Validation of Revenue Funded
Projects:
Pre- Stage 1 Approval
Key Stage Review
(hub DBFM KSR2 - Pre-Stage 1)
October 2014
Page 1 of 18
Revenue Funded Projects
Pre-Stage 1 Key Stage Review
CONTENTS
Notes to the Reviewer ................................................................................................................ 3
1.1.
Background ................................................................................................................. 3
1.2.
Timing ......................................................................................................................... 3
1.3.
Process ......................................................................................................................... 3
1.4.
Further information ..................................................................................................... 4
1.5.
Post review .................................................................................................................. 4
Section 1: Project Outline .......................................................................................................... 5
Section 2: KSR Update .............................................................................................................. 6
Section 3: Project Requirements ................................................................................................ 7
Section 4: Readiness ................................................................................................................ 10
Section 5: Affordability ........................................................................................................... 11
Section 6: Value for Money ..................................................................................................... 14
Section 7: Commercial ............................................................................................................. 15
Section 8: Compliance ............................................................................................................. 16
Scottish Government (SG)
Project Sponsor
E.g. SGHD, SFC, TS
Procuring Authority
E.g. LA, College, Health Board
Project Team
Page 2 of 18
Notes to the Reviewer
1.1. Background
It is a condition of Scottish Government (SG) funding support that all projects in the revenue
funded programme are, in addition to any existing project approvals processes, externally
validated by SFT. SFT undertakes validation by carrying out Key Stage Reviews (KSRs) of
projects at key stages of procurement. The KSR process is designed to support the successful
delivery of revenue funded projects whether delivered through the non-profit distributing
(NPD) model or the hub initiative as Design Build Finance and Maintain (DBFM) projects by
providing a stand-back assessment of the readiness of a project before it moves on to the
next stage in the procurement process.
1.2. Timing
This review is required to be completed in advance of the Stage 1 submission being submitted
for approval by the Procuring Authority.
The review should be carried out by the member of the Scottish Futures Trust team who
normally provides support to the relevant project (the Reviewer). The Reviewer must agree
the precise timing of the review and submission of SFT’s report with the Project Sponsor
and/or SG to integrate with the other project approvals processes.
In the run up to each review point, the Reviewer will inform and keep up-to-date the SFT
validation team of the estimated timetable for carrying out the KSR. The validation team will
arrange for a member of the SFT’s senior management team (SMT) to scrutinise the list
completed by the Reviewer before it can be submitted to the Project Sponsor and/or SG. The
Reviewer should thereafter liaise directly with the allocated SMT member and must return a
countersigned copy of the list to the Validation Team upon SMT sign-off. The Reviewer should
discuss arrangements with the allocated SMT member and provide a verbal briefing if
requested in advance of review so that if required necessary background information can be
made available.
1.3. Process
The Reviewer must familiarise him/herself of the requirements of the checklist and consider
which elements s/he can answer on the basis of existing knowledge of the project and identify
what additional information is required in relation to the project in order to complete the
remaining sections. The Reviewer should, at the earliest opportunity, explain to the Procuring
Authority / Project Team what additional information s/he will require, in what form and by
when in order to complete the review within the agreed timescales.
The review is not intended to be a “stop-start” process and the Reviewer should refer to the
list throughout each delivery stage so that all sections of the checklist can be completed
without delay to the project. The process involves the Reviewer completing this pro-forma
list on the basis of information obtained in his/her day-to-day dealings with the project,
considering whether in his or her view the project is ready to proceed to the next stage of
procurement and making recommendations as to what actions may be required to achieve
appropriate state of readiness. No formal submission, as such, will be required from the
Page 3 of 18
Procuring Authority, but the project team will be required to provide the Reviewer with
information to allow him/her to complete the list and compile his/her report.
Once completed by the Reviewer, the list and draft report should be submitted to the
allocated SMT member for scrutiny. The Reviewer in consultation with the SMT member
must agree what follow-up will be required to any recommendations made, in what form and
in what timescales before being issued to the relevant Project Sponsor and/or SG and copied
to the Procuring Authority. The relevant Project Sponsor and/or SG will thereafter, as part of
its overall sign-off process, determine whether and on what basis the project should proceed
to the next stage taking into consideration any recommendations made in the KSR report.
The Reviewer should liaise directly with the Project Sponsor and Procuring Authority as may
be required to address any queries arising from the KSR report or recommendations.
