LIFT Initiative – Going Up or Down?

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Thursday 18 September 2003 at The RIBA, London

This event, hosted by Architects for Health, was designed to review the first eighteen months of the NHS Local Improvement Finance Trust (LIFT) Programme. The event was highlighted in the article Hitching a Lift that appeared in Building Design (26 September 2003)

AGENDA 2.00pm to 6.00pm

Welcome and Introduction: (10 minutes) Ann Noble, Chair, Architects for Health

Doug Wantling, Event Chairman

What is the role of Partnerships for Health in the LIFT programme? (30 minutes)

Overview of the achievements to date including comments and questions from the floor

Tim Challis, Partnerships for Health

Partnerships for Health is a 50/50 joint venture between the Department of Health and Partnerships UK. Partnerships UK was set up as the Treasury task force to standardise PFI documentation. It then moved into to looking for ways to lever private finance into the public sector – Local Improvement Finance Trust is its first ‘outcome’.

LIFT is a national structure to establish a common framework and approach, but it supports local projects by providing resources, planning and procurement advice and standardised documentation. It aims to spread learning across all projects and helps select the private sector partner for local schemes. It also retains a financial stake (20 per cent) in local Liftcos, with a director on each Liftco.

A Liftco is the local LIFT company, a partnership between local stakeholders, Partnerships for Health and the chosen private sector business partner (rather than a contractor). The private sector partner has a 60 per cent stake in the company. The aim of the Liftco is to find a way of delivering the appropriate accommodation to meet local health needs.

Strategic partnering agreements stretch forward into the future. The LIFT company comes up with ideas and proposals to deliver answers to local problems and needs. The local participants identify need for accommodation and it is for Liftco to find a way of delivering that.

Each particular scheme is delivered under a contractual arrangement known as a ‘lease plus’ agreement. This is meant to be more than a lease – not a PFI arrangement. Tenants only pay for buildings when they are available after they have been built. Until then Liftco is providing its services at risk.

The agreement is a long term arrangement whereby Liftco is contracted to the local NHS and local authority participants to deliver answers to property problems over the next 20 years. The project is governed by a strategic partnering board.

It is an exclusive agreement with one partner and the benefits of exclusivity are said to be:

  • meets EU procurement rules
  • stimulates involvement and investment
  • flexibility of leases
  • private sector commitment to the vision
  • economies of scale
  • efficiency gains from repeat business
  • to spread bid costs and avoid future bid costs
  • to incentivise Liftco to deliver quality
  • commitment to the partnership

Long term value for money is brought about by allowing the contractor new ways of supply chain management, the ability to benchmark effectively and market testing for each new project and periodically (with the first testing taking place after five years).

Selecting a private sector partner is a 12 month process:
3 months – issue ITN to shortlist
6 months – ITN response
9 months – preferred bidder
12 months – establish Liftco

Problems so far

  • public sector has not been able to secure land
  • inability to secure planning consent
  • funders resistant to new concept
  • hard to get banks engaged early in the process and to bring the relevant bank departments together

Issues from the discussion

In taking the procurement regulations into account, Partnerships for Health has been unable to give any certainty that the supply chain can be fixed for more than five years. But assuming the right long term agreement is in place with the supply chain, performance can be taken into account in evaluation as part of the later market test. It is expected, but not guaranteed, that the supply chain will be able to get future business. This includes the design team.

There are four sub-groups on the evaluation team: technical, including design; partnering services; financial; legal and commercial. Teams are required to us the NHS Estates Evaluation Toolkit which directs on how to evaluate design. Evaluation also involves users.

Design features highly in the evaluation of projects, suggests Tim Challis, but LIFT is about “looking for a business partner”.

The Lift process raises tensions between time, cost and quality. The process is simplified in the interests of speed, but Lift is designed to deliver improved facilities over a long time to higher standards.

Tim Challis is a Chartered Quantity Surveyor. He spent twenty-two years working for contractors, mainly on infrastructure projects such as road and rail. Joined Partnerships for Health in 2002 as the transactor on East London (PQQ to ITN Response), Sandwell (OJEC to ITN), Leicester (SSDP), Redbridge (Shortlist – PB) SW London (conception to ITN), Oxford (conception to bid evaluation – continuing) and EHH (conception to PB – continuing). He also drafted much of the procurement documentation (Interview Stage/ITN Volume 1 etc.), and was involved in many contract document revisions (version 2 and 3). He is currently overseeing all standard documentation, negotiation and amendment (local authorities, PBs etc.), and the delivery of certain elements of the LIFT vision – e.g. supply chain management, effective Partnering Services, etc.

