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Annex A The Business Case Production and Delegated Approval Process

Capital and Revenue Business Case Production and Approval Process

V5.1

September 2014(Revised March 2016)

Capital and Revenue Business Case production and Approval process September 2014 (revised March 2016) 1 of 33

Table of Contents1. Introduction....................................................................................................................3

2. Purpose of this Policy/Procedure...................................................................................3

3. Ownership and Responsibilities.....................................................................................3

4. Standards and Practice - Stages in the Business Case Process...................................4

Investment Proposal.............................................................................................................4

Mini Business Case..............................................................................................................5

Short Internal Business Case...............................................................................................5

Replacement of High Value Equipment Case......................................................................5

Project Initiation Document (PID).........................................................................................6

Strategic Outline Case (SOC)..............................................................................................6

Outline Business Case (OBC)..............................................................................................7

Full Business Case (FBC)....................................................................................................7

5. Standards and Practice - Quality Assurance Controls...................................................8

6. Standards and Practice - Revenue................................................................................8

7. Standards and Practice - Capital Business Cases.......................................................10

Investment Decision Review Process................................................................................12

Establishing Capital Expenditure........................................................................................14

Committee Structure..........................................................................................................15

8. Dissemination and Implementation..............................................................................16

9. Monitoring compliance and effectiveness....................................................................16

10. Updating and Review...................................................................................................16

11. Equality and Diversity..................................................................................................16

12. Equality Impact Assessment........................................................................................16

Annex A The Business Case Production and Delegated Approval Process...............17

Annex B The Business Case Production and Delegated Approval Process - Service Line Management and Reporting..................................................................18

Annex C Trust Committee and Subcommittee Structure............................................19

Annex D Capital Projects Building Planning, Design and Control Process Major Capital Projects over £500k................................................................20

Annex E Capital Projects Building Planning, Design and Control Process Minor Capital Projects under £500k..............................................................24

Appendices 1 to 15 - Contact Capital Business Case Manager.........................................29

Appendix 16. Governance Information...............................................................................30

Appendix 17. Initial Equality Impact Assessment Form......................................................32


1. Introduction

1.1. This Policy and procedure provides advice and guidance to officers of the Trust on the production and approval process of capital and revenue business cases.

1.2. In order to ensure good governance is maintained the Trust is required to operate a sound and robust process for the approval of all expenditure commitments. The purpose of this document is to provide guidance and templates to ensure good standards of control and governance are in place without inhibiting the speed of decision making.

1.3. All proposed projects that require significant revenue or capital investment must have undergone a rigorous development process assessing purpose, benefits, operational impact, efficiencies, income generation potential and financial consequences. This ensures that the limited revenue and capital resources available to the Trust are invested in a way that provides best value for money for the taxpayer and the Trust.

1.4 The business case process is the method by which this assessment is conducted, and therefore completing the various documents that support the different stages in the approval process to a high standard is vital to ensure projects can be reviewed, considered and progressed to the next stage in a timely fashion.

1.5 As capital resources become scarcer it is inevitable that choices between capital projects will need to be made. The robustness and completeness of the capital business cases presented for approval is likely to be a factor in determining where these scarce resources are invested.

1.6. This version supersedes any previous versions of this document.

2. Purpose of this Policy/Procedure

2.1. This Guide is designed to assist those responsible for completing or contributing to a business case. It supports the objective of ensuring that all business cases are of a high standard and provides key decision makers with all the information required to approve the case.

2.2. Business Cases should be seen as an integral part of delivering Divisional Plans and the Trust’s Long Term Capital Programme, rather than a standalone investment decision in isolation.

3. Ownership and Responsibilities

3.1. The completion of the business case process requires a multi-disciplinary team approach. All capital projects should be driven by improvements to the service that can be offered to patients and the efficiencies and/or income generation that can be released through capital investment and service redesign.

3.2. The Project Sponsor must therefore ultimately be responsible for the quality and timely completion of the different documents produced during the business case process. Support would normally be provided by:


An identified Project Lead, normally an individual with detailed operational knowledge of the relevant service area;

The divisions Finance Manager; For Capital cases, where appropriate, a Capital Planning and Projects

Manager and Capital Business Case Manager; Clinical, Nursing, Infection Control, IT and Support Services may also need to

contribute to the development of the case; and Additional business case and service delivery support can be provided on

application to the Trust Management Committee. The Trust Management Committee have discretion to support requests where it is clear that this will ensure that only properly completed business cases are submitted into the approvals process.

Role of Managers and Individual Staff

3.3. All are responsible for complying with the requirements of the Capital and Revenue Business Case Production and Approval Process Policy/Procedure as outlined in this document. If any aspect is unclear then they must bring this to the attention of their line manager.

4. Standards and Practice - Stages in the Business Case Process

4.1. For small investments or investments that replace high value equipment, that is included in the Long Term Capital Programme, there are simplified single documents. There are up to four formal documents that need to be produced in the full business case process. Each document will require formal approval by the relevant committee or Board before the investment proposal can proceed to the next stage.

Investment Proposal

4.2. This document is the first step in the business case process and requires Divisional/Director approval. It is not required for High Value Equipment Replacement business cases or for cases less than £50k that are funded within a Divisions/Departments budget, (budget approved at the start of the year, after CIP, that has been allocated to the Division/Department).

4.3. Investment proposals should form part of a Divisions/Department annual business planning process, with approved proposals being submitted as part of the budget setting process.

4.4. This document is designed to be short (word restricted) and will briefly outline the proposed scheme, including the benefits and estimated financial information.

4.5. A Quality Impact Assessment (QIA) must be completed and appended to the Investment Proposal. Documentation for completing this is attached as Appendix 9

4.6. Guidance on how to complete an investment proposal and a standard template can be found at Appendix 1.


Mini Business Case

Following the approval of an investment proposal, a mini business case is required for the following projects:-

Up to £50k, that are to be funded within a Divisions/Departments budget, (budget approved at the start of the year, after CIP, that has been allocated to the Division/Department). Once approved by the Division/Department no further business case documentation/approval is required.

Up to £50k not funded; Up to £100k where the funds are held within reserves until conditions or business

case are approved; and Replacement/new consultant posts.

