Executive summary (two to three pages) - NHS England



4181475-42862500Capital regime, investment and property business case approval guidance for NHS trusts and foundation trustsAnnex 11: Whole-life costs – template recommendation reportNovember 2016For completion by NHS ImprovementNHS Improvement publication code: CG 24/16To:Director of finance or Resources Committee (see delegated limits in Table 1 of the main guidance)For meeting on:Date/month/yearAgenda item:XReport by:Name (job title)Report on:XXX NHS Trust/Foundation Trust outline/full business case for XXX [project name]Whole-life cost recommendation report template guidanceThis template is to be used where whole-life cost rules apply, for example:IM&T schemeselectronic patient records (EPR)/patient administration systems (PAS) schemesmanaged equipment/managed service schemes energy service performance contracts (ESPC)property/ equipment leases.Foundation trusts in financial distress and all NHS trusts will be required to submit capital investment and property transaction business cases to NHS Improvement in line with the delegated limits set out in Section 3 of the Capital regime, investment and property business case approvals guidance for NHS trusts and foundation trusts.The Department of Health (DH) has deemed foundation trusts in financial distress to mean:in financial special measuresin breach of their licence (financial or non-financial breaches)in receipt of distress funding (received or planned).NHS Improvement regional teams will review the trusts’/foundation trusts’ business case and will complete a recommendation report that will be used internally by NHS Improvement to discharge the governance arrangements in line with the delegated limits set out in Table 1 of the main guidance.The report will follow the five case model and summarise each of the sections in the business case. This will include clinical quality considerations. NHS Improvement regional teams should refer to the business case core checklist in Annex 1 to the main guidance when reviewing business cases and completing the recommendation report.XXX NHS Trust/Foundation Trust outline/full business case for XXX [project name]ContentsPage noSection 1Executive summary XPurpose XBackground XRecommendationXSection 2Summary of the full business case XStrategic case XClinical quality case…………………………….................................XEconomic case XCommercial case XFinancial case XManagement case XSection 3Summary of NHS Improvement review XProcess of engagement XProvision proposal and best practice XFinance, value for money and affordability XSection 4Conclusion XSection 5Recommendation XSection 6Operational regional director of finance approvalxSection 7Executive regional managing director approvalXAppendix 1Business case summary……………………………………...XAppendix 2Statement of Comprehensive Net Income (whole trust)…XAppendix 3Benefits of the project………………………………………...XAppendix 4Key risks …………………………………………………………XExecutive summary (two to three pages)PurposeThis section of the report provides an executive summary of the outline/full business case (OBC)/(FBC) for XXX scheme at XXX NHS Trust/Foundation Trust. Following a detailed review of the business case, NHS Improvement’s regional team recommends NHS Improvement director of finance/ Resources Committee approval of the OBC/FBC for whole-life costs of ?X million, including capital expenditure of ?X million and ?X million of associated revenue costs. These costs exclude VAT and capital charges in line with Department of Health (DH) guidance for assessing whole-life cost schemes.(Foundation trusts only) XXX Foundation Trust is in financial distress because it is in financial special measures/in breach of its licence/in receipt of distress funding. As such, under the capital delegations confirmed by HM Treasury this business case requires approval.BackgroundThe following questions will be addressed when summarising the business case:What is the background to development of the business case? What is the driver for the investment and why does the existing system/provision need re-procuring/ re-providing?What are the key timescales and phases for the project?How will this investment improve services? What efficiencies will be delivered and service improvements made?What are the capital and revenue consequences of the investment?Does the investment require DH/external financing and has this been agreed?Confirmation of the governance and business case sign off arrangements that have been made at trust/foundation trust level, eg the business case has received NHS trust/foundation trust board sign off before being submitted to NHS Improvement for approval.RecommendationThe NHS Improvement director of finance/Resources Committee is asked to approve the OBC/FBC for XXX NHS Trust/Foundation Trust for capital expenditure of ?X million and the associated revenue costs.Summary of the full business case Strategic caseProvide a short organisational overview, including current financial performance.Table 1 provides guidance on the areas to include in this section of the report. For further guidance, refer