Hospital Case Study

College of Estate Management
K105FCP Assignment 1
FUNDAMENTALS OF CONSTRUCTION PRACTICE

K105FCP Assignment 1 0703013
18 August 2008 7 Day Extension
WORD COUNT 3,468
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Fundamentals of Construction Practice
CONTENTS
1.0 1.1 1.2 1.3 1.4 1.5 1.6 2.0 2.1 2.2 2.2.1 2.2.2 2.2.3 2.2.4 2.2.5 2.3 2.4 2.4.1 2.4.2 2.4.3 2.5 2.5.1 2.5.2 2.6 2.7 3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.6.1 3.7
QUESTION 1 ...................................................................................................................................1 Introduction 2 Ethical Dilemmas 3 Personal Integrity 3 Application of Ethical Philosophies 4 Codes of Conduct 5 Summary 6 QUESTION 2 ...................................................................................................................................8 Introduction 9 Key Drivers on Clients Requirements 9 Time 9 Cost Certainty 9 Complexity 9 Quality 10 Risk 10 Phasing 10 Procurement Strategies 12 OPTION A Traditional Procurement Lump Sum Route 12 OPTION 2 Design & Build Procurement Route 13 Selection Matrix 15 Further Traditional Procurement Options 16 Option 1 - Two Stage Tender 16 OPTION 2 Traditional Lump Sum with Partial Contractor Design 17 Other Considerations 17 Summary & Recommendations 18 QUESTION 3 .................................................................................................................................19 Introduction 20 Employers Requirements 20 Design Considerations 20 Programme 21 Cost Control 21 Capital Costs 22 Life Cycle Costing 24 Summary & Recommendations 25
REFERENCES APPENDIX
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1.0
QUESTION 1
Write a short essay explaining how ethical dilemmas arise in your field of practice and discussing the extent to which these can be resolved by employing ethical philosophies, personal integrity, professional codes or corporate guidance. Consider your work in Activity 1.4 and your participation in the ethics debate to help you prepare your answer. You should not name individuals, companies or cases when preparing your essay. Marks will be awarded for: structure and presentation of the essay; (5 marks) discussion of the issues and conflicts; (18 marks) research and analysis; (13 marks) reflection and conclusion. (9 marks)
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1.1
Introduction
The term ethics originates from the Greek term ethikos meaning the authority of custom and tradition, and has been the source of over two millennias worth of philosophical debate. Many authors of the 21st century have attempted to further define and interpret its true application within the business environment, however nearly all observation has been too rigid for universal application. Despite the relative amount of conjecture, it can be unequivocally agreed upon that the concept of ethics is intertwined with that of morals and values. The application of ethics can broadly be defined as what is morally right; however its interpretation is heavily dependant on the social, cultural and industrial context and at the relative moment in time that the issue operates. In a professional context it denotes giving ones best to ensure the clients interests are properly cared for and in doing so, ensuring that the wider public interest are both recognised and respected. (Land, 1998).
As a professional there is a duty of care owed to those who engage in the services offered, therefore professional judgement and opinion needs to satisfy what Armstrong (1999) has outlined as the requirements of a professional, these are:
Integrity involving openness and honesty, both individually and with others Independence freedom from undisclosed secondary interests with other stakeholders
Impartiality freedom from bias and unbalanced interests Responsibility the recognition and acceptance of personal commitment Competence thorough knowledge of the work to be undertaken Discretion care with communications, to avoid unnecessary differences
The application of ethical decision making is therefore essential in maintaining professionalism as it infers the disregard of self interest and the avoidance of temptation to gain advantage (Leary, 1991).
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1.2
Ethical Dilemmas
An ethical dilemma can be considered as the relaxation of an absolute, which requires a judgement based upon the application of a value system to make an informed decision on the best course of action. Predicaments result as there is no universal set of ethics to apply; instead the professional must determine which action would be in the best interests of all (or the majority, or most valued of) stakeholders. These decisions are often mutually exclusive, especially when issues arise in the secondary (cultural shaped) and tertiary (specific codes of practice) levels (Fellows et al, 2005).
Ethical dilemmas can face any individual at all levels within the business environment, and it should be the goal to maintain professionalism. On a basic level of economics it can be considered that the openness and mutual trust is vital in maintaining a free market. However, short term gain can cloud the judgement of individuals. The Royal Institute of Chartered Surveyors (RICS) has identified increasing ethical standards amongst its members as one of the main concerns in the 2002 publication Agenda of Change (Fan, 2001).
1.3
Personal Integrity
Personal integrity differs between individuals as it relies upon a personal sensitivity to an ethical issue and the associated behaviour that follows. Kohlbergs Cognitive Moral Development has been used widely to better understand why different individuals make different decisions when faced with the same ethical dilemma. According to this theory, an individuals level of moral development passes through three stages as they mature, from pre-conventional (children & adolescents), to conventional and finally principled. The principled level is where an individual is likely to apply ethical philosophies (as listed in Table 1).
In research carried out by Poon in 2005 into quantity surveyors view of professional ethics (in contrast to findings from Fan et al 2001), respondents rated fairness at the most important behaviour in resolving ethical conflicts, while self interest was the least important consideration. Although this study proves useful it must be remembered that the theoretical conduct which was played out in this questionnaire might be wholly different from that which is actually carried out in practice, but it can be inferred that the majority of professionals are at least aware of what
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is required of them. The following table, taken from the same research, ranks the most frequent acts of unethical activity in the industry.
Rank by frequency 1 2 3 4 5
Unethical Conduct Falsifying reports Over claiming of expenses Having a low level of personal honesty Having deceptive advertisements Providing trade secrets in order to exchange for personal benefit
1.4
Application of Ethical Philosophies
The following table summarises the basic schools of ethical philosophy, the right hand column explains the basis by which action are judged as either ethical or unethical.
Actions are judged ethical or unethical based on: Teleological Egoism Utilitarianism Deontological Justice Relativism The anticipated outcome Consequences to ones self The consequence to the others; the greatest good for the greatest number Rights of the individual and the intention of that person performing the action On fairness to those that are affected Subjective factors that vary from individual to group to culture
Source - Ferrell et al, 2006.
It is not hard to see that most, if not all these schools of thought can be applied to better interpret a dilemma. Poons research indicated that professionals predominately make decisions based on considerations for the client and for the maintenance of their professional membership, If this is indeed the case for the majority of members would employ egoism, teleological and
