Redevelopment of Chalmers
Hospital and Health Centre
Full Business Case
July 2008
DRAFT
Implementing
2
Contents
EXECUTIVE SUMMARY
4
1.
INTRODUCTION
10
2.
STRATEGIC CONTEXT
10
3.
SUMMARY OF OUTLINE BUSINESS CASE/CASE FOR CHANGE
15
4.
AFFORDABILITY
25
5.
VALUE FOR MONEY
29
6.
RISK ANALYSIS
29
7.
SENSITIVITY ANALYSIS
30
8.
BENEFITS ASSESSMENT
31
9.
BENEFITS REALISATION PLAN
36
10.
CONTRACT STRUCTURE
40
11.
PROCUREMENT PROCESS
41
12.
CAPITAL AVAILABILITY
41
13.
REVENUE FUNDING STRATEGY
41
14.
STAKEHOLDER SUPPORT
41
15.
PROJECT MANAGEMENT
42
16.
POST-PROJECT EVALUATION
42
17.
RISK MANAGEMENT
43
18.
IM & T
46
19.
PERSONNEL ISSUES
46
20.
EQUIPMENT
46
21.
TIMETABLE
47
22.
CONCLUSION
47
23.
SUPPORT FROM NHS GRAMPIAN BOARD
47
APPENDICES (see separate volume)
Appendix A
Report on Tenders
Appendix B
Development of the Options
Appendix C
Design Configuration of Site & Design Elevations
Appendix D
Planning Permission and Conditions –
Appendix E
Optimism Bias
Appendix F
Health Profile for Banff & Buchan
Appendix G
Project Organisation Structure
Appendix H
Summary Project Programme & Timetable
Appendix I
Decanting Information
3
THE REDEVELOPMENT OF CHALMERS HOSPITAL AND HEALTH CENTRE
EXECUTIVE SUMMARY
1.1 INTRODUCTION
This Full Business Case sets out the requirement for the redevelopment of Chalmers Community Hospital
and Health Centre facility in Banff.
The document also quantifies the impact of the final report and recommendations from the Design Team
on Tenders Received for delivery of the preferred option.
1.2 BACKGROUND
The original Outline Business Case (OBC) was approved by the SGHD Capital Investment Group on 10th
March 2003. The preferred option approved at that time as delivering the most advantageous return on
capital was to progress a partial refurbishment of the old building and a new build ward and primary care
accommodation.
Subsequently an addendum to the OBC was approved in March 2004. This proposed an alternative
financial model that would split the scheme to be part funded using NHS Capital for the Hospital
component and GMS revenue funding through the GP Third Party Development scheme for the Health
Centre. This option recognised the restricted availability of NHS Capital funding, the impact of an increase
in the size of the health centre accommodation in line with National Standards and construction industry
inflation on overall costs.
In progressing the detailed design work that followed this approval, it was necessary to change the
proposed site configuration and construction specification in order to achieve final planning and Historic
Scotland approval. This change in design specification and the inflationary pressures from a buoyant
construction industry had an adverse impact on the overall capital costs of the scheme and, significantly,
on the potential third party rentals. The NHS Capital option ranked the most cost effective solution
following a revised financial appraisal and a further addendum to the OBC was submitted in June 2007 to
request approval to proceed as an entirely NHS Capital funded project.
Following a series of iterations between the Board and the SGHD final approval to proceed to tender and
prepare the Full Business Case was received in January 2008.
It should be noted that the subsequent approvals to alter the financial model and the technical building
specification did not materially affect the preferred service model approved in the original OBC in March
2003.
1.3 PREFERRED OPTION
The preferred option is for a partial new build facility for inpatient areas and a new Health Centre, with the
remaining clinical services and support functions housed in an adjoining refurbished area of the existing
building on the Chalmers Hospital site.
The process in choosing the preferred option has involved extensive public consultation at all stages, with
regular formal press releases, public meetings and questionnaires. In addition, the use of a Project Board
and reference-Groups in the development and appraisal of options has been core to the final choice for
redevelopment of this hospital on its current site.
The consequence of these proposed service changes is that Campbell Hospital at Portsoy will become
surplus to requirements.
The agreed service specification for the preferred option is as follows: 4

24 GP acute beds and 6 slow stream rehabilitation beds

Midwifery led service with access to a birthing unit

Health Centre

24 hour nurse led minor injuries service

Out-patient department including a minor surgery unit to accommodate the range and complexity
of locally available services e.g. endoscopy service, new orthopaedic service, new ENT service,
and new oral chemotherapy as part of the approved Change and Innovation Plan

6 place day service for a range of groups such as older people, physically disabled, dementia
sufferers, alcohol and drug misusers

A full range of allied health professional services

X-ray and enhanced ultrasound service

Plans for local rehabilitation service to enable transfer of patients from the acute service

Essential office accommodation

The development of alternative care models using a mixture of sheltered and very sheltered
housing, augmented home care and care home services to replace all continuing care in-patient
activity at Chalmers and Campbell Hospital, Portsoy, including development of psycho-geriatric
services

The transfer of all GP acute activity from Campbell Hospital to Chalmers Hospital
1.4 BENEFITS OF PREFERRED OPTION
The preferred option will deliver the following benefits:
Local, accessible and equitable health care services for the Banff locality as identified through
robust public and staff involvement.

Enhanced quality of life indicators for patients through faster access to health services and
appropriate discharge planning for the catchment population.

Better, fairer access to a range of services and improved journey of patient care.

A clinically effective facility at Chalmers Hospital, which will be responsive and flexible to patients
needs now, and in the future.

A new day service for the older/demented/physically disabled population.

Expansion of the Health Centre to meet current and future demands/potential in primary care and
better integration with the hospital facility.

Scope to provide a “one stop” facility for patients with complex needs.

Smoother transition of services from the acute sector to both Chalmers Hospital and the
community.

Opportunities will arise for investment in the infrastructure of the hospital to provide more
specialised services and for the further development of modern intermediate care services in local
communities e.g. rehabilitation and endoscopy services.
5

Improved communication with, and within, the different points of service delivery will facilitate
effective multi-team management and continuity of care for patients.

More effective use of existing skills and resources will be secured through the overall reduction in
GP acute and maternity beds.

The development of a range of diagnostic and treatment services locally for the people of the Banff
locality, greatly reducing travelling distance/time and potentially waiting times.
1.5 TENDERING PROCESS
Following an OJEC process four Companies, all National organisations with strong local experience, were
shortlisted and invited to tender. Tenders were submitted on 18 th June 2008 and are open for acceptance
for a period of 90 days. The expiry date is 16th September 2008. The Architect led design team have
managed the tendering process on behalf of NHS Grampian and their report on tenders with a
recommendation to accept the lowest offer from Robertson Construction Northern Ltd is included at
Appendix A.
1.6 REVISED CAPITAL COSTS
The overall Project Capital finance requirement, incorporating the recommended tender value, is
summarised below:Scheme Element
Refurbish
Old
New Ward
£000’s
£000’s
Building
Mechanical
Electrical
Externals
Tender cost (app A)
Optimism Bias
Total
£000’s
1325
2468
1673
5466
961
935
571
2467
1687
919
557
3163
41
314
307
662
4014
4636
3108
11758
170
40
210
IT/Comms
Fees
Scheme Total
£000’s
Moveable Equip
VAT
New Hlth
Centre
125
125
702
863
551
2116
393
454
263
1110
15
19
12
46
5124
6267
3974
15365
The following should be noted in relation to these costs:

Capital cost estimates (appendix A) are based on the lowest tender value from Robertson Construction
of £11.758m which includes an allowance for contract fluctuations and inflation but excludes Moveable
equipment, IT/Communications, VAT and Fees as detailed in the above analysis of total projected
capital costs.

Tender values are on a fluctuating price basis using a May 2008 Base Date and adjusted in line with
the “Price Adjustment Formulae for Construction Contracts” using the June 1990 Series of Indices
(familiarly referred to as the “NEDO” Indices), published by BERR.
6

The capital cost of the project detailed above represents the total cost of the option, including fees,
VAT and equipping but net of £414k costs associated with the project incurred in 06/07 and previous
years. These costs mainly relate to fees, temporary works at Campbell Hospital and the purchase of
28 Fife St. They are currently reflected as a balance in “assets under construction” and are treated as
“sunk” costs for the purpose of this economic appraisal. The costs are however attributable to the
project and are reflected in the total expenditure figures used to calculate the “impairment” on property
value that will arise when the scheme is complete (difference between the DV assessed property value
and total expenditure on the project). 28 Fife Street is reflected in the existing land value of Chalmers
Hospital.

Costs reflect an estimated 3-year project timescale, commencing on site in September 2008.

An estimate of any temporary works costs associated with decanting (See Appendix I) is included in
the above capital estimates.
1.6.1 Phasing of Capital expenditure
The capital expenditure is expected to be phased as follows:
Preferred Option
07/08
£000’s
08/09
£000’s
09/10
£000’s
10/11
£000’s
11/12
£000’s
532
2831
3816
5593
2593
Planned expenditure
Total
£000’s
15365
1.7 REVISED REVENUE COSTS
A summary of the revenue consequences of the preferred option is shown below :-
Service Change
Preferred
Option (a)
£000’s
Hospital Clinical Costs – net saving
1029
Hospital Property & Support Costs - net saving
233
Increase in Community Care & Nursing Home placements
(1032)
Third Party Rental Net Increase
Capital Charges Net Increase
(457)
Increase in running costs
(227)
Other income sources (GP)
29
Contribution from GMS budget
197
Net revenue cost ()/saving
0
The following should be noted in relation to these costs:

All revenue costs are stated at 2008/09 pay and price levels.
7

Staffing costs have been assessed using agreed Community Hospital skill mix models and reflect the
grading impact of Agenda for Change.

Facilities costs have been estimated by applying a unit cost for the floor area

Savings from an overall reduction in beds have been estimated based on the variable cost reduction

Capital charges are calculated based on the estimated valuation of the site and buildings. This figure is
derived from the overall project cost less non added value site preparation and down takings. Buildings
structure is assumed to have a useful life of 60 years, Mechanical and Electrical plant infrastructure 25
years and equipment/IT 10 years.

All savings from the closure of Campbell Hospital (£1.391m) will be reinvested. This includes £0.116m
of capital charge funding.

The costs saved as a result of long stay bed closures are used partially to meet the additional capital
charge cost of the scheme and partially reinvested in alternative community care models.

GMS Premises funding of £0.155m originally identified for 3PD rental is available as a contribution
towards the capital charges associated with the Health Centre element of the project
1.8 COMPARISON TO APPROVED OBC ADDENDUM VALUES
The key financial highlights are as follows :
The project capital cost estimate of £15.365m has increased by £1.127m or 7.9% from the
previously approved value of £14.238m (both values are stated net of the £414k “sunk” costs).

This overall increase is net of a reduction in anticipated expenditure on moveable equipment of
£0.15m and Optimism Bias of £0.55m.

The main underlying reasons for this increase are partly the impact of inflation due to the extended
project timescales (£0.3m), partly to the actual impact of inflation out-turning at higher levels than
previous estimates (£0.9m), partly to an increased technical specification (£0.4m) particularly
Mechanical and Engineering plant in order to meet new building regulations in relation to carbon
emissions and partly to the complexity of the design necessary to ensure ongoing operation of the
site during the construction period (£0.1m).