What are the roles of design and designers in the LIFT programme? (30 minutes)

Including comments and questions from the floor

Chris Shaw, Director, MAAP Ltd

Context of Local Improvement Finance Trust: Talk of restructuring primary care has been around for a long time. Primary care has many sub-standard facilities. In London an audit found that 75 per cent of primary care facilities were inaccessible. Structure of primary care in many areas involves many single-handed GPs.

Issues for designers advising the NHS: Language is a problem – understanding what is meant by particular terms, eg primary care, walk in centre and so on.

Who you are advising is sometimes unclear. There may be more than one PCT, and there are other stakeholders such as local authorities, mental health trusts and others.

There is a need to understand the existing primary care estate. Some PCTs have good records, but not all.

The Strategic Services Development Plan (SSDP) is forming as the work is underway – PCTs are new organisations still developing.

In selecting schemes, what makes a good LIFT phase 1 scheme?

  • Looking for a proof on concept around the SSDP.
  • Looking for good geographical distribution of the schemes
  • Test the bid schemes – is there enough variety and complexity and a good mix of refurbishment and new build
  • Is the value of the scheme enough to attract bidders
  • How many samples are there?

There is a need to package up the data as part of the initial bid. Debate around whether schedules of accommodation need be part of the package (probably not because you are testing the team’s ability as to whether they can assess and discuss the functional content). Have to check that the selection of sites and content match. Increasingly there is a move towards looking for outline planning consent at an early stage.

Evaluating design proposals involves:

  • establishing the criteria; the capability and resource of partners, can they comply technically, can they deliver
  • process; is it clear and understandable
  • the product; is it any good?

Issues for designers with the bidding team: Many of the designers help set up consortium bid teams. Designers are an important part of the ‘persona’ of the consortia. Designers need to understand the amount of commitment needed to the bid; how much time and resources the work will involve.

It is also important to have view of what the future role might be; through the tranches of the bid, in the supply chain and in partnering services.

Designers as part of the bidding consortium need to liaise with PCTs and need to establish early on what the ‘product’ is – are you going to treat everything as a bespoke design or have product that is customised (designs have to be produced very quickly). Also need to interpret the brief, question the function and content and come up with a design strategy.

In the larger projects there may be more than one team of architects involved.

The package needs to be evaluated by the design team. Check that it is consistent with the SSDP, whether the costs are sensible and will it ‘fit’.

User consultation: This is very important. It is a chance to understand the key movers and personalities involved and a chance to demonstrate you are the kind of person they can work with.

Designing for the bid: This is a challenge. There is a tight programme which is resource hungry. The briefing process is unsatisfactory from the designer’s point of view – more like product design than ‘normal architecture’. The questions in the brief must be answered as these will be what you are evaluated against.

Post bid clarification: This isn’t usually costed for at the start of a project, but it can be resource hungry and time consuming. Some re-design may be necessary.

Getting to closure: Again, this is resource hungry. However, briefing gets better – more honest. GPs start to get involved at this stage.

The Liftco role: Once Liftco is established designers can feed more into strategy and maintenance and development of the Liftco estate. They will also be involved in evaluation of subsequent phases and the next SSDP.

Other roles for designers: The designer is part of the supply chain, giving them closer link to construction and delivery. There is also a role in partnering services: auditing of the estate; feasibility studies; post project evaluation.

Other points

  • Expensive to bid
  • Very little benchmarking
  • Very little feedback on how designers are doing

Christopher Shaw is an architect who has spent most of his career working on health and social care projects. A decade ago he became a founding director of MAAP architects, specialising exclusively in healthcare work. After years of working quietly in this niche he is now surprised to find himself rather busy.

Whilst remaining closely involved with the administration and development of the practice, principal areas of his expertise lie in facility evaluation and auditing, as well as the design and planning of primary care premises. Christopher’s recent projects include completion of three PFI Mental Health hospitals. He has worked on several LIFT projects as both NHS Trust advisors and for a participating consortium. He is currently writing the new HBN 36 for NHS Estates.

