Kill or ProCure?

Ask any contractors on the NHS ProCure21 (P21) framework what is at the top of their wish list and the same answer comes back. "It's workload," they all say.

Pickings have been thin for over a year now. So poor, in fact, that only eight of the 12 original Principal Supply Chain Partners (PSCPs) remain in the framework.

So why has P21 failed to deliver? A key problem is the reluctance of a majority of Trusts to adopt this new form of procurement since its launch in December 2003.

Shifting policies

The programme also fell foul of shifting policies, which saw NHS Estates, tasked with overseeing P21, abolished in May 2004. The programme was then transferred to NHS Estates and Facilities, where it underwent three reviews and a change of management. Next came the Department of Health's reorganisation of NHS Trusts.

Coupled with the introduction of the new Payment by Results regime, this had a devastating effect on Trusts' budgets, reducing the sluggish stream of P21 work to a mere trickle, and so it remains today.

Speaking at a recent health conference Ray Stephenson, P21's programme manager, admitted that the scheme's workload has not lived up to expectations. However, he is optimistic this will change as Trusts tackle their deficits and P21's successes become more widely recognised.

According to Stephenson, these are legion. The total estimated value of P21 projects at all stages is currently £2bn. There are 61 projects, worth £618m, in the construction phase, and 137 completed projects valued at £557m.

The P21 programme is being used by 133 Trusts, and 38% of these have more than one scheme in the programme. Of those Trusts progressing to more than one scheme, 83% continued to use the same PSCP - not a bad rate of return.

Price guarantee

The attraction of P21, said Stephenson, is that it cuts out the OJEU process, and offers a guaranteed maximum price, delivering schemes on time and to budget. He claimed that P21 can save six months in the pre-construction phase, cut construction time by 17% and keep design fees down to 13% of the project cost.

In addition, said Stephenson, 75% of P21 schemes use the VAT recovery service, saving the NHS £3m so far.

The P21 team has also introduced a simplified benchmarking dataset, programme risk analysis and regular meetings with PSCPs.

So what of the future? Stephenson said P21 is ideally suited to deliver Foundation Trusts' capital works and part of the £750m community hospitals programme.

But is this too little, too late? PSCPs declined to go on record, but privately said the circus has now moved on. "The PSCPs' lights are on, but everyone is out chasing better markets," said one. "Until the tap is turned back on and the P21 team starts to aggressively market this, it will stay in the doldrums."

Another PSCP told CJ: "The benchmarking shows that this is a good product, but they are not showing the data to Trusts in case they cherry pick the best performers."

Incentives

So will more PSCPs leave the framework this year? Probably not, say P21 contractors. How-ever, there are incentives to stay. The £1,700 annual membership fee for 2007 has been slashed by 25% and there are moves to try and extend the contract by two years.

There are also plans to hire a consultant to investigate why Trusts did not avail themselves of an estimated £2bn of funds for capital projects in 2006. "Perhaps as Trusts adjust to the new regime we'll see more work coming through," suggested one optimistic contractor.

But will it land in the laps of PSCPs? Sol Construction has recently picked up work from clients that have pulled out of P21. "In our experience, clients are coming out of P21 because it is too expensive and time consuming," said Sol's financial director John Heard.

Other PSCPs confirm Heard's claim. "It is a small but significant minority," said one. "It is largely because some Trusts don't understand how P21 works."

PSCPs are committed to P21, for now. How long that commitment lasts will depend on how well the P21 team can market the programme to a new generation of Trusts.

ProCure21's principal supply chain partners

Balfour Beatty

Costain

HBG

Integrated Health Projects (Norwest Holst/Sir Robert McAlpine)

Interserve Health

Kier Health

Laing O'Rourke

Medicinq (B&K, Midas, Osborne and Simons)

Former PSCPs

Carillion

Medicor (Pearce Health)

Taylor Woodrow

Wates

Amec and Mowlem (formerly part of ACM consortium with Costain)

Factfile: ProCure21

Total value of all ProCure21 schemes £2bn

Number of projects under construction 61

Value of projects under construction £618m

Number of completed projects 137

Value of completed projects £557m

Number of trusts using P21 133