Friday, May 19, 2006

Sick Hospitals Haemorrhage Cash

Three times over budget, seven years behind schedule, zillions spent on consultants...and finally just abandoned. Yes, the Paddington hospital project is another everyday story of the dribbling institutionalised incompetence inside the NHS.

As the National Audit Office reports, the dribbling in Paddington's case was pretty extensive: no coherent leadership, no adherence to standard project rules, no appreciation of the risks or the rapidly escalating costs, no financing plan, and- most astonishingly of all- no idea how to secure enough land for the buildings themselves.

And the cost? Well, the £15m wasted on professional fees is just the start. There's all the time put into it by NHS staff. Yes, I know they're all administrators who wouldn't have been doing anything useful anyway, but we're still paying. And then there's the cost of now refurbishing the decrepid hospitals Paddington was meant to replace. Construction costs have soared in the interveing period and the NAO report suggests the extra cost could run into hundreds of millions. And all that's before taking account of the costs to patients (and indeed staff) of struggling on in buildings that Florence Nightingale would have been ashamed of.

The NAO report also contains this absolutely gob-smacking chart on cost over-runs in hospital projects generally:


They comment:

"All large NHS capital investments (schemes above £75 million) cost significantly more than their initial Outline Business Cases. For major schemes either in planning or build stage, the average cost increase above the original OBC is 117 per cent."

We've discussed salami slicing tactics before, and we know that worldwide 90% of public projects exceed their initial budgets. But this really takes the hospital Rich Tea.

Again- and I apologise for droning on about it- this kind of shambolic carry-on would simply not be acceptable in a FTSE100 company.

True, in Paddington's case, the original Project Director’s contract "was terminated by mutual agreement", but precious few other heads seem to have rolled. Indeed, one "Gareth Goodier, the chief executive of the health authority, received a £10,000 bonus on top of his £150,000 salary after the collapse of the scheme for achieving "organisational objectives" (see here). Do we think Sir Terry was so forgiving when his new store at Beaconsfield fell onto the railway line?

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