

Eight weeks

£10 million to £25 million

NHS TDA Capital Investment Group

SOC, OBC and FBC required (or SOC, ABC, CBC or LIFT stage 1

and 2 equivalent for PFI/ PF2 or

LIFT)

Eight weeks

£25 million to £50 million

NHS TDA Capital Investment Group

and NHS TDA Board

SOC, OBC and FBC required (or SOC, ABC, CBC or LIFT stage 1

and 2 equivalent for PFI/ PF2 or

LIFT)

Minimum eight

weeks

Over £50 million NHS TDA Capital Investment Group, NHS TDA Board

and DH

SOC, OBC and FBC required (or SOC, ABC, CBC or LIFT stage 1

and 2 equivalent for PFI/ PF2 or

LIFT)

Minimum eight

weeks

5. Capital Planning and Reporting Requirements

Planning documentation

Planning for capital investment and property transaction business cases 5.1 NHS Trusts will be required to submit five year capital plans as part of

submitting their final TFMS plans for the financial year. As part of the submission of capital plans NHS Trusts will be required to provide a schedule of all capital investment and property transaction business cases that exceed the NHS Trusts own delegated limits and a timescale as to when it is anticipated these will be submitted to the NHS TDA. If a NHS Trust wishes to submit a business case that arises in year and was not earmarked in the annual plan then a strategic intent document relating to the business case will need to be submitted. The strategic intent document will need to outline the reason the investment is required, how the business case fits with the NHS Trusts strategic plan, why the business case was not included within the NHS Trusts original financial plan, the estimated value of the investment,

23 of 46

timescales for the investment, procurement process and risks of not proceeding with the business case. The business case will not be considered by the NHS TDA until the strategic intent document has been received and approved.

Planning for loans 5.2 As per paragraphs 2.68 and 2.69 where long term plans exist for a NHS Trust,

which it is expected will be the case, it is anticipated that LTFMs will include planned loans. In addition loan applications for planned loans of all types should be included within NHS Trust planning forms (TFMS) submitted to the NHS TDA in January to early April of each year. A central database of all planned loans will be collated from NHS Trust plan submissions and will be used to inform negotiations with the DH around loan requirements for forthcoming financial years. NHS Trusts should not automatically assume that loans will be approved and therefore should not incur expenditure in advance of loan approval. If loans for the NHS Trust sector exceed DH funding availability the NHS TDA will work with DH and NHS Trusts to review affordability.

5.3 Unplanned loan requests that emerge in-year will need to be discussed with the NHS TDA Corporate Finance Team and Business Support as to how NHS Trusts should proceed and as to whether these loans can be afforded within the overall funding envelope given that they will not have been flagged at plan stage. The NHS TDA Corporate Finance Team will advise as to whether these loans should be included in a TFMS returns.

TFMS planning and monitoring forms

5.4 NHS Trusts will be required to submit:

• initial plan forms;

• full plan forms.

5.5 Submissions will be required in the January to early April period leading up to the start of each financial year.

6. General and Other Issues Health Gateway Reviews

6.1 Current guidelines for Health Gateway Reviews of NHS capital projects remain in place irrespective of whether projects are funded by NHS capital, PFI, Private Finance 2 (PF2 - the Governments new approach to private finance initiatives), Procure 21+ or from internal or other sources of capital.

6.2 The Senior Responsible Owner (SRO) of all medium and high risk capital projects should use the Health Gateway Review process facilitated by the DH Gateway Team. The service is free for all NHS organisations.

24 of 46

6.3 Health Gateway Reviews examine programmes and projects at key decision points in their lifecycle and look ahead to provide assurance to the SRO of the programme or project that they can progress successfully to the next stage.

6.4 Health Gateway Reviews are independent snapshot assessments, usually carried out over 3 to 4 days, at key stages in the planning, development and delivery of projects as follows:

• Gateway 0 - Strategic assessment for programmes only;

• Gateway 1 - Business justification;

• Gateway 2 - Delivery strategy;

• Gateway 3 - Investment decision;

• Gateway 4 - Readiness for service;

• Gateway 5 - Operations review and benefits realisation.