1.4. Further information
Please contact the Validation Team for further information on the KSR process. Queries
relating to the revenue funded programme requirements should be directed to the SFT
Finance Team.
1.5. Post review
Once the review document has been agreed with the Procuring Authority a copy of the final
document (preferably in Word -format) must be submitted to SFT validation team together
with an estimate of timing of the next review.
The Reviewer is responsible for updating the SMT member with progress made in
accordance with the agreed follow-up plan.
Page 4 of 18
Section 1: Project Outline
Project title
Brief project description
Outline of scope of
services in project (please
identify services and who
will provide those services)
Planned Stage 1 Approval
Date
Project Timetable
Project Contact Details
Project Sponsor /SG
Responsible Officer
(name & contact details)
Project Authority
Responsible Officer
(name & contact details)
Project Director/Manager
(name & contact details)
Principal legal, technical
and financial advisers
(firm/company & name of
main contact)
Page 5 of 18
Section 2: KSR Update
A) Please provide an update in respect of any outstanding Pre-NPR KSR recommendations and provide a reason for delay.
Recommended actions:
To be completed by:
Status:
B) If any of the agreed KSR follow-up actions remain outstanding please restate these here and provide reason for delay.
SFT follow up actions:
Reporting requirement:
Page 6 of 18
Status/Update:
Section 3: Project Requirements
The key objective of this section is to ensure that the proposed solution has been developed in sufficient technical detail, minimising the need for
any change in the run-up to financial close and that the Procuring Authorities have considered all retained risks.
Question
1.
2.
Yes/No
Have there been any changes to the scope of the
project since the NPR was launched and, if so, what
has been their impact on the Stage 1 proposal?
-
Have these changes been signed off by the
Project Sponsor?
3.
What is the proposed solution, how has it been
evaluated and is the Procuring Authority satisfied
that it delivers the project objectives, benefits and
outcomes?
4.
Is the technical solution deliverable and does it meet
expected sustainability standards? Has it been
signed off by external advisers to the project?
Please briefly describe the Procuring Authority’s
position in relation to the following matters and
confirm that the Procuring Authority’s approach has
been reviewed following the Stage 1 Submission:
5.
-
the scope, cost and timing of any enabling
works that require to be carried out to
Page 7 of 18
Comments
support the effective construction and
operation of the facilities;
6.
-
the scope and interface between FM services
to be included within the project and those
for which the Procuring Authority will retain
responsibility;
7.
-
the interface between design and the
delivery of FM services (e.g. cleaning) and
risks (e.g. energy consumption, security)
retained by the authority;
8.
-
the impact of the project on staff (including
potential impact of TUPE legislation);
9.
-
the delivery of equipment and the Procuring
Authority’s IT requirements within the new
facilities;
10.
-
sustainability and delivery of community
benefits;
11.
-
decant from existing facilities, migration to
new facilities, disposal of residual assets and
termination/variation of any existing
contractual arrangements related to the
existing facilities;
Page 8 of 18
12.
-
any conditions or recommendations on
scope/specification/design identified in the
outline business case approval or previous
KSRs.
13. Is the clarity over the interface (during both
construction and operations) between the works
and services within the project and the Procuring
Authority’s other facilities and services obligations
(e.g. impact on use of adjoining facilities and service
delivery during construction phase) and is the
Procuring Authority satisfied that the interface
issues described above can be resolved in a manner
that will satisfy its operational and functional
requirements and deliver the project outcomes?
Page 9 of 18
Section 4: Readiness
The key objective of this section is to ensure that the commercial issues have been sufficiently tied down to ensure that the project is affordable
and deliverable.
Question
14.
Are there any changes to the governance
arrangements, project resourcing or budgets that
are required for Stage 2?
15.
Is there any update on key risks?
16.
Yes/No
- Have mitigation strategies been adopted?
Is a deliverable land and planning strategy in place
which includes details of outstanding surveys,
acquisition activities and remedial/enabling works?
17.
If this is a health hub project resulting in surplus
land, does the Procuring Authority have a plan in
place to deal with any surplus land receipts?
18.
Have statutory and stakeholder consultations been
carried out?
-
Have any significant objections been dealt
with?
Page 10 of 18
Comments
Section 5: Affordability
The key objective of this section is to assess the certainty of the stated affordability position of the project, and to highlight any areas that lack
certainty.