The revenue affordability of the scheme remains neutral with the increase in capital charges
absorbed by the increase in the nurse salary budget released from closure of Campbell Hospital
as a consequence of the Agenda for Change pay settlement.
1.9 CONCLUSION
The design team have recommended acceptance of the lowest priced tender from Robertson
Construction, Northern Ltd. In their report the design team make it clear that, in their opinion, there are no
further specification savings feasible and that “Value Engineering” has already been optimised within the
tendered proposals. The Robertson tender is £0.6m less than the next closest tender. It is clear therefore
that given the constraints on the site, the planning conditions on the development and current market
conditions there is no scope to compromise on the project construction costs and little flexibility overall
within the required financial envelope if the project is to proceed.
8
1.10 SUPPORT FROM NHS GRAMPIAN BOARD
NHS Grampian confirms that:
 the development fits with the Local Delivery Plan and the objectives of the Board as set out in the NHS
Grampian Health Plan
 an appraisal of a full range of options has been considered and evaluated following the guidance in the
Scottish Capital Investment Manual (SCIM) considering costs, benefits and risks
 the Full Business Case has been approved by NHS Grampian Board and that the revenue
consequences have been agreed
 procurement options have been adequately explored
 a plan for governance and implementation has been agreed
 the delivery of the project aims will maximise the use of the Board’s estate
The Full Business Case is signed off by the NHS Grampian Chair and Chief Executive, for submission to
the Scottish Government and approval is sought to fully implement the redevelopment plans.
[note: the above is subject to formal NHS Grampian Board approval on 5 August 2008]
9
THE REDEVELOPMENT OF CHALMERS HOSPITAL AND HEALTH CENTRE
1.0 INTRODUCTION
This document sets out the Full Business Case (FBC) for the redevelopment of Chalmers Community
Hospital and Health Centre Facility in Banff. The FBC is submitted following the approval of the Outline
Business Case (OBC) on 10th March 2003 and subsequent approval of the Addendum to the OBC in
January 2004 and January 2008.
2.0 STRATEGIC CONTEXT
This section sets out the current circumstances in which health services are provided within the Banff
Locality, examining the external environment within which these services are operating and how the
provision of these services are expected to change over the coming years.
2.1 National
This proposed development at Chalmers was originally set within the context of the Scottish Health
Plan “Our National Health” published in December 2000:

care provided as close to home as possible

easy access to services

shorter waits to get an appointment at a local GP surgery or hospital

fewer referrals around the health system

community and public participation in service design and provision

Staff partnership – involvement and support to provide new flexible and effective ways of working

Improved care for older and younger people

Addressing the priorities of heart disease, cancer and poor mental health

Improved recruitment & retention
The development was re-examined in light of Delivering for Health published in 2006, which focussed
on changes that patients will see including –

More of their healthcare will be provided locally in GP practices, in community pharmacies or
increasingly, in Community Health Centres, with greater use of day case treatment

If they stay in a less well-off area, their local primary care team will have dedicated resources to
reach out and help people with higher risks of ill-health

If they have a long term condition, help and support will be available so they can play an
increasing role in managing the condition themselves

If they are older, frail or liable to frequent hospital admission they will get co-ordinated care
provided locally

Carers will be treated at partners in the provision of care

Patients will have access to their own electronic health record and so will all the clinical staff who
treat them

If they need specialist treatment in hospital they will get access to a good, safe service provided by
the right person, even if that means they have to travel

If they need to go to hospital, they will have quicker access, more tests will be done locally, and
their length of stay will be planned and shorter

If patients require care urgently, they will be able to see the right person, with the right skills, at the
right time

Patients will experience fewer cancelled appointments or procedures because of an emergency or
because tests are not available

If they stay in remote and rural areas, the NHS will provide them with a core set of services in
Rural General Hospitals.
Most recently the publication of Better Health, Better Care advocated –

Helping people to sustain and improve their health, especially in disadvantaged communities,
ensuring better, local and faster access to health care

Patients as service owners

Provides 30 HEAT targets, most of which have a direct impact on service provision at Chalmers
now and in the future
Crucially, the design and delivery of health services at Chalmers Hospital has involved, and will continue to
involve, the people of Banff in an effective and meaningful way, which features as a key theme throughout
the Plan.
An NHS Scotland priority is to, wherever appropriate, enable the shift of care from large specialised acute
hospitals to local community based facilities. This is consistent with policy direction contained within both
Delivering for Health
"Our vision for the NHS is to reapply its founding principles with vigour to meet the needs of the
people of Scotland. Delivering for Health means a fundamental shift in how we work, tackling the
causes of ill-health and providing care which is quicker, more personal and closer to home."
and the ideas proposed within the current document, Better Health, Better Care.
“Locally delivered services wherever possible, linked by new technology to specialist centres to
provide additional support and information where this is required”
2.2 Grampian
Robust consultation with the people of Banff and the staff providing their services translates national and
local policy into action, reflecting NHS Grampian’s belief that people have the right to be involved at all
stages in the planning and delivery of progressive health and health care services. The principles and
values of NHS Grampian, as outlined in the NHS Grampian Health Plan 2006-2007 and 2007-2008, are
encompassed in the approach to health care outlined in the preferred option. The Health Plan states “We
aim to increase our emphasis on improving health through strengthening local preventative services, with
more support for self-care, more intensive case management for people with serious long-term conditions,
and more capacity for diagnosis and treatment locally.”
“Ageing with Confidence”, the Grampian Older Person’s Strategy, supports the provision of health, social
care and housing support models to allow older people to remain living at home, or as close to home as
possible. The strategy aims to reduce institutional care by maintaining older people in their own home for
as long as possible and supports the provision of local, accessible outpatient clinics and intermediate care
in order to achieve this.
11
This development will enable the hospital to fulfil the requirements of the NHS Grampian Property Strategy
by ensuring that the right buildings are in the right place at the right time in order to fully support patient
care.
NHS Grampian’s Change & Innovation Programme focuses on the provision of care as close to people’s
homes as possible through the rationalisation of the acute sector to provide only acute care and the
expectation that CHPs, through locally based services, meet 40% of outpatient activity previously provided
in the acute sector as well as intermediate care.
Affecting a shift in the balance of care is fundamental to both NHS Grampian corporate strategy ‘Healthfit’
and Aberdeenshire CHP’s strategic direction as outlined in the Aberdeenshire CHP Change and
Innovation Plan.
Other key factors include –

Nearest large Acute Hospital is 47 miles to Aberdeen or 35 miles to Elgin with very poor public
transport links.

Health Board led locality review (Jan 1999) includes clear recommendation for replacement of the
existing Chalmers Hospital and health centre with new purpose built accommodation.

Specification allows capacity for introduction of additional and enhanced Diagnostic &Treatment
services consistent with current thinking around creation of specialist Diagnostic and Treatment
Centres.

Grampian estate rationalisation - project enables closure of Campbell Hospital, Portsoy.
2.3 Aberdeenshire Community Health Partnership
The Aberdeenshire Community Health Partnership came into existence on 1 April 2005 and is responsible
for the provision of the following services –

All community health services

Community nursing

Community hospitals

Rapid response services

Community midwifery

Community based health promotion and pubic health services

Specialist community nursing services for sexual health, the homeless, breast care, stoma care and
diabetes

All community based AHP services

Salaried GMS medical services

Community mental heath services and integrated learning disability services

Community and salaried dentistry

Integrated substance misuse services

Housing and disability assessments and travel clinic

All CHP/Practice based pharmacy support services
12
In line with the NHS Grampian Change and Innovation Programme the Local Aberdeenshire Change and
Innovation Plan sets out the strategic direction being taken by the CHP to achieve maximum efficiency
from available resources through a shift in the balance of care, where appropriate, from centralised,
specialist, consultant led facilities to generalist mainly GP or nurse led care in local settings.
In Aberdeenshire, it is agreed that Primary Care’s capacity will be increased by developing intermediate
care with local access to Diagnostic and Treatment facilities and enhanced chronic disease management
in General Practice. All remaining long stay elderly and a proportion of long stay psycho-geriatric beds will
be closed and replaced with a range of hospital and community services designed where possible to
sustain people at home. These clinical service changes will allow development of local services in strategic
locations utilising free hospital capacity and where there is no need for this accommodation, the sale of
surplus sites. Other specific infrastructure improvements will include further development and rollout of
telemedicine, PACs and the electronic patient record to improve communication and remote access to
services.
In Aberdeenshire, the Joint Older People’s Management Team have developed an action plan to progress
the redesign of both health and social care services to meet the expected increase in the numbers of older
people in future. The plan reflects the outcomes of the review of Aberdeenshire Council’s Care Homes, the
current review of Sheltered Housing, the development of an older person’s housing strategy and the
redesign of older people’s health services as part of the Change and Innovation Plan. The resettlement
programme for Elderly and Psychiatric patients will include the development of a number of integrated
Health and Social Care facilities to meet the increasing demand for local availability of sheltered housing,
home care, day care and community rehabilitation.
The impact on physical infrastructure within Aberdeenshire is captured within the Property Development &
Rationalisation Strategy of which Chalmers is a key priority.
Aberdeenshire CHP provides services within 13 Community Hospitals throughout Aberdeenshire (though
Maud and Campbell are scheduled for closure). The services available in each hospital differ, to reflect
the local needs and historical development. However, services based around these facilities include:

GP acute care, assessment, treatment and rehabilitation

Maternity or birthing units

Old age psychiatry assessment and dementia services

Day hospital care

Casualty services

Radiology

Consultant and primary care led outpatient clinics

Paramedical services

Telemedicine
In summary the re-development of Chalmers is in line with the following strategies –
 Better Health, Better Care and Delivering for Health – provision of care and DTS close to home

Developing Community Hospitals – A Strategy for Scotland


NHS Grampian Healthfit Programme
NHSG and Aberdeenshire CHP’s Change and Innovation Programme/Plan

Strategy for Primary Care

Grampian Older People’s Strategy “Ageing with Confidence”
13

Aberdeenshire Joint Older People’s Action Plan

South Aberdeenshire CHP’s Action Plan
 NHS Estate Rationalisation and Aberdeenshire CHP’s Property Development and Rationalisation
Strategy
2.4 Banff
This section describes the population profile of the Banff locality within the wider context of Aberdeenshire
and Grampian. It is important to note that, for the purpose of this Full Business Case, the Banff Locality
was defined less by reference to a geographic area, but more by reference to the practice populations of
the following practices (as at 1 April 2007):
Practice
Aberchirder
Deveron
Macduff
Banff and Gamrie Medical
Practice
Portsoy
Partners
Gatenby, Lyons
Anderson, Innes, Thomson,
Campbell
Brooker, Barbour
McRae, Popoola, Hoddinott
Practice Population
2457
6535
Smith, McKerrchar
2797
TOTAL
17431
2562
3080
By 2010, Aberdeenshire is expected to have the biggest population increase (2.2%) of the three local
authority areas. The most substantial increases are in the 85+ age group.
Over 85s – %
increase in North
Aberdeenshire LCHP
Males
Females
1991 to 2006
2006 - 2015
2006 - 2024
45%
42%
64%
26%
154%
64%
In general the population is regarded as relatively young which makes services for children and families a
key issue.
NHS Grampian and Aberdeenshire Council’s Health Profile for Aberdeenshire show that the health status
of Banff and Buchan is poorer than Aberdeenshire as a whole. Deprivation is significant within Banff and
Buchan and placed second only behind the Aberdeen Inner population. Carstairs scores suggest that
11.4% of the population in Banff and Buchan should be regarded as being in the most deprived category.
Standardised mortality ratios in the under 75s reveal that, alongside Moray, Banff and Buchan appears to
have the second highest rate of deaths (Aberdeen Inner City with the highest).
The NHSG 2005 Banff and Buchan Traffic Light Report shows the area has –

Banff & Buchan has 81% higher than Scotland average drug related deaths

Banff & Buchan has 23% higher than Scotland average infant mortality

Banff has 52%, Macduff has 26% higher than Scotland average teenage pregnancies

Banff has 55%, Portsoy & Whitehills has 24% higher than Scotland average low birthweight babies

Banff has 25%, Macduff has 41% higher than Scotland average alcohol related hospital
admissions

Banff has 30%, MacDuff has 36% higher than Scotland average hospital admissions for suicide
and deliberate self harm
14

Banff has 25% higher than Scotland average for death from heart disease

Aberchirder has 32% higher than Scotland average smoking during pregnancy

Aberchirder has 20% higher than Scotland average for hospital admissions for cancer
3.0 SUMMARY OF OUTLINE BUSINESS CASE/CASE FOR CHANGE
3.1 Current Service Description
Deveron and Seafield Ward
40 GP beds (Temporary Reduction to 22 Beds from February 2007)

Average occupancy over 3 years is
56%

Average length of stay being
17.17 days
 Average Turnover Interval
13.43 days

These beds are managed by local GPs supported by hospital staff. This service provides care for patients
who need nursing or medical care which cannot be provided at home but who do not require the specialist
facilities of an acute facility and covers:

Acute Medical Care

Post-operative and other rehabilitation

Convalescence

Palliative/Terminal Care
Currently there are only 3 single rooms within these wards and the remainder is a mixture of:

1 ward area that can accommodate 8 or 9 beds depending on demand for male or female beds

1 ward area that can accommodate 4 beds depending on demand for male or female beds

1 ward area that can accommodate 6 beds depending on demand for male or female beds
Findlater Ward (now relocated to Campbell Hospital, Portsoy)
12 Dementia Beds (Reduced to 8 Beds from November 2006)
A consultant psychiatrist, supported by hospital staff and a local GP who provides general medical cover
manages the beds. The focus is now on assessment rather than long-term care.