6.5 Health Gateway Reviews are peer assessments in which independent practitioners from outside the organisation use their experience and expertise to examine the progress and likelihood of successful delivery of the programme or project. The process involves both interviews and an assessment of relevant documentation to provide a valuable additional perspective on the issues facing the project team and an external challenge to the robustness of plans and processes.

6.6 The process remains confidential to the programme or project SRO and as such the report is not shared with other bodies without the express permission of the SRO concerned.

6.7 The DH Gateway team is responsible for arranging individual reviews. A Gateway Project Director (GPD) works with individual NHS organisations to assess their Gateway Review requirements based on the risk profile of the programme or project. A risk potential assessment tool can be used to support the assessment of risk. Where the assessment indicates a review is required this is then arranged by the Health Gateway team. SROs or Project Directors should, in the first instance, contact the relevant regional GPD to discuss their requirements.

6.8 Contact details for the DH Gateway Process shown in table 5 below:

Table 5: Regional Gateway Project Directors

Region Name Email Address Contact Number

London Caroline Charlton carolinecharlton@tiscali.co.uk 07788 916761

Midlands & East Tim Ainger t.ainger@gardiner.com 07795 812514

North George Whitley cgeorgewhitley@aol.com 07973 941570

25 of 46

Region Name Email Address Contact Number

South Alan Connor alanc@facilitation.fsbusiness.co.uk 07909 993166

General enquiries dh_nhsgatewayreviews@dh.gsi.gov.uk 0113 254 6213

6.9 The Health Gateway Review process is also used in NHS organisations for

other types of programmes and projects such as: information, communications and technology projects; organisational and service reconfigurations; clinical, clinical support and other shared services; procurement and outsourcing of services. NHS organisations should contact the relevant GPD should they wish to use the Health Gateway process for other types of programmes and projects.

Post project evaluation

6.10 Post project evaluation is an essential element of the assurance process for capital developments and is good practice for projects with a cost in excess of £1 million.

6.11 The objectives of undertaking a post project evaluation include the assessment of:

• whether the objectives of the project are being met;

• value for money;

• whether the project is progressing according to plan;

• any corrective actions required;

• lessons to improve decision making in the delivery of future capital developments by the wider NHS.

6.12 Guidance on best practice in post project evaluation is contained in the guidance for the gateway review process (Gateway 5: operations review and benefits realisation).

6.13 The key elements of post project evaluation are:

• the post project evaluation plan which should be developed as an integral part of the preparation of the FBC;

• stage 1: construction completion;

∗ the evaluation of the project outputs on completion of the facility, to assess whether the project has been delivered on time, to budget, and to the required quality standards;

26 of 46

• stage 2: building operational;

∗ the evaluation of the service outcomes six to 12 months after the facility has been commissioned, to assess whether the stated service benefits and required change management programmes were realised;

• follow up evaluation;

∗ part of the ongoing programme to assess the longer-term service outcomes and contract performance, particularly in the case of PFI/ PF2 and LIFT contracts.

6.14 As part of the post project evaluation process, recommendations should be made for the benefit of the organisation (and the wider NHS if relevant). These should be disseminated to staff concerned with future project design, development, implementation and management.

6.15 NHS Trusts should undertake the evaluation in accordance with the guidance. It is best practice that the outcome of the post project evaluation should be signed off by the senior responsible owner and the Board of each NHS Trust should ensure that effective post project evaluation is happening.

6.16 NHS Trusts may wish to obtain assurance about their approach to post project evaluation through their Audit and Governance Committee and ensure that any recommendations made are incorporated into the post project.

Major Projects Authority

6.17 For major projects the Government has established the Major Projects Authority and for NHS Trusts that are undertaking major projects useful information may be found on the following weblink:

https://www.gov.uk/government/policy-teams/major-projects-authority

Appendix 1

27 of 46

Delegated Limits for Capital Investment Definitions and Further Technical Guidance

1. Retention of Land Sale Proceeds

1.1 This section concerns the retention and re-investment by NHS Trusts of the proceeds from the sale of their surplus property to bodies outside the NHS.