4.7. This document is designed to be short (word restricted) and will detail the proposed scheme, including current and future services arrangement as well as the benefits and financial information.

4.8. For replacement/new consultant posts job plans must be included in the mini business case along with details of any potential service change.

4.9. Guidance on how to complete an investment proposal and a standard template can be found at Appendix 2.

Short Internal Business Case

4.10. Short business cases are required for projects up to a value of £500k and not covered by a mini business case.

4.11. These are designed to be simple to complete but also contain sufficient information so that key questions are answered before such expenditure is approved.

4.12. Guidance on how to complete a short internal business case and a standard template can be found at Appendix 3.

Replacement of High Value Equipment Case

4.13. Much of the Trust’s high value medical equipment would normally require a Full Business Case due to the value involved. However, it has been recognised that the majority of this equipment is needed to maintain core services and must be purchased as the asset nears the end of its useful economic life. These replacements are included in the Trust’s Long Term Capital Programme.

4.14. Guidance on how to complete a high value equipment case and a standard template can be found at Appendix 4.

Project Initiation Document (PID)

4.15. The completion of a PID is the first step of the full business case process (business cases exceeding £500k). The objective of the PID is to define the


project in order to form the basis for its management and an assessment of its overall success. The PID gives the direction and scope of the project and is an essential assurance document to ensure that appropriate governance arrangements are in place to undertake the project.

4.16. Production of a PID ensures that the project has a sound basis before the Trust enters into commitments associated with the project. The PID provides a single source of reference about the project and the version of the PID that was authorised at the start of the project represents the basis on which the performance of the project can be assessed when the project is completed.

4.17. The PID should be able to answer the following questions: What is the project aiming to achieve? Why is it important to achieve it? Who will be involved in managing the process and what are their

responsibilities? How and when will the project be undertaken?

4.18. Guidance on how to complete a PID and a standard template can be found at Appendix 5.

Strategic Outline Case (SOC)

4.19. The objective of the SOC is to provide a clear reason for change and to ensure that any proposed investment is both consistent with the Trust’s strategic direction and affordable to the Trust and Commissioners. The case for change must be fully considered at this stage, including identification of what is wrong with the status quo. The SOC will involve the following activities:

Confirmation of the Strategic Direction and Business Objectives of the Trust.

Review of the current position of the Trust. An analysis of the market and the Trusts market position. Consideration of the service requirements taking the identified current

position into account and the ability to meet the perceived demand for the service.

High level assessment of the feasibility of any capital builds assumptions

4.20. Guidance on how to complete a SOC and a standard template can be found at Appendix 6.

Outline Business Case (OBC)

4.21. The objective of an OBC is to identify the preferred option for the project through an objective investment appraisal process. This will involve the following activities:

Identification of the objectives of the project and their link to the Trust’s strategy and overall business objectives.

Identification of the benefits expected as a result of the planned investments.

Identification of any constraints on the means of achieving the objectives of the project.


Generation of a full list of options for meeting the objectives of the project and a short list on the basis of agreed criteria.

An assessment of the costs and benefits of each short listed option. A risk analysis and an assessment of the impact of the investment on

the Trusts revenue costs. Formulation of plans for project monitoring and post project evaluation. Identification of the preferred option and estimated costs to develop it

to Full Business Case stage.

4.22. Guidance on how to complete an OBC and a standard template can be found at Appendix 7.

Full Business Case (FBC)

4.23. Once an OBC has been approved, the project will proceed to the production of the Full Business Case. FBC will only be progressed when capital funds have been identified and where relevant, commissioner support obtained. Production of the FBC is an opportunity to validate/review the work previously done in the SOC and OBC, but primarily it is developing the preferred option. This involves a re-appraisal of the preferred option with detailed cost information and plans for managing the project and its implementation. This will involve the following activities:

A review of the Strategic Outline Case including more precise quantification of future service requirements.

A review of the Outline Business Case including validation of the main elements of the investment appraisal.

Detailed development of the preferred option. Detailed plans, design proposals, delivery methodology, and market

tested costs for any capital build project Detailed plans for project monitoring and post project evaluation.

4.24. The output of the FBC stage is an updated assessment of the strategic context and an expansion of the previously prepared OBC, clearly presenting the arguments for the planned investment and demonstrating that the Trust can deliver the scheme on time and in line with identified budgets.

4.25. Where the business case is related to the development of a clinical service the FBC should be supported by a Strategic Specialty Plan spanning 5 years which should be in place and support the business case production and be available to be presented at the same time as the Outline and Full Business Case.

4.26. Guidance on how to complete a FBC and a standard template can be found at Appendix 8.

The Inter-relationship of the documents

4.27. In the full business case process each of the four documents should build on the document that preceded it in the process. Whilst the structure of the PID and SOC are slightly different the table below shows how the FBC sections are populated with the work undertaken earlier in the process.


PID SOC OBC FBCExecutive Summary

First Draft Finalised

Strategic Outline Outline Only Final Draft FinalisedOption Appraisal Outline Only First Draft Final Draft FinalisedSelection of Preferred Option

Final Draft Finalised

Operational Considerations

Outline Only First Draft Final Draft Finalised

Detailed Financial Implications of Preferred Option

Outline Only


Project Management Arrangements


Conclusion First Draft Final Draft Finalised

5. Standards and Practice - Quality Assurance Controls5.1. All business cases (capital and revenue), as part of the business case approval

process, are required to go through a quality assurance assessment prior to consideration by the relevant Group / Committee. A Quality Impact Assessment (QIA) must be completed and appended to all business cases. Documentation for completing this is attached as Appendix 9 whilst the QIA process can be found in the documents library.

5.2. To complete the Quality Assurance Assessment, all investment proposals and business cases need to be sent to the Business Case Review Group (BCRG) which must include the QIA. The business cases will then be forwarded to the relevant Group/Committee for scrutiny/approval.

6. Standards and Practice - Revenue

Documentation

6.1. Both revenue and capital business cases are completed using the same documentation/templates.

6.2. For each stage of the business case process the following templates have been produced:-

Investment Proposal Mini Business Case Short Business Case Project Initiation Document (PID) Strategic Outline Case (SOC) Outline Business Case (OBC) Full Business Case (FBC) High Value Equipment Replacement (HVE)

6.3. The templates are all supported by detailed guidance on how to populate them. These can be found at appendices 1 to 7.