Average Occupancy April 2004 – October 2006
77%

Average Occupancy November 2006 – March 2007
100%
Birthing Unit (opened September 2007)
1 bedded birthing unit

Average Occupancy since opening in September 2007
2 births/month

Average Deliveries per month (at home or in unit)
2.4
15
Casualty Department
This busy department is situated in a cramped corner of the hospital providing both casualty and general
medical sessions:

Expected Casualty Attendance for year
6200

Expected General Medical Services - attendance for year
1050
All nurses working within this department have undergone minor injuries training which allows them to deal
with a large range of presenting conditions, thereby reducing GP workload and reducing patient waiting
times. The department is also used out of hours by GMED as a patient treatment centre.
Outpatients Department
An extensive range of consultant clinics are currently provided at Chalmers Hospital which, in total, treated
1,988 new and 2,111 return patients in 2006/2007.
SPECIALTY
SESSIONS
ATTENDERS
New
Return
Total
Dermatology
27
176
162
338
Gastroenterology
12
62
112
174
0
0
0
0
Respiratory medicine
23
94
263
357
ENT
18
248
139
387
Ophthalmology
19
190
237
427
General surgery
55
540
364
904
5
31
0
31
Urology
12
90
119
209
Gynaecology
23
147
208
357
Obstetrics
23
149
260
409
6
3
78
81
Orthopaedics
10
256
169
425
Audiology
52
257
378
635
Orthotics
21
32
321
353
Psychiatry
23
26
469
495
329
2,301
3,277
5,578
Paediatric medicine
Minor surgery
Clinical oncology
TOTAL
Allied Health Professionals
Average attendance per year:
Profession
Physiotherapy
Occupational Therapy
Dietetics
Profession
Podiatry
S.A.L.T.
ENT
Orthoptist
Inpatient
Outpatient
Inpatient
Outpatient
Inpatient
Outpatient
Inpatient
Inpatient
Outpatient
Outpatient
Total
1926
5433
828
41
49
Total
91
40
27
33
174
16
X-ray Department
This offers a service from 9 till 5 Monday to Friday
 Total X-ray examinations
4128
 Total Patient Numbers
3517
Health Centre
This building no longer meets the increasing needs of Primary Care due to the lack of space available.
The health centre provides a base for the following professionals:

2 Primary Care Teams - GPs, Practices Nurses, District Nurses, Health Visitors

1 Mental Health Team - Consultant, CPNs, Social Workers, Ots

1 Learning Disability Team - CPNs, Care Manager and Homemakers
3.2 Case for Change
The following areas are poorly designed which prevent the provision of a clinically effective modern service
with inter-active departmental relationships.
Wards
GP Beds are located on two floors, the ground floor area has a main hospital corridor running through it,
which reduces the level of privacy and dignity afforded to patients and does not allow for the provision of
modern day care.
The lack of single rooms and toileting facilities greatly reduces the flexibility with which bed areas can be
used and causes problems when trying to accommodate both male and female patients. This also limits
the capability to provide palliative/terminal care for patients whose needs cannot be met at home.
Casualty Department
This busy department is very cramped, poorly laid out and difficult to access, requiring patients on trolleys
to be taken through the entire ground floor of the hospital on arrival or departure. During the night patients
attending casualty must pass through the GP acute ward to reach casualty.
Midwifery Unit
This unit was provided across 3 floors in a building that is distant from the main building. On the second
floor there were 6 beds, 4 situated within a security system and 2 outside the system. The inpatient area
was separated from the outpatient clinics, which are on the ground floor and the parent education facility is
on the third floor. The Scottish Executive and NHS Grampian, in approving Aberdeenshire’s Change and
Innovation Plan, agreed the closure of all midwifery units, except at Peterhead, and their replacement with
birthing units. The requirements of this model are very different from those of the existing midwifery unit
and a new birthing unit model is in place, which involves women coming in to the unit to deliver and then
return home between 2-6 hours later. This model requires the midwives to be on call to support this
system and indeed home deliveries.
Outpatients Department
This department was originally designed as an infectious disease unit and has been adapted in an attempt
to accommodate 15 Outpatients Clinics, which provide an extensive service for the locality. Due to the
original purpose of this area, the quality of service provided is reduced and patient confidentiality is
17
compromised, e.g. no desk or hand washing facilities in examination rooms. This department is also
separate from the main building therefore it cannot be used in the evening due to security difficulties. The
Change and Innovation Plan offers patients a much wider range of diagnostic and treatment services
locally. In order to provide suitable facilities, which meet clinical standards, to enable the provision of an
expanded range of services requires significant physical upgrade.
Functional Suitability Status Report
The provision of a new facility will address the fact that Chalmers Hospital is a series of single, two and
three storey buildings, which are structurally outdated, provide poor access and are no longer deemed
suitable to provide, in their present state, modern health care facilities. Furthermore, it is not compliant
with the strict criteria set out in the Disability Discrimination Act. Specific problems identified in a functional
suitability status report carried out for the Chalmers Outline Business Case are as follows:
Fire risk
Asbestos risk
Statutory Standards
Functional Suitability
Utilisation
84.36% of buildings are considered to present a moderate fire risk, with
a further 7.14% presenting a substantial fire risk
28.67% of buildings are deemed to present a tolerable risk, 13.94% a
moderate risk and 57.39% an intolerable risk.
48.35% of buildings are Ranked C (serious non-compliance to
standards) when measured to NHSiS criteria.
51.28% of buildings are Ranked Category C (below acceptable
standards) when measured to NHSiS criteria.
45.12% of buildings are considered to be over crowded, with 51.25%
merely adequate, when measured to NHSiS criteria.
Should the scheme not proceed, then a minimum of £3.3m in backlog maintenance expenditure will be
required to rectify the immediate problems within the building. In addition it is estimated that a further
£2.5m requires to be invested to meet the costs of compliance with ward dignity and privacy regulations.
Service Changes Expected from Preferred Option
As a result of this development the following changes in activity levels and quality of care issues are to be
expected.
GP Beds
Occupancy Rate
It is anticipated that the occupancy rate of 56% will rise to at least 80% (Grampian average) as a result of
the reduction in GP beds.
Average Length of Stay
The reduction in beds, the availability of continuing care/slow stream rehabilitation beds and additional
allied health professionals input will lead to a lower average length of stay for patients in these beds than
the current 17.17 days, the Grampian average being 1.95 days.
Turnover Interval
This indicator shows the average length of time that a bed remains empty between patients i.e. higher the
number indicates over provision. Currently 13.42 days for Chalmers, when compared with Grampian
average of 19.33 days.
Mixed Sex Accommodation
All patients will have access to toilet facilities and ward accommodation, which preserve their privacy and
dignity
Outpatients Department
The new refurbished department will increase the accommodation available to visiting consultants, offering
opportunities for increased activity and improved patient privacy/confidentiality. This department will also
be available for use by other groups e.g. voluntary and community, in the evenings and at weekends.
18
Casualty Services
Direct access to this department will be through one main door allowing easy access to all non-ambulatory
patients.
3.3 Development of the Original Outline Business Case
NHS Grampian completed a review of local health needs in January 1999 and identified a range of
proposed service changes that would modernise the delivery and significantly improve overall access and
quality of care available within the Banff Locality. Following these recommendations, an Outline Business
Case for replacement of Chalmers Hospital was prepared and submitted to the Scottish Executive in May
2000.
Shortly after this case was submitted the growing financial difficulties across the NHS system in Grampian
became apparent and NHS Grampian could no longer commit to the use of development funding in order
to meet the projected running costs of the project. In addition the Grampian Older People’s Strategy,
“Ageing with Confidence”, was developed and agreed for implementation with the clear recommendation
that the care of all NHS continuing care patients is best placed in a community rather than a hospital
environment.
The NHS Grampian Assessment Panel was created at this time to review and reprioritise all major capital
projects. A proposal for the redevelopment of Chalmers Hospital and Banff Health Centre was submitted
to the Panel in August 2001. The Panel agreed that the redevelopment of Chalmers Hospital and Banff
Health Centre was a priority but also highlighted a number of issues worthy of further review. It was
agreed that the review should be completed and the proposal resubmitted in April 2002.
The local management team were specifically asked to demonstrate that:

The project fully incorporates the recommendations of Ageing with Confidence.

Costs can be contained within existing revenue funding levels.

Capital investment is kept to the minimum necessary to deliver the revised specification.

Ensure that the redevelopment was considered within the context of community hospital provision
across Grampian.

Focus on core service provision namely GP acute, intermediate care and specialist outpatient
services.

Consider future arrangements for day services.

Review the number of GP acute beds.
3.3.1 Development of Service Specification
In order to address these specific areas and to review the Outline Business Case, a Project Board and four
local project groups were immediately set up. Each of the project groups was multi-disciplinary in nature
and included appropriate public and patient representation.
The project groups, were as follows:
Older Peoples Services

Outpatient Services
19

Banff Health Centre

Outline Business Case
As a result of the recommendations from the four groups, the original configuration of services was
transformed into the following model of modern service provision:

24 GP acute beds & 6 slow stream rehabilitation beds. This represents an increase in the number
of GP acute beds over the previous proposal from 26 to 30, 6 of which will be for slow stream
rehabilitation purposes in order to enhance the core service and intermediate care provision.

Midwifery led service with access to a birthing unit. In line with the approved Change and
Innovation Plan the Maternity Unit will close and a birthing unit will be provided with a
corresponding increase in access to community based maternity provision

24 hour nurse led minor injuries service

Out-patient department including a minor surgery unit to accommodate the range and complexity
of locally available services e.g. endoscopy service, new orthopaedic service, new ENT service,
and new oral chemotherapy as part of the approved Change and Innovation Plan

6 place day service for a range of groups i.e. older people, physically disabled, dementia sufferers
and alcohol and drug misusers. This represents a reduction in day service provision from 12 to 6
places.