1.2 An NHS Trust is entitled to retain and re-invest land sale proceeds of up to £5 million from a disposal transaction (this limit mirrors the delegated limit for the approval of NHS Trust capital investment business cases). However, there is an exception to this rule:

• if the NHS Trust goes into financial deficit, the NHS Trust Development Authority (NHS TDA) Director of Delivery and Development or Director of Finance has the discretion to reduce the limit. Where this is the case all schemes over £500,000 in value will need agreement to proceed from the relevant Director of Delivery and Development. Where this applies NHS Trusts will be notified in writing by the NHS TDA.

1.3 Financial deficit means4:

• a reported year-end deficit in the most recent audited accounts, or;

• a forecast full-year deficit in the current financial year, or;

• an unplanned year to date deficit.

1.4 The delegated limits for the retention of land sale proceeds apply to individual land sale transactions. Property disposals should not be artificially parcelled or staggered to keep beneath a delegated limit. The disposal of adjoining or otherwise logically connected pieces of land will be viewed as a single disposal transaction for the purposes of applying delegated limits, regardless of when sold.

2. I.T., Leased Equipment and Leased Property

2.1 For I.T., leased equipment and leased property (except LIFT and third party development schemes providing buildings for health care/ service provision where delegated limits still apply to capital cost) the delegated limits apply to whole life costs, not capital cost. For leased property, the limits apply to the whole-life cost of the transaction, rather than just capital cost. The definitions that apply to these delegations are given below. (Note that calculations of cost should not include any amounts for optimism bias).

4 Deficits will be measured using the NHS financial performance metrics.

Appendix 1

28 of 46

Total capital cost – Publicly funding build scheme

2.2 The total capital cost is as per line 10 – ‘TOTAL (for approval purposes), cost including VAT’ – of forms OB1/ FB1. This total includes the cost of all equipment that has to be bought to deliver the functioning scheme.

Total capital cost – PFI Funded Build Scheme 2.3 Total capital cost to the private sector including the cost of construction,

equipment, professional fees, rolled-up interest and financing costs such as bank arrangements fees, bank due diligence fees, banks lawyers fees, and third party equity costs plus irrecoverable VAT. Any capital cost that will be incurred directly by the NHS in progressing the schemes must also be included. Typical examples include land purchased from outside the NHS, equipment and enabling works.

Whole life cost – As applied to IM&T schemes 2.4 Whole life costs are: the total cost of the project over the life of the contract

(typically seven to ten years); including: capital costs, running costs, IM&T costs, project management costs and training costs.

2.5 The whole life cost is not discounted and does not include: capital charges or depreciation, the cash-releasing benefits, the non cash releasing benefits, the cost of non-IM&T staff who may use the systems (e.g. pathology staff). The cost avoided of the existing IM&T systems should also not be included: nor should VAT, whether recoverable or non-recoverable by the NHS body.

Whole Life Cost – as applied to equipment leases and property leases (except LIFT and third party development schemes providing buildings for healthcare/ service provision)

2.6 For leased equipment and buildings, it is the whole life cost payable under the contract, excluding any VAT that is compared to the delegated limit. To clarify, this includes any servicing and materials that must be paid for under the contract, even if these are itemised separately and any enabling capital expenditure that is required e.g. premises alterations to accommodate the equipment or, in the case of property, to make it suitable for the occupiers use.

2.7 The relevant term over which to calculate the whole-life cost is the contractual term. In the case of property, any break points that are exercisable only by the occupier should be ignored, as should any statutory right of renewal.

Consortium investments 2.8 If a consortium of NHS Trusts is making an investment the delegated limits of

the consortium members are not cumulative and where a scheme goes above the delegated limit of a single NHS Trust, it will require NHS TDA approval.

Appendix 1

29 of 46

2.9 For the purpose of approval there must be one Outline Business Case and one Full Business case for the whole project. Other members of the consortium are not required to seek external business case approval for their parts of the scheme. They would however need to consider what documentation would be needed to comply with their organisations own standing orders and standing financial instructions.

Non–Hospital and Community Health Service Funding (Non-HCHS) 2.10 Non-HCHS funding, such as donations and grants, should be included in the

cost of a scheme when deciding if a business case needs external approval. For example:

• an NHS Trust has a delegated limit of £5 million;

• it is developing a business case for a £6 million project, and;

• this project is being funded by a £5 million charitable donation and £1 million of public capital.