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deontological reasoning, however relativism would be an over-riding philosophy. The relevant professional bodies and many companies have attempted to limit the impact of relativism by instigating codes of conduct.
1.5
Codes of Conduct
Ethical codes of conduct are usually written rules and procedures and form a base for self regulation within both corporate and professional arenas. Research carried out on construction professionals by Vee et al (2003) found that 90 per cent subscribed to a professional code of ethics and a large proportion had an ethical code of conduct in place at their work, with the majority considering good ethical practice to be an important coporate goal.
The benefits of codes of conduct are obvious, by offering guidance and shaping the decisions made by members or employees so the consistency of action is increased throughout. However the standardisation removes a sense of uniqueness to the dilemma in question. Certain authors have voiced concerns over the internal focus and lack of consideration on the impact on the collective organisation and outside environment. The more cynical view is that corporate guidelines attempt only to limit legal liability and vaguely influence employees behaviour; and in the vast majority of instances were they are relied upon, they are often not applicable or problematic to utilise. However others have claimed that the absence of codes would result in the increase of legal fees and authority intervention. While Henry (1995) claims that despite the rigidness and problematic application, the very existence of codes of conduct raises awareness and encourages ethical practice. As recent years have seen an increase in the bringing together of cultures in construction projects, ethical conflicts have increased due to different standards in practice. Kang et al (2005) has advocated the use (in such instances) of project specific code of conduct where a pragmatic approach is used to determine a level ethical playing field. Although this may be problematic to introduce successfully this also brings into debate the behaviour of a professionals operating in a foreign environment which conflicts with their earlier native ethical training. This might be construed as the future, were ethical conduct merges across cultural divides. In order to lessen the impact, considerations should be made at the early phases of the development process, outlining potential conflicts over the course of professional involvement, which will bring consistency at project level.
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1.6
Summary
Land (1998) has shown that in order to maintain profession integrity, a client must be able to place complete trust and confidence in their professional advisors, whos duty is to recognise their limitations in competence and identify when the services of a professional is not required.
The research conducted by Vee et al (2003) further advocates this, where 93 per cent of the respondents believed that ethics in pratice should be regulated by personal ethics, with 84 per cent of respondents stating that a balance should be struck between the requirements of the client and the impact on the public. But despite this, all respondents had witnessed unethical behaviour. The pivotal platform is that of personal integrity, if this is unsatisfactorily developed then it would be highly unlikely for the individual to even attempt to employ codes of conduct or ethical philosphies. Much of a professionals ethical consideration is therefore instilled at the formative moral stages by society, academic, business and professional institutes.
Ethics is ultimately a function of both culture and time. The last 50 years has seen wide sweeping changes in procedure, standardisation has allowed for greater scrutiny of the acts of individuals. Despite this, the industry will continue to throw up situations where a professional will be required to provide an informed ethical decision or recommendation. Knight et al (2005) have illustrated that in order maintain the divide (and therefore reliance) between a professional and the public it is imperative that new members buy in into the concept of the profession, if it is to maintain integrity. This infers that existing members have a duty of stewardship to preserve and better the behavioural norms within the profession by signifying the position of power and duty of care to new members.
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Case Study Scenario
This project concerns a major programme of extensions, alterations and refurbishment to a large general hospital. Specifically, the works include: Construction of a new operating theatre suite adjacent to the existing theatres. This will require the demolition of the existing boiler house and existing central boiler plant. Refurbishment of the existing operating theatres, including replacement of the existing mechanical services installations. Provision of a new detached boiler house and the installation of a new central boiler installation on a site adjacent to the main hospital buildings, together with external service mains to serve the existing hot water and steam heating installations. Major alterations, extensions and refurbishment of the existing accident and emergency suite. Alterations and refurbishment of the main entrance, reception and outpatient waiting area to incorporate a shop and coffee bar. Realignment of the main entrance drive, and the construction of a large area of new surface car park.
The hospital already has a master plan for development of the site which was prepared by a consultant architect some years ago, and the work is to be carried out generally in accordance with this, although the plan does need some minor updating to take account of current legislation. The employer has secured funding for the scheme from a combination of government, charitable donations and private sector finance, and it is a condition of the funding package that the works be carried out in phases over a maximum period of four years from the start of design. At this point in time, the employer thinks that he would like to appoint a single contractor to carry out the whole of the works, supported if necessary by appropriate consultants. Whilst the employer has some ideas regarding phasing of the work, final details will be decided in consultation with the chosen construction team.
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2.0
QUESTION 2
Prepare a draft report to the client advising on a suitable procurement strategy for the project in Case Study 1 (Paper 0762). Include in your report the following: a. your reasoned assumptions as the clients requirement for this project; b. a selection matrix to support a choice of procurement option for the project.
Marks will be awarded for: critical analysis of the selection criteria appropriate to this project; (10 marks) explanation as to how you have arrived at the priority weightings and utility scores assigned to each procurement option in relation to this project; (10 marks) quality of reasoning when making your recommendation. (5 marks)
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2.1
Introduction
The following report considers the available strategies for procuring the work that has been outlined in the preceding scenario. The adopted strategy will be the best suited in meeting the Clients needs and achieving the project objectives. In selecting the appropriate strategy an assessment of the clients requirements will be considered in conjunction with a suggested rationale of phasing.
Relative public sector procurement regulations will need to be adhered to, which ensures appropriate levels of competition and compliance with the restrictions of the EU procurement directive.
2.2
Key Drivers on Clients Requirements
The following criteria have been outlined as the key drivers for the selection of procurement strategy.
2.2.1 Time