A full range of allied health professional and therapy services

X-ray and enhanced ultrasound service

Health Centre

Essential office accommodation

Local rehabilitation service

Closure of Campbell Hospital, Portsoy and reinvestment in appropriate alternative community care
This redeveloped model more accurately reflected the national, regional and local strategies on enhancing
the range and quality of primary and community health services to local populations. In addition, the
model has the potential to support the outcome of NHS Grampian’s Healthfit events in 2002 and 2008. The
purpose of these events were to create a shared vision for the future of how services should develop
across the region and which would guide current decision making and provide the basis for a set of robust
and integrated service improvement plans. The outcome was a consistent view that there was a need for
the decentralisation of some specialist services together with the development of local services
representing a rebalancing of service provision in the form of Diagnostic and Treatment Services (DTS).
Each locality would provide facilities and infrastructure for a wider range of local DTS to be provided
outside the main acute centres.
In supporting the development of DTS, the redevelopment of Chalmers Hospital is also well placed to
support the development of a unified pan-Grampian out of hours service as the provision of services
through these projects is critically linked. The emerging model focuses on integration of primary and
secondary care services and increasing capacity in the community.
3.3.2 Site Selection
The OBC described the process of selection of the site and exploration of the options for the development
of Chalmers Hospital. The original Locality Review process identified several sites capable of supporting a
new build development in Banff and the surrounding area. The Project Board considered the potential of
these sites in some detail and concluded that the problems associated with location, availability, access,
20
enabling and site preparation were such that the only viable option was to use the existing Hospital site for
service re-provision. In arriving at this conclusion the Project Board also took into account the risk that
there was no obvious local market for the disposal of the existing site should an alternative location be
selected. The primary risk factors are Chalmers Hospital’s listed building status as a category B listed
building and the relatively low value of property generally in the Banff area.
The decision of the Project Board was further supported by the output from the public consultation
process, which clearly stipulated the existing site as the preferred location.
3.3.3 Summary of OBC approval March 2003
The modern model of service provision developed by the Project Board, which encompassed NHS
Grampian’s vision for future service delivery, formed the basis of the updated proposal for the amended
OBC which was then approved to proceed to FBC in March 2003.
The preferred option approved at that time as delivering the most advantageous return on capital was to
progress a partial refurbishment of the old building and a new build ward and primary care accommodation
The basis of this approval was as follows: 
The problems associated with location, availability, access, enabling and site preparation are such that
the only viable option is to use the existing Hospital site for service reprovision.

Due to capital and revenue funding constraints partial new build, partial refurbishment agreed.

All 30 beds to be single room provision

Ongoing revenue costs will be contained within existing resource.

PFI considered but discounted on grounds of affordability
In arriving at the preferred option the shortlisted options included as part of the financial appraisal included:
Option 1 – Do Minimum
The ‘Do minimum’ option assumed existing service provision will continue in its present form with
additional expenditure incurred only to address statutory maintenance and compliance with ward dignity
and privacy regulations.
Option 2 – New Build – entire facility

Demolition of the existing buildings and new rebuild but retaining the external façade of the old
Hospital Building to comply with requirements of Historic Scotland

A decanting programme to cover temporary works and provision of temporary accommodation on site.
Option 3 – Partial Refurbishment and partial New Build

Demolition of the existing Health Centre with new build block for ward and Primary Care Team
accommodation. Existing Hospital building retained in existing form but with varying degrees of
refurbishment to address all backlog maintenance and improve overall functionality

A decanting programme to cover temporary works and provision of temporary accommodation on site.
3.4 OBC Addendum March 2004
On approval of the OBC a design team comprising an architect, structural engineer, mechanical engineer
and quantity surveyor were appointed to develop the plans. The outcome of this review resulted in a
21
significant increase to the overall NHS capital investment required which was in excess of the available
NHS capital funding.
There were two main reasons:

a pricing pressure within the construction industry as a result of an industry pay award agreement
and the overall buoyancy of the market;

new guidance on Health Centre accommodation to support improvements in primary care
services.
The Project Board examined options to address the increase in capital investment required and agreed to
look innovatively at how the overall scheme could be funded.
In support of this Stratagem, a firm of management consultants who specialise in this type of project, were
commissioned to independently review and reconcile the revised costs to the original estimates. Their
report supported the cost increases as reasonable considering the increase in GP accommodation (now
an additional 300m 2 as a result of recent guidance on accommodation for GMS services) and an increase
in the forecast impact of inflation on the tender price.
The Project Board considered the position and agreed that any significant reduction in the service
specification or build quality would seriously compromise the original objectives of the project and the
ongoing operational effectiveness of the facility. It was further agreed that a request for additional capital
funding would be unrealistic given the overall pressures on the capital programme at that time. The only
remaining practical option was to examine the idea of a separate, but co-located GP led 3PD development
for the Health Centre component. The two GP practices involved agreed to pursue this route in order to
support delivery of the project.
The Project Board then commissioned a study to test the feasibility of a suitable design that would meet all
of the original service objectives of the project but deliver this through two separate co-located buildings on
the existing site. An option was developed that required purchase of an adjoining property (28 Fife Street)
which created sufficient flexibility on site to develop the ward accommodation on ground level as an annex
to the existing hospital with the health centre to be a separate, adjacent building.
The Project Board, satisfied that this was a deliverable option, agreed to pursue a third party finance
development approach to the Health Centre element of the project. This option recognised the restricted
availability of NHS Capital funding, the impact of an increase in the size of the health centre
accommodation in line with National Standards and construction industry inflation on overall costs.
This change to the overall project was described in the Addendum to the OBC submitted to the Capital and
Investment Group and subsequently approved in March 2004.
3.5 Design and Planning approval
Following approval of the alternative procurement and financing arrangements in March 2004 NHS
Grampian continued to progress the project to full planning and historic Scotland approval.
Key milestones in this process are as follows: 
Medical Centres Scotland Ltd appointed as lead Developer for the Health Centre Development
following a competitive formal selection process.

Purchase of 28 Fife Street completed with a view to demolition to allow maximum design flexibility on
the existing site

Architect led Design team appointed following an OJEC procurement process to progress Hospital
design through to full Planning permission and then through the construction phase.

Medical Centres Scotland Ltd agree to use the same architect and to jointly agree the site Masterplan.

Joint application for Planning Permission submitted July 2006.
22

Findlater Ward (Old Age Psychiatry) and Renal Dialysis unit decant to refurbished accommodation in
Campbell Hospital May 2006

Temporary works to create single GP Acute ward in Chalmers Hospital complete January 2007 – bed
numbers temporarily reduced to 22.

Full planning permission and status of conditions for Hospital and Health Centre Development,
including Historic Scotland agreement, confirmed in March 2007.

Final hospital and health centre design and associated cost estimates including all planning conditions
available April 2007
3.6 OBC Addendum January 2008
In progressing the detailed design work that followed this approval, it was necessary to
change the proposed site configuration and construction specification in order to achieve final planning and
Historic Scotland approval. This change in design specification and the inflationary pressures from a
buoyant construction industry had an adverse impact on the overall capital costs of the scheme and,
significantly, on the potential third party rentals. The NHS Capital option ranked the most cost effective
solution following a revised financial appraisal and a further addendum to the OBC was submitted in June
2007 to request approval to proceed as an entirely NHS Capital funded project.
Following a series of iterations between the Board and the SGHD final approval to proceed to tender and
prepare the Full Business Case was received in January 2008.
It should be noted that the subsequent approvals to alter the financial model and the technical building
specification did not materially affect the preferred service model approved in the original OBC in March
2003.
Appendix B provides a detailed description of the development of options, appraisal process and key
factors for superiority.
3.7 Key design changes
The final design configuration for the site approved in the OBC addendum in January 2008 is attached at
Appendix C and the elevations at Appendix C(1).
The key changes incorporated in this design compared to previous approvals are summarised as
follows: -
3.7.1 Site Configuration and New Build Design

All car parking contained on existing site therefore no need to utilise Battery Green (previously
highlighted as a risk)

Health Centre and Hospital main entrance off Fife Street (not Battery green)

Hospital Pedestrian entrance off Clunie Street

Demolition of Boiler House and Chimney and replacement of the existing boiler and central
heating plant.

Amendments to elevations, external facings and finishes to satisfy planners/Historic Scotland
23
3.7.2 Site preparation


Asbestos removal - level 3 asbestos survey highlighted some asbestos content in buildings to be
demolished
Contaminated ground allowance – Site condition report has highlighted rock at Southwest corner
of the site requiring excavation and sand in east corner requiring piling.
3.7.3 Refurbishment of Existing Buildings

Replacement of all hot and cold pipe work and central heating radiators in the Old building

Replacement of all electrical wiring and distribution system in the old building

Reinstatement of Ornamental Handrails

Reinstatement of external lighting (period luminaries)

Thermal Insulation of External walls and ground floor

Upgraded lighting controls and emergency lighting

Upgrade of fire doors and compartmentalisation of floors
3.8 Planning Permission and Historic Scotland Approval
The letter confirming Planning and Historic Scotland approval is attached at Appendix D. The Architects
have reached agreement with the planning department on an action plan to deliver each of the conditions
identified in the letter and provision has been made for this is the revised scheme costs.
The key conditions are as follows:  Work to begin within 5 years
 External finishes to be approved in writing
 Detailed scheme for external railings, walls and lighting to be approved in writing
 Detailed scheme to mitigate against Seagull Nesting to be approved in writing
 Noise and vibration assessment of heating and ventilation system
 Detailed bat survey
 Demolition of Out Patients Building and the Chimney Stack - contract must either offer for sale the
complete brickwork and structure or donate the material to the councils material store
 Plans detailing on site traffic management to be agreed with planners when available
 Photographic record of all buildings to be taken prior to demolition
3.9 Original Project Timescales
As the preferred option progressed to a detailed stage of design a number of significant issues were
highlighted that had an impact on the original project timetable. The project team were required to review
the financing and technical design requirements as follows:
24

design development to meet the technical challenges of a constrained site, new building
regulations and the in depth mechanical and electrical designs that identified fundamental
replacement and upgrading of key components as the most cost efficient way forward.

the listed building status and complexity of the designs required considerable discussion and
amendment to achieve informal agreement on the way forward with local planners and then the
formal progress through Planning and Historic Scotland approval.

at each stage of development it was necessary to pay cognisance to the involvement of the public
representatives on the project in order to find an affordable way forward that delivered the
redevelopment on the existing site in accordance with public expectation.

limited availability of capital and revenue funding to progress the required solutions
It is the intention to carry out a full evaluation of the project processes to help improve the approach to
future projects.
3.10 Tendering Process
The OBC Addendum was submitted to the CIG in draft form in June 2007. Following lengthy discussion
with the SGHD the final version was submitted in November 2007 and subsequent approval granted in
January 2008.
The project program approved in the OBC addendum included an assumption, based on advice from the
design team, that a staged tender would be the only acceptable approach. Subsequent soundings from
contractors then indicated that a single tender approach would attract the most interest. This created a
delay in proceeding to tender while the detailed room layouts, drawings and associated engineering
drawings were prepared to a sufficient standard. Previously the program allowed for this work to be carried
out in parallel with each phase of the tendering process.
In addition, the design team re-organised the proposed timing of elements of the program in order to
maximise overall efficiency and avoid temporary works and unnecessary decanting during the construction
phase. Major refurbishment of the old building will now to be completed as phase 1 - the original view was
that the initial phase of the project would be minor temporary works to allow decant and demolition. As the
design team put more detail on the program it became clear that this was not a practical option. The major
works, electrics, plumbing, plant etc required in the old building needed to be complete in the first phase to
avoid unnecessary expenditure and disruption to key clinical services.
The impact of these changes to the process has created approximately a 4 month delay in proceeding to
tender.
Following an OJEC process four Companies, all National organisations with strong local experience, were
short listed and invited to tender. Tenders were submitted on 18 th June 2008 and were open for
acceptance for a period of 90 days. The expiry date is 16th September 2008.
The Architect led design team have managed the tendering process on behalf of NHS Grampian and their
report on tenders with a recommendation to accept the lowest offer from Robertson Construction Northern
Ltd is included at Appendix A.
4.0 AFFORDABILITY
Availability of Capital Funding and the ability to contain revenue costs within available resource are the key
drivers for success of the project.
4.1 REVISED CAPITAL COSTS
4.1.1 Capital Cost Summary
The overall Project Capital finance requirement, incorporating the recommended tender value, is
summarised below:25
Scheme Element
Refurbish
Old
New Ward
New Hlth
Centre
£000’s
£000’s
Building
Mechanical
Electrical
Externals
Tender cost (app A)
Scheme Total
£000’s
£000’s
1325
2468
1673
5466
961
935
571
2467
1687
919
557
3163
41
314
307
662
4014
4636
3108
11758
170
40
210
Moveable Equip
IT/Comms
125
VAT
Fees
Optimism Bias
Total
125
702
863
551
2116
393
454
263
1110
15
19
12
46
5124
6267
3974
15365
The following should be noted in relation to these costs:

Capital cost estimates (appendix A) are based on the lowest tender value from Robertson Construction
of £11.758m which includes an allowance for contract fluctuations and inflation but excludes Moveable
equipment, IT/Communications, VAT and Fees as detailed in the above analysis of total projected
capital costs.