2.11 In this case, the NHS Trust will still require the business case to be signed off by the NHS TDA as the amount of the overall capital investment, (£6 million) is outside of the NHS Trusts delegated limit.

Appendix 2

30 of 46

Business Case Checklist (Version 1: 18 January 2013)

This checklist is for use by the Directors of Delivery and Development and Business Support teams in reviewing and providing assurance on capital investment and property transaction business cases and should also be of use for business case writers in NHS Trusts in order to both structure the business case and to ensure that all aspects of the case have been covered. This checklist is intended for generic use in relation to capital schemes. Some questions in the checklist will therefore not apply to all types of business case. NHS Trust Name:

Scheme Name:

Date of Submission to NHS TDA:

Status of business case e.g. SOC/OBC/FBC

Checklist Sign-off Completed By Date

NHS Trust

• NHS TDA Director of Delivery and Development Team

• NHS TDA Corporate Finance Team – Capital and Cash

• NHS TDA Director of Finance (where relevant)

• NHS TDA Capital Investment Group

HM Treasury/ DH (where relevant)

Brief summary of scheme content:

NHS Trust Project Director name and contact details:

Capital costs – including VAT:

Proposed start on site date:

Proposed start operational date:

Appendix 2

31 of 46

Approvals

Date

Date the SOC was approved by:

• the NHS Trust Board or delegated committee; • the NHS TDA Director of Finance (where relevant);

• the NHS TDA.

Date the OBC was approved by:

• the NHS Trust Board; • the NHS TDA Director of Finance (where relevant);

• the NHS TDA and HMT/DH if required.

Date the FBC was approved by:

• the NHS Trust Board; • the NHS TDA Director of Finance (where relevant);

• the NHS TDA and HMT/DH if required.

1. Strategic and technical case (including approvals and stakeholder

involvement)

NHS Trust

Yes/No DD&D Yes/No

Comments and further references in the business case

Strategic aspects

1.1 NHS Trust Board has approved all parts of the business case.

1.2 Clear background and rationale is set out and consistent with Government policy and strategic priorities. Any specific policies/priorities should be listed.

1.3 The underlying health need for the investment is set out clearly in the executive summary of the business case.

1.4 Clear SMART objectives with clearly defined benefits which are measurable and time related and which are included in benefits realisation plans/CIPs as appropriate. This should be consistent with benefits identified in the economic case.

1.5 Relevant Clinical Commissioning Groups (CCGs) and other relevant bodies and other commissioners with a material interest in the scheme have provided written confirmation supporting:

Appendix 2

32 of 46

NHS Trust

Yes/No DD&D Yes/No

Comments and further references in the business case

a) the proposal, approving the case and all key parameters, documented in the relevant NHS Trust Board minutes;

b) the future activity assumptions, these being consistent with those of the NHS Trust and the NHS Trusts expected income and the CCGs own financial projections.

Expect sign-up from those commissioners who will fund at least 80% of the service affected by the investment.

1.6 The Health and Wellbeing Board has been consulted and its support provided in writing where applicable.

1.7 Changes to key services must continue to be consistent with four key tests for reconfiguration (provide evidence):

• support from GP Commissioners/CCGs;

• strengthened public and patient engagement;

• clarity on the clinical evidence base;

• consistency with current and prospective patient choice: does the scheme support greater choice of treatment and access or quality of service provision?

1.8 The NHS Trust Board has approved all parts of the bid, in particular:

• the strategic fit and service models;

• overall activity in relation to agreed contract and annual operating plan agreements;

• financial impacts.

1.9 The bid demonstrates that service planning for new acute facilities:

a) is linked to decisions about primary and community care services, set in the context of the current planning guidelines and outcomes framework, and consistent with the Joint Strategic Needs Assessment and the Joint Health and Wellbeing Strategy;

Appendix 2

33 of 46

NHS Trust

Yes/No DD&D Yes/No

Comments and further references in the business case

b) clinical and service priorities have been informed by consultation with the local patient/wider population and evidence provided that the findings have influenced the scheme development (e.g. design) and specific references are made to:

• how investment is compatible with the QIPP agenda going forward;

• how investment is consistent with focusing more resources on prevention;

• how the scheme improves service quality and safety;

• the integration of health, social care and public health.