The project has been given a maximum programme length of 4 years and although this will be assessed later it is not likely to be a priority in influencing the procurement strategy as there is likely to be sufficient time for a fully pre-designed solution or a Design and Build arrangement.
2.2.2 Cost Certainty
It is important to have cost certainty before the project commences, in addition to control of the cost implications of changes in the post contract stage, this requires a clear and agreed brief, comprehensive tender and contract documents and clear change management processes to deal with circumstances of unforeseen works.
2.2.3
Complexity
The construction works must have a minimal impact on the day to day operation of the hospital and works will therefore need to be precisely phased and executed. Thus a large level of control will need to be maintained over the construction phases
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2.2.4
Quality
Design quality is of importance to the project. The objective is to provide high standard of build with maximum functional efficiency and flexibility, with consideration for future alterations, as well as providing a good working environment and cost effective running and maintenance costs.
2.2.5 Risk
Under the procurement arrangement, clearly defined roles and management of risk to manage the level of risk, with appropriate action taken to avoid, transfer or mitigate the risks involved. Contract arrangements can also encourage collaboration, on risk identification and management, early warning and up front agreement of the total cost and impact of change.
2.3
Phasing
The scheme will be require phasing in accordance with the outlined work within the 4 year period. A recommendation and rationale is shown in the table below.
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Phase 1
Outline of Construction Work The construction and installation of a new boiler house and central boiler on a site adjacent to the main hospital buildings, together with external service mains to serve the existing hot water and steam heating installations. Demolition of the existing boiler house and existing central boiler plant. The construction of a new operating theatre suite adjacent to the existing theatres.
Rationale of Phasing This phase has less onerous lead-in periods in terms of design and statutory approval. Low impact on existing building Vital to have this element operational prior to the demolition of the existing unit
Works can be undertaken with relatively little impact on existing areas used by the public and staff. On completion, the existing operational suite will be vacated and temporarily adapted to house units affected by later works and therefore maximizing the ability of the hospital to function as normal Accident and emergency services can be temporarily housed in the operating suite (due to be refurbished) during construction. The main bulk of construction work can be done together thus lowering preliminary cost and health and safety issues as the extensions can be contained within designated areas to have less potential impact on hospital operations. Once works have been completed A&E will vacate this space for outpatient waiting room and reception. The unit will temporarily be housed in the existing operating theatre, supplemented with temporary accommodation.
Major alterations, extensions and refurbishment of the existing accident and emergency suite.
Alterations and refurbishment of the main entrance, reception and outpatient waiting area to incorporate a shop and coffee bar. Refurbishment of the existing operating theatres, including replacement of the existing mechanical services installations Realignment of the main entrance drive, and the construction of a large area of new surface car park.
Existing operating facilities can be transferred to the new build
All focus will be on external works, preferably during the summer months so completion can be maximised
The outlined phasing has attempted to offer synergy between the elements of the works by maintaining continuation of new building and refurbishment works.
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2.4
Procurement Strategies
Having considered the key drivers for the project and identified the phasing, two procurement strategy options have been identified as the most appropriate to satisfy these objectives for further consideration, a Traditional client design lump sum method and a Design & Build. Under either of these procurement arrangements, tenders can either be obtained on a single stage or two stage basis as described later in this report.
2.4.1
OPTION A Traditional Procurement Lump Sum Route
This option involves the completion of a full design by appointed consultants prior to tender. A lump sum tender is achieved using bills of quantities and/or a specification and drawings. Cost certainty is ensured at the beginning of the works, provided that all client decisions are made, the works are fully designed and surveys or investigations have been completed and accurate. Timeframe for completion of the works is fixed at the award.
The contract sum can only be altered by variations to the completed design or by any unforeseen necessary works that arise. The responsibility, and therefore the risk, for the performance of the design team remains with the client. The contractor, meanwhile, is responsible for the building works. The advantages of this method are set out below, together with a list of important considerations.
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Advantages
Disadvantages / Considerations
Design quality control retained by the client Competitive fairness all tenders are based on exactly the same information, and there is no interpretation of information Less contractor risk in pricing likely to provide more competitive price Greater cost certainty the total cost is known at the outset of the contract (subject to control of variations) Programme certainty the timeframe is established at the outset of the contract Minor changes are easy to implement, with an established method of valuation based on tendered rates and prices Bills of Quantities assist evaluation process and the post contract cost management The form is capable of conversion to a guaranteed maximum price (GMP).
Client retains responsibility and risk for the performance of the design team The method relies on relatively full design information prior to the tender, which requires time to prepare Little or no integration of the contractor and subcontractors in design process Full design may not be achievable, and this can require the use of provisional sums or some contractor design elements reducing price and time certainty The client can be penalised in terms of cost and delays if major changes are introduced during the contract
2.4.2
OPTION 2 Design & Build Procurement Route
The tender documents outline the employers requirements and are usually in the form of a brief, which take into account the schemes design stage, building function, the area required, services performance criteria and basic finishes. If a develop and construct scenario was adopted, the design is taken to a more detailed stage. Allowing for greater client control and influence on the end-product. However the more prescriptive the design brief the less benefits will accrue from the contractor design process. A single contractor is then appointed following competition, which shall employ their own design team. It is the clients (or team) responsibility to ensure the design and work continues satisfactorily. This arrangement therefore requires discipline and an understanding of expectations at the outset. There is a Single point responsibility placed on the contractor to deliver to time, cost and stated quality. There is little flexibility for making changes, which can be both costly and have programme implications. The
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advantages and list of considerations of the design and build approach are summarised below.
Advantages