6.4. As a general rule all requirements for additional revenue funding should be supported by a Business Case showing the link between the funding request and the Strategic Speciality Plan.

6.5. A business case is not required for known cost pressures (inflationary uplifts, incremental pay etc.) that have been identified as part of the annual budget setting process. Funding available to mitigate these pressures will need to be agreed with the Director of Finance (delegated to the Head of Financial Management & Contracting).

6.6. If funding to mitigate these known cost pressures does not currently exist or there is a particular issue that requires further consideration it will be referred via the Director of Finance to the Executive Directors for consideration.

Approval

6.7. There are different levels of approval depending on the scale of the business case. This is shown in Annex A and described below:

Cases up to £50k, funded within Divisional and Department budget

6.8. This relates to proposed expenditure up to £50k that will be funded from the Division/Departments budget. This is budget that has been approved at the start of the year, after CIP, that has been allocated to the Division/Department.

6.9. For these cases, a mini business case is required that is approved by the Divisional General Manager/Divisional Board (revenue cases) or the Director of Estates/Director of CITS/Medical Director (capital cases).

Cases up to £50k not funded OR approved investment up to £100k (but held within reserves until conditions or business case is approved) OR replacement consultant post

6.10. For these cases an investment proposal is required. Following the approval of the investment proposal a mini business case is required.

6.11. For cases up to £50k not funded or for approved investments up to £100k where funding has been held within reserves until conditions or business case has been approved, Divisional approval must be obtained prior to submission to the Business Case Review Group.

6.12. Business cases for replacement and new Consultant post must be supported by current and future job plan and require final approval by the Director of Finance and Medical Director.

6.13. The mini business case will require final approval from the Trust’s Management Committee (TMC) before any expenditure can be incurred.

Cases up to £500k and not included in the above


6.14. For these cases an investment proposal is required. Following approval of the investment decision a short business case must be completed.

6.15. The short business case will require final approval from the Trust’s Management Committee (TMC) before any expenditure can be incurred.

Cases in excess of £500k

6.16. As a general rule cases in excess of £500k will require completion of the Full Business Case.

6.17. Trust Management Committee (TMC) provides strategic direction and maintain overall control of the development and delivery of Trust strategic investments. It will give approval to strategic revenue investments with a cumulative value above £500k prior to such schemes going forward to the Trusts Finance, Performance and Investment Committee (FPIC) and for investments above £1m, Trust Board for formal approval.

6.18. Where funding for known cost pressures (inflationary uplifts, incremental pay etc.) has been identified as part of the annual budget setting process then a business case is not required. The Director of Finance and the Chief Operating Officer will retain authority to release funding into budgets where the revenue impact is less than £500k per annum.

6.19. Where no funding exists, cases will be referred via the Director of Finance and the Trust Management Committee to the Finance, Performance and Investment Committee for consideration and authority to proceed.

6.20. The case should also be supported by the Sustainable Development Management Plan (SDMP) checklist, attached as Appendix 13. Additionally any revenue case requiring changes to the use of space should be supported by a Space Allocation Request Form which will help assess any financial impact on the changes being proposes. This form is attached as Appendix 14, and further details and guidance about this can be found in the Accommodation and Space Management Policy.

6.21. The process for completion and approval of business cases can be found at Annex A.

7. Standards and Practice - Capital Business Cases

The Capital Budget Setting Process

7.1. The Trust’s Director of Finance determines the available capital funding as part of the annual budget setting process. Potential capital projects will be prioritised across a range of criteria, including clinical need, health and safety requirements, addressing recognised risks, delivering Annual Operating Framework agreements and affordability.

7.2. The majority of capital funding will be approved as part of the annual planning round and budget setting.


The Clinical Site Development Plan (CSDP) Programme Board will prioritise the capital infrastructure projects that support delivery of the CSDP

The E-Health Programme Board will prioritise informatics capital bids, The Medical Equipment Programme Board will prioritise capital equipment

bids The Backlog Maintenance Programme Board will prioritise estates bids.

7.3. These priorities will be received by the Trust’s Management Committee (TMC) for their recommendation to the Trusts Finance, Performance and Investment Committee prior to the Trust Board for final approval.

7.4. As part of the annual budget setting process, budget holders should review the service needs and assets held within their service area. This should include a needs and risk assessment of new items and items which need replacing. Based on this review, budget holders should identify a list of potential capital investments, prioritised for those items which have the highest impact on business continuity and feed these into the capital prioritisation process.

7.5. Divisional Directors and Divisional General Managers are responsible for ensuring that their Division is adequately represented on each of the subcommittees and that they have a process within their Division for ensuring that the investment needs of the individual services within their Division can be considered in these committees.

7.6. For medical equipment, Divisional Directors and Divisional General Managers will need to consider the bids from each budget holder within their Division to determine the Divisional priorities forwarded into the Trust-wide process. These should then be submitted to the Director of Transformation who will chair the Medical Equipment Programme Board which will manage that prioritisation process. Medical Equipment is defined as equipment connected to the patient as part of their treatment and care in hospitals and health centres; and devices used for diagnostic, therapeutic and laboratory purposes. Medical Equipment does not include consumable medical devices such as syringes and dressings, which should be charged to revenue.

7.7. Potential health informatics projects are scrutinised by the E-Health Programme Board for recommended inclusion in the Health Informatics capital programme. The Trust’s investment in developing health informatics solutions in-house and costs of installing and implementing purchased and developed IT software should be included in the capital programme. Allowed expenditure includes:

Directly purchased infrastructure, including workstations, servers, memory storage and trunking and cabling.

Purchased software and licenses. Limited workforce costs incurred in developing, installing, testing and enhancing

health informatics systems.

7.8. Potential bidders for capital equipment should liaise with the Procurement and Supplies Department to determine the likely cost and future revenue consequences, as well as liaising with Specialist Equipment Maintenance System (SEMS), Estates and Medical Physics, as appropriate, to assess the likely maintenance costs of any potential new equipment. When completing the templates for equipment, the intended location of the item should be included and all costs should be shown as VAT inclusive (except donated assets bought through charitable funds).