Tender values are on a fluctuating price basis using a May 2008 Base Date and adjusted in line with
the “Price Adjustment Formulae for Construction Contracts” using the June 1990 Series of Indices
(familiarly referred to as the “NEDO” Indices), published by BERR.

The capital cost of the project detailed above represents the total cost of the option, including fees,
VAT and equipping but net of £414k costs associated with the project incurred in 06/07 and previous
years. These costs mainly relate to fees, temporary works at Campbell Hospital and the purchase of
28 Fife St. They are currently reflected as a balance in “assets under construction” and are treated as
“sunk” costs for the purpose of this economic appraisal. The costs are however attributable to the
project and are reflected in the total expenditure figures used to calculate the “impairment” on property
value that will arise when the scheme is complete (difference between the DV assessed property value
and total expenditure on the project). 28 Fife Street is reflected in the existing land value of Chalmers
Hospital.

Costs reflect an estimated 3-year project timescale, commencing on site in September 2008.

An estimate of any temporary works costs associated with decanting is included in the above capital
estimates.
4.1.2 Phasing of Capital Expenditure
The capital expenditure is expected to be phased as follows:
Preferred Option
Planned expenditure
07/08
£000’s
08/09
£000’s
09/10
£000’s
10/11
£000’s
11/12
£000’s
532
2831
3816
5593
2593
Total
£000’s
15365
26
4.1.3 Optimism Bias
The Project Team have taken account of the Optimism Bias guidance as contained in the “Supplementary
Green Book Guidance – Optimism Bias” and conducted an exercise, examining the likely type of
construction etc and arriving at an Optimism Bias factor of 0.3%. The calculation in the prescribed format is
included at Appendix E.
4.2 REVISED REVENUE COSTS
A summary of the revenue consequences of the preferred option is shown below :Service Change
Preferred
Option (a)
£000’s
Hospital Clinical Costs – net saving
1029
Hospital Property & Support Costs - net saving
233
Increase in Community Care & Nursing Home placements
(1032)
Third Party Rental Net Increase
Capital Charges Net Increase
(457)
Increase in running costs
(227)
Other income sources (GP)
29
Contribution from GMS budget
197
Net revenue cost ()/saving
0
The following should be noted in relation to these costs:

All revenue costs are stated at 2008/09 pay and price levels.

Staffing costs have been assessed using agreed Community Hospital skill mix models and reflect the
grading impact of Agenda for Change.

Facilities costs have been estimated by applying a unit cost for the floor area

Savings from an overall reduction in beds have been estimated based on the variable cost reduction

Capital charges are calculated based on the estimated valuation of the site and buildings. This figure is
derived from the overall project cost less non added value site preparation and down takings. Buildings
structure is assumed to have a useful life of 60 years, Mechanical and Electrical plant infrastructure 25
years and equipment/IT 10 years.

All savings from the closure of Campbell Hospital (£1.391m) will be reinvested. This includes £0.116m
of capital charge funding.

The costs saved as a result of Long Stay bed closures are used partially to meet the additional capital
charge cost of the scheme and partially reinvested in alternative community care models.

GMS Premises funding of £0.155m originally identified for 3PD rental is available as a contribution
towards the capital charges associated with the Health Centre element of the project
27
4.3 COMPARISON TO APPROVED OBC ADDENDUM VALUES
The Key financial highlights are as follows :
The project capital cost estimate of £15.365m has increased by £1.127m or 7.9% from the
previously approved value of £14.238m (both values are stated net of the £414k “sunk” costs).

This overall increase is net of a reduction in anticipated expenditure on moveable equipment of
£0.15m and Optimism Bias of £0.55m.

The main underlying reasons for this increase are partly the impact of inflation due to the extended
project timescales (£0.3m), partly to the actual impact of inflation out-turning at higher levels than
previous estimates (£0.9m), partly to an increased technical specification (£0.4m) particularly
Mechanical and Engineering plant in order to meet new building regulations in relation to carbon
emissions and partly to the complexity of the design necessary to ensure ongoing operation of the
site during the construction period (£0.1m).

The revenue affordability of the scheme remains neutral with the increase in capital charges
absorbed by the increase in the nurse salary budget released from closure of Campbell Hospital
as a consequence of the Agenda for Change pay settlement.
4.4 IMPACT OF PREFERRED OPTION ON PROPERTY VALUES
It is assumed that the loss on disposal of Campbell Hospital and the write off on demolition of buildings on
the Chalmers Hospital site will be accounted for as a charge to the Capital Resource Limit (CRL). It is
envisaged that if NHS Grampian are allowed to retain the NBV benefit then this will be sufficient to cover
the impact on the CRL for each individual transaction. In the wider context NHS Grampian will agree the
overall strategy for the management of asset gains/losses with the SGHD Finance Directorate annually
through discussion on the allocated CRL.
It is also assumed that the SGHD Finance Directorate will liaise with the Treasury to ensure sufficient
support funding is available to mitigate the impact of impairment on the projected asset value at completion
estimated as £5.827m in line with the revised NHS Scotland Capital Accounting guidance.
The impact of these issues is summarised as follows: Preferred Option
08/09
09/10
10/11
£000’s
£000’s
£000’s
3 (b)
11/12
£000’s
Loss on sale Campbell
Write off on Demolition
12/13
£000’s
902
673
Impairment
380
Total
£000’s
902
1053
5827
5827
4.4.1 Disposal of Campbell Hospital, Portsoy
The scheme requires disposal of Campbell Hospital in Portsoy which has a current Net Book Value (NBV)
of £1.102m. The open market value of the site is estimated at £0.2m. Assuming disposal in August 2012,
an estimated net loss on sale £0.902m will arise. This will be charged to the Capital Resource Limit (CRL)
in 2012/13.
28
4.4.2 Demolition of Existing Buildings
The first phase of the planned development program on the Chalmers Hospital site requires demolition of
the Maternity Annexe, Out Patient Block, Boiler House and 22 Fife St in order to allow construction of the
new Health centre to commence by 1st August 2009. These blocks collectively have an existing NBV of
£0.673m. The resulting write off on demolition will be charged to the CRL in 2009/10.
The second phase of the development program, on completion of the new Health Centre, requires
demolition of the existing Health Centre to allow construction work to commence on the new ward block by
1st April 2011. Banff Health Centre has an existing NBV of £0.380m and the resulting write off on
demolition will be charged to the CRL in 2011/12.
4.4.3 Valuation of the asset on completion
The District Valuer, appointed by the Scottish Government to value all fixed assets owned by NHS
Grampian previously reviewed the plans for the proposed development and concluded that the completed
buildings and associated land will be valued at depreciated replacement cost of £8.170m at May 2007
prices. Assuming average price increases (based on BCIS averages) the land and buildings will be valued
at £11.032m on completion of the overall project. In addition it is assumed that expenditure on moveable
equipment and IT/communications will be capitalised at cost (£394k) giving a total asset value £11.426m
on completion of the scheme.
The estimated depreciated replacement cost valuation is defined as being “The aggregate amount of the
value of the land for existing use or a notional replacement site in the same locality, and the gross
replacement cost of the buildings and other site works, from which appropriate deductions may then be
made to allow for the age, condition, economic or functional obsolescence, environmental and other
relevant factors”
The Chalmers Hospital land and buildings in their present condition (after adjusting for the write off of NBV
on demolition £0.673m explained above) has an existing NBV of £1.474m.
The total additional investment in the preferred option is £15.779m (£0.414 “sunk cost under assets in
course” and £15.365m additional costs to complete project).
The added value of the asset on completion is therefore £9.952m (£11.426m final value on completion less
the existing NBV of £1.474m.) and the impairment on asset value when complete is £5.827m (£15.779m
total project cost less the added value of £9.952m).
5.0 VALUE FOR MONEY
The OBC previously demonstrated that partial refurbishment and partial new build would deliver a
significant benefit in improved functionality and access to services. This option scored highly in the nonfinancial benefits criteria assessed within the OBC.
Funding the project as a complete scheme from NHS capital remains the most cost effective option when
linked to the non financial benefit criteria i.e. delivers the greatest benefit for the required investment.
The design team have recommended acceptance of the lowest priced tender from Robertson
Construction, Northern Ltd. In their report the design team make it clear that, in their opinion, there are no
further specification savings feasible and that “Value Engineering” has already been optimised within the
tendered proposals. The Robertson tender is £0.6m less than the next closest tender. It is clear therefore
that given the constraints on the site, the planning conditions on the development and current market
conditions there is no scope to compromise on the project construction costs and little flexibility overall
within the required financial envelope if the project is to proceed.
6.0 RISK ANALYSIS
The existing physical state of the building and associated configuration of services do not lend themselves
to the provision of quality health care by current standards. Risks highlighted above and identified below
indicate the extent that the current premises are below expected health and safety standards and the level
of improvement required to ensure functional suitability. Should the scheme not proceed, then a minimum
of £3.3m in backlog maintenance expenditure will be required to rectify the immediate problems within the
29
building. In addition it is estimated that a further £2.5m requires to be invested to meet the costs of
compliance with ward dignity and privacy regulations. Recently the midwifery and administration block has
started to show signs of structural failings and fencing has been put in place to protect staff and public from
falling debris.
Current quality of service relates to the calibre and commitment of health care staff working in difficult
circumstances. All disciplines i.e. medical, nursing, AHPs are experiencing difficulties in recruitment and
retention. Lack of investment in the hospital will exacerbate staff recruitment problems, reducing the
quality and range of services that can be delivered locally. The hospitals capability will “wither on the vine”
committing local people to travel to Aberdeen (94 mile round trip) for health care, to transport friends and
relatives to clinics and visit in-patients who would otherwise be cared for in Chalmers. This will increase
the pressure on acute sector beds, outpatient clinics and ambulance services (ambulances are tied up
longer, 3 hours, when taking patients to Aberdeen). A declining hospital will increase community stress by
making people feel more vulnerable when they are ill and have a negative impact on the economy of the
Banff area.
In addition the following benefits would not be delivered:









Improvement to service quality available to the local population by providing modern purpose built
facilities.
Provision of accessible services.
Maximisation of clinical effectiveness.
Provision of efficient and effective services.
Access to a facility and service that is acceptable to patients, staff and the public.
Flexibility for future change.
Ability to meet the current and future demand for community hospital services.
Reduction in pressures on secondary care services by improved local accessibility.
Non compliance with Better Health, Better Care, Delivering for Health, the Grampian Change and
Innovation Programme and Aberdeenshire Change and Innovation Plan which focus on local
accessible services to patients
7.0 SENSITIVITY ANALYSIS
The sensitivity of the preferred option to changes in capital costs is relatively low. All key risks are
identified and provided for within the overall tender value. Any key variances on the following factors may
influence the final out-turn costs :
Preliminaries – The programme period offered by Robertson Construction is considerably less
than the timescales outlined in the tender enquiry documents and their preliminary costs reflect
this. There is a risk that any interruption in the flow of information between the Design Team and
the client will create project delays and trigger a subsequent claim for recovery of preliminaries
associated with any resulting extension to the contract period.

Fluctuating Price Tender – An estimate of the impact of inflation is included on the tender value
(£1.4m). The fluctuating price tenders received limit cost rises to agreed national inflation linked
parameters i.e. May 2008 base using the “Price Adjustment Formulae for Construction Industry
Contracts” using the June 1990 series (or NEDO) indices. This does not however constitute a
“fixed price contract” or indeed provide any certainty over future payments under the contract. The
indices are applied retrospectively based on actual inflation levels and are sensitive to National
pricing trends.