Disadvantages / Considerations

Cost certainty the total cost is established at the outset of the contract Programme certainty the timeframe is established at the outset of the contract
Longer tender period A longer tender evaluation period is required, to ensure that the contractors proposals meet the employers requirements Design risk may attract premium in contractors price Limited cost benefit if design brief very prescriptive
Can benefit from more cost effective and efficient design through contractors building experience There is an option to novate the clients architect or engineers to work directly with the contractor although it may be preferable to retain the design team to monitor and manage quality control Leaving the choice of design team to the contractor may encourage innovation and drive down design costs
Single-point responsibility, with the main contractor; full responsibility for design
Shorter tender documentation period (depending on detail of design brief) Capable of conversion to a guaranteed maximum price (GMP)
The employers requirements need to be clearly defined at the outset. Any important requirements of the design must be clearly specified in the tender documents The employers requirements must be clear and unambiguous, so that cost and programme certainty can be obtained from the tenders Quality needs to be carefully defined and supervised Post-contract changes is unlikely to achieve as competitive a price as contracts based on bills of quantities The method is not flexible in terms of incorporating client changes and is likely to lead to cost and time penalties There is a loss of client control over design and construction activities May introduce additional fee element for PM and Design Monitor
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2.4.3
Selection Matrix
The following matrix has been constructed and weighted in accordance with the previously outlined criteria. The results show that a traditional procurement strategy would be most favourable in terms of fulfilling the clients requirements.
SELECTION MATRIX FOR PROCUREMENT STRATEGY