Investment Decision Review Process

7.9. The Trust Board has an on-going responsibility to ensure that only appropriate business cases are approved and that the Trust has the legal powers to undertake them.

7.10. The use of the delegated limits and the Business Case structures set out in this guidance are designed to ensure that business cases are being reviewed and approved at the appropriate level in the Trust whilst retaining a method of reporting to the Trust Board that allows on-going scrutiny and reassurance as to the robustness of the business case approval process.

7.11. The development of the Project Initiation Document and Strategic Outline Case allows preliminary review of a business case to be undertaken enabling:

The evaluation of the Business Cases fit with the Divisions speciality plan and the Trust’s overall clinical and corporate strategy.

An assessment of the resources needed to undertake the business case evaluation and development process.

Clarification of the rationale for pursuing the business case development at a detailed level.

7.12. The development of the Outline Business Case allows the detailed review of a business case to be undertaken enabling:

Options to be assessed using non-financial techniques such as SWOT analysis and benefits analysis.

Risks to be evaluated and where possible quantified. Outline financial consequences to be identified and modelled for short-

listed options. Alignment with the Trusts Investment Policy to be assessed. Cost/Benefit Analysis to be undertaken for all short-listed options. The completion of a draft Quality Impact Assessment (Appendix 9). The completion of a draft Equality Impact Assessment Screening Form

(Appendix 10). Resources required for implementation to be reviewed and refined. Impact on operational aspects of the Trust to be properly evaluated. A conclusion to be reached on whether the Business Case remains

viable and what the preferred option is.

7.13. The development of the Full Business Case / High Value Equipment Case allows for:

The preferred option to be converted into a contractual structure with the relevant supplier(s).

Clarification of the timescales for the implementation phase. The final financial values and impact on the Trusts asset base that arise

from the business case to be quantified and assessed. Confirmation of the risks inherent in the business case and the mitigating

action being taken. The impact on staff and the change management programme that will be

put in place. The completion of the final Quality Impact Assessment and Star

Chamber review. The completion of the final Equality Impact Assessment Screening Form.


The completion of the final Project Benefit Realisation Review form.

7.14. The development of the Short Internal Business Case allows for:- A simple and short business case to be developed for small revenue and

capital projects. Clear identification of the project and associated costs. The completion of a Quality Impact Assessment and Star Chamber

review. The completion of an Equality Impact Assessment Screening Form. The completion of a Project Benefit Realisation Review form.

7.15. As part of the approval process it is vital that there is clarity about how the business case will be monitored during its implementation and post completion operational phase. This ensures the Trust can demonstrate that the original objectives of the business case have been achieved and value is being obtained as a result of the business case being delivered. There should therefore be:

Clarity as to who is responsible for the success/delivery of the business case.

Re-assurance that the person deemed responsible for the business case delivery has the right experience and authority to discharge that role.

Clarity on the basis on which the business case will be assessed during implementation and post completion.

Clarity on who will receive progress reports, an outline structure of those reports and the frequency of their production.

The escalation process to be used should implementation or post completion performance not be at the required levels.

7.16. As a project is completed and moves into an operational phase there are two dimensions of review that need to be undertaken.

A Post Project Evaluation (Appendix 11) needs to be undertaken that reviews the delivery of the project from a capital/physical delivery perspective.

A Benefits Realisation Review of the delivery of the operational benefits expected at the time of the Full Business Case / High Value Equipment Case approval needs to be undertaken with reports addressing delivery of the financial, workforce, quality and operational impacts of the projects.

7.17. The Finance, Performance and Investment Committee should receive a Post Project Evaluation report for each major (over £1m) capital project. The timing of the report to be agreed on a scheme by scheme basis reflecting the complexity of the scheme itself and the level of stakeholder feedback and involvement required in the post project evaluation work. However in normal circumstances it would be expected that a Post Project Evaluation would take place shortly after the project has been completed and be reported to the Finance, Performance and Investment Committee within 2 to 3 months of the project completion.

7.18. A Benefits Realisation Review programme is developed and agreed Business Case Committee. The evaluations will be conducted 6 to 12 months after project completion and reported to the Finance, Performance and Investment Committee.


Establishing Capital Expenditure7.19. In order for a capital project or asset purchase to be included within the Trust’s

Capital Programme, each potential project must be subjected to an assessment process, to determine the necessity and affordability of the proposals and to consider the priority which should be attached to the project.

7.20. In order for capital business cases to proceed the following Department of Health definitions of capital need to be met. Property, plant and equipment expenditure may be capitalised where individual items of expenditure exceed £5,000. The expenditure must either create a new asset for the Trust or enhance an existing asset.

7.21. Additionally, the Department of Health permit smaller items of expenditure to be capitalised as ‘grouped assets’ where all of the following criteria are met:

The items purchased are capable of being used for a period which exceeds one year;

They have a collective cost of at least £5,000 and an individual cost of more than £250;

They are functionally interdependent; They have broadly simultaneous purchase dates, are anticipated to

have simultaneous disposal dates; and They are under single managerial control.

7.22. Intangible assets are capitalised when they: Are capable of being used for Trust activities for more than one year; Can be valued; and Have a cost of at least £5,000.

7.23. Purchased computer software licences are capitalised as intangible assets where expenditure of at least £5,000 is incurred. Licence expenditure is amortised over the shorter of the term of the licence and the useful economic life of the asset.

7.24. Under International Financial Reporting Standards (IFRS) items which are leased by the Trust from suppliers may be required to be capitalised by the Trust. In such circumstances, the Trust must recognise the fair value of the asset on its Balance Sheet and will incur revenue capital charges throughout the life of the asset. The Trust’s Financial Controller or Deputy Financial Controller & Financial Accountant will need to be contacted to ascertain this before ANY lease agreement is concluded.

7.25. Expenditure in relation to capital projects which is directly attributable to the creation of an asset may be capitalised. Examples of these types of expenditure are:

Direct costs, including directly attributable labour costs and design consultant’s fees incurred in enhancing an existing fixed asset.It should be noted, however, that enhancement and newly built assets are subject to revaluation on completion. The revaluation will often identify that the asset is worth less than the cost of its creation/construction and therefore an impairment will be required to reduce the value of the asset. Impairments are charged to the Trust’s revenue expenditure, where insufficient revaluation reserve balances are held to absorb the loss, and therefore need to be carefully considered.