Building warrant – although the tender value includes a number of significant additional
Mechanical and Electrical Engineering works assessed by the design team as required to achieve
the appropriate “S-BEM” rating the application for building warrant has still to be formally
approved. The design team have been asked to submit a 4 stage warrant covering the entire job. It
is likely that each stage will be approved individually as the project progresses.
30

Provisional Sums in tender value – the recommended tender includes a total of £0.9m of
provisional items and a further general contingency of £0.2m. These are items for which the
contractor had insufficient information available from the design team to obtain firm pricing and are
detailed as part of the report on tenders at Appendix A.
The sensitivity of the agreed option to changes in revenue costs is low. All revenue operating cost
savings applied to meet the increased cost of the development are deliverable based on current
budgeted levels and capital charge estimates are prepared based on an assessment of building
valuation at the post completion, depreciated replacement cost. Any increase in operating costs above
estimated levels would impact on the ability to reinvest in alternative community care. In this context
£1m is planned for reinvestment.
8.0 BENEFITS ASSESSMENT
Health Improvement

Local, accessible and equitable health care services for the Banff locality as identified through robust
public and staff involvement and in line with the Aberdeenshire Change and Innovation Plan.

Enhanced quality of life indicators for patients through faster access to health services and facilitating
appropriate discharge planning for the catchment population.

Better, fairer access to a range of services and improved journey of patient care.

A clinically effective facility at Chalmers Hospital which will be responsive and flexible to patients
needs now, and in the future.

A new and flexible day service for the older/demented/physically disabled population.

Expansion of the Health Centre to meet current and future demands/potential in primary care and
better integration with the hospital facility.

Community confidence in local health services has indirect health benefits through sense of security
and stress reduction which leads to better social cohesion.

Scope to provide a “one stop” facility for patients with complex needs.

Provision of a step down facility for patients currently within ARI, thereby reducing delayed discharges
as part of Grampian’s overall Winter Planning Process

Smoother transition of services from the acute sector to both Chalmers Hospital and the community.

Opportunities will arise for investment in the infrastructure of the hospital to provide more specialised
services and for the further development of modern intermediate care services in local communities
e.g. rehabilitation and endoscopy services.

Improved communication with, and within, the different points of service delivery will facilitate effective
multi-team management and continuity of care for patients.