1.10 Mental health schemes should demonstrate consistency with current policy.

1.11 The NHS Trust has demonstrated that activity and capacity planning is consistent with requirements of the commissioners/ local health economy, and is robust.

1.12 The proposal is consistent with projected activity levels and the service changes developed in the local health economies (and demonstrates how it contributes to local and regional QIPP plans).

1.13 The proposal is able to clearly describe its interrelationship to other investments and service developments by other parties (e.g. community-based organisations) to achieve the revised service configuration. Details on each related programme are set out.

Technical aspects

1.14 The proposal is compliant with NHS estates design and costing requirements, including taking account of proposal ‘abnormals’ Costs to be set out using DCAGs (or new HPCG) on OB forms and latest promulgated Department of Business, Innovation and Skills (BIS) PUBSEC index (which has superseded MIPS). In addition there should be:

Appendix 2

34 of 46

NHS Trust

Yes/No DD&D Yes/No

Comments and further references in the business case

• a reasoned contingency sum

• the inclusion of any consequential planning costs, e.g. s106.

1.15 The business case shows:

• evidence of the use of AEDET (NHS Achieving Excellence in Design Evaluation Toolkit) and there is evidence of scoring of the evaluation of the design proposals;

• compliance with firecode;

• Building Regulations, including an appraisal of the fire protection strategy.

1.16 Please detail any land transactions that are necessary to enable the scheme, together with any conditions that are attached to those transactions, including any constraints relating to the site. If there are conditions, are they built into the options appraisal?

2. Economic Case NHS

Trust Yes/No

DD&D Yes/No

Comments and further references in the business case

2.1 Has a wide-ranging long-list of options (including a do-nothing or do-minimum) for achieving the investment objectives been drawn up? Does it reflect the views of all stakeholders?

2.2 Are the criteria for the short listing of options clear? Do they derive clearly from the investment goals set out in the Strategic case, and have the reasons for their relative weightings been set out?

2.3 Have costs, valued benefits, optimism bias (where relevant) and quantified risks been combined to give a net present value for short listed options?

2.4 Is the preferred option consistent with the results of the cost, benefits and risk appraisals? If not, why not?

Appendix 2

35 of 46

NHS Trust

Yes/No DD&D Yes/No

Comments and further references in the business case

2.5 Appropriate sensitivity analysis has been performed on the key variables to demonstrate that the preferred option remains value for money under a range of plausible scenarios compared with other short listed options, including worst case scenarios.

2.6 Have costs been shown in constant prices, with the base year clearly stated and the current year shown as Year 0?

2.7 Have all relevant capital costs, revenue costs, opportunity costs, organisational development costs, lifecycle costs, residual values, avoided costs and costs borne by others been identified and properly assessed? The costs should cover the whole life of the investment usually and care should be taken not to double count them.

Note that costs must be assessed on a ‘bottom-up’ basis: that is, the case must show the total costs of each option, not just costs incremental above existing levels of expenditure.

2.8 Does the economic appraisal exclude sunk costs (those already incurred, e.g. project management), transfer payments (e.g. redundancy payments, VAT), depreciation, capital charges and other non-resource costs?

2.9 Is the appraisal period appropriate to the life of the asset? (e.g. the economic life of a building is generally considered to be 60 years).

2.10 Have benefits been identified for all short listed options through consultation with stakeholders?

2.11 Are the benefits consistent with investment objectives and benefits realisation plan identified in the strategic and management cases?

2.12 Have valued benefits been discounted over period of appraisal? (Discount rate should be 3.5% for the first 30 years and 3% for years 31 to 75).

2.13 Have the values of benefits been stated in constant prices and consistent with cost assessment?

2.14 Have the weights and scores for qualitative benefits been sufficiently justified for non-quantified benefits?

Appendix 2

36 of 46

NHS Trust

Yes/No DD&D Yes/No

Comments and further references in the business case

2.15 Is there a clear plan to ensure monitoring and evaluation of the valued benefits?

3. Commercial Case

NHS Trust

Yes/No

DD&D Yes/No

Comments and further references in the business case

3.1 What procurement is required? Has the business case described the goods, services or buildings/premises to be procured?