What are the implications and impact of bringing together key players from different cultures? (30 minutes)

Including comments and questions from the floor

    Chris Webber, Project manager, Greater Nottingham LIFT

    Lift requires the successful integration of different organisations with different cultures.

    It is a fast track process, but the Greater Nottingham Local Improvement Finance Trust was helped because it already had a complete record of its property portfolio and written a primary care property strategy.

    All stakeholders were able to see the preliminary designs from bidders (as long as they had signed a confidentiality agreement).

    Design time is very short, so designers need strategies for ‘winging it’.

    Design outputs are not conventional building designs. They don’t have to address some of the more difficult issues, although these have to be considered at a later stage.

    Discussion points

    • Briefs are not clear and change
    • Possibilities to be innovative are limited
    • Need for some ground rules on alterations to bids

    Chris Webber is currently an independent consultant acting as a Project Manager for Greater Nottingham LIFT, which has reached preferred bidder stage. He has extensive experience of public and private sectors in terms of management and consulting, including working with third party Primary Care developers.

    Break and completion of questionnaire (20 minutes)

    What quality of design is being achieved with the sample schemes? (30 minutes)

    Including comments and questions from the floor

      Sunand Prasad, Partner, Penoyre & Prasad Architects

      Is there any evidence that good design can prevail in LIFT and how might it do so.

      The Commission for Architecture and the Built Environment (CABE) tried for some time to get engaged with LIFT and Partnerships for Health, but met resistance. It found that the partners were talking different languages: Partnership for Health’s focus was on delivery, and it was not interested in the ‘ins and outs’ of the immediate delivery of the first schemes. Despite suggestions, nothing about design was going in the early documentation.

      Relationships have improved and CABE has seen four or five Local Improvement Finance Trust projects and three CABE enablers are working on LIFT schemes and reporting back on them. The quality is extremely variable – no consistency.

      It is impossible to separate partnerships from design. Started off in the dark about the process.

      From early on the consortium that Penoyre & Prasad was part of realised there was a big ‘joining up’ regeneration agenda here and that LIFT provided potentially a replacement for all the powers that have been lost by the local state. For example, until about 20 years ago local authorities were key players in joining up services and acting as an effective enabler of the state. LIFT allows quite far reaching proposals about whole areas.

      The equity partners in the consortium appreciated the importance of design. From the start, we took the approach that we were designing buildings that would not necessarily be health buildings in 25 years. They would, however, release equity for use on health buildings.

      Finance was a weakness in the consortium initially. That was solved by bringing in an equity partner with a long term view of money – more interested in residual value than yield as a measure of success.

      Strategic health expertise was also included in the team.

      The consortium was not contractor led. But having been successful the consortium has re-established the differentials between who pays and who is paid.

      As other aspects of bid even out, the real differentiators could become partnering services and design.

      The bidders taking part in LIFT don’t really have the capacity to find good designers.

      Sunand Prasad was born in India in 1950. He trained at the University of Cambridge School of Architecture (1970-73) and the Architectural Association (1973-75). From 1976 to 1985 he was partner in Edward Cullinan Architects and ran his own practice from 1985-88. Sunand also completed a three year research project as a Leverhulme Fellow at the Royal College of Art. The research concerned the traditional and contemporary house and urban form in North Indian cities and led to a doctorate. Sunand has taught and lectured in many schools of architecture in the UK and India, and continues to be involved in teaching and writing about architecture.
      Currently he is a CABE Commissioner where he has a special overview for health buildings, and chairs the Constructive Change Committee at the RIBA.

      Is this concept of partnering a house built on sand? (30 minutes)

      Including comments and questions from the floor

        Richard Nugent, Chairman, Oldbury and Smethwich PCT and Chairman, Sandwell LIFT Project Board

        As a Primary Care Trust, the primary objective is not to produce wonderful buildings, it is to improve the health of the population.

        PCTs are used to partnerships – they are part of many existing partnerships such as Local Strategic Partnerships, the local health economy and have a tradition of joint working and joint commissioning.

        Characteristics of partnerships are common objectives, similar values, some financial incentives and some joint targets.