More effective use of existing skills and resources will be secured through the overall reduction in GP
acute and maternity beds.
The current catchment area is primarily 17,300, although potential developments in ambulatory care could
increase this number with the inclusion of other populations in Grampian. Examples of the level of activity
that will be provided within the new facility are as follows:
Occupied bed days (GP)/year
Maternity Unit (appointments per year)
Casualty department
9402 (projected)
290 (projected)
9500
31
Health Centre consultations
Total X-ray examinations
AHP attendances
Total outpatient attendances
34000
3239
6174
7500
This redevelopment is consistent with national, regional and local strategies on enhancing the range and
quality of primary and community health services to local populations and is in line with the Aberdeenshire
Change and Innovation Plan which had been approved by NHS Grampian and the Scottish Government.
In depth and extensive consultation with local and regional staff, gives North Aberdeenshire LCHP
confidence that the provision of a new facility will ensure identified benefits will be delivered.
The population in the Banff area is arguably one of the most distant from either Elgin or Aberdeen, this
proposal will provide a broad range of services close to where they are required for this population.
The aim, which is in line with Better Health, Better Care, Delivering for Health and the Change &
Innovation Programme, is to provide the highest quality of care at the most local point, using acute hospital
services only when appropriate. This will provide better overall management of referrals to, and discharge
from, the acute sector and help to reduce the demand on services within Aberdeen, thereby enhancing
health outcomes for the wider population of Grampian.
Current facilities in Banff are sub-standard - patients choose between second rate facilities locally, or long
journeys to first class facilities in Aberdeen. The redevelopment would reduce the inequality by giving
access to facilities more comparable to Aberdeen City.
Patients will receive community hospital standards comparable to that provided in Peterhead, Stonehaven,
Turriff and Buckie where facilities have been upgraded in recent years.
The provision of a new facility will address the issues highlighted in the case for change section,
particularly pertaining to the functional suitability status report.
As a result of this development the following changes in activity levels and quality of care are to be
expected:
Occupancy Rate - It is anticipated that the current occupancy rate of 56% will rise to at least 80%
(Grampian average) as a result of the reduction in GP beds.
Average Length of Stay - The reduction in beds, the availability of continuing care/slow stream
rehabilitation beds and additional Allied Heath Professional input will lead to a lower average length of stay
for patients in these beds. However, it should be noted that the current figure of 17.17 days is higher than
the Grampian average of 1.95 days.
Turnover Interval - This indicator shows the average length of time that a bed remains empty between
patients i.e. higher the number indicates over provision - currently 13.43 days for Chalmers.
Mixed Sex Accommodation - Patient’s Privacy and Dignity are impossible to achieve within the existing
hospital. As a result of this proposal, all patients will have access to toilet facilities and ward
accommodation, which preserve their privacy and dignity.
Outpatients Department - The relocated/refurbished department will increase the accommodation available
to visiting consultants, offering opportunities for increased activity, intermediate care and improved patient
privacy/confidentiality. This department will also be available for use by other groups e.g. voluntary and
community, in the evenings and at weekends.
Casualty Services - Direct access to this department will be through one main door allowing easy access
to all non-ambulatory patients.
Benefits to patients
Demographics
Growth of Elderly:
32
The population of North Aberdeenshire Local Community Health Partnership shows similar trends for both
male and females. While the population size as a whole looks to be almost static the age composition is
set to alter significantly over the next 15-20 years as outlined below:
Males: 2006-2004
Females: 2006-2004
Age band
% increase
65-69
70-74
75-79
80-84
85+
Age band
50
59
79
59
154
% increase
65-69
70-74
75-79
80-84
85+
49
50
63
42
64
Population Projection July 2006 – prepared by NHS Grampian Statistical Information Officer
The impact of this will be a growing requirement for locally accessible service owing to increase in long
term conditions (LTC) and other age-related illness.
The picture above applies both to the local population across North Aberdeenshire that is served by
Chalmers Hospital and equally to the Health Centre. The practice population has remained consistent at or
around 6700 with an increasing bias towards the elderly.
Diagnostic and Treatment Services
The consultant-led outpatient clinics at Chalmers Hospital are currently working to full capacity, with the
following services being delivered:
Dermatology
Radiology
ENT
Urology
Obstetrics
Gastroenterology
Respiratory Medicine
Ophthalmology
Gynaecology
Clinical Oncology
General Surgery
Renal Dialysis
Additional services in development include:
Endoscopy
Ultrasound
Minor Surgery
Oral Chemotherapy
The delivery of some of these services will alter through the development of practitioners with specialist
interest, improving local accessibility.
Delivery of local services is consistent with national and local policy direction and is central to Grampian
‘Healthfit’ strategy which aims to transfer 40% of outpatient activity to community settings. Therefore
investment in Chalmers will compliment proposals currently under development to ‘right size’ acute
services at Foresterhill site in Aberdeen while ensuring quality and access elements of patient care.
Health, social and economic profile
Health profile
Attached (Appendix F) is a profile for Banff and Buchan Area highlighting NHS Grampian ‘Traffic Lights’
profile comprising information from NHS Health Scotland’s ‘Community health and well-being profiles’. This
demonstrates that this is an area of relative deprivation in relation to health status when compared to the
national average. Indicators of poor health in Banff and Buchan include
33
Deaths from CHD and Cancer
Teenage pregnancies
Low Birth weight
Smoking during pregnancy
Drug related deaths
Mental Health (Suicide)
Infant mortality
Hospital admissions
Social and economic profile;
Aberdeenshire Council’s area profile of the area draws attention to key social economic challenges that the
area is currently experiencing as follows:
‘Key challenges facing Banff and Buchan include the need to overcome peripherality, to sustain social and
commercial facilities in the Area’s villages, to tackle the decline in the fishing industry and the impact of this
on the coastal community, and to broaden the Area’s economic base. ‘
Banff and Buchan Area Plan 2006-08
This position has been further accentuated with the closure of the town’s largest employer - ‘Grampian
Country Chickens’ closed in November 2007.
The Banff and Buchan area has experienced a significant inward migration of Eastern European migrants
in recent years. Grampian racial equality Council estimate that around 3000 migrants are located in the
Banff and Buchan area and this is expected to increase.
As can be seen from above health status indicators – the town has significant challenges around
substance misuse, teenage pregnancies and other lifestyle behaviour issues consistent with areas of
deprivation.
Therefore investment in hospital facilities in the Banff area will contribute to addressing access for an
ageing population with low quality of life indicators.
Therapies/ Geriatrics – ‘One-stop shop’ for patients with complex needs
A full range of AHP diagnostic and treatment services are delivered at Chalmers including:
Radiology
Audiometry
Orthoptics
Ultrasonics
Chiropody
Dietetics occupational Therapy
Physiotherapy
Combined number of appointments 8720 (2007-08).
The new facilities will enable opportunities for day patients with complex needs to be assessed by the
above therapies in conjunction with geriatric input on a single visit.
Benefits of increased single room provision
Under the current 34 bed composition the number of inpatients in Chalmers is around 650 per year. The
proposed change to 30 single beds will provide greater flexibility and it is estimated will allow an increase
to around 800 per year.
34
This will positively impact whole system changes by effecting improved transition of patients from acute
sector in Aberdeen Royal Infirmary. This will in turn, contribute to the target of reducing ARI inpatients by
25 % and consequentially ARI bed numbers by 200 as outlined in NHS Grampian’s ‘Healthfit’ strategy.
Taken in combination, the changes outlined above will support the management of the health challenges
associated with the growing elderly population in North Aberdeenshire as well as making a contribution to
the wider challenges around implementing NHS Grampian Healthfit strategy which is consistent with future
national policy direction outlined in Better Health, Better Care and current policy Delivering for Health.
35
9.0 BENEFITS REALISATION PLAN
PATIENT
EXPERIENCE
Modern, upgraded,
fit for purpose
surroundings for all
clinical services,
especially Casualty,
GP Wards and
Outpatients which
are poorly laid out
and in particular
with respect to
access, security,
privacy and dignity
Measure
Evidence of achievement
Evaluation
Key
Responsibility
Improved patient flow
through minor surgery and
out patient suite leading to
accreditation under the GRS
Global Rating Scale
Provision of a more complex
range of procedures eg.
Endoscopy, Colonoscopy or
Bronchoscopy that will enable
immediate local Therapeutic
intervention for specific
conditions following Diagnostic
investigation within the O/P
and Minor Surgery Suites.
Post
completion
accreditation
as GRS Global
Rating
Compliant
locality
Manager
All in patient bed provision in
single wards
Increase of 25% of outpatient
activity by 2015.
No thoroughfare and
controlled access to in
patient ward and waiting
areas area
Project delivers required
physical design by 2015.
Direct access to the A&E
department will be through
one main door allowing easy
access to all non-ambulatory
patients
Dedicated Ambulance
access to A&E
Dedicated staff changing and
subsidiary waiting areas for
minor surgery/casualty, out
patient clinics, therapies and
Xray
Increased capacity for out
patient clinics
Expansion of the
Health Centre to
meet current and
future
demands/potential
in primary care
Improved access to services
through provision of properly
“sized” and configured
primary care facility
incorporating additional
treatment, minor procedures
and consulting space
consistent with practice size.
Increased number of
Specialist, Nurse and GP led
Out patient clinics as facilities
open.
Currently there is no dedicated
ambulance access – this will
be rectified through the
redesign of hospital and will
contribute to improve patient
experience consistent with
modern health facility
expectation.
Post
implementatio
n evaluation
which in
addition to
Specific Health
Outcome
Indicators will
focus on
patient flow,
access and
effectiveness
of security
arrangements
Project
Manager
Aberdeenshire
CHP Quarterly
Performance
Review
CHP General
Manager
Post
implementatio
n evaluation
which in
addition to
Specific Health
Outcome
Indicators will
focus on
patient flow,
Project
Manager
Currently two consulting rooms
– this will increase to four
ensuring compliance with
quality expectation in the
delivery of healthcare – e.g for
Endoscopy, the facility will be
global-rating scale (GRS)
compliant – this will allow for
therapeutic intervention and
more complex scoping
procedures to be delivered.
The current facilities only allow
for diagnostic intervention.
Project delivers required
physical design
Increased number and range
of services available to
practice population eg. Minor
surgery, practice based
Chronic Disease management
36
access and
effectiveness
of security
arrangements
Project delivers required
physical design
Patients will have
access
to,
and
better
movement
between,
the
services
they
require
A new Day Service
for the
Elderly/Demented/P
hysically Disabled
Population,
supporting patients
at home
Scope to provide a
“one stop” facility
for patients with
complex needs
Co location of Hospital and
Health Centre
Integration of modern
GPAcute
Rehabilitation/Therapies/Out
patients and Elderly day
hospital services on same
site
Increased ability of Health
professionals to anticipate
future health patterns and
treat accordingly
Increased number of patients
receiving assessment and
immediate follow on treatment
or therapy. This will allow for
reduced waiting times
consistent with national
targets.
Increase number of patients
receiving anticipatory
treatment to prevent
worsening or onset of specific
conditions. This will allow us
to meet the targets for reduced
admissions/readmission as per
national SPARRA/Risk
Register project.
Post
implementatio
n evaluation
which in
addition to
Specific Health
Outcome
Indicators will
focus on
patient flow,
access and
effectiveness
of security
arrangements
Project
Manager
Post
implementatio
n evaluation
which in
addition to
Specific Health
Outcome
Indicators will
focus on
patient flow,
access and
effectiveness
of security
arrangements
Project
Manager
1 – A full range of, etc
Enhancing palliative
care by improving
the environment for
patients with
terminal conditions,
their relatives and
friends.
Enhanced quality of
life indicators for
patients through
faster access to
health services and
facilitating
appropriate
discharge planning
for the catchment
population
Project delivers required
physical design
Single room ward
accommodation and facilities
for relatives to stay overnight
On site and increased
capacity for
medical/therapy/diagnostic
support and correct
environment to allow more
Acute in patient treatment
and rehabilitation
Increased number of terminally
and seriously ill patients cared
for locally either within the
hospital or at home locally
utilising the enhanced support
available
Hospital-based palliative care
available to all patients within
Banff & Buchan locality who
have a clinical requirement for
this.
37
EFFICIENCY AND
EFFECTIVENESS
Measure
Evidence of
achievement
Evaluation
Key
Responsibility
Aberdeenshire
CHP Quarterly
Performance
Review
CHP General
Manager
Reduced number of
people travelling to
Aberdeen/Elgin for
investigation/ treatment
leading to improved
patient experience.
Redesign of Elderly Services
Consistent with
national and local
priorities
Redesign of Diagnostic and
Treatment Services with
improved access and an
increased range of services
available locally
Local access to key services
Currently approximately
4,000 outpatient
appointments in Chalmers
– we will aim to increase
this by 25% in order to
meet previous peak
activity and take account
of additional services that
will be provided. In
relation to Endoscopy,
there are currently zero
therapeutic interventions.
This will potentially
increase to 350 per year
by 2015.
Overview of
progress by
Aberdeenshire
CHP Committee
CHP General
Manager
Increased range of
investigative and
therapeutic services
available locally by visiting
specialists and through
General practice led
initiatives
Comprehensive range of
alternative care models
available for the Elderly
More effective use of
existing skills and
resources will be
secured through the
rationalisation of
services
Local monitoring
arrangements,
Reduction in GP Acute beds
from 41 to 30
Reduction in Maternity beds
from 4 to 1
Closure of all Long Stay
Elderly beds
Identification of alternative
Closure of Campbell
Hospital Portsoy and
reinvestment in a range of
alternative care models
supporting the elderly at
home
Aberdeenshire
CHP Quarterly
Performance
Review
Locality
Manager
CHP General
Manager
GP Acute bed occupancy
of minimum 80%
No long stay beds by
2010
community care
arrangements for Elderly
Increased capacity for Out
patient clinics within same
Target average length of
stay in GP Acute beds of
11 days
Reduced Elderly
38
overall floor area
Service change delivered
within existing resource
admissions. 20%
reduction by 2015
following full
implementation of
anticipatory care risk plan.
Project delivers required
design
Project delivered on
budget and all revenue
consequences met within
identified funding
envelope
Enhancing
management of
safety risks; infection
control, moving and
handling
Design underpinned by
advice on moving and
handling, health and safety
and Infection Control advice
Project delivers required
physical design by 2015
Improved recruitment and
retention of skilled staff
Enhance recruitment
and retention of
skilled and trained
staff
Improved marketing of
services and working
conditions for staff
Increased consultant input
of 20% by 2015.
Reduced Sickness
absence rates
Lower staff turnover in key
trained roles
CARE PATHWAY
The co-terminosity
with local authority
departments, such as
social services,
housing and
education, which
already exists with
the Banff Locality, will
enhance a greater
integration of service
planning and coordination of the local
communities’ health
needs.
Community
Measure
Services can be designed
flexibly around current and
future requirements and is
responsive to patient and
carer need
Facility already known and
Integrated into local
community
Delivery of care by known
and wherever possible
Evidence of
achievement
Project delivers required
design
Reduced number og
journeys for
treatment/investigation
into Aberdeen or Elgin
Facilities at Chalmers will
contribute to the Healthfit
target of 40% reduction of
outpatient activity in NHS
CHP audits;
Risk Control
Plan monitoring,
Health and
safety adviser
and Infection
Control nurse
monitoring visits.
Project Manager
Regular HR
monitoring
returns, number
of vacancies
and staff
turnover;
number of posts
still vacant after
3 months
Locality
Manager
Aberdeenshire
CHP Quarterly
Performance
Review
CHP General
Manager
Evaluation
Local monitoring
arrangements
through Joint
management
team with Local
Authority
Aberdeenshire
CHP Quarterly
Performance
Review
CHP General
Manager
CHP General
Manager
39
confidence in local
health services has
indirect health
benefits through
sense of security and
stress reduction
which leads to better
social cohesion.
named providers
Grampian Acute Sector.
Easier access for patients
and relatives
No delayed discharges
over six weeks by April
2008 onwards.
Satisfied patients and
relatives
Improved
communication with,
and within, the
different points of
service delivery will
facilitate effective
multi-team
management and
continuity of care for
patients
Provision of a step
down facility for
patients currently
within the Specialist
Service thereby
reducing delayed
discharges
Patient and
carer
satisfaction
survey post
implementation.
Improved discharge from
Acute to Chalmers –resulting
in reduced length of stay
Smoother transition of
services from the
acute sector to both
Chalmers Hospital
and the community.
The hospital will
continue to develop
the role of staff
working across
professional and
departmental
boundaries at both
hospital and
community settings.
The aim will be to
provide the greatest
possible care and
support at the most
local point, using
acute hospital
services only when
appropriate. This will
provide better overall
management of
referrals to, and
discharge from, the
acute sector.
Post
implementation
evaluation which
in addition to
Specific Health
Outcome
Indicators will
focus on patient
flow, access and
effectiveness of
security
arrangements
This aspect to be regularly
reviewed through cross
sector groups and health
intelligence reporting.
Friends of
Chalmers
Hospital and
Action Group to
be an integral
part of the post
implementation
valuation
Project Manager
Project Manager
Project Manager
Improved quality of referral to
acute sector services from
Banff.
10.0 CONTRACT STRUCTURE
Due to the overall program length it was not possible to obtain fixed price tenders. The contract will be a
fluctuating price contract which will limit cost rises to agreed national inflation linked parameters i.e. May
2008 base using the “Price Adjustment Formulae for Construction Industry Contracts” using the June 1990
40
series (or NEDO) indices. An estimate of the cost of inflation has been included in the final tender value
recommended by the Design Team.
11.0 PROCUREMENT PROCESS
Approval to proceed to tender was granted in January 2008.
Following an OJEC process four Companies, all National organisations with strong local experience, were
short listed and invited to tender in March 2008. Tenders were submitted on 18 th June 2008 and are open
for acceptance for a period of 90 days. The expiry date is 16th September 2008.
The Architect led design team have managed the tendering process on behalf of NHS Grampian and their
report on tenders with a recommendation to accept the lowest offer from Robertson construction Northern
Ltd is included at Appendix A.
12.0 CAPITAL AVAILABILITY
The project capital cost estimate of £15.365m has increased by £1.127m or 7.9% from the previously
approved value of £14.238m (both values are stated net of the £414k “sunk” costs).
NHS Grampian intend to meet this additional capital cost from existing relevant provisions within the
recently agreed capital plan.
13.0 REVENUE FUNDING STRATEGY
The revenue affordability of the scheme remains neutral with the increase in capital charges absorbed by
the increase in the nurse salary budget released from closure of Campbell Hospital as a consequence of
the Agenda for Change pay settlement.
14.0 STAKEHOLDER SUPPORT
This redevelopment is one of NHS Grampian’s top priorities for Capital Investment and is fully supported
and welcomed by the local population. As part of the Aberdeenshire Change & Innovation Plan the
redesign of services has been approved by NHS Grampian and the Scottish Government.
Throughout the review of health services locally and preparation of the Outline Business Case and Full
Business Case the CHP has adopted an open and collaborative approach with all stakeholders, including
staff and public. This approach will continue with close involvement of stakeholders beyond the
completion date.
The final design solution has been delivered following extensive public consultation and at each stage of
development has been shared with and agreed by a joint public and professional panel, the "Friends of
Chalmers Hospital" as well as the Project Board which is chaired by the Hospital Medical Director and in
addition to senior management and technical support includes a local Councillor, the Head of Social Work,
two members of the public and local staff side representation.
Extensive public consultation (press releases, public meetings, questionnaires and the involvement of a
public panel) on the formation and appraisal of options has been central to the collaborative decision to
redevelop on the current site. In relation to the revised model, continued public involvement has been
integral to the redesign process, through participation on the local project groups, public panel meetings
and promulgation of information via press briefings.
41
In addition the CHP has placed paramount importance on actively engaging with stakeholders throughout
the consultation process around the Aberdeenshire Change & Innovation Plan. A paper detailing the
approach is available on request. Mechanisms employed include:
Staff briefings, 14 public events, 1200 Citizen’s Panel questionnaire, externally facilitated focus groups,
local authority officer and members briefings, MSP/MP briefings, lobby group engagement, direct public
engagement, locally focused fora, media engagement, community council briefings, Grampian Maternity
Services Management Board, engagement with local groups led by Partners. In addition NHS Grampian
has conducted a consultation exercise on the CHP proposals. The consultation processes have been
reviewed by the Scottish Health Council and deemed appropriate.
15.0 PROJECT MANAGEMENT
NHS Grampian have recently appointed to the position of Infrastructure Manager for North Aberdeenshire.
A key part of this role is to provide dedicated project management support and to oversee the
implementation of the preferred option on behalf of the project board. Appendix G outlines the agreed
project structure that will guide the project to completion and oversee the post project and post
implementation review process.
16.0 POST PROJECT EVALUATION
Given that this project is concerned with the development of services and accommodation, the requirement
for both a post-project and a post-occupancy evaluation is essential. The post project evaluation relates to
the capital project itself and will cover all aspects of the procurement cycle, budget, timescales and
finished quality.
The post occupancy evaluation will be undertaken after the hospital has been operating for some time (at
least 1 year). Typically this will include: Evaluation - The aim of the evaluation will be to provide the CHP and NHS Grampian with information on
the following key areas of the project and to inform continuous local improvement:

To extend and improve the range of services available locally for the people of Banff in a modern
facility.

