6 External Factors - Qualitative Assessment

6.1 The high level factors outlined above can be assessed and scored against a range of criteria and evaluation parameters. These are shown in the matrix provided in Figure 4 below.

6.2 The detailed qualitative assessment of the scheme is undertaken against factors in five weighted categories as set out in Figure 2 below:

Figure 2 - Qualitative Assessment - Weighting

Category	Weighting
Capital Efficiency	40%
Revenue (Facilities Management) Efficiency	20%
Potential to Transfer Risk	30%
Residual Value	5%
Potential for alternative source of income	5%

6.3 Each parameter in Figure 4 should be considered and the extent to which the project provides scope to satisfy the requirements of the criteria should be scored using the following scale:

Figure 3 - Qualitative Scoring Scale

Extent of Contribution	Score
No scope for the project to contribute	0
Some scope for the project to contribute	1
Good potential for the project to contribute	2
The project offers scope to contribute significantly	3

6.4 The score for each part of the matrix (A to E) in Figure 4 below should be totalled manually and the relevant score included in the shaded box at the end of each section. The totals should then be entered into Figure 5 and subsequently be multiplied by the weights as given in Figure 2 above to arrive at a weighted score. Finally, the weighted scores should be totalled to reach a final score.

Figure 4 - Detailed Qualitative Assessment for "PPP ability" of Potential Capital Scheme - Evaluation Parameters

Ref	Scheme Title

Scoring System

0 = No scope for the project to contribute

1 = Some scope for the project to contribute

2 = Good potential for the project to contribute

3 = The project offers scope to contribute significantly

Capital Cost

Major Criteria		PPP Opportunity		Detailed Test	Score (0-3)	Comments
A	Potential for PPP to be more capital cost effective	A1	Increase the scheme to generate economies of scale	• Enlarging the scheme to allow greater use by other users • Changing the quality and range of service provision of the scheme to make it more attractive to users • Adding extra facilities/services which cater for other customers
Weighting = 40%
		A2	Design Innovation	• Adding in 'higher technology' or including built in technology upgrades to save labour or reduce other ongoing costs • Using new materials to provide a quicker build or cheaper capital expenditure • Using new building techniques through design team integration to provide lower maintenance and lifecycle costs • Redesigning the scheme in some way to make it more efficient and therefore possess a lower unitary charge
		A3	Reduce NHS Capital Costs	• Changing the specified materials without altering the quality of the facility (and therefore no change to service standards), such as using either lower cost replaceable fittings or achieving a higher procurement discount • Tighter control over subcontractors who may take an equity stake in the project • Longer term materials that have lower replacement cycles such as high tech roofing • Redesigning the scheme in some other way to make it cheaper to build • Providing a higher level of integration of departmental services and therefore a smaller gross floor area (e.g. shared reception areas)
A OVERALL POTENTIAL FOR PPP TO BE MORE COST EFFECTIVE						(max. possible = 36)
Major Criteria		PPP Opportunity		Detailed Test	Score (0-3)	Comments
B	Potential revenue efficiencies	B1	Lower costs through economies of scale	• Provision by large multidisciplinary specialist FM providers
Weighting = 20%
		B2	Lower costs through more efficient service provision	• Provision by specialist FM providers • Optimising the interface between build solutions and FM provision through design innovation • Working FM facility equipment for longer hours such as HSDU sterilisers, therefore reducing requirement for plant and/or machinery
		B3	Sharing the facility with other users	• Enlarging the scheme for shared NHS and private sector use and sharing running costs and overheads
		B4	Help increase effectiveness	• Increasing the throughput to take advantage of positive associations between higher volumes of work and better outcomes for patients • Changing the quality of the facility, or the embodied technology, to make it better for users • Redesigning the scheme in some other way, the better to suit users' requirements
B OVERALL POTENTIAL FOR PPP TO GENERATE FM SAVINGS						(max. possible = 24)
Major Criteria		PPP Opportunity		Detailed Test	Score (0-3)	Comments
C	Potential risk transfer to private sector	C1	Design risks	• Failure to design to brief and build to design.
Weighting = 30%
		C2	Construction risks	• Incorrect time estimate, unforeseen ground conditions, on-site security, site safety, third party claims, delay events, force majeure, non NHS legislation, changes in taxation, contractor default, poor project management, contractor/sub contractor industrial action, building commissioning, availability of adequate labour, availability of construction materials
		C3	Performance risks	• Latent defects, sub-contractors performance and default, industrial action, availability of facilities
		C4	Operating cost risks	• Incorrect cost estimates, non NHS legislative change, inflation
		C5	Revenue variability	• Third party income streams and demand
		C6	Technology and obsolescence	• Buildings, plant and equipment may become obsolete during the contract
C OVERALL POTENTIAL TO TRANSFER RISK						(max. possible = 18)
Major Criteria		PPP Opportunity		Detailed Test	Score (0-3)	Comments
D	Potential residual value and transfer of surplus land to private sector	D1	Location of Land	• Location of facilities in relation to other healthcare facilities
Weighting = 5%
		D2	Re-siting of the facility	• Constructing the new build facility closer to the edge of the site to achieve separate identity • Constructing facilities that could serve an alternative purpose such as hotel, conference or office accommodation if sited so as to be able to segregate from the health site at a later date
D OVERALL POTENTIAL FOR THE AVAILABILITY OF RESIDUAL VALUE						(max. possible = 9)
Major Criteria		PPP Opportunity		Detailed Test	Score (0-3)	Comments
E	Potential for alternative source of income?	E1	Recover its cost via user charges to make the scheme more financially free standing	• Making the facility/equipment/system larger or smaller and more profitable • Changing the quality of the facility/equipment and making it more profitable • Redesigning the scheme/project in some way so as to allow additional profitable uses
Weighting =5%
E OVERALL POTENTIAL FOR PRIVATE SECTOR TO GENERATE OTHER INCOME						(max. possible = 9)

6.5 The results of the above assessment should now be summarised in Figure 5 below:-

Figure 5 - Summary of Qualitative Assessment of "PPP ability"

Ref	Scheme Title	Capital Costs if Publicly Financed

Summary of Assessment of Scope for PPP
	Raw Score	Weighting	Weighted Score
A Capital Efficiency B Revenue (FM) Efficiency C Risk Transfer D Residual Value E Alternative Income Stream	/36 /24 /18 /9 /9	40% 20% 30% 5% 5%
WEIGHTED 'PPP ABILITY' SCORE

Rating of Score		Indicated Action
Score 0 - 25% = Minimal prospects for PPP/PFI		Unsuitable for PPP/PFI - public capital required
Score 25-50% = Some prospects for PPP/PFI		Combine with other schemes, re-evaluate
Score 50-75% = Good prospects for PPP/PFI		Review, re-evaluate and modify scheme to increase opportunities for securing best value
Score 75%+ = Excellent prospects for PPP/PFI		Test scheme for PPP/PFI

Note - the weighted score is calculated by multiplying the raw score per category by the weighting (e.g. if the score for Capital Efficiency were 27/36, then the weighted score would be 30.