SCORING 1 undesirable 2 3 desirable 4 5 essential CLIENT PRIORITY TIME 3 TRADITIONAL 10 30 DESIGN & BUILD 100 300
COST
90
450
40
200
COMPLEXITY
40
200
30
150
DESIGN
100
400
40
160
FLEXIBILITY
100
300
30
90
RISK
30
90
80
240
RESPONSIBILITY TOTAL
30
90 1560
100
300 1440
Source Skitmore & Marsden
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2.5
Further Traditional Procurement Options
2.5.1
Option 1 - Two Stage Tender
This involves the tender process split into two separate parts, the first stage tender is awarded on the basis of fixed lump sums for management, supervision staff and preliminaries with approximate quantities and firm tenders for major sectors of work that have been designed and provisional sums for the remaining work, together with percentage additions for overheads and profit relating to the provisional work. The second stage involves the competitive tendering of the provisional sum items of work to subcontractors. A list of the advantages and considerations involved with two stage tendering is listed below.
Advantages
Considerations
Allows for a quicker start on site than a traditional route Shorter tender documentation period and can commence tender process whilst brief is developing Early contractor advice in procurement process Can be used with elements of contractor design Flexibility is possible in the procurement of finishing trades and design can extend into construction period Fixed programme period is possible Allows for competition and a degree of cost certainty with lump sum price element Capable of conversion to Guaranteed Maximum Price
Delays can occur in tender process if second stage does not achieve desired results Some cost and time risk to client depending on reliability and extent of provisional sums Degree of competition and cost certainty depends on extent to which design information is available at first tender stage Essential to select client-focused contractor and to have visibility of final account pricing The final cost of provisional sums is not known until later in the contract and subject to market forces at the time the work is procured
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2.5.2
OPTION 2 Traditional Lump Sum with Partial Contractor Design
Elements of the traditional route are designed by the contractor. This allows the client to retain control of the principle design elements whilst utilising specialist subcontractor design input. A list of the advantages and considerations involved are shown below.
Advantages
Considerations
Design quality control retained by the client for core elements of design Use of performance specifications for specialist elements with design responsibility passed to contractor Allows early integration of specialists and reduces risks associated with design coordination. Compatibility with main contractor can be achieved by listing subcontractors Competitive fairness all tenders are based on exactly the same information, and there is no interpretation of information Less contractor risk in pricing likely to provide more competitive price Cost certainty the total cost is known at the outset of the contract Programme certainty the timeframe is established at the outset of the contract Minor changes are easy to implement, with an established method of valuation based on tendered rates and prices The form is capable of conversion to a guaranteed maximum price (GMP).
Client retains responsibility and risk for the performance of the design team for core elements The method relies on relatively full design information prior to the tender, which requires time to prepare Allows some integration of the contractor and subcontractors in design process
Full design may not be achievable, and this can require the use of provisional sums or some contractor design elements reducing price and time certainty Degree of competition depends on extent to which design information is available Needs careful control of the interface between contractor design elements and with consultant designed elements
2.6
Other Considerations
Guaranteeing Maximum Price (GMP) could also be considered through negotiations following single stage or two stage tender processes. This applies to the defined works, where should the costs exceed the GMP, after allowing for material changes to the employers requirements; the contractor bears all the cost. However, the transfer of risk will incur a price premium and the contractor benefits if the works are constructed less than the GMP
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2.7
Summary & Recommendations
The current master plan is not sufficiently developed to provide the necessary level of detail for this project to commence in its current state under Design and Build procurement. For it to be considered it shall have to be developed to RIBA stage D or above, this will significantly lessen the initial financial benefits and the associated risk benefit.
If the design brief was further developed it would still require adequate scrutiny which will never fully remove the risk of a reduced quality and failure to achieve the design objectives. To ensure these quality requirements are met, the client needs a certain amount of control of the design and specification. There is less price risk for a
contractor under traditional procurement and tender evaluation is easier. This is likely to provide more economic pricing. There is scope to adopt differing procurement paths for each phase but this should be evaluated only when the clients brief is full defined.
A hybrid arrangement could be adopted whereby under a traditional arrangement elements of design responsibility are passed onto the contractor giving some benefits of integration particularly for specialist elements whilst retaining overall design and quality control. The decision to procure on a single or two stage process will have to be made once more requirements of the employer is known.
To enhance the likelihood of successful delivery of the project it is important that the risks are appropriately managed and best practice management approach is adapted to the procurement process. The transfer of risk to the contractor needs to be understood and pre-contract processes adequately controlled to ensure changes to the design brief are not necessary post contract.
Therefore it is this reports recommendation that a strategy of traditional procurement is adopted, as it will provide greater flexibility to develop the detailed requirements to a robust level ensuring greater cost certainty of cost quality and time. The key driver to cost and complexity is the detail of tender information and the avoidance of change post contract.
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3.0
QUESTION 3