3.2 The procurement process to be followed, in accordance with EU regulations, is set out and confirms the procedure to be used. E.g. for PFI, Competitive Dialogue must be used, but for public capital the Open, Restrictive, Competitive Dialogue or Negotiated procedures can be used provided there is justification for the particular route adopted.

3.3 The procurement strategy, (for example, the process of taking the shortlist of bidders to a preferred bidder) is set out and is otherwise realistic and robust; there is a credible timetable and sign-off from the NHS Trusts advisors that it complies with procurement legislation.

3.4 The work needed to complete the necessary procurement documents (for example OJEU, ITPD, evaluation criteria, all output specification schedules for works and services, contract, payment mechanisms where applicable) is set out and the required resources and timetable are identified.

3.5 Clear contractual key milestones and delivery dates are set out that are realistic.

3.6 Has the NHS Trust set out and described a full equipment strategy?

3.7 Outline planning permission has been obtained for all the developments described in the business case.

Appendix 2

37 of 46

NHS Trust

Yes/No

DD&D Yes/No

Comments and further references in the business case

a) where exceptionally authorities do not grant outline planning permission, the NHS Trust can demonstrate that planning authorities have no major objections to the scheme and the development principles are agreed;

b) the impact of any significant conditions included in the planning permission is set out;

c) strategy to engage the local planning authority to minimise forward risks is described.

4. Financial Case

NHS Trust

Yes/No DD&D Yes/No

Comments and further references in the business case

4.1 Is all funding assumed by the NHS Trust (capital and revenue) secured and confirmed by all parties?

4.2 Any elements of the scheme to be funded from external sources, capital and revenue, (borrowing, PDC, charitable, external grants, and other non NHS Trust sources etc.) are identified with the profile of funding/spend by year. Confirmation to be evidenced by the external provider of the funding.

4.3 In addition, support, including potential support for external commitments, must have been received in writing. Where amounts are uncertain alternative sources of funding must have been identified.

CCG letters must confirm the CCG is content with activity modelling (thus confirming NHS Trust income) and if

any transitional funding is to come from the CCG this must be confirmed.

4.4 Where borrowing is assumed the source of the loan, amount of loan, loan term assumed, interest assumed, prudential borrowing assessment and repayments need to be clearly stated. A statement showing the effect of the loan on the NHS Trusts financial position and financial risk ratings before the loan and after assuming the loan need to be modelled through the NHS Trusts LTFM and should be included within the business case.

Appendix 2

38 of 46

NHS Trust

Yes/No DD&D Yes/No

Comments and further references in the business case

4.5 What are the sources of income? Sources of income need to be clearly described (including non-recurrent, transitional, third party, NHS Trust resources, land sales etc.)

4.6 A commentary on the underlying/ normalised financial position is provided for the last two completed years and the forecast for the outturn for the year in progress. Identify any:

a) Non-recurrent support;

b) Non-recurrent income;

c) Non-recurrent costs;

This normalised financial position agrees with the LTFM provided.

This section should include a statement of the NHS Trusts overall reference cost and specialty level where business case is specialty level specific, as these are a rough indication of a NHS Trusts scope for performance improvement.

4.7 Projected Income and Expenditure accounts are provided that fully include all anticipated operational developments that:

Note – this data must be presented both in the form that Monitor would accept (i.e., excluding impairments) and in the form used for DH accounting (i.e., impairments are included, though not funded by the NHS Trust).

a) cover the past two years’ figures, current year forecast and at least a five year projection. These must contain appropriate commentary and notes that cover;

• all key underlying assumptions used (such as pay awards, incremental drift, PBR income and non PBR income, maintenance, and the income assumptions must be supported by the commissioners and reflected in their commissioning assumptions);

• details of the inflationary assumptions used and evidence that this is consistent with the NHS Trust assumptions contained within the LTFM;

• income and activity assumptions are clearly stated and demonstrate:

Appendix 2

39 of 46

NHS Trust

Yes/No DD&D Yes/No

Comments and further references in the business case

• non recurrent items such as clearance of backlog waiting lists are correctly accounted for;

• the effect of national policy initiatives are clearly shown within the business case e.g. patient choice, AQP etc.;