to the document Capital regime, investment and property business case approvals guidance for NHS trusts and foundation trusts.Table 1: Recommendation report guidance: Strategic caseAreaGuidanceApprovals and supportHas the business case been approved by the trust board?Rationale and objectives for the schemeScope of the investmentCase for change. What is the driver for the investment and what will it achieve? What will be the consequences if the scheme does not go ahead?Spending objectivesExisting arrangementsBusiness needs – current and futureExpected benefits from the investmentFor build schemes, is there evidence of an approved estates strategy and is the rationale consistent with that strategy?Strategic and policy context including:Current strategiesImpact on existing service configuration and wider health systemEvidence of support from other bodies, eg commissionersConsistency with government and strategic policies and prioritiesCompliance with relevant Carter efficiency recommendationsDoes activity and capacity planning demonstrate consistency with related service planning?Risks, constraints and dependenciesHas the strategic case summarised the main risks, constraints and dependencies?The key milestones of the project are set out in Table 2 below.Table 2: Key milestonesStageDateClinical qualityTable 3 provides guidance on the areas to include in this section of the report. For further guidance, refer to the document Capital regime, investment and property business case approvals guidance for NHS trusts and foundation trusts.Table 3: Recommendation report guidance: Clinical qualityAreaGuidanceClinical strategy and commissioning intentionsDescribe how the scheme will support the delivery of the trust’s clinical strategy and is aligned to commissioning intentionsDesign and buildingHas the design of the building considered the model of care, patient need, privacy and dignity, workflows and logistics, adaptability and security?Has consideration been given to future proofing the investment?Leadership and stakeholder engagementDescribe the leadership and stakeholder engagement process and outcomesWorkforceDescribe how national drivers for workforce have been considered and how the investment aligns to the trust’s workforce strategySustainabilityProvide evidence of triangulation of demand and capacity modelling, workforce strategy and financial assumptionsLearning and continuous improvementDoes the trust have arrangements in place to evaluate lessons learned including post-project benefits?Economic caseThe trust should adopt the following process to establish the preferred option for the investment:Step 1: Generate a list of critical success factors against which the options could be assessed.Step 2: Identify a long list of potential options for satisfying the investment objectives.Step 3: Evaluate the long list of options against the critical success factors.Step 4: Create a shortlist by forming composite options from the individual options that emerged from each category in the previous step.Step 5: Undertake a full value for money appraisal of these shortlisted options to identify a preferred option.Table 4 provides guidance on areas to include in this section of the report. For further guidance, refer to the document Capital regime, investment and property business case approvals guidance for NHS trusts and foundation trusts.Table 4: Recommendation report guidance: Economic caseAreaGuidanceOptions appraisalHas a wide-ranging long list of options including ‘do nothing’ (unless not credible) and/or ‘do minimum’ been identified?Have critical success factors been developed?Shortlisted options (including ‘do minimum’; three or four is the recommended number) and a description of how these have been shortlistedConsideration should be given to a public sector comparator (PSC) as part of the option appraisal where appropriate CostsThe basis of costs and assumptions should be set outHave all relevant capital and relevant costs been identified and properly assessed in line with Her Majesty’s Treasury (HMT) Green book?Have sunk costs, transfer payments, VAT, capital charges and depreciation been excluded from the net present cost (NPV)?Is the appraisal period appropriate to the life of the asset?BenefitsHave appropriate and credible cash and non-cash releasing benefits been identified?RiskHave the risks been quantified and costed?Have the assumptions and impact of risk been explained?NPV, optimism bias and sensitivity analysisA discounted cash flow model should be used, such as the generic economic model (GEM) to calculate an NPV as part of the economic appraisalHave costs, benefits and risks been adjusted for optimism bias?Has an appropriate sensitivity analysis been included?SummaryIs there a clear conclusion and clear recommendation for a preferred option?Tables 5 to 9 are examples that can be included in the recommendation report as appropriate.Describe the long-list options and how they were developed, by completing Table 5.Table 5: Summary of long list of optionsOptionNameDescriptionTables 6 to 8 below provide examples of the qualitative assessment.2.10For