7.26. Expenditure which cannot be defined as capital includes the following: Repairs;


Maintenance costs, which cannot be shown to be enhancements; Training costs associated with the installation and use of the new

asset; Employee costs not directly attributable to a specific asset, including

site selection activities; and Other costs, which are capital in nature but which do not either create

a new asset or enhance an existing asset.

7.27. Where pay costs are planned to be charged to capital, it is essential that a reliable record is kept of the time spent and the activities involved. The Trust must be able to demonstrate that the costs are directly attributable to individual assets.

Committee Structure7.28. The Committee structure and the relationships to the Trust Board are shown at

Annex C.

7.29. The Finance, Performance and Investment Committee are responsible for recommending the capital programme to the Trust Board for approval. This Committee has clear Terms of Reference and agreed membership.

7.30. The Trust’s Management Committee provides strategic direction and maintains overall control of the development and delivery of Trust level strategic investments. This includes oversight of the Trusts capital programme which incorporates the Clinical Site Development Plan and the E-Health Development Plan.

7.31. The TMC will be supported by four subcommittees namely:

The Clinical Site Development Plan (CSDP) Programme Board who will develop and prioritise the capital infrastructure projects that support delivery of the CSDP.

The E-Health Programme Board who will develop and prioritise informatics capital bids.

The Medical Equipment Programme Board who will develop and prioritise capital equipment bids.

The Backlog Maintenance Programme Board who will develop and prioritise estates bids.

7.32. A Capital Delivery Group has been established to manage and ensure the delivery of the agreed Capital Programme. This group is chaired by the Deputy Director of Finance. The Group has clear Terms of Reference and agreed membership; it will receive reports from the four Boards and report into the Finance, Performance and Investment Committee.

8. Dissemination and Implementation8.1. This document will be published on the Trust’s document library, replacing the previous version, as a source of information for senior managers and other members of staff who may wish to be aware of the Capital Business Production and Approval Process.

8.2. No specific training for managers or staff is required; however help and


assistance is always available from the Capital Business Case manager in Finance.

9. Monitoring compliance and effectiveness 9.1. Monitoring compliance and effectiveness of this approval process will be undertaken by the relevant Trust committees and sub-committees, as detailed in Annex E.

10. Updating and Review10.1. This document will be reviewed and updated every 3 years or upon being made aware of major changes to the associated legislation.

11. Equality and Diversity 11.1. This document complies with the Royal Cornwall Hospitals NHS Trust service Equality and Diversity statement which can be found in the 'Equality, Diversity & Human Rights Policy' or the Equality and Diversity website.

12. Equality Impact Assessment12.1. The Initial Equality Impact Assessment Screening Form is at Appendix 17.


http://www.rcht.nhs.uk/RoyalCornwallHospitalsTrust/OurOrganisation/EqualityAndDiversity/HumanRightsEqualityAndInclusion.aspx

http://www.rcht.nhs.uk/GET/d10268876

http://www.rcht.nhs.uk/GET/d10268876

Annex A The Business Case Production and Delegated Approval Process


Revenue and Capital Schemes

Amount Documentation required

Up to £50,000, funded within Divisional and Department budget (budget approved at the start of the year, after CIP, that has been allocated to Division/Dept)

Mini business caseDGM/Divisional Board (revenue only)Director of EstatesDirector of CITSMedical Director

Up to £50,000, not funded ORApproved investment up to £100,000 but held within reserves until conditions or business case is approvedORReplacement/new consultant post

Investment proposal reviewed by BCC, followed by a mini business case

DGM/Divisional Board (revenue only)Director of EstatesDirector of CITSMedical Director

BCRG (for info)

Director of Finance/Medical Director(replacement consultant posts)

TMC

Up to £500,000 and not included in the aboveShort Business Case required

Investment proposal reviewed by BCC, followed by a short business case

DGM/Divisional Board (revenue only)Director of EstatesDirector of CITSMedical Director

BCRG (for info)

CSDP/E Health Board

(Capital Projects only)

TMC

Between £500,001 and £1,000,000Full Business Case required

Investment proposalBCRG

(for info)

PIDBCRG

(for info)

SOCBCRG

(for info)

CSDP/E Health Board


TMC

OBCBCRG

(for info)

CSDP/E Health Board


TMC FPIC

FBCBCRG

(for info)

CSDP/E Health Board


TMC FPIC

Between £1,000,001 and £5,000,000Full Business Case required

Investment proposalBCRG

(for info)

PIDBCRG

(for info)

SOCBCRG

(for info)

CSDP/E Health Board


TMC

OBCBCRG

(for info)

CSDP/E Health Board


TMC FPIC Board

FBCBCRG

(for info)

CSDP/E Health Board


TMC FPIC Board

High Value Equipment replacement (HVE)

HVEBCRG

(for info)

CSDP/E Health Board


TMC FPIC Board

1) Business Cases over £1m, but below £5m, once approved by the Board are subject to a 'Governance Review' by the TDA

2) Business Cases above £5m, once approved by the Board require approval by the TDA.

Approval process

NHS Trust Development Authority

RCHT Trust Board

Finance, Performance and Investment Committee

Capital Delivery Group

Clinical Site Development

Plan Programme

Board

E-Health Programme

Board

Medical Equipment Programme

Board

Backlog Maintenance

Programme Board

Direction for reports on Delivery and Progress of Approved Schemes

Direction for new schemes for approval and reports on schemes below delegation limits from sub committees to Investment Committee

Business Case Review Group

Trust Management Committee

Annex B Trust Committee and Subcommittee Structure


Annex C Capital Projects Building Planning, Design and Control Process Major Capital Projects over £100k

For Major Capital Projects over £100k there is an 8 stage capital project process covering original project inception through to completion and post project evaluation which must be followed, it is shown in a flowchart below. The process will ensure that following the production of a Project Initiation Document based on the outline service requirements and an identification of an appropriate project management team, proper requirements definition is undertaken, followed by rigorous option assessment that feeds into a Strategic Outline Case, Outline Business Case and Full Business Case / High Value Equipment Case before investment decisions are taken and project works commence. The process will ensure that for major investment decisions the Trust Management Committee, its four sub committees and the Finance, Performance and Investment Committee are appropriately involved from an early stage in defining the direction and programming of the project.