        The Local Improvement Finance Trust legal framework has a strategic partnership agreement, a lease plus agreement and a shareholder agreement. Partnership is a key criteria for selecting a LIFT partner – eg how well did they work together as a partner and how well did we think we could work with them as a team.

        The timescale for LIFT is breakneck and may lead to some missed opportunities.

        The members of the strategic partnering agreement are Liftco, PCTs, other NHS trusts and local authority(s) – but some are more involved than others. The agreement has many positive aspects about what should be achieved – eg high quality accommodation, open book relationship, agreed mutual objectives – but also notes that the “parties recognise and agree that the partnering ethos, principles and objectives…are aspirational and not intended to give rise to legally binding rights…”

        Anything we want to build in the next 20 years will have to be built by Liftco. There is also a relatively low threshold for Liftco work – £20,000.

        The strategic partnering agreement is administered by the Strategic Partnering Board (SPB). One of the board’s key task is to review the SSDP and approve it. Concern that SSDP does reflect the true strategic development requirements of the PCT and does not ‘drift off’ and become something disassociated, which has happened in the past. The SSDP must reflect the Local Delivery Plans (LDP) or LIFT will not deliver what it should deliver.

        The Strategic Partnering Board must be careful not to create barriers between other partnerships. It should enhance the Local Strategic Partnership. Other partners can be nervous because they see it as ‘just about health’. But other partners can be added to the SPB.

        LIFT should be seen as a delivery method for the wider partnership. We will miss a trick if we only see LIFT as being about a few health centres; it should be used as part of the wider regeneration programme.

        There is an issue about possible conflicts between Lift shareholders and consumers; PCTs are mainly consumers and purchasers of services and affordability is a bigger issue for PCTs than promises of future dividends.

        Benefits and risks to local health economy

        Benefits

        • free to concentrate on core business – health
        • access to capital without ‘construction’ risks
        • relative certainty over costs and quality
        • potential for integration with other services – hoping that we can bring in other partners and services in the next wave

        Risks

        • uncertainty for future need – we can change, but at a cost and we can’t say what our use will be in ten years
        • locked into single provider
        • long term financial commitment
        • head lease – GPs do not seem to want to enter into lease plus agreements, they don’t want to enter into long leases

        Benefits and risks to Liftco

        Benefits

        • guaranteed income
        • captive market for future health business
        • toe hold in local economy

        Risks

        • construction risks
        • third party tenant risks
        • future business probable but not guaranteed
        • financial risks

        Some LIFT issues

        • need to shift emphasis from process to outcome – too much emphasis so far on developing the process, now need to concentrate on what we are trying to achieve from it
        • common objectives or common understanding of different but compatible objectives?
        • extended scope or limit and refine what we do?
        • future role of Partnerships for Health? Who are they representing?
        • design is not the overriding consideration

        Richard Nugent is an architect by training. He is currently Chairman of Oldbury and Smethwick PCT, and Chairman of Sandwell LIFT Project Board. He was formerly Director of Estates, Director of Purchasing and Development, and responsible for Strategic Planning of Health Services for West Midlands RHA.

        Will things get better when partners are in place? What does the future look like? (30 minutes)

        Including comments and questions from the floor

          Henry Lafferty, Chief Executive, Jarvis Primary Health

          Jarvis Primary Health is a joint venture between Jarvis and Sinclair Montrose Trust. It is not a consortium, but a business designed to provide services to the primary care sector.

          The Local Improvement Finance Trust programme has been so tight that it has been difficult for bidders to learn from one bid to the next.

          JPH is a type B bidder is a supply chain management bidder that puts together a team for each project. Advantages are that it can use local architects and it ensures that all schemes will be different. Architects in any scheme are expected to meet JPH standards. If the supply chain is local, the money generated stays in the local area – another plus for regeneration.

          A type A bidder is an integrated bidder with a pre-assembled supply chain.

          In sample schemes the bid process is a ‘phoney war’. When the ITN designs are submitted, they are works in progress. Should not worry too much about the fact that the first three buildings are designed quickly and likely to include less innovations as they have to deliver certainty. On future schemes that will be different.

          The future will see stronger partnerships: joint teams co-located, working together to develop the SSDP jointly so that there is joint ownership of it. It is important to develop trust and eliminate fear, which is a key feature of the early stages. There are detailed agreements, but if they ever have to be used ‘in anger’ the partnership will have failed.