the economic case, a detailed NPV calculation should be included in the report; and summarised for example by completing Table 9. Capital and revenue costs should be analysed as appropriate to the business case.Table 6: Qualitative assessment of long-listed options against critical success factors (CSF)OptionWeightingTotal score availableDo nothingDo minimumOption AOption BOption CCSF 1CSF2CSF 3CSF 4TotalTable 7: Key benefits of shortlisted options (qualitative scores)NoKey benefitsOptionsDo minimum and/or do nothingOption AOption BOption CList benefitsRankTable 8: Risk assessment of shortlisted options (qualitative scores)Qualitative riskWeightingOptionsDo minimum and/or do nothingOption AOption BOption CList of risksRankTable 9: Net present value summaryCostsDo minimum and/or do nothingOption AOption BOption CCapital Revenue Total costsDiscount factorNet present costRankProvide information in the report on the cash-releasing and non-cash releasing benefits (for example by completing Tables 10 and 11): what these are and how they have been derived and phased over the appraisal period.If the trust has not identified or quantified benefits, this should be explained and a condition of approval should be considered as part of the business case development.The report should include a table which outlines the rankings and scorings of the short-listed options as per the example in Table 12. Table 10: Cash-releasing benefitsOptionYear ?’000Year ?’000Year ?’000Year ?’000Year ?’000Year ?’000Year ?’000Total ?’000Table 11: Non-cash releasing benefitsOptionYear ?’000Year ?’000Year ?’000Year ?’000Year ?’000Year ?’000Year ?’000Total ?’000Table 12: Options appraisal summaryHeadingOptionOptionOptionQualitative benefits scoreRankNPVRankAffordabilityRankRiskRankOverall rankingCommercial caseTable 13 provides guidance on areas to include in this section of the report. For further guidance, refer to the guidance document Capital regime, investment and property business case approvals guidance for NHS trusts and foundation trusts.Table 13: Recommendation report guidance: Commercial caseAreaGuidanceCommercial feasibilityHas a suitable range of procurement options been considered and has a realistic and credible timetable been set out?ScopeThe business case should clearly describe the output to be procured Has a realistic and robust procurement strategy been identified?Confirm compliance with EU procurement law?Procurement processDoes the tender process ensure robust competition, shortlisting of supplier responses and adequate tender evaluation?Accounting treatmentIs the accounting treatment set out and does the trust have written confirmation from its external auditors?Key contractual issuesIs there a summary commentary of key contractual issues, legal advice and contractual milestones and delivery dates?Has the payment mechanism been set out?What break clauses are in place should the trust circumstances change, eg hospital is relocated?RiskHas the risk been appropriately allocated between public and private sectors?PersonnelAre any staff likely to be transferred? If yes, does TUPE apply?Build schemes onlyDoes the report include a summary of compliance with design guidance, relevant health building notes (HBN), health technical memoranda (HTM), Building Research Establishment Assessment Model (BREEAM) assessment and other relevant guidance?Financial caseTable 14 provides guidance on areas to include in this section of the report. For further guidance, refer to the document Capital regime, investment and property business case approvals guidance for NHS trusts and foundation trusts.Table 14: Recommendation report guidance: Financial caseAreaGuidanceWhole-life costsA detailed table showing the whole-life cost of the project (capital and revenue). As an example see Table 15 belowA reconciliation to the financial case (SoCI and SoFP) should be provided. As an example see Table 16 belowAffordabilityHas a clear statement of capital and revenue affordability been included?Does the investment require DH/external funding? If so, has this been confirmed?What is the implicit interest rate in the preferred option? Is RPI inflation linked and how is RPI risk being managed?Where required, is the investment consistent with commissioners’ financial plans and has support been confirmed in writing?What are the implications for the trust’s cost improvement plan (CIP) and reported financial performance?Incremental impact on the primary financial statementsTrusts are required to show the incremental impact on the Statement of Comprehensive Net Income (SoCI), Statement of Financial Position (SoFP) and Cash Flow (see examples below)Where DH financing is required, a source and application of funds statement should be included showing the trust’s capital programme over five yearsThe accounting treatment should be set out and where this is unclear or a matter of professional judgement, written confirmation should be obtained from the trust’s external auditorIf the investment has an adverse impact on the trust’s financial position, describe the mitigating actionsImpact on overall trust financial