• the impact of QIPP is clearly shown within the NHS Trusts income and activity calculations;

• the effect of best practice tariffs embedded into the tariff are clearly shown within the business case where relevant;

• the impact of casemix change is shown within the business case where relevant;

• parameters used to determine bed, theatre and other capacity requirements are clearly set out (including LOS, occupancy rates, daycase rates, theatre efficiency rates, theatre utilisation) and are shown against local and or national benchmarks;

b) a clear statement of affordability is included and the impact of the scheme on NHS Trust finances and the NHS Trusts ability to meet any statutory financial duties applying to the NHS Trust is clearly stated;

c) ongoing maintenance commitments are included;

d) any impairments, deferred assets and residual interest charges;

e) workforce implications are clearly described and costed in £’s and wte’s and include:

• the staff and cost implications of service redesign are set out;

• workforce modernisation has been demonstrated and linked to service re-design;

Appendix 2

40 of 46

NHS Trust

Yes/No DD&D Yes/No

Comments and further references in the business case

• the plans are aligned with the NHS Trusts workforce strategy and LTFM;

• where workforce implications impact partner organisations these have been agreed with those organisations and if TUPE arrangements apply these have been agreed with the organisation concerned. Where change requires consultation the NHS Trust needs to demonstrate that this has been built into the business case timetable;

• where staff reductions have potential financial impact these have been included and costs have been covered by the NHS Trust;

• Full Quality Impact Assessments (QIA) have been undertaken and have been signed off by the Medical and Nursing Directors.

f) the I&E account projections should be shown gross and net of any one-off impairment charges, so that the underlying financial performance is clear;

g) the I&E account information supplied should be consistent with the NHS Trusts LTFM.

4.8 A projected cash flow statement is provided for the same period (as for the I/E) and demonstrates that there is sufficient cash flow to cover running costs and debt servicing in the transition/double running period and beyond.

4.9 Where NHS Trust efficiency savings/cost improvement programmes are required to deliver affordability, including any short-term financial recovery requirements:

a) the measures proposed have been sanctioned by the NHS Trust Board (underlying CIP and additional revenue for the project);

Appendix 2

41 of 46

NHS Trust

Yes/No DD&D Yes/No

Comments and further references in the business case

b) responsibilities for delivery have been assigned;

c) likely amounts quantified; d) there are underlying plans

supporting the CIP programme including Quality Impact Assessments signed off by the Medical and Nursing Directors;

e) details of the NHS Trusts performance at delivering its CIP plans for the previous 2 years, analysed between recurrent and non-recurrent schemes;

f) monthly outturn on existing programme is provided.

4.10 There is alignment between the business case and local/regional QIPP plans. Where NHS Trust QIPP savings are required to deliver affordability, or recovery arrangements are required to ensure robust finances:

a) The measures proposed have been sanctioned by the NHS Trust Board;

b) Responsibilities for delivery have been assigned likely amounts quantified;

c) Monthly outturn on existing programme is provided; and

d) Contingencies should also be identified.

4.11 The business case plans must acknowledge that:

a) best practice tariffs are being expanded to cover a number of new service areas; and

b) any further efficiency requirements embedded into the tariff are included within the business case.

4.12 Where the NHS Trust is in financial deficit:

a) It can demonstrate that its recovery plan is robust, and will bring the NHS Trust back into surplus;

Appendix 2

42 of 46

NHS Trust

Yes/No DD&D Yes/No

Comments and further references in the business case

b) The NHS Trusts monthly performance against the recovery plan is provided; and

c) The NHS Trusts plan is supported by the NHS Trust Board, the CCG and the NHS TDA.

4.13 The procurement costs:

a) are clearly set out, including the basis for internal costs of the project team and the costs of advisers and technical support etc.

b) are included in the forward I/E projections (see below)

c) any funding provided from commissioners or others for these is also included in the I&E, NB: these need to have been confirmed as agreed by the relevant organisations’ Boards or individuals/groups with the delegated authority to agree such amounts. There should be commentary on the sources of funding, the agreements to provide funding and any conditions attached.