Stage 1 – Development of the Project Initiation DocumentThe purpose of a Project Initiation Document is set out in Section 5.2.3 above. The PID will be informed by the perceived service requirements and once drafted should be agreed by the relevant Subcommittee or Committee

Stage 2 - Develop User Requirements Document and Rough Order of Estate InformationThe purpose of this Stage is to allow the Division / Speciality to formally record the project’s requirements in output terms, which are captured in the User Requirements Document. During this Stage, the requirements need to be approved by the Divisional Manager. The Planning & Projects Team will be tasked with developing a Rough Order of Estates Information (ROEI) to help identify the possible range of options, costs and programme, which will be necessary to deliver a solution that meets the requirement. It is anticipated that ROEIs will be undertaken using internal RCHT resources, but where specialist external consultancy support is needed this must be identified in the PID and approval have been given. Once completed this work should support the completion of the Strategic Outline Case to be put forward for the relevant Subcommittee or Committees approval.

Stage 3 - Develop Option Study BriefHaving produced a Strategic Outline Case which has been approved by the relevant Subcommittee or Committee, the Project Manager will prepare an Option Study Brief which will be agreed with the Service Lead and Associate Director of Planning and Projects as the basis for the next stage of the project. At the end of this Stage the team should have agreed the scope and costs associated with the Option Evaluation phase of the project and these will need to be reviewed by the Associate Director of Planning and Projects and the Deputy Director of Finance prior to approval by the relevant Subcommittee or Committee.

Stage 4 - Carry out Option StudyThe Option Study Phase of the project involves a range of possible solutions being generated to meet the requirements. The phase can involve much iteration as the potential solutions are investigated and interrogated against key user requirements. Surveys or investigative works on site may be undertaken during this stage to mitigate high level risks to the project. Although risk management is required in earlier stages, it


really starts to develop here and will be followed through to all future stages. The output required from this stage is to provide the information to support the development of the Outline Business Case (OBC) and Cost/Benefit Analysis and to recommend the preferred solution, the likely costs and programme, as well as risks to the delivery. The OBC will initially be submitted to the relevant Subcommittee for approval along with the funding of the costs to develop the preferred option which will also need to be approved. Depending on the capital value of the scheme it may need subsequent approval by the Trust Management Committee and Finance, Performance and Investment Committee (over £500k), Trust Board (over £1m) and the NHS TDA (over £5m)

Stage 5 – Develop Preferred OptionThe preferred option is further developed by the project team to produce sufficient documentation which will result in a robust pricing agreement in the form of a Guaranteed Maximum Price (under Procure 21 Plus arrangements) or a Contract Sum under traditional procurement arrangements. The output of this stage is a Project Execution Plan outlining the works information, cost, timescale and details of the technical solution. Risk management continues to be undertaken throughout this stage to agree a costed Risk Management Plan with agreed responsibilities and ownership. The output of this stage is to ultimately receive approval to award the contract by providing the necessary information to inform the Full Business Case / High Value Equipment Case so that it can be approved by the relevant Subcommittee or Committee. Depending on the capital value of the scheme it may need subsequent approval by the Trust Management Committee and Finance, Performance and Investment Committee (over £500k), the Trust Board (over £1m) and the NHS TDA (over £5m)

Stage 6 - Secure Contract CommitmentDuring this Stage and upon receipt of the funding confirmation the project team prepare and agree the contract documentation in order to award the contract to a supplier. Contract documentation to be completed includes the Works Information and Target Cost (under Procure 21 Plus), Risk Register and Project Execution. At the end of this Stage the project team should be ready, having achieved all the necessary approvals, to award the contract and enter Stage 7 implementation.

Stage 7 - Implement Project and Accept for Occupation / CommissioningThis is the stage, which involves the completion of any final design element and focuses principally on the construction stage of the project. The contractor will deliver the project in line with the contract and the agreed programme, quality and costs parameters and ensure commissioning and any application training is undertaken. The output of this stage is a completed facility, which has been accepted by the users.

Stage 8 - Manage Compliance Period and Post Project EvaluationThe purpose of this stage is to undertake the Post Project Evaluation with key stakeholders. This is also the Compliance period stage, which includes the monitoring of the project for any defects that should be covered by warranty guarantees. Under traditional procurement this will also involve the final financial reconciliation of costs with any retention monies being released to the contractor.

Stage 9 – Undertake Benefits Realisation ReviewThe purpose of this stage is to carry out a review of the objectives and benefits which were set out in the Business Case. The responsibility for undertaking the review rests with the


sponsoring and the review should be undertaken 6 to 12 months after the project has come into service.


STAGE MAJOR CAPITAL PROJECTS PROCESS


Develop Preferred Option (FBC)

Secure Contract Commitment

Implement Project & Occupation/Commissioning

Manage Compliance & Post Project Evaluation

Stage 5

Stage 6

Stage 7

FBC to BCC then relevant

Subcommittee/ TMC/FPIC

Project Sponsor to oversee

implementation

Progress Reports to Capital

Delivery Group

Service Requirements and Drafting of PIDStage 1

Develop User Requirements Document & Rough Order of Estate Information (SOC)

SOC to relevant Subcommittee

PID to relevant Subcommittee

Stage 2

Develop Option Study BriefStage 3

Carry out Option Study (OBC)Stage 4OBC to BCC then

relevant Subcommittee/

TMC/FPIC

AD Planning and Projects and DD

Finance to sign off Option Brief

Stage 8Report to relevant

Subcommittee/ TMC/FPIC

Report to relevant Subcommittee/

TMC/FPICUndertake Benefits Realisation Review Stage 9

Annex D Capital Projects Building Planning, Design and Control Process Minor Capital Projects under £100k

The Minor Works Process has been designed to ensure that appropriate standards of governance are maintained and the appropriate Business Case process can be completed with approvals obtained at the relevant stages without making the process over bureaucratic. The process is outlined in a flowchart below. This Planning, Design and Control process must be followed for all minor building works above £25,000 but below £100k. For minor ad-hoc works below £25,000 and undertaken by Estates (such as converting an office to a bathroom), simplified procedures will apply.