positionAn appendix should be included to show the impact of the investment on the whole trust SoCITechnical checksConsideration should be given to the relevant accounting standards, treatment of VAT and the issues noted in the business case core checklistContingenciesAre contingency plans described and sensitivity analysis included on the relevant variables, eg delivery of cash-releasing benefits, cost changes, activity assumptions, etc?Tables 15 to 19 below show the incremental impact of the scheme on the NHS trust’s SoCI, Cash Flow and SoFP.Table 15: Whole-life cost of the projectWhole-life costsYear ?000sYear?000sYear?000sYear?000sYear?000sYear?000sTotal?000sXXXXXTotal capital costXXXTotal revenueTotal whole life costTable 16: Whole-life cost reconciliationCost reconciliationCapital?’000sRevenue?’000sTotal?’000sWhole life costsLess: Cash-releasing benefitsPlus: PDC dividendPlus: DepreciationPlus: Irrecoverable VATTotal financial costs(Note: This should reconcile to the SoCI and SoFP)Table 17: Impact on the Statement of Comprehensive Net Income (incremental)ActivityYear?'000Year?'000Year?'000Year?'000Year?'000Year?'000Year?'000Year?'000Year?'000Year?'000Year?'000Total?'000Revenue costsXXXDepreciationPDC dividendsCash-releasing benefitsIncremental impact on I&E surplus/(deficit)Table 18: Impact on Cash Flow (incremental)ActivityYear?'000Year?'000Year?'000Year?'000Year?'000Year?'000Year?'000Year?'000Year?'000Year?'000Year?'000Total?'000Capital costsRevenue costsPDCCash Releasing BenefitsIncremental impact on Cash FlowCumulative impact on Cash FlowTable 19: Statement of financial positionActivityYear?'000Year?'000Year?'000Year?'000Year?'000Year?'000Year?'000Year?'000Year?'000Year?'000Year?'000Year?'000Property plant and equipmentCash and cash equivalentsManagement caseTable 20 provides guidance on areas to include in this section of the report. For further guidance, refer to the document Capital regime, investment and property business case approvals guidance for NHS trusts and foundation trusts in financial distress.Table 20: Recommendation report guidance: Management caseAreaGuidanceProject planIs there a project plan with delivery plan dates and detailed milestones?Project managementAre the programme and project management structures and plans set out?Project reporting and monitoringHave reporting structures and monitoring arrangements been set out?Benefits managementIs there a benefits realisation plan with detailed underpinning project plans for delivery?Change managementIs there a detailed, resourced and robust change management plan with appropriate contingency plans?Risk managementIs there a comprehensive, costed risk register and are risks being appropriately mitigated and managed?Post- implementation evaluation arrangementsAre post-project evaluation plans clearly set out?Summary of NHS Improvement reviewNHS Improvement will seek assurance that an NHS trust/foundation 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. NHS Improvement will require assurance that a capital investment business case has been through an appropriate level of scrutiny and governance by the NHS trust/foundation trust proposing the investment, before the case is submitted to NHS Improvement. NHS Improvement will ask for NHS trusts/foundation trusts to demonstrate the following: Process of engagementThe investment proposal demonstrates a high level of engagement with clinical staff and the use of appropriate staff and patient feedback. Patient care, quality and care delivery system benefitsThe investment proposal is consistent with the NHS trust’s/ foundation trust’s clinical strategy and supports the provision of high quality care. 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 system have been addressed and the proposed solution adequately assists the health system in managing present and future issues. 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. The NHS trust/foundation trust has the resource and capacity to deliver the investment programme within a realistic timeframe.Provision proposal and best practiceWhich is the preferred option and why? Is the NHS trust/foundation trust option appraisal process robust?Is there evidence of innovation and best practice in the business case that demonstrates an NHS trust/ foundation trust has put patients at the centre of their investment proposal with the aim of delivering the highest standards of NHS care?Finance, value for money and affordabilityPlease address the following questions:Is the business case included in XXX NHS Trust/Foundation Trust long-term financial model (LTFM) or equivalent strategic planning model/plan?Are the figures consistent with LTFM or equivalent strategic planning model?What is the impact on the NHS trust’s/foundation trust’s Statement of Comprehensive Income?What is the impact on the Statement of Financial Position? What are the cash implications?Is the cash available to fund the project?What is the profile of expenditure?How will the scheme be financed?What is the capital cost of the option proposed?What are the ongoing revenue consequences (depreciation/capital charges)?What