          During the bid, my job is not to satisfy the client’s requirements, but is ‘to beat the other guy’. Once you are a preferred bidder and move into the Liftco arrangements you have joint objectives which are to solve local problems. If you have a shared objective, the idea of conflict does not arise.

          LIFT is for the long haul. It is about planning on an integrated basis across a number of services, where at present there are artificial boundaries.

          Notes from the discussion

          Would an equivalent programme outside LIFT be a better idea, because there is potentially access to more established agreements and processes? But would the funding work? LIFT gives the back up of enabling mechanisms funds, but these may decrease in the next phase. So there is a good argument but it would require good leadership.

          A lot of clients prefer the type A bidder because they know who they are working with.

          What is there to stop a type A bidder adding people to the supply chain? Type A bidder as an integrated supplier has no immediate mechanism other than through the strategic partnering agreement to add or remove members of the supply chain. Might be a good idea to encourage PCT to add diversity later in the contract.

          If you are in the client’s affordability level, affordability itself achieves a low of the total mark; if you are outside the affordability envelope, affordability is everything.

          Despite the new and increased resources in the NHS, affordability is still a key issue.

          Levels of affordability between PCTs may vary.

          In terms of cost, as a designer you have to keep focus on how you can make maximum use of the available space. Concern of LIFT process is that it should have been a full facilities management programme where management of the building was in the control of the consortium and the NHS only paid for what it used. This would have improved the possibilities for usability of space and helped address issues such as energy usage and sustainability. As it is designers are asked to design buildings that are energy efficient, but nothing to stop people leaving windows open all day.

          Should be embracing lifecycle costs. Designers find it difficult to understand the whole cost picture of the consortium and may not be involved in all discussions about affordability. More opaque than it ought to be. Needs to be a clearer understanding of the cost model. This is an internal issue for the consortium and design team could ask for briefing or information from finance people.

          Why don’t PCTs say we want to spend £x million and see what they can get for the money? This happens in N Ireland for traditional bids. What would be the equivalent here? Per square metre rental costs? Or say ‘this is my affordable level of rent’?

          Henry Lafferty. Having qualified as an accountant in the glass industry, Henry spent the majority of his early career at NFC plc (now Exel plc), where he held a number of senior positions. These included five years as Finance Director and four years as Managing Director of its property arm, which he helped to establish to be responsible for the estate management of the group’s extensive property portfolio, in addition to a substantial development programme on behalf of group companies, their clients and third parties.
          He completed the London Business School Sloan Programme prior to joining Jarvis, as Group Finance Director and Chairman of Jarvis Projects (the PFI arm), in November 1994. In 2000 he was appointed Chief Executive of Jarvis Accommodation Services Division, which provides serviced accommodation and associated services in the school, university, local authority, health, defence and commercial sectors. In November 2001 he formed Jarvis Primary Health Ltd, a joint venture between Jarvis plc and The Sinclair Montrose Trust Company Ltd, where he is Chief Executive.

          What lessons can be learnt from experiences to date? (25 minutes)

            Ann Noble, Chair, Architects for Health

            Struck by the objectivity and optimism of people who have been ‘battered’ by the process over the last 18 months.

            Tim Challis put into context the fact that the sample schemes are the ‘phoney war’ and we should separate what we can achieve from sample schemes from what can happen in the future.

            Chris Shaw highlighted the way that the architects jump around the whole system: one moment a person who has been on one side the day before is judging colleagues the following day.

            Chris Webber showed that there is a great value for a PCT in having someone with knowledge and experience of procurement, design and the whole NHS.

            Richard Nugent made interesting points about partnering. There are all sorts of issues and we have been led to believe that partnering is the deciding factor on whether we become the preferred bidder or not, and our understanding of it is growing, but still not complete. Architects often have a mediating role between different client groups and we are very good at getting people to come together and share things. But in sample schemes were in a forum where that is not possible because of the competitive nature of the situation.

            Sunan set out some of the conditions that have enabled some of the programmes to allow good design to emerge.

            Henry referred to the phoney war. If we can reduce the pain and anguish for the next wave we should; we have learnt the lessons. People should take heed of his warning that adversarial arrangements are often easier than partnerships.

            Communications in the process have generally been appalling and these must improve.

            Vote of Thanks (5 minutes)

            Close

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