Minor works with a capital value below £100k will need to complete a mini business case and follow the approval process. Stage 1 - Develop Ward or Department Requirements & Justification The purpose of this stage is to allow the Division or Ward to record their outline requirements. These should be submitted to the Divisional General Manager and if approved will be submitted to the Trust’s Management Committee for approval to proceed to stage 2.

Stage 2 - Develop User Requirements Document and Rough Order of Estate InformationThe Ward or Department need to transfer the Statement of Justification into a User Requirements Document. The Planning & Project Team will assist in this process and based on an agreed User Requirements Document prepare a Rough Order of Estates Information (ROEI) which will help identify the possible range of options, costs and programme to deliver a solution that meets the requirement. It is anticipated that ROEIs will be undertaken using internal RCHT resources, but where specialist external support is needed this must be identified and funded from the Division’s revenue budget.

Stage 3 – Develop Preferred OptionThe preferred option is developed by the project team to produce sufficient documentation which will result in a robust pricing agreement in the form of a Guaranteed Maximum Price (under Procure 21 Plus arrangements) or a Contract Sum under traditional procurement arrangements. The output of this stage is a Project Execution Plan outlining the cost, timescale and detail works information. Risk management continues to be undertaken throughout this to agree responsibilities and ownership. The final output of this stage is to produce a Business Case which will need to be presented to the relevant subcommittee where there will be a robust challenge of business need and user requirements and confirmation that the affordability/cost of projects in resource terms has been fully exposed before it is approved. A mini business case is normally required for cases with a capital value of up to £100k.

Stage 4 - Secure Contract CommitmentDuring this stage and upon receipt of the approval and funding confirmation the team prepare and agree the contract documentation in order to award the contract to a supplier. Contract documentation to be completed includes the Works Information and Pricing Statement, Risk Register and Project Execution Plan.


Stage 5 - Implement Project and Accept for OccupationThis is the implementation stage, which includes the remainder of the design and the full construction stage of the project. During this stage, the contractor and supply chain will deliver the project in line with the contract and within the time, quality and costs parameters agreed in the contract. The output at the end of this Stage is a completed, ready for acceptance facility.

Stage 6 - Manage Compliance Period and Close the Contract The purpose of this Stage is to undertake the Post Project Evaluation with key stakeholders and for the Divisional Manager to sign this off. This is also the Compliance period stage, which includes the monitoring of the project for any defects that should be covered by warranty guarantees. Under traditional procurement this will also involve the final financial reconciliation of costs with any retention monies being released to the contractor.


STAGE MINOR NEW WORKS DEVELOPMENT


Secure Contract Commitment

Manage Compliance Period & Close Contract

Stage 2

Stage 4

Stage 5

Stage 6

Progress reports to Subcommittee

AD Planning & Projects to

oversee implementation

Ward or Departmental Requirement & Justification

TMC ApprovalStage 1

Develop Preferred OptionStage 3

Develop User Requirements Document & Rough Order of Costs & Programme Information

TMC Approval

Approval by Subcommittee

Implement Project & Accept for Occupation

Report to Divisional General

Manager

Annex E Schemes involving the Disposal of Land or Buildings

Health Building Note 00-08: Estatecode provides guidance to all NHS organisations on the checks and processes to be carried out when an NHS organisation is considering the disposal of land and/or buildings (including lease arrangements). The main items to be considered are:

Once land and/or property has been identified as surplus to the Trust, the Trust has a responsibility to initially offer the land for sale to other parts of the NHS, the Local Authority or in certain circumstances previous owners (under Crichel Down Rules) before attempting to dispose of it on the open market

A cost-benefit analysis of the disposal options should inform the business case.

If the sale of land and property is a key part of meeting re-provision costs, consideration should be given to obtaining a preliminary report covering market conditions, planning constraints and legal title in the context of the planned disposal, and timescales, before the business case is finalised.

Covenants affecting the land and property may prevent its sale at the anticipated or higher price.

Whenever a property is identified as potentially surplus to requirements, the business case should identify the holding costs, including any exceptional maintenance, security or other costs.

An assessment should be made of the property’s suitability for sale in its present state, and what (if any) work may need to be done to prepare it for sale.

The business cases should identify the need for receiving a receipt within any particular financial year, and evaluate any exceptional risks that might arise which may delay completion of the transaction.

The Trust should engage the services of the Valuation Office to assist in assessing/evaluating the different purchase options from alternative purchasers

Appropriate overage and clawback provisions should be reflected in any sale agreement and its potential impact modelled in the business case sensitivity analysis

All schemes that involve the disposal of land and/or buildings must demonstrate that the scheme is compliant with the requirements of Estatecode.

Business cases with a capital disposal impact of under £500k can be presented using the short internal business case but must still provide all information required to demonstrate compliance with Estatecode. They will be referred via the Director of Finance to the Executive Directors for consideration and authority to proceed if approved by the Director of Finance and at least one other Executive Director and retrospectively reported to the Finance, Performance and Investment Committee.


Business cases with a capital disposal impact of over £500k will requireo A Full Business Case / High Value Equipment Case and will need to be

reviewed and approved by the Trust Management Committee before being presented to the Finance, Performance and Investment Committee for consideration and authority to proceed.

o Schemes over £1m will require review and approval by the Trust Management Committee before being considered by the Finance, Performance and Investment Committee who in turn will be required to make a recommendation to the Trust Board who will consider the scheme before approval

o Schemes over £5m in capital value will subsequently need the Full Business Case / High Value Equipment Case reformatted into the five case structure (Strategic, Economic, Financial, Commercial and Management) to go to the NHS Trust Development Authority for approval.


Appendices 1 to 15 - Contact Capital Business Case Manager

Below is a list of Appendices that are referred to in the main document.