In a draft report to the client, outline a strategic brief for the pre-contract activities for the project in Case Study 1. Include in your report the following: a. A programme of pre-contract activities showing the relationship between the various activities and their timescales, based on the recommended procurement route for the project; b. Identification of cost planning and controlling activities from first stage estimates through to tender submission. Marks will be awarded for: demonstrating an understanding of a strategic brief, appropriately presented; (10 marks) quality of programme and details included. (10 marks)
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3.1
Introduction
The following report considers the project objectives by strategically outlining the procedure and organisational structure of the suggested traditional procurement strategy for the proposed scheme. A suggested rationale of the phasing has been analysed in the previous report and this will form the basis of the indicative programme.
3.2
Employers Requirements
A clearly defined employers brief taking into consideration requirements for size, storeys, height and quality of build will need to be made in consultation with the design team. The remodelling works to the hospital shall have to be accordance with current best practice in design, assessing both internal and external environmental quality.
It is imperative to conduct a site survey to determine aspects such as access, soil conditions, existing services and boundaries, so to become aware of any limiting factors to the suggesting phasing. Access will have to be carefully managed as site vehicles should not hinder any emergency vehicles.
3.3
Design Considerations
An energy efficient and low maintenance approach to design would help reduce staffing costs, which are the highest incurred of the running costs over a projects life time. The last decade has seen a considerable increase in Hospital Associated Infections (HAIs), a sensitive design approach and specification of materials has been proven to reduce the level of occurrence. It is now widely acknowledged that high quality architecture and internal environments enhance the experience of patients and staff in healthcare facilities and that it aids in the reduction of recuperation time required by patients (Clarke, 2005). The design could incorporate ASPECT (A Staff and Patient Environment Calibration Toolkit) in conjunction with Achieving Excellence Design Evaluation Toolkit (AEDET Evolution) so to achieve such goals. The need for the allocation of space to maintain an element of flexibility so to accommodate clinical changes and to be multifunctional to accommodate as many procedures as possible has become central to future proofing hospital projects (Building magazine, 2005).
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3.4
Programme
The proposed outline programme is found in the appendix, this covers the key activities of the pre-contract award as well as the phasing programme outlined in the previous report. This indicative programme has excluded certain elements which can be added once the employers brief is more robust. The programme indicates that the works can be carried out within the maximum period of 4 years.
The current market conditions are favourable due to the economic slow-down; contractors will be pricing competitively despite the BCIS indices showing price rises across all in tender prices for this period.
3.5 Cost Control
The following diagram illustrates the sequence of cost control activities that will be undertaken during the RIBA plan of Work stages A to H on the proposed scheme. In general as more details of the design are added the firmer the costs will become. After the preliminary estimate, an elemental based budget estimate can be conducted on sketch plans and then upon approximate quantities. It is vital to have cash flow projections in place so to inform all parities involved and plan against unnecessary loss or change of interest. The cost planning phase brings design team together and each party builds up a repository of information to exchange and thus control the project cost. This is considered as one of the best ways to make efficient use of the budget available. The analysis of elements can also help to isolate areas of abnormal spend, while cost planning can also aid control at the post contract stage (Hackett et al, 2005).
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COST PLANNING AND CONTROL DURING RIBA PLAN OF WORK STAGES
Site appraisal cost study Initial capital cost studies Value management Cost benefit studies Cost of recommended solution
A APPRAISAL Cost check of design against cost plan Update of cost plan and cash flow projection E TECHNICAL DESIGN
Cost check of design against cost plan Update of cost plan and cash flow projection
F PRODUCTION INFORMATION
Whole life costing Target cost and cash flow constraints Feasibility study
B DESIGN BRIEF
Pre-tender estimate Update cash flow projection
G TENDER DOCUMENTATION
Assess economic constraints Cost study of design options initial cost plan cash flow projection
C CONCEPT Update cash flow projection H TENDER ACTION
Further cost studies Elemental cost plan Updating of cost plan as design develops Cost of compliance with statutory regulations Firm cost plan Cash flow projection
D DESIGN DEVELOPMENT
Source: adapted from Hackett et al (2003)
Diagram 1. Cost Planning & Controlling Activities during RIBA stages A H. 3.6 Capital Costs
An assessment has been made on the general spatial requirements of each element of the phasing. The cost estimate have been calculated on a cost per m2 based an assessment of similar schemes from the RICS Building Cost Information Service (BCIS) together with an assessment of typical costs using published cost data. These rates are accurate for the third quarter of 2008 and represent the UK mean for construction. This cost is indicative and should not be considered as the preliminary estimate which would be
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based on a more detailed employers brief. On viewing it should be noted that the following assumptions have been made:
VAT is excluded Normal ground conditions No remediation of contaminated land is required Land cost have not been included Fit out costs have not been included Professional Fees have not been included Contingencies have not been included
An indicative cost of 4,771,375 for the project is considered for appraisal with the clients budget and further evaluation with Life Cycle Costing.
PHASE WORKS ESTIMATED GFA (m2) 125 COST / m2 TOTAL ESTIMATED PHASE COST 275,750.00
New boiler Unit
2,206
2A
Demolition of exiting Boiler Unit
75
95
7,125.00
2B
New Build Operating Theatre
750
1,637
1,227,750.00
3A
Horizontal Extension to A&E
250
1,825
456,250.00
3B
Refurbishment of A&E
1000
1,100
1,100,000.00
Alterations & refurbishment of Entrance and waiting area
400
1,405
562,000.00
Refurbishment of operating theatre
900
1,100
990,000.00
6A*
New car park
1250
80
100,000.00
6B
*2
Realignment works
50
1,050
52,500.00
ESTIMATED PROJECT TOTAL