are the CIP implications? Comment on overall CIP position and impact on business case.Include an overall comment on the affordability of the scheme.Provide summary/extracts from the business case to help the reader if this strengthens the case. Clarify if the capital investment incurs capital refresh costs or lifecycle costs, and whether these are included in the business case. If costs exceed the NHS trust/foundation trust delegated limit and are excluded from the sign-off value, a further business case should be submitted for approval.Provide a comment on the current financial position of the NHS trust/foundation trust. If the NHS trust/foundation trust is in deficit or is behind plan: What are the plans to address this position and do they affect the affordability of the business case? What mitigating actions are being taken to ensure the business case is still affordable? Include a comment on the regional teams view of the trusts financial position and how this influences the approval of the OBC/FBC.ConclusionThe following questions should be addressed when summarising the conclusion of the business case:Does the business case demonstrate the requirement and sufficiently robust reasoning for the investment, are financial benefits stated and can the NHS trust/ foundation trust withstand a reasonable level of risk if the benefits are not realised? What is the current financial position, year-to-date and forecast outturn?What are the key actions required during implementation/ next stage?Is any immediate action required before approval is given?The OBC/FBC is recommended for approval by the relevant NHS Improvement executive regional managing director with a number of actions that XXX NHS Trust/Foundation Trust needs to ensure are delivered in advance of the FBC review and approval.Key actions required during the next stage/implementation are:XXXXXXXXX.RecommendationThe following questions should be addressed when summarising the recommendation of the business case:What is the NHS Improvement recommendation? Ensure this is a clear recommendation.Is the approval requested subject to loan/Public Dividend Capital funding approval?An example is given below:the NHS Improvement director of finance/Resources Committee is asked to approve the OBC/FBC for XXX NHS Trust/Foundation Trust subject to a successful funding application to the Department of Health/Independent Trust Financing Facility (ITFF) on X to the value of ?XXX.the director of finance/Resources Committee is asked to approve the OBC/FBC for XXX NHS Trust/Foundation Trust to the value of ?XXX.the director of finance/Resources Committee is asked to approve the OBC/FBC for XXX NHS Trust/Foundation Trust to the value of ?XXX subject to……..Operational regional director of finance approvalAs operational regional director of finance for XXX region, I am satisfied that XXX NHS Trust/Foundation Trust has subjected the business case to appropriate governance and that the proposed investment is affordable and represents good value for money to the taxpayer.The NHS Improvement director of finance/Resources Committee is asked to note the approval of the FBC for XXX NHS Trust/Foundation Trust from the operational regional director of finance for XXX region.Signature:Name: Name, Operational Regional Director of Finance (X Region) Date:XExecutive Regional Managing Director approvalAs executive regional managing director for XXX region, I am satisfied that XXX NHS Trust/Foundation 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 taxpayerThe NHS Improvement director of finance/Resources Committee is asked to note the approval of the FBC for XXX NHS Trust/Foundation Trust from the executive regional managing director for XXX region. Signature:Name: Name, Executive Regional Managing Director XXX regionDate:DateAppendix 1: XXX NHS Trust/Foundation Trust business case summaryWhole-life costs ?mCapital ?mRevenue ?mDH funding (if applicable)Contract value ?mContract termSupplierProvisionCash- releasing benefits ?mNon-cash releasing benefits ?mAppendix 2: XXX NHS Trust/Foundation Trust Statement of Comprehensive Net Income (whole trust position including the investment over the appraisal period)Statement of Comprehensive IncomeYear ?'000Year ?'000Year ?'000Year ?'000Year ?'000Year ?'000Year ?'000Year ?'000Year ?'000Year ?'000Total ?'000Gross employee benefitsOther operating costsRevenue from patient care activitiesOther operating revenueOperating surplus/(deficit)Investment revenueOther gains and lossesFinance costs Surplus/(deficit) for the financial yearDividends payable on public dividend capital (PDC)Net gains/(loss) on transfers by absorptionRetained surplus/(deficit)Adjustments (including PPA, IFRIC 12 adjustment)Adjusted financial performance retained surplus/(deficit)Appendix 3: Benefits of the project (mandatory)GoalKey deliverableDescription of benefitTypeFinancialNon-financialTracked in benefits realisat-ion planValue for total benefits ?’000Non-cash releasingCash releasingAppendix 4: Key risks NoRisk descriptionProb-abilityImpactMitigation plan ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download