10 The Campus scheme faced a number of significant risks, due in part to its intrinsic complexity and the timescale over which it was being planned. The timescale itself led to additional risks due to the impact on design assumptions of new national policies for the NHS introduced while the scheme was being developed. These risks included project risks, in particular the mismatch between the size of the scheme and the land and funding available, and the impact of 'consumerism' guidelines on space in new hospital building schemes. There were also policy risks because of the change in the structure of the NHS, with the creation of Strategic Health Authorities and Primary Care Trusts, and the implications for this scheme of Payment by Results and patient choice that could not have been foreseen by the Campus partners.
11 The Department of Health (the Department) is currently reviewing how the commissioning of major capital schemes through PFI can be reconciled with long-term affordability and policies on choice, Payment by Results and the movement of care away from acute hospitals to the primary care sector.
12 Any one set of the above project or policy risks would have been challenging. However, the layering of risks upon risks without adequate mitigation or an effective risk management strategy made the scheme particularly vulnerable and reduced its chances of success.
13 The Campus partners failed to address some of the requirements of the Department's Capital Investment Manual in developing an OBC. For example, they did not draw up a risk register as part of the 2000 OBC or carry out a formal reappraisal of the 2000 OBC when its estimated capital cost increased by more than 10 per cent. Whilst the Campus partners drew up 'snapshot' risk registers on three occasions (summer 2001, autumn 2003 and autumn 2004), in summer and autumn 2004 the Project Director made a deliberate decision not to embed risk management processes in the scheme as the scheme did not have sufficient resources or capacity to do so at the same time as drawing up a new OBC. As a result, the lack of structured and integrated risk management processes was a key contributor to the Campus partners' collective inability to realise fully and act earlier on the threats to the viability of the scheme.
14 The biggest single constraint throughout the life of the scheme, was that the NHS failed to identify an adequate land requirement before securing the original OBC approval in 2000. As the Campus partners developed the scheme, their land requirements became clearer and new schemes emerged which had different land and space requirements. It was over two years after the 2000 OBC was approved that the Campus partners realised they did not own enough land to make the Campus work within Westminster City Council's planning policy. They therefore needed to acquire additional land.
15 From early 2003 on, the Campus partners explored a number of complex ways of addressing the scheme's space requirements but without any satisfactory resolution. This included, in early 2005, exploring an offer from Westminster City Council to assemble a land package suitable for the scheme as required by the December 2004 OBC, although without any written parameters but ultimately subject to approval by Trust Boards.
16 The Comptroller and Auditor General has expressed his concern that the need to have transactions off balance sheets was inappropriately distorting decision making.2 This was a contributing issue in the struggle to develop an affordable Campus scheme as the Campus partners believed that the Department would not accept any OBC if the OBC or supporting land deal was on balance sheet. However, the Campus partners' December 2004 OBC was supported by an embryonic land deal which, at that stage, was on balance sheet. The Department did not have the resources at that time to fund such a deal and the NHS Trusts could not afford to put it on their own balance sheets. The land deal supporting the OBC had to be developed and improved to reflect this view and other matters relating to the overall affordability of the deal.
17 All Campus partners agreed that the scheme had to be affordable within local NHS resources. In early 2003 they had a gap of £53 million between available revenue and the expected running costs of the scheme. Although all parties agreed that the December 2004 OBC was affordable under the existing funding regime, they also recognised that short-term support would be required to support the land deal. However they could not agree that the May 2005 Addendum to the OBC was affordable. Constantly changing forecasts of revenue, based on evolving Departmental guidance, and the cost of the land deal also undermined the confidence of the North West London Strategic Health Authority and Royal Brompton and Harefield NHS Trust. Concern over whether the scheme was affordable was one of the reasons the Royal Brompton and Harefield NHS Trust Board was unable to recommend the final OBC to the Strategic Health Authority for approval.
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2 Public Accounts Commission, Twelfth Report of Session 2003-04.