* 50 bay car park proposed @ 25m2 per car 2 * 50m of road works required
1
4,771,375.00
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3.6.1
Life Cycle Costing
The design must meet the requirements of the building over the entire envisaged life of project. Higher initial constructions costs can be evaluated against lower on going cost in-use; this can further inform the design and specification process (Hackett et al, 2005)
Based on the estimate provided above, life cycle costs have been calculated over a 30 year period assuming a discount rate of 3.5% to give a Total Net Present Value figure. The detailed life cycle cost appraisals are included in the appendix. A description of the costs involved is outlined below.
Capital costs are the net building cost excluding professional fees and VAT Administrative costs include all service attendants, porterage, security, rubbish disposal and management. Cleaning includes internal and external cleaning. Utilities cost includes all fuels together with water rates and effluent and drainage charges. Services Maintenance includes planned maintenance and repair and replacement of the components in plumbing, heating, lifts, power and lighting and other mechanical and electrical installations. Fabric Maintenance includes repairs and replacements of any components associated with external walls, doors and windows, roofs, internal partitions and doors, fitting and fixtures and all finishes.
The estimates are based on cost information provided by the BCIS and generally relates to historic expenditure. The figures are intended to represent average annual expenditure. The following represents the costs of the proposed hospital remodelling works.
Capital Cost 4,771,375
Total Life Cycle Cost over 30 years 16,943,706
Net Present Value 12,510,773
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3.7
Summary & Recommendations
The necessary appointments should be made as soon as possible in order to begin the design process. It is vital that the clients brief is defined and agreed prior to completion of design and tender. The tender period is intended to be longer than usual to allow for consultation with contractors during the process so that there is a strong input on risks involved.
The indicative monetary figures contained in this report should be assessed against the funding available for the project and a decision of the economic and temporal viability should be made.
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REFERENCES
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Texts Armstrong, J, Dixon, R, & Robinson S. 1999. Decision Makers. Ethics for Engineers. Thomas Telford. Oxford, UK. Ferrell, O. C, Fraedrich, J. 2006. Business Ethics Ethical Decision Making and Cases. Seventh Edition. Houghton Mifflin Company. London, UK. Hackett, M & Robinson, I. 2003. Pre-Contract Practice and Contract Administration. Blackwell Science Ltd. Oxford, UK
Journals & Trade Publications Clarke, D. 2007. Metric Handbook Planning and Design Data. Number 25 Hospitals. Architectural Press. Oxford, UK Fellows, R & Storey, C. 2005. Ethics in Project Briefing. Construction Information Quarterly. Volume 7 Issue 4. CIOB, London, UK. Kang, B. G, Price, A, Thorpe, T and Francis, E, F. 2005. Ethics Training on Multi-Cultural Construction Projects. Construction Information Quarterly. Vol 7 Issue 4. CIOB, London, UK. Page 70 76. Knight, A & Mortledge, R. 2005. Professionalism and Ethical Decision Making. http://www.rics.org/Practiceareas/Management/Businessmanagement/Professionalpractice/Pr ofessionalism+and+ethical+decision+making.htm Land, H. 1998. Professional Ethics and the Rules of Conduct of the Royal Institution of Chartered Surveyors. A CPD study pack. The College of Estate Management. Reading, UK. Poon, j. 2005. Professional Ethics fo UK Construction Professionals. Construction Information Quaterly. Volume 7 Issue 4. CIOB, London, UK. Page 70 76. RIBA, 2008. RIBA Plan of Work: Multi-Disciplinary Services. RIBA Publishing. London, UK Svensson G & Wood, G. 2003. The Dynamics of Business Ethics: a function of time and culture cases and models. Management Deicsion Journal. Vol 41 Issue 4. Page 350 361. Vee, C & Skitmore M. 2003. Professional Ethics in the Construction Industry. Engineering, Construction and Architectural Management Journal. Volume 10 Issue 2. Page 117 127.
Websites Building Magazine PFI Hospitals - Cost model, December 2003 http://www.building.co.uk/story.asp?sectioncode=113&storycode=1032511&c=1 Accessed on 8 August 2008 BCIS online http://service.bcis.co.uk/v2000/bcis/docs/frames.html?login=indirect Accessed on 7 August 2008
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APPENDIX
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YEAR 1 3rd Quarter 4th Quarter 1st Quarter 2nd Quarter Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
architect appointment design team appointments consultant appointments Design Brief Site Survey
DESIGN STAGE
Design development Consult with planning authority Consult with Service providers Feasibility study
COST PLANNING STAGE