To improve the effectiveness and quality of health care provision.

To ensure that the facilities are used to maximum levels to obtain high levels of asset utilisation and
required target income to investment-ratios.

To guarantee that the growth of services locally do not impose an excessive cost burden on the rest of
services within the Grampian area.
Indicators - Work will be undertaken under the direction of the Project Board to develop the following
indicators:

Draft a timetable for introduction against which to monitor the extension of new services and reshaping
of existing facilities.

Agree a schedule for increased utilisation rates against which to monitor enhanced utilisation.

Set targets for costs of services against which to monitor efficiency of service provision.

Define a relevant list of other services outwith Banff against which to monitor the impact of the growth
in terms of cost and workload.
42
Quality - Quality is an integral component of the formal evaluation protocol and this will include a rigorous
assessment of the development’s impact on the following list of initial indicators:

Patient and staff satisfaction

Clinical performance

Patient waiting times and time for complete episode of care

Impact of disruption to patients

Environment and conditions in which care is delivered

Effectiveness of communication strategy (e.g. patient information and GP letters)
17.0 RISK MANAGEMENT
The following table highlights the key project specific risks and the risk management arrangements:-
43
Risk Title
Project being
consistent with the
strategic direction of
NHS Grampian
Description
Risk Risk level
Score
Controls in place
Action Plan
There is a risk that the project will not 1
deliver national and local priorities for
health care
Negligible
1) Performance management of
aberdeenshire C&I plan; 2)
Frequent reporting to CHP
Management Team and NHSG
Asset Investment Group; 3)
Health Intelligence Data; 4)
Physical planning data;
Implementation of C&I project action plan and continual
monitoring
Public, stakeholder and There may be resistance to change 1
political support for from within the workforce and local
change
population. Stakeholders may not
fully appreciate the interdependent
nature of the project and potential for
improved efficiency within the
planned service changes
Negligible
1) Extensive public consultation;
2) Joint Public and Professional
Advisory Panel; 3) Planning for
Real event; 4) Regular Staff and
Public briefings (Rotary Club,
Friends of Chalmers Hospital); 5)
Project Board Chaired by Hospital
Medical Director; 6) Project Board
included local Counselor, public
reps, and staff side reps
Continual staff and public involvement on project board
business and on professional advisory panel
Operational benefits there is a risk that failure to fully
not being fully realised implement the project plan will lead
to minimal benefits realisation
minor
1) Performance management of
C&I plan by the CHP Mgt Team;
2) Performance Mgt of project
plan by project board
1) Project currently managed
within CHP Mgt Team with lead
officer identified
1) Projected capital costs include
an allowance for optimism bias;
2) Revised cost of scheme is now
included in NHSG most recent
capital plan; 3) Projected revenue
costs are contained within the
C&I financial plan agreed by the
NHSG Board
1) Recruitment of dedicated Project Manager
1) Robust Implementation plan
agreed locally (decanting plan)
with the affected services; 2)
minimal relocation of essential
services; 3) Ongoing liaison
between Design Team and
affected Services; 4) Oversight of
progress by project board
1) Appointment of dedicated project manager
Inability to fully
manage and
implement change
Project affordability
2
Lack of capacity and capability within 3
existing resource to affect change
moderate
Insufficient resources being available 2
to allow the continuation of the
project
minor
Disruption to current The ability to continue with service
service delivery during delivery on site during construction
change
phase
3
moderate
1) recruitment of dedicated Project Manager
1) Ongoing monitor by Finance Manager and project board;
2) Exception reporting via CHP Mgt Team
In addition to the project specific risk management plan, Aberdeenshire CHP has agreed the following risk
management plan in relation to implementation of the Change and Innovation plan :-
44
Risk Title
Public and political
perception of change
Description
There is resistance in some areas to the change proposed.
Availability of alternative This element of the plan requires support from colleagues within the
service provision for older public, voluntary and private sectors, particularly around the
people and old age
development of supported accomodation. This carries practical
psychiatry service
(building, etc), financial and political risks.
Consequence/Effect
Controls (Assurance)
1) Public road show events
2) Public Participation Forum
3)
Local Community Health Partership Public Involvement and Focus Groups
4) Provision of information on request to aid understanding of the issues
5) NHS Grampian Consultation process
6)
Scottish Health Council review of process
7)
Partnership approach to service redesign with Staff Side representation on all key
decision making forums including the CHP Committee and NHS Grampian Board
Inability to discharge patients to suitable alternatives will create a
MODERA
delay in progressing the in patient bed reconfiguration within the
Community Hospitals. This will in turn impact on ability to shift
resource to support alternative care models in the community and to
implement the enhanced range of Diagnostic and treatment services.
1) Aberdeenshire Joint Older peoples management teams and Joint Older peoples
Housing and Strategy group.
2) CHP
Committee & Management Team
3) Local
Authority Housing and Social Work Committee
4) All
three Local Authorities in Grampian together with NHS Grampian are Co-Signatories
and are fullycommitted to the redesign of Elderly care set out in"Ageing with
Confidence " the Elderly Strategy.
5)
Joint management arrangements are well supported within Aberdeenshire with Senior
Local Authority involvement in all key decision making forums including elected
members as part of the CHP Committee.
6) The Local authority have agreed to develop Jointly, a medium term resource plan
that allows the implications of service change in both Social work and Health to be
quantified and addressed jointly in order to make the most efficient use of available resource.
Availability of appropriate The existing transport infrastructure does not easily allow movement This may prevent patients accessing a "local clinic".
transport infrastructure "cross Aberdeenshire" but encourages travel, particularly using public
transport, using the main artery routes to Aberdeen.
Shortage of clinical
This will present an increasing challenge as we develop more
capacity from within CHP Diagnostic and Treatment Services
Risk level
Lack of physical capacity and insufficient resource available to deliver MODERA
the planned local improvements in Diagnostic and treatment services
MODERA
1) A multi agency Transport Healthfit planned
2) Scottish Ambulance Service (SAS) representation on CHP Committee
3)
Regular review meetings with the local SAS patient transport representatives
4) CHP involvement with local Authority and other partners in the Community Planning
process
5) NHS
Grampian involvement in Multi Agency working group reviewing transport
infrastructure
Inability to recruit into key clinical posts may delay implementation of MODERA
local Diagnostic and Treatment services.
1) register of GPs and other clinical staff interested in obtaining a "special interest" currently 69 existing GP's have indicated a special interest
2) Utilisation of other contractual models to ensure service continuity eg. Salaried GP
contracts
3) Development of
Local "Networks" allowing cross cover arrangements
4) Displaced staff developed into new posts to support DTS
5) Workforce plan in place
Increasing Elderly
There is a recognised diminishing working population to cope with an Inability to recruit into key Community care posts in the future will
population and decreasing increasing demand for services with partners competing for the same affect the ability to manage both simple and complex cases in the
Working age population workforce.
community and may result in admission for social reasons.
SUBST
Information management As DTS rolls out it is critical that referral information is appropriately Impact of service change cannot be quantified, resource implications MODERA
tracked. Efficient capacity planning will require that information on tracked and resource shift achieved.
demand, waiting list, throughput etc is managed and tracked.
1) Extraordinary partnership meetings and initiatives to keep staff informed of C&I
developments
2) Joint
workshop - 17th August to focus on future joint care team model
3) Workforce redesign strategy in place - offering diversity of clinical activity has
demonstrably improved recruitment in traditionally hard to fill geographical areas.
4) Joint working arrangements allow for skill sharing, more flexible role profiling and
efficient use of staff
5) Priority
given to retraining and redeployment of existing staff
1) Dedicated IM support hours established
2) Funding secured for upgrade of existing GP system
3) "Steering Group" for each significant service implementation to include Acute and
Primary care clinicians
4) Weekly
operational management team meetings to review progress on systems an processes
at a local level.
E3 5) GP referral
management pilot underway
45
18.0 I M & T
The project will provide the necessary modern communications infrastructure to support voice, data and
video telemedicine links. There are no specific IM&T systems included as part of this proposal but once
complete, the redeveloped hospital will provide a modern well, equipped platform for the roll out of a
number of clinical initiatives using new technology eg video technology in support of ENT/Dermatology and
digital archiving of imaging information and medical records.
19.0 PERSONNEL ISSUES
Under the preferred option Campbell Hospital, Portsoy will close and NHS Grampian will no longer provide
NHS continuing care beds in the Banff Locality. These changes will have implications to the nursing staff
and other support staff currently employed in the delivery of NHS continuing care services for the Frail
Elderly. NHS Grampian is fully committed to supporting staff through these changes. A local HR Strategy
Group is currently in existence and will monitor individual circumstances during project implementation
ensuring that staff are informed, involved throughout the process, treated fairly, consistently and provided
with an appropriate and safe working environment. The Health Board is confident that staff can be
redeployed locally.
20.0 EQUIPMENT
The agreed requirement for additional equipment represents the essential new clinical and office
equipment purchases that arise as a direct consequence of the project. Any older items of equipment,
which would have been replaced in the course of the ongoing cyclical replacement programme e.g.
hospital beds have now been excluded.
Whilst the level of new equipment is relatively low, the successful procurement of equipment, required for
the future operation of the services is essential part of this project. NHS Grampian’s procurement
department have assigned a lead contact to work closely with local management to ensure that all
necessary equipment and furniture is available in the refurbished facilities at the point at which services
transfer.
The Procurement lead in liaison with local management has prepared a detailed equipment plan. The
following key actions were undertaken in preparing the plan :
In conjunction with stakeholders propose and prepare an inventory of existing equipment and furniture,
identifying items for replacement;

Support stakeholders in identifying furniture and equipment requirements for the refurbished facilities;

Prepare equipment lists detailing new equipment and furniture requirements;

Prepare a costed proposal for the furniture and equipment procurement for approval by the project
team;

Work with the project team to consider the implications of the write off of equipment that would require
replacement;
On an ongoing basis throughout the project implementation phase the procurement lead will be
responsible for the following actions :
Procure new equipment and furniture required in accordance with Standing Financial Instructions and
available budgets;

Prepare an operational commissioning plan covering ordering, receipt, storage and delivery of all
equipment and furniture, including management during decanting periods;

Ensure satisfactory installation of equipment and furniture including existing items for transfer.

Liase with contractors as appropriate;
46

Liase with the project team and IM & T staff to ensure that IM & T equipment requirements and budget
allocations are managed within the projections;

Ensure that the Moving and Handling Co-ordinator is involved from the outset in providing advice both
on the suitability of equipment to be retained and new items of equipment to be purchased;

Report regularly to the project team on progress.
21.0 TIMETABLE
The summary project program and timetable is included as Appendix H.
22.0 CONCLUSION
The design team have recommended acceptance of the lowest priced tender from Robertson
Construction, Northern Ltd. In their report the design team make it clear that, in their opinion, there are no
further specification savings feasible and that “Value Engineering” has already been optimised within the
tendered proposals. The Robertson tender is £0.6m less than the next closest tender. It is clear therefore
that given the constraints on the site, the planning conditions on the development and current market
conditions there is no scope to compromise on the project construction costs and little flexibility overall
within the required financial envelope if the project is to proceed.
23.0 SUPPORT FROM NHS GRAMPIAN BOARD
NHS Grampian confirms that:
 the development fits with the Local Delivery Plan and the objectives of the Board as set out in the NHS
Grampian Health Plan
 an appraisal of a full range of options has been considered and evaluated following the guidance in the
Scottish Capital Investment Manual (SCIM) considering costs, benefits and risks
 the Full Business Case has been approved by NHS Grampian Board and that the revenue
consequences have been agreed
 procurement options have been adequately explored
 a plan for governance and implementation has been agreed
 the delivery of the project aims will maximise the use of the Board’s estate
The Full Business Case is signed off by the NHS Grampian Chair and Chief Executive, for submission to
the Scottish Government and approval is sought to fully implement the redevelopment plans.
47