These are available from:Sue Hick, Capital Business Case Manager, Finance Department , Carlyon House01872 258053. e mail: [email protected] orGraeme Booth, Financial Planning Manager, Finance Department, Carlyon House01872 258017. e mail: [email protected]

Appendix Ref Title1 Investment Proposal2 Mini Business Case Template3 Short Internal Business Case Template3a Business Case Production (Short case) - Guidance notes4 High Value Equipment Case Template4a High Value Equipment Case - Guidance Notes5 Project Initiation(PID) Template5a Business Case Production PID – Guidance Notes6 Strategic Outline Case (SOC) Template6a Business Case Production SOC – Guidance Notes7 Outline Business Case (OBC) and Full Business case(FBC) Template7a Business Case Production OBC & FBC – Guidance Notes8 Business Case Financial Workbook9 Quality Impact Assessment (QIA)10 Equality Analysis Screening11 Post Project Evaluation Questionnaire12 Business Case Checklist13 Sustainable Development Management (SDMP) Checklist14 Space Allocation Request Form15 Post Benefit Realisation Review


Appendix 15. Governance Information

Document Title Capital and Revenue Business Case Production and Approval Process

Date Issued/Approved: 22 September 2014 (revised March 2016)

Date Valid From: 22 September 2014

Date Valid To: 31 August 2017

Directorate / Department responsible (author/owner):

Finance Department, Susan Hick , Capital Business Case Manager

Contact details: Susan Hick, Capital Business Case Manager01872 258053

Brief summary of contentsDetails the requirements and approvals process for the production of Capital and Revenue Business cases.

Suggested Keywords: Business Cases

Target Audience RCHT PCH CFT KCCG

Executive Director responsible for Policy: Director of Finance

Date revised: June 2010, May 2011, April 2012, August 2014, March 2016.

This document replaces (exact title of previous version):

Capital and Revenue Business Case Production and Approvals Process

Approval route (names of committees)/consultation: Trust Management Committee (TMC)

Divisional Manager confirming approval processes Director of Finance

Name and Post Title of additional signatories Not Required

Signature of Executive Director giving approval Karl Simkins

Publication Location (refer to Policy on Policies – Approvals and Ratification):

Internet & Intranet Intranet Only

Document Library Folder/Sub Folder Finance/ Finance General

Links to key external standards Key Governance DocumentRelated Documents: Standing Orders, Standing Financial Instructions,


Scheme of Delegation, Investment PolicyTraining Need Identified? No

Version Control Table

Date Version No Summary of Changes Changes Made by

(Name and Job Title)January

2010V1 New document introduced to clarify Business

case approvalsChris Cale Deputy Director of Finance

June 2010 V2 Refresh - Minor amendments to include approval for capital projects by CSDP Board and changes to the delegated limit to £8m (formerly £3M).

Chris Cale Deputy Director of Finance

May 2011 V3 Major rewrite of document to reflect current Best Practice.

Chris Cale Deputy Director of Finance

May 2012 V4 Integration of Investment policy principles and update of approval process.

Chris Cale Deputy Director of Finance/ Garth Weaver Associate Director

August 2014 V5

Refresh – Review and update to reflect:

Changes to RCHT Governance structure. Piloting of Service Line Management and

Reporting. Minor changes to templates based on

practical experience over the last 12 months.

Addition of new High Value Equipment Case Template.

Update of Annexes and Appendices.

Sue Hick, Capital Business Case Manager

March2016 V5.1

Refresh – Review and update to reflect:

Changes to RCHT Governance structure. Addition of an Investment Proposal

template. Addition of a mini business case template

Update of Annexes and Appendices.

Sue Hick, Capital Business Case Manager

All or part of this document can be released under the Freedom of Information Act 2000

This document is to be retained for 10 years from the date of expiry.

This document is only valid on the day of printing

Controlled DocumentThis document has been created following the Royal Cornwall Hospitals NHS Trust

Policy on Document Production. It should not be altered in any way without the


express permission of the author or their Line Manager.


Appendix 16. Initial Equality Impact Assessment Form

Name of the strategy / policy /proposal / service function to be assessed (hereafter referred to as policy) (Provide brief description): Capital and Revenue Business case Production and Approval ProcessDirectorate and service area:Finance

Is this a new or existing Policy?Existing – updated

Name of individual completing assessment:

Telephone:01872 258029

1. Policy Aim*Who is the strategy / policy / proposal / service function aimed at?

To ensure good governance is maintained for the approval of expenditure commitments.

2. Policy Objectives*To ensure that Capital and Revenue expenditure is robust.

3. Policy – intended Outcomes* That the Trust Board discharges its responsibilities for the

management of Capital and Revenue Business cases correctly.

4. *How will you measure the outcome?

Through regular management review and by audit review by the Trust’s Internal and External Auditors.

5. Who is intended to benefit from the policy?

The Trust – by ensuring robust processes are in place.

6a) Is consultation required with the workforce, equality groups, local interest groups etc. around this policy?

b) If yes, have these *groups been consulted?

C). Please list any groups who have been consulted about this procedure.

No

n/a

n/a

7. The ImpactPlease complete the following table.

Are there concerns that the policy could have differential impact on:Equality Strands: Yes No Rationale for Assessment / Existing EvidenceAge X The guidance is neutral in its impact on equalities.


Sex (male, female, trans-gender / gender reassignment)

X

Race / Ethnic communities /groups

X

Disability -Learning disability, physical disability, sensory impairment and mental health problems

X

Religion /other beliefs

X

Marriage and civil partnership

X

Pregnancy and maternity X

Sexual Orientation,Bisexual, Gay, heterosexual, Lesbian

X

You will need to continue to a full Equality Impact Assessment if the following have been highlighted:

You have ticked “Yes” in any column above and No consultation or evidence of there being consultation- this excludes any policies

which have been identified as not requiring consultation. or Major service redesign or development

8. Please indicate if a full equality analysis is recommended. Yes NoX

9. If you are not recommending a Full Impact assessment please explain why. N/a

Signature of policy developer / lead manager / director

Karl Simkins

Date of completion and submission

Names and signatures of members carrying out the Screening Assessment

1. Garry Cooper2. Graeme Booth

Senior Finance ManagerFinancial Planning Manager

Keep one copy and send a copy to the Human Rights, Equality and Inclusion Lead, c/o Royal Cornwall Hospitals NHS Trust, Human Resources Department, Knowledge Spa, Truro, Cornwall, TR1 3HD

A summary of the results will be published on the Trust’s web site.

Signed _______________

Date ________________


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