Cost planning period Prepare PQQ & Post Notice with OJEU PQQ assessment invitation to tender tender period and evaluation contract award Mobilisation Site Preparation Phase 1 New boiler house - Construction Period Services Remedial work Phase 2A Demolition of Boiler house - Construction Period Phase 2B New Operating Theatre - Construction period Transfer unit to new building Transfer A & E into vacated existing Operation Theatre suite Phase 3A Extension to A & E - Construction Period
TENDER STAGE
CONSTRUCTION STAGE
Phase 3B Refurbishment of A & E - Construction Period Transfer A & E back to refurbished building Transfer Waiting Room to vacated existing Operation Theatre suite Temporary accommodation hire Phase 4 Alterations & Refurbishment to waiting room - construction period Transfer waiting room back to refurbished building Phase 5 Refurbishment of existing Operating Theatre - construction period Phase 6 New car park - construction period Realignment of main entrance Practical completion & handover
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Case Study 1 Hospital

Life Cycle Costs GFA
3425
Date : 3RD QTR 2008

Year Capital Costs Construction cost Fees Running Costs Utilities Decoration maintenance Services Cleaning Administration TOTAL PRESENT VALUE OF 1 @ 3.5% PRESENT VALUE Year Capital Costs Construction cost Fees Running Costs Utilities Decoration Fabric maintenance Services Cleaning Administration TOTAL PRESENT VALUE OF 1 @ 3.5% PRESENT VALUE 23 4 13 19 36 19 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.5767 220,237 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.5572 212,789 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.5384 205,593 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.5202 198,641 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.5026 191,924 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.4856 185,433 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.4692 179,163 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.4533 173,104 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.4380 167,250 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.4231 161,595 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.4088 156,130 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.3950 150,850 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.3817 145,749 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.3687 140,820 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.3563 136,058 12,510,773 2,311,875 359,625 1,284,375 1,900,875 3,647,625 1,952,250 16,943,706 Rate m2 23 4 13 19 36 19 5,487,081 1.0000 5,487,081 16 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.9662 368,973 17 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.9335 356,496 18 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.9019 344,441 19 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.8714 332,793 20 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.8420 321,539 21 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.8135 310,666 22 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.7860 300,160 23 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.7594 290,010 24 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.7337 280,203 25 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.7089 270,727 26 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.6849 261,572 27 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.6618 252,727 28 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.6394 244,180 29 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.6178 235,923 30 77,063 11,988 42,813 63,363 121,588 65,075 381,888 0.5969 227,945 Total 4,771,375 715,706 Rate m2 0 4,771,375 715,706 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
TOTAL NET PRESENT VALUE
12,510,773
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Hospital Case Study

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FUNDAMENTALS OF CONSTRUCTION PRACTICE

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WORD COUNT 3,468

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College of Estate Management

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Application of Ethical Philosophies

Source - Ferrell et al, 2006.

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Case Study Scenario

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Key Drivers on Clients Requirements

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Existing operating facilities can be transferred to the new build

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OPTION A Traditional Procurement Lump Sum Route

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College of Estate Management

OPTION 2 Design & Build Procurement Route

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SELECTION MATRIX FOR PROCUREMENT STRATEGY

Source Skitmore & Marsden

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