4.14 The NHS Trust has included in its projections all double running and decant costs and any other transitional costs in the financial projections and has explained the basis for their calculation, and the extent to which any funding is available for meeting those costs. Funding for transitional costs should be put in I&E projections, but only where the funding has been confirmed and evidence of this has been provided.

A sensitivity test of the absence of any assumed transitional support should be in the case.

4.15 The NHS Trust has completed switching analysis on each key variable to assess what is the maximum and minimum of each of the following for the scheme to remain affordable (keeping other variables as per the base case):

Appendix 2

43 of 46

NHS Trust

Yes/No DD&D Yes/No

Comments and further references in the business case

• activity charges; • efficiency gains; • cost improvements; • income/ PBR parameters; • pay costs; • drugs and other running costs; • construction inflations.

4.16 A ‘bridge’ statement is provided showing how the incremental cost of the scheme for the first full year of the operation is proposed to be funded (e.g. efficiency saving, capital charges savings, application of existing budgets etc).

4.17 The anticipated balance sheet treatment of the scheme is set out. Any unusual risk factors are fully analysed and discussed.

4.18 Detail any land transactions that are necessary to enable the scheme, together with any conditions attached to those transactions. Have costs of those transactions been incorporated into the case?

4.19 Where land sale proceeds are to be used, then the OBC sets out the valuation basis, timing for sale and a contingency for downward market movements, and approval from the NHS TDA may need to be sought (depending on the NHS Trust delegated limits).

4.20 Have financial contingencies for risk been made?

4.21 A clear statement of capital and revenue affordability is included within the business case with any key assumptions highlighted.

Appendix 2

44 of 46

5. Management Case

NHS Trust

Yes/No DD&D Yes/No

Comments and further references in the business case

5.1 What are the delivery plans? Are there clear delivery dates and detailed milestones – a Management Control Plan (MCP) and detailed project plan should accompany the business case.

5.2 Details of the project team, capacity requirements and skills are set out with their roles and responsibilities. This should include:

a) a management structure indicating communication links and reporting responsibilities;

b) the skills set of the team and any skills gaps are identified with plans on how they are to be filled, including any plans to use advisers;

c) exactly what project resource is available, i.e. full/part-time staff and in what roles;

d) what the project management budget is;

e) does the proposal require programme or project management arrangements? Please outline the arrangements in place;

f) confirmation of project methodology, e.g. PRINCE2 has been applied;

g) role of advisers is set out, including the terms on which they have been appointed, confirmation of the breadth of their appointment, and arrangements to manage their fees;

h) the extent of senior management and clinical time has been assessed and factored into resource requirements;

i) the resources to manage the bids to preferred bidder appointment are sufficient and clearly set out.

Appendix 2

45 of 46

NHS Trust

Yes/No DD&D Yes/No

Comments and further references in the business case

5.3 The Senior Responsible Officer is identified and the reporting structure is set out, including the composition and terms of reference of the project board and its links to the NHS Trust Board.

5.4 The case includes clear arrangements for Gateway Peer Reviews with dates where relevant.

5.5 For Gateway reviews that have been completed, it should be shown that their recommendations are being addressed. In particular, assurance should be given that all high priority recommendations are being acted on.

5.6 Is there a robust contract management plan? What is the resource for this?

5.7 Is there a robust change management plan? What is the resource for this?

5.8 Other workstream milestones and their interdependencies with the proposal are clearly set out and included within the MCP, e.g. workforce, equipment, managing the retained estate.

5.9 A Risk Register has been established with risk identified managed and allocated with provision for risk management. Are contingency plans set out?

5.10 Business case sets out at least top ten highest risk items for delivery of the preferred option and the plans to manage these.

5.11 There is a benefits register and a benefits realisation (delivery) plan. The benefits realisation plan should reconcile with economic benefits identified and valued in the economic case.

5.12 Plans are in place for post implementation monitoring, evaluation and where appropriate, participation in wider aggregate research (and resource is identified). What is the resource for this? Plans should be consistent with the benefits identified in the economic case and in line with overall objectives.

Appendix 2

46 of 46

NHS Trust

Yes/No DD&D Yes/No

Comments and further references in the business case

5.13 Where applicable external advice on design, build, health and safety, firecode, estate issues and information technology has been sought and evidenced in the business case.