1) Please complete the following project affordability table below covering the duration of the contract period applicable to your project (25 or
30 years etc) and provide an outline of any key assumptions1:
OBC (£m)
Construction cost (nominal cumulative)
Design fees
(nominal cumulative)
hub development costs2 (nominal cumulative)
Sub-hubCo costs (in construction)
(nominal cumulative)
Hard FM costs
(real per annum)
In-house service costs (for services not included in the hubCo
contract)
Lifecycle costs
(real cumulative)
Sub-hubCo costs (in operations)
(real per annum)
Operational Term
(years)
Percentage of unitary charge indexation
Swap rate3
1
It is expected that these costs will be based on internally generated estimates pre-NPR
Including success fees
3 Including any buffer
2
Page 11 of 18
NPR
Stage1
Stage2
OBC (£m)
NPR
Unitary charge
(nominal year 1 of operations)
Unitary Charge
(NPV)
SG funding support (nominal year 1 of operations)
SG Funding Support
(NPV)
Question
Yes/No
Comments
19. Please outline reasons for any major cost
movements between the proposal and pre-NPR cost
estimates together with any key assumptions,
exclusions, prime and provisional sums included in
the proposal.
20. Is there a plan in place for how the risks associated
with cost assumptions will be managed during
Stage2?
21. Has a review by the Technical Advisers of the Stage
1 Pricing Report been completed and have matters
arising been resolved?
22. Does the Procuring Authority have clarity over all
outstanding technical and design issues and have
Page 12 of 18
Stage1
Stage2
they evaluated their impact on the deliverability and
cost of the project?
23. Have the Stage 1 and forecast Stage 2 affordability
positions been formally signed off by SFT, the
Procuring Authority and the Project Sponsor?
Page 13 of 18
Section 6: Value for Money
The key objective of this section is to ensure that the achievability, viability and desirability of the solution and the funding route have been
reviewed. Please refer to relevant Value for Money guidance 4.
Question
Yes/No
Comments
24. Please demonstrate how the authority intends to
drive value for money through “Effective Delivery”.
[Response required only to the extent that the
position has changed since Pre-NPR KSR]
25. Have any changes to scope and procurement
options since the Pre-NPR KSR been assessed and is
there an impact on the delivery of value for money
because of these changes?
26. Has the Procuring Authority assessed the
requirements for demonstrating VfM in accordance
with SFT VFM Guidance?
4
Value for Money Assessment Guidance: Capital Programmes and Projects (updated October 2011) and SFT’s Supplementary Guidance for projects in £2.5bn Revenue Funded Investment
Programme (October 2011)
Page 14 of 18
Section 7: Commercial
The key objective of this section is to ensure that the commercial issues have been sufficiently tied down to ensure that the project is affordable
and deliverable.
Question
Yes/No
Comments
27. Has a realistic programme been produced by hubCo
(and agreed with their funders) for the various due
diligence processes required to reach financial
close?
28. What, if any, key commercial issues remain
outstanding and how are the implications for the
project programme and affordability position to be
managed?
29. Please confirm the status of the Procuring
Authority’s title investigations, and whether a list of
disclosed title conditions, and the impact of these
conditions, has been agreed with hubCo.
Page 15 of 18
Section 8: Compliance
The key objective of this section is to test that the project has considered and adopted procurement best practice and that the project sponsors
are aware of any outstanding commercial issues.
Question
Yes/No
Comments
30. Has the Procuring Authority adopted relevant
standard documentation?
31. Has the Procuring Authority provided a copy of the
schedule of amendments provided as part of the
Stage 1 proposals and have all derogations been
signed off by SFT?
32. Is the proposal in accordance with the agreed
method statements?
Page 16 of 18
Is the project ready to proceed to the next stage?
Yes.*
(*Delete as applicable)
Yes , subject to recommendations below*
No, due to reasons outlined below.*
Reasons / Recommended actions:
To be completed by:
Signature of Primary Reviewer
Signature of Secondary Reviewer
Date:
Date:
Procuring Authority Declaration
I confirm that I am not aware of any information that would
materially change the assessment and review of the project.
Name and Position:
Date and Signature:
Page 17 of 18
SFT follow up action:
Reporting frequency / deadline:
Page 18 of 18
Date of completion:
Signature of Secondary
Reviewer on completion: