How to cost a hospital

How to cost
a hospital

ISBN 0-11-322712-4

9 780113 227129
www.tso.co.uk
How to cost
a hospital

London: The Stationery Office

Published by TSO (The Stationery Office) and available from:
Online
www.tso.co.uk/bookshop
Mail, Telephone, Fax & E-mail
TSO
PO Box 29, Norwich NR3 1GN
Telephone orders/General enquiries 0870 600 5522
Fax orders 0870 600 5533
E-mail book.orders@tso.co.uk
TSO Shops
123 Kingsway, London WC2B 6PQ
020 7242 6393 Fax 020 7242 6394
68–69 Bull Street, Birmingham B4 6AD
0121 236 9696 Fax 0121 236 9699
9–21 Princess Street, Manchester M60 8AS
0161 834 7201 Fax 0161 833 0634
16 Arthur Street, Belfast BT1 4GD
028 9023 8451 Fax 028 9023 5401
18–19 High Street, Cardiff CF10 1PT
029 2039 5548 Fax 029 2038 4347
71 Lothian Road, Edinburgh EH3 9AZ
0870 606 5566 Fax 0870 606 5588
TSO Accredited Agents
(see Yellow Pages)
and through good booksellers

© Crown copyright 2005

Published with the permission of NHS Estates,

an Executive Agency of the Department of Health,
The paper used in the printing of this document
on behalf of the Controller of Her Majesty’s Stationery
(Revive Silk) is 75% made from 100% de-inked post-
Office.
consumer waste, the remaining 25% being mill broke
Applications for reproduction should be made and virgin fibres. Recycled papers used in its
in writing to: production are a combination of Totally Chlorine Free
(TCF) and Elemental Chlorine Free (ECF). It is
NHS Estates recyclable and biodegradable and is an NAPM and
1 Trevelyan Square Eugropa approved recycled grade.
Boar Lane
Leeds
LS1 6AE.

ISBN 0-11-322712-4

First published 2001; second edition 2005

Printed in the United Kingdom for The Stationery Office

Contents

1. Introduction page 2

2. Outline Business Case costings page 3

Appendices page 15
Appendix 1 – Glossary
Appendix 2 – Departmental Cost Allowance Guide forms
Appendix 3 – Schedules of functional content

References page 26

About NHS Estates guidance and publications

page 27

1
HOW TO COST A HOSPITAL
1 Introduction
IDENTIFYING COSTS
1.1 This document aims:
• to support the NHS in ensuring robust cost
information is obtained, to underpin business cases;
and
• to give guidance to the NHS and private sector
colleagues involved in producing business cases.
It is strongly advised that NHS bodies employ fully-
qualified and health-experienced Chartered Quantity
Surveyors and other equally professionally qualified
consultants when calculating the cost of healthcare
facilities. NHS colleagues will find it useful in
understanding the issues that need to be covered in
calculating capital costs, and in working with
consultants.
1.2 The Capital Investment Manual (CIM) gives practical
guidance on the technical considerations of the full
capital appraisal process and provides a framework for
establishing management arrangements. This ensures
that the benefits of every capital investment are
identified, evaluated and revealed. It should be noted
that the essential principles can be applied to all capital
investments irrespective of size or complexity.
1.3 As part of the business planning process NHS
bodies need to evaluate investment schemes within the
context of the whole business of the NHS body. It is
therefore important that NHS bodies discuss the level of
detail and scope of work required to develop a Strategic
Outline Case (SOC), Outline Business Case (OBC), Full
Business Case (FBC) and Public Sector Comparators
(PSC) in private finance initiatives, with the Department
of Health.
1.4 This document is intended to provide guidance on
the production of accurate capital cost estimates at the
different stages of cost planning. It will examine the
OBC forms and demonstrate the methodology of
building up the cost of a scheme based on a
hypothetical District General Hospital (DGH). Each
element of the business case form is discussed, and
how standard information can be used is demonstrated.
A glossary of the terms used is contained in
Appendix 1.
2
CONSUMERISM
1.5 The NHS Plan talks specifically about a vision of a
health service designed around the patient and offering
a personalised service. This vision is service-led and
sets targets as follows:
• more information for patients;
• greater patient choice;
• raising standards for the protection of patients;
• introduction of a new patient advocacy service;
• the right to redress when things go wrong;
• better patient consultation and representation.
1.6 However, efforts need to be made to translate this
vision with regard to its effects on the quality of
healthcare facilities.
1.7 This could range from improvements in first
impressions of primary and secondary care centres such
as car parking, external signage, grounds, entrances,
corridors, to the general facilities which enhance the
patients’, carers’ and visitors’ experience of the NHS for
example catering/retail outlets, and waiting spaces.
1.8 The above list is not intended to be exhaustive but
to give an indication of some of the areas that need to
be taken into consideration when producing capital cost
estimates.
LIFE-CYCLE COSTS
1.9 There is no provision within this document for life-
cycle costs. Its function is the understanding and basis
of how to generate an initial capital cost allowance for a
scheme, although the increased importance of the
whole-life costs is recognised.
1.10 NHS Estates is developing a model which will allow
scheme-specific information to be input to generate a
predicted annual cost of running a facility.
1.11 The model requires detailed information that can
only be produced from scheme-specific details.
1.12 The information and details of the standard model
will be published separately within the guidance to NHS
ProCure21 by NHS Estates.
2 Outline Business Case costings

PRODUCTION OF OUTLINE BUSINESS CASE
(OBC) COSTS
2.1 A copy of the relevant capital cost forms for the
DGH used in this guide is contained in Appendix 2, and
should be referred to. The schedules of functional
content used in this example are contained in
Appendix 3.
2.3 DCAGs are the only source of health building cost
data readily and conveniently available to all NHS bodies
in the country.
2.4 The Healthcare Capital Investment (HCI) document,
available from NHS Estates, 1 Trevelyan Square, Boar
Lane, Leeds, LS1 6AE, contains comprehensive
information on an extensive list of DCAGs.

2.2 At the early stage of the production of costs for 2.5 A more detailed description of DCAGs is contained
business cases there may be very little information in Appendix 1.
available to assist in the build-up for the cost of the
scheme. The use of Departmental Cost Allowance
Guides (DCAGs) will assist in the preparation of:

a) Strategic Outline Case (SOC);

b) Outline Business Case (OBC) capital costs;

c) Full Business Case (FBC) capital costs;

d) Initial Target and Guaranteed Maximum Price (GMP)

setting in relation to NHS ProCure21; and

e) Public Sector Comparators (PSC) in private finance

initiatives.

3
HOW TO COST A HOSPITAL

COMPLETING OUTLINE BUSINESS CASE

CAPITAL COST FORMS

LINE 1: DEPARTMENTAL COSTS

PROCESS

See ‘Departmental Costs –

Collect relevant information
Relevant Information’

See ‘Departmental Costs – Calculate individual departmental costs for each

Insert on cost form OB2
Calculations Examples’ department

See Appendix 2 for example Calculate individual departmental areas Insert on cost form OB2

Add Essential Complementary Accommodation

See Glossary for definition of
(ECA) and Optional Accommodation and Services Insert on cost form OB2
terms
(OAS) as necessary

Summarise total departmental cost, including Transfer to Line 1 of cost form

ECAs and OASs OB1

Summarise total departmental floor area

Experience and good

Review total departmental cost/m2 for
professional judgement
reasonableness
essential at this stage

DEPARTMENTAL COSTS – RELEVANT • departmental schedules of accommodation for non-

INFORMATION standard departments;

2.6 Collection of the following information (if available) • category of work to each department i.e.:
will assist in the calculation of departmental costs: – new build (N);
– existing accommodation adapted for alternative
• departmental functional contents, for example: size, use (A);
number of units, beds, theatres; – existing accommodation upgraded for same
• departmental areas; use (C).

4
 OUTLINE BUSINESS CASE COSTINGS

DEPARTMENTAL COSTS – CALCULATION Example 3

EXAMPLES
Using DCAGs
2.7 Line 1 of cost form OB1 is a summary of the total
departmental costs. This is arrived at by aggregating the
cost of all the functional units, Essential Complementary
Accommodation (ECA) and Optional Accommodation
and Services (OAS) appropriate to the scheme
contained on cost form OB2.
2.8 If a DCAG is either unsuitable or unavailable for a
particular department, costs should be allocated, where
possible, on the basis of similar accommodation in
another department.
2.9 The following demonstrates how different
departmental costs can be calculated:
Examples
Example 1
A DCAG is needed for an out-patient department with
12 consulting/examination (C/E) suites.
A DCAG is needed for an out-patient department with
12 C/E suites but with a departmental area different to
that published in the HCI. For example, the proposed
department is designed with an area of 860 m2 and not
955 m2 as in the HCI.
There are three options that can be adopted to come to
an appropriate cost; these are discussed below:
Option 1
It may be decided that even though the area has
changed, the existing DCAG for the required functional
size may still be appropriate, that is all functions are still
being provided although in a smaller area.
Therefore the appropriate cost in this instance is
£992,879.
Option 2
It may be decided that it is more appropriate to adjust
the cost of the correct functional unit on a cost per m2
basis.

The relevant reference in the Healthcare Capital Therefore, the appropriate cost in this instance is:
Investment (HCI) document is 04.01.01 (MIPS 360).
£992,879 ÷ 955 x 860 = £894,111
The DCAG for 12 C/E rooms is £992,879.
Option 3
Example 2
A third option could be to decide that neither of the
A DCAG is needed for an out-patient department with first two options is quite appropriate and therefore a
16 C/E suites. judgement will be needed as to what cost level is
actually required. At this stage experience and
There is no specific DCAG for this functional size, professional judgement may be the only solution.
therefore a simple calculation is required. The aim is to
add the extra over-cost of 4 C/E rooms to the existing
DCAG for 12 C/E rooms.

i. Need to find the extra over-cost of an out-patient

department with 1 C/E room.

18 C/E rooms: £1,302,316

12 C/E rooms: £992,879
6 C/E rooms: £309,437

Divide by 6 = £51,573/1 room.

ii. Need to find the extra over cost of an out-patient

clinic with 4 C/E rooms:

1 C/E room: £51,573 x 4 = £206,292.

iii. Finally, calculate the cost of 16 C/E rooms.

12 C/E rooms: £992,879

4 C/E rooms: £206,292
16 C/E rooms: £1,199,171

5
HOW TO COST A HOSPITAL

LINE 2: ON-COSTS

PROCESS

See ‘On-costs – Relevant

Collect relevant information
Information’

Is sufficient information available to

calculate on-costs?

No Yes

Use standard Use approximate

See ‘Calculating on-costs’ for
percentages to quantities to calculate Insert on cost form OB3
guidance
calculate on-costs on-costs

Transfer to Line 2 of cost form

Summarise total on-cost implications
OB1

Experience and good Review total on-cost as percentage of

professional judgement departmental cost for accuracy and
essential at this stage reasonableness

ON-COSTS – RELEVANT INFORMATION • number and type of auxiliary buildings for example
gas meter housing, bicycle stores etc.;
2.10 Collection of the following information (if available)
will assist in the calculation of on-costs: • ground conditions survey report;

• scheme drawings showing room and/or departmental • details of any major abnormal costs associated with
layouts as appropriate; works;

• length of new hospital street; • Information management and technology (IM&T)

costs necessary for project;
• number of new stairwells;
• details of any other costs to be included.
• type and number of new lifts;
CALCULATING ON-COSTS
• sketches of anticipated external works indicating
areas of: 2.11 On-costs are a key element in the pursuit of good
– courtyards; capital cost planning at the business case stage. They
– roads and paths; define the individual nature of a particular project when
– car parks and/or number of car park spaces; set against the more generic definition of the
– external steps, walls, fences, and gates; departmental costs. Specific attention must therefore be
– soft landscaping; given to the preparation of on-costs to ensure that they
– planted areas; support the departmental cost in providing an accurate
– number of mature trees to be removed/replaced; estimate of the Works Cost for a project. On-costs
– drainage, and incoming services. should be based at the same price level as the DCAGs.

6
 OUTLINE BUSINESS CASE COSTINGS

2.12 Following a study of the comparison between on-
costs and departmental costs included within past FBC
cost forms, the following findings were evident:
• for projects with a Works Cost value of between £1m
and £5m, the average on-cost value as a percentage
of departmental costs was between 40% and 50%;
• for projects with a Works Cost value greater than
£5m, the average on-cost value as a percentage of
departmental costs was between 70% and 85%.
2.13 A further study of the comparison between the
different elements that make up the overall on-cost total
was also undertaken. The outcome of this study is
detailed in Table 1 Comparison between On-Costs and
Departmental Costs, which highlights the typical
percentages anticipated for each element if the overall
on-cost percentage is between 65% and 100%.
2.14 It should be noted that the information from the
two studies is for guidance only, as the sample size
used in the study was not great enough to make the
statistical outcome accurate.

2.15 The information must therefore be used with a

degree of caution, and users are reminded that
percentages of departmental costs for on-cost
calculations must only be used at early planning stages
when no further information is available.

TABLE 1 COMPARISON BETWEEN ON-COSTS AND DEPARTMENTAL COSTS

% on-costs in relation to departmental costs

65% 70% 75% 80% 100%

Communications

Space 15.65 16.85 18.05 19.27 24.08

Lifts 3.64 3.92 4.20 4.48 5.60

External building works

Drainage 3.51 3.78 4.05 4.32 5.40

Roads, paths etc 4.82 5.19 5.57 5.94 7.42

Site layout 2.44 2.63 2.82 3.01 3.76

BWIC 2.57 2.77 2.96 3.16 3.95

External engineering works

Steam, heating, hot water 3.47 3.74 4.01 4.27 5.34

Cold water and storage 2.00 2.15 2.30 2.46 3.07

Electric 4.31 4.64 4.97 5.30 6.63

Calorifiers 1.43 1.54 1.65 1.76 2.20

Miscellaneous services 4.93 5.31 5.69 6.07 7.59

Auxiliary buildings 1.09 1.18 1.26 1.34 1.68

Abnormals

Building 10.47 11.27 12.08 12.88 16.10

Engineering 4.67 5.03 5.39 5.74 7.18

7
HOW TO COST A HOSPITAL

LINE 3: WORKS COSTS TOTAL

PROCESS

See ‘Index series for Business

Identify correct index level for basis of costs
Cases’

Update cost forms OB2 and

Refer to Quarterly Briefing for Adjust departmental costs and on-costs to correct
OB3 and transfer to cost form
up-to-date index series index level
OB1

See ‘Adjusting Estimates for Insert on line 3 of cost form

Add together departmental costs and on-costs
Tender Price Movement’ OB1

INDEX SERIES FOR BUSINESS CASES
2.16 The following points should be noted when
preparing capital cost estimates for business cases:
• to achieve consistency and avoid confusion, all
business cases are expected to be submitted at a
promulgated index level and not at the quarter of the
anticipated tender date for a specific scheme. This
allows all business cases to be compared on a like-
for-like basis and avoids the need to constantly
change estimates when the forecast index level used
is changed;
that the base date of any PFI costs is known. This will
enable a fair adjustment of costs if there are delays in
the procurement process.
2.20 After the base date is confirmed, the Public Sector
Comparators (PSC) can be prepared on the same base
date to enable a comparison to be made. Where the
Outline Business Case costs are used as the PSC they
must be adjusted using appropriate indices to the
correct base date.
ADJUSTING ESTIMATES FOR TENDER PRICE
MOVEMENT

• the index levels, which should be used for business 2.21 The following represents the works cost of a typical
case purposes, are published in Quarterly Briefing project at a business case stage.
obtainable from NHS Estates, 1 Trevelyan Square,
Boar Lane, Leeds LS1 6AE, and on the Knowledge Departmental cost £1,000,000
Information Portal (KIP). This is accessed using a
On-costs (70%) £700,000
unique username and password obtained by
completing the application form on the homepage at: Sub total £1,700,000
http://195.92.246.148/nhsestates/knowledge/
knowledge_content/home/home.asp Local adjustment x 1 –

2.17 The Business Case should contain an appropriate Works cost £1,700,000
adjustment to the estimate to take account of future
This estimate is based at current-day costs of 1st
inflation (tender inflation and cost inflation as necessary).
quarter 2002.
2.18 It is the responsibility of the project manager in
2.22 The works cost represents the estimated tender
control of the cost estimate to anticipate the effect of
price to be submitted under a traditional procurement
this adjustment and to ensure that both the trust and
route. Therefore, any adjustment to this estimate for
the Strategic Health Authority are aware of the
tender price movement will need to involve the use of a
implications of this at the early stages of cost planning.
tender price index (that is, the MIPS index).
2.19 When preparing Public Sector Comparators (PSC)
2.23 Adjustment of the above estimate to represent
for schemes that have been selected for The Private
current-day costs of 2nd quarter 2004 requires the
Finance Initiative (PFI) procurement route it is imperative

8
 OUTLINE BUSINESS CASE COSTINGS

costs to be divided by the index figure associated with

the original base date of the estimate (369) and then
multiplied by the appropriate index number of the
revised date of estimate (416). This should have the
following outcome:

Departmental cost £1,127,371

On-costs (70%) £789,160

Sub total £1,916,531

Local adjustment x 1 –

Works cost £1,916,531

Based on MIPS Index for FP contracts:

1st quarter 2002 – 369

2nd quarter 2004 – 416

9
HOW TO COST A HOSPITAL

LINE 4: LOCATION ADJUSTMENT

PROCESS

Refer to Quarterly Briefing for

Identify region in which project is to be built
location map

Refer to latest Quarterly Briefing Multiply Line 3 costs by appropriate location Insert on Line 4 of cost form
for up-to-date location factors adjustment factor OB1

PROVISIONAL LOCATION ADJUSTMENT boundaries. They do not represent specific cost-

2.24 The use of regional location factors to adjust
project estimates.
2.25 Line 4 of cost form OB1 contains a figure for
‘Provisional Location Adjustment’.
2.26 DCAGs, along with most other construction-related
cost information, are set at a notional UK average price
level which does not take account of the particular
location in which a project may take place.
2.27 Local market conditions may have a significant
impact on price levels in that region. Factors such as
vicinity and availability of labour, prosperity of an area,
short-term peaks and troughs in local construction
output, as well as the general ease of construction
within a region, may all add up to affect tender price
levels between neighbouring towns, counties and
regions. In the preparation of project estimates,
attention must therefore be paid to this locational effect
on tender price levels.
2.28 NHS Estates issues information to assist project
estimators to take account of this effect, namely regional
location factors, which are published in Quarterly
Briefing.
2.29 This information is given in numerical format, where
the national average is 1. If any region has a location
factor either higher or lower than this, it suggests that its
tender price levels are different from the national
average, as explained below.
sensitive areas and should therefore not be considered
as such.
2.32 It should be noted that even within different areas
of each region, large variations in tender prices may
occur which are not reflected in the average location
factor for that region. Care must therefore be taken,
when adjusting project estimates by the location factor,
that the specific area in which the project is to be
constructed is not unduly different from the average for
that region. This may need to be considered when
preparing a risk assessment for a project.
HOW TO ADJUST A PROJECT ESTIMATE FOR
LOCATION
2.33 A project estimate can be quickly adjusted for its
location by simply multiplying the works cost or tender
price estimates by the regional location factor pertinent
to the area in which the project is to be constructed.
2.34 For example, a project with a works cost of
£2,000,000 in a region with a location factor of 0.94 can
be adjusted as follows:
Works cost £2,000,000
Location Adjustment (–6%) – £120,000
£1,880,000
or, more simply, £2,000,000 x 0.94
= £1,880,000

2.30 For example, a regional location factor of 0.95

suggests that the average price level in that area is 5%
less than the national average. Conversely, a regional
location factor of 1.03 suggests that price levels in that
area are 3% higher than the national average.

2.31 The regions chosen to divide the location factors

issued by NHS Estates approximately represent regional

10
 OUTLINE BUSINESS CASE COSTINGS

LINE 5: SUB-TOTAL COST

PROCESS

Insert on Line 5 of cost form

Add together Line 3 and Line 4 costs
OB1

Experience and good

professional judgement Review works cost against expected tender costs
required at this stage

LINE 6: FEES
PROCESS

See ‘Fees – Relevant

Collect relevant information
Information’

Calculate fees for individual in-house and external

Refer to latest Quarterly Briefing
professional services required for planning, design
for up-to-date location factors
and execution of project

Use either percentage of Line 5 or

Insert on cost form OB4
provisional sums

Transfer to Line 6 of cost form

Summarise total fee costs
OB1

Experience and good

Review total fee costs as a percentage of
professional judgement
works cost
required at this stage

FEES – RELEVANT INFORMATION • quantity surveyors;

2.35 Line 6 of cost form OB1 contains a figure for fees. • project managers;
The figure included here should include for both in-
• project director;
house and external professional services for planning,
design and execution of the project; examples would • in-house staff resourcing etc.
include:
2.36 Fees for items such as the purchase/disposal of
• architects; property should also be included.

• mechanical engineers;

11
HOW TO COST A HOSPITAL

LINE 7: NON-WORKS COSTS

PROCESS

See ‘Non-Works Costs

Collect Relevant Information
Relevant Information’

Provide costs for items of capital expenditure not

Insert on cost form OB4
included elsewhere on cost forms

Transfer to Line 7 of
Summarise total non-works costs
cost form OB1

NON-WORKS COSTS – RELEVANT
INFORMATION
2.37 Line 7 of cost form OB1 contains a figure for
non-works costs. Non-works cost can be too easily
dismissed as not being a very important element of a
business case, especially when viewed in the wider
context of a major capital investment, but may still
attract very significant costs that should be given due
consideration.
2.38 Costs entered against the three main headings:
‘land purchase costs and associated legal fees’,
‘statutory and Local Authority charges’ and ‘Building
Regulation and planning fees’ are self explanatory and
need not be expanded on. However the costs entered
must be realistic, with any appropriate tariffs being
thoroughly checked.
2.39 In general, because costs in this section tend to
stand alone and cannot normally by validated against a
known baseline or other guidance, they must be explicit
and have as much detail as possible. This maxim is
particularly important for costs entered under the
heading ‘Other’. For example, decanting costs may
include building and engineering works associated with,
and facilitating, a decant. Decanting costs should also
include the cost of external removal specialists as well
as the cost of in-house portering and administration/
management time. Decommissioning and/or
recommissioning costs can also be significant if
engineering services, including medical gases, are to be
brought back on-line or made safe.
2.40 Examples of non-works costs include:
• land purchase costs;

• statutory and Local Authority charges;

• building regulations and planning fees;

• decanting costs;

• commissioning;

• decommissioning.

12
 OUTLINE BUSINESS CASE COSTINGS

LINE 8: EQUIPMENT COSTS

PROCESS

See ‘Equipment Costs –

Collect relevant information
Relevant Information’

Refer to latest Quarterly Briefing Calculate individual equipment costs for each
Insert on cost form OB2
for up-to-date location factors department

Add equipment costs for ECAs and OASs Insert on cost form OB2

Reasonable transfer rates Abate equipment costs for existing equipment that
Adjust on cost form OB2
should be used can be transferred

Summarise total equipment costs including ECAs Transfer to Line 8 of cost form
and OASs OB1

Review total equipment cost as percentage of

departmental cost for accuracy and
reasonableness

EQUIPMENT COSTS – RELEVANT INFORMATION
2.41 Line 8 of cost form OB1 is a summary of the total
equipment costs contained on cost form OB2.
2.42 The Equipment Cost Allowance Guide (ECAG)
contained within HCI is based on the listed price of
middle of the range items of equipment taken from NHS
Estates Activity DataBase room data sheets and are
exclusive of VAT, trade discount etc. It is important to
note when using these costings that no contingency
allowance has been added to the costs and therefore a
full risk estimate should be undertaken in respect of
estimates for specific projects. It should be noted that
Quarterly Briefing contains information relating to the
current equipment price index that should be used in
calculating the adjusted cost for equipment.
2.43 If any equipment is transferred then this should be
shown as an abatement on cost form OB2 and the
adjusted total carried forward to cost form OB1.
2.44 Within healthcare facilities, equipment is classified
into different groups dependent upon its specialist
nature and the space implications. There are four
different groups of equipment:
group 1 – items (including terminal outlets) which are
supplied and fixed within the terms of the building
contract;
group 2 – items which have specific requirements
with regard to space and/or building construction
and/or engineering services and are fixed within the
terms of the building contract but supplied under
arrangements separate from the building contract;

13
HOW TO COST A HOSPITAL

group 3 – as Group 2, but supplied and fixed (or

placed in position) under arrangements separate from
the building contract;

group 4 – items which are supplied under

arrangements separate from the building contract
possibly with storage implications but otherwise
having no effect on the requirements for space or
engineering services.

2.45 It should be noted that the equipment costs

contained within HCI relate to equipment in groups 2
and 3 only. Group 4 equipment is specifically excluded
from the costs contained within HCI as items are likely
to be transferred from other departments or are so
project specific that it is not considered practicable or
reasonable to establish a common cost target.

PLANNING CONTINGENCY – RELEVANT

INFORMATION

2.46 Line 9 of cost form OB1 is a summary of the total

amount of risk. A risk analysis calculation is required to
establish the planning contingency sum which is an
allowance intended to cover the most likely outcome for
potential risk associated with the project. CIM contains
further guidance on Risk and Contingency allowance.

LINE 9: PLANNING CONTINGENCY

PROCESS

Undertake a risk assessment of the design and

construction risks associated with the project

Identify risks

Allocate risks to best party able to manage them

Transfer financial implications to

Quantify financial and time implications on project
Line 9 of cost form OB1

Prepare strategy for managing risks

14
Appendix 1 – Glossary
CAPITAL INVESTMENT MANUAL (CIM)
A framework document produced by the Department
of Health giving detailed guidance on planning and
delivering all types of capital schemes within the NHS.
It comprises eight sections:
• Overview;
• Project organisation;
• Business case guide;
• Private finance guide;
• Management of construction projects;
• Information management and technology (IM&T)
guidance;
• Commissioning a healthcare facility;
• Post-project evaluation.
The Capital Investment Manual is available from The
Stationery Office.
DEPARTMENTAL COST ALLOWANCE GUIDES
(DCAGs)
An allowance for building and engineering costs for an
individual department within a development for a new or
extended general hospital. Costs are given by function,
for example per bed, per theatre etc. They include:
• building and engineering costs;
• group 1 equipment;
• 12.5% for preliminaries; and
• 2% for variations/contingencies.
DCAGs are used at an early planning stage to establish
a cost target that ensures developments are designed in
an economical manner but without impairing their
functional requirements.
The cost data has been subjected to a substantial and
thorough review in terms of the cost levels reported and
the information upon which they are based. This was
undertaken to improve the accuracy and consistency of
the costs produced and to put them in line with normal
construction cost/standards of buildings which still
provide the quality of service that the NHS is depended
upon to provide.
This provides users (NHS bodies and suppliers) with
confidence that the cost allowances are sufficient for the
construction of buildings which still provide the quality of
service that the NHS is depended upon to provide over
the life of the facilities.
DCAGs are a cost-effective means of establishing the
capital cost and area of a scheme at the early stages of
a project’s development. They are of particular use when
little information is available on the functional content of
a scheme. If used correctly, they can provide a sound
basis for assessing the capital cost implications of a
healthcare project.
DCAGs are based on latest expert advice on good
practice and spatial requirements within a department
as detailed in the relevant Health Building Note (HBN).
Unless stated otherwise in the cost chapter of individual
HBNs, certain assumptions are made when compiling
DCAGs. These are as follows:
a. the department will be incorporated into a general
hospital development;
b. the building is a two-storey framed structure;
c. the engineering services are readily available, have
the necessary capacity and are located at the
boundary of the proposed development;
d. the building will be on a greenfield site.
Schedules of accommodation, found at the back of
each HBN, list all the functional areas to which is added
an allowance for circulation space within the
department. This circulation space includes the
following:
• general circulation within the confines of the
department;
• planning provision – a 5% allowance for flexibility of
design;
• engineering zone – a 200 mm allowance measured
adjacent to all external walls to allow for the
15
HOW TO COST A HOSPITAL
distribution of services within the department,
radiators and small vertical ducts;
• the area occupied by partitions.
Costs for the following are excluded from DCAGs and
should be included in the on-costs:
• circulation associated with communications to other
departments, for example the main hospital street;
• staircases, lifts and plantrooms;
• external works.
The total DCAG allowance for a scheme is obtained by
aggregating the cost of all the functional units, Essential
Complementary Accommodation (ECA) and Optional
Accommodation and Services (OAS) as appropriate to
the scheme.
If a DCAG is either unsuitable or unavailable for a
particular department, costs should be allocated on the
basis of similar accommodation in another department.
DCAGs relate purely to the work within the department.
In addition, the HCI contains schedules of Essential
Complementary Accommodation (ECA) and Optional
Accommodation and Services (OAS). ECAs are essential
to the running of the department but could be located
elsewhere, whereas OASs are project options that can
be selected as required to give a more bespoke
approach to a project.
ON-COSTS
Line 2 of cost form OB1 contains a figure for on-costs.
These on-costs are additional capital costs, not included
within DCAGs, arising from the interaction of individual
departments within a development, and the relationship
of that development to the particular site and existing
buildings. Initially, at early planning stages, they may be
included as a percentage added to the total of the
departmental costs. As information becomes available, a
more detailed and realistic valuation should be
calculated for on-costs.
On-costs include the following:
• communications;
• external works;
• auxiliary buildings;
• abnormals.
Communications
Includes all costs associated with space/circulation etc
between departments, for example corridors, lifts, stairs
16
and main ducts/shafts, but not those within a
department which are included in the departmental
costs.
External works
Typically covers all costs associated with works external
to the outer walls of the building but forming an integral
part of the scheme, for example roads, paths, drainage,
services etc.
External works also include all the main engineering
supply services, which may include those internal to the
building, but which are outside the confines of the
individual department, for example services in the main
corridor or "hospital street".
Auxiliary buildings
This includes minor buildings such as bin stores, bicycle
sheds, meter housing etc.
Abnormals
Includes all known exceptional factors that arise from
the development which increase capital costs on either
the building or the engineering services. Examples are
demolitions, adverse soil conditions and poor bearing
capacity of ground, alterations to existing buildings, full
air-conditioning. Only known abnormals should be
included under this heading. The risk analysis used to
establish the planning contingency should allow for
other possible abnormals.
INDICES
All project estimates must be capable of adjustment to
take account of the effects of historical or forecast
inflation within the construction industry.
For example, an estimate based on current-day
construction costs must be able to be adjusted to
reflect construction cost in, say, five years’ time. To
achieve this, the estimate must be linked to a base date
or an appropriate index.
Before explaining how indices can be used to adjust
project estimates, it is necessary to explain what indices
are and what they represent.
Indices are a list of numbers whose sole purpose is to
reflect the rate of inflation in numerical format. Most
indices commence with the number 100, and the next
number in the series will reflect either an increase or a
decrease in the rate of inflation.
For example, the following theoretical index series
shows an increase of inflation between the 1st and 2nd
quarters of the year 2004 (that is, (105 – 100) ÷ 100)
followed by a reduction in inflation of 2% between the
2nd and 3rd quarters of year 2004.

Year 2004 1st quarter 100
2nd quarter 105
3rd quarter 103
There are many and various indices published within the
construction industry and sound professional judgement
is required to select the most appropriate index for the
purposes required.
Quarterly Briefing includes the following indices:
Median Index of Public Sector (MIPS )Building
Tender Prices
This index highlights the effect of inflation on "tender
prices" of capital works projects within the public sector.
Building Cost Index
This index highlights the effect of inflation on "actual"
costs of building construction.
Maintenance Indices
These indices show inflationary trends within different
elements of maintenance work.
Equipment Price Index
This index series represents the effect of inflation on
equipment costs.
EQUIPMENT COST ALLOWANCE GUIDES
ECAGs)
An allowance for items of equipment, usually of a
specialist nature, which have an effect on the building
construction and/or engineering services and are
supplied separately from the main building contract (see
also "Departmental Cost Allowance Guides").
HEALTH BUILDING NOTES
A series of publications that give design teams advice
on best practice when designing new hospital
departments as well as giving a thorough background
to all departmental policy and schedules of
accommodation for that department.
HEALTH SERVICE CIRCULARS
A series of letters issued to Chief Executives of NHS
Trusts and Special Hospitals Service Authorities;
General Managers of District Units and Special Health
Authorities; Estate Managers of NHS Estates Regional
Directors and Territorial Health Departments notifying
them of policy matters that affect the health service
estate. This series of letters replaces Estate Policy
Letters.
APPENDIX 1 – GLOSSARY
HEALTH SERVICE COST INDICES
A series of indices prepared by the Department of
Health to measure the movement in price changes of a
range of goods and services purchased by the Hospital
and Community Health Service.
MEDIAN INDEX OF PUBLIC SECTOR (MIPS)
BUILDING TENDER PRICES
A quarterly series of indices calculated from rates for
measured work contained in bills of quantities for
accepted tenders for a range of public sector building
works including those for the Department of Health.
MIPS is the Department of Health acronym for the
Public Sector (PUBSEC) unweighted index series
produced by the Department of the Environment. The
index series is sub-divided into tenders let on a Firm
Price (FP) – generally those with a contract period not
exceeding two years. Unlike FP tenders, where the
tenderer has to make an allowance for increased costs
in the original tender, Variation of Price (VOP) tenders
are net of increased costs, which are reimbursed
separately – usually by means of a formula applied to a
breakdown of the original tender.
NHS TENDER PRICE INDEXING
CIM requires tenders to be indexed. It is also
recommended that those contracts with values not
exceeding the relevant reporting/approval thresholds are
also indexed. NHS Estates has an agreement with the
Department of Transport (DTI) for it to carry out
indexation of tenders. NHS bodies are reminded of this
requirement and the address at the DTI for the tender
indexation service. Contact:
Construction Market Intelligence
DTI
Bay 290
151 Buckingham Palace Road
London SW1W 9SS
Tel: 020 7215 3662
Fax: 020 7215 2953
NHS PROCURE21
A standardised approach to the provision of healthcare
facilities, based upon long-term relationships with
carefully-selected supply chains which have the ability to
work with NHS clients across the whole life-cycle of a
scheme.
17
 HOW TO COST A HOSPITAL

Appendix 2 – Departmental Cost

Allowance Guide forms
OUTLINE BUSINESS CASE COST FORM OB1

TRUST/PROVIDER UNIT..................................... WHOLE HOSPITAL COST – DGH

SCHEME.............................................................. Whole Hospital including In-patient accommodation 75% singles & CFPU
PHASE...........................................................................................................

PROJECT DIRECTOR.....................................................................................

CAPITAL COSTS SUMMARY

Cost Exc.VAT VAT Cost Incl.VAT

£ £ £
1 Departmental Costs (from Form OB2) 82,835,367 14,496,189 97,331,556
2 On-Costs (from Form OB3)
(70% of Departmental Cost) 57,984,757 10,147,332 68,132,089
3 Works Cost Total at 395 FP MIPS
(Tender Price Index Level 140,820,123 24,643,522 165,463,645
1975 = 100 Level)
4 Provisional location adjustment (if applicable)
(0% of £140,820,123) 0 0 0
5 Sub Total 140,820,123 24,643,522 165,463,645
6 Fees
(16% of sub total) 21,827,119 N/A 21,827,119
7 Non-Works Costs (from Form OB4)
LAND 0 0 0
OTHER 1,408,201 246,435 1,654,636
0
8 Equipment Cost (from Form OB2)
(23% of Departmental Cost) 19,360,207 3,388,036 22,748,244
9 Planning Contingency 0.10 18,200,745 3,185,130 21,385,875
10 TOTAL (for approved purposes) 201,616,396 31,463,123 233,079,520
11 Inflation Adjustments
12 FORECAST OUTTURN BUSINESS CASE TOTAL 201,616,396 31,463,123 233,079,520

Proposed start on-site

Proposed completion date

Cash
Flow: SOURCE £
EFL OTHER GOVERNMENT PRIVATE

Total Cost (as 10 above) –

This form completed by:………………..

Telephone No:.............…
Address:....................…
Date:..........……........…
Authorised by:....................................................................
PROJECT DIRECTOR

18
 APPENDIX 2 – DEPARTMENTAL COST ALLOWANCE GUIDE FORMS

OUTLINE BUSINESS CASE COST FORM OB2

TRUST/PROVIDER UNIT............................. WHOLE HOSPITAL COST - DGH

SCHEME...................................................... Whole Hospital including In patient accommodation 75% singles & CFPU
PHASE...........................................................................................................
PROJECT DIRECTOR................................. 0

CAPITAL COSTS: DEPARTMENTAL COSTS AND EQUIPMENT COSTS

Function Units/Space Cost Allowance Equipment Cost

Functional Content N/A/C
Requirements HCI Version 2.1 HCI Version 2.1
£ £

General Wards 224 beds N 15,252,105 –

Children's 1 Dept N 2,172,222 144,856
Elderly Type A acute 96 beds N 6,658,327 408,147
Maternity 4487 m2 N 6,010,368 3,089,683
Intensive Therapy 6 beds N 1,278,613 767,433
Cardiology 1 Dept N 1,278,613 767,433
Operating Suites 6 theatres N 2,935,228 695,977
Radiodiagnostics 2321 m2 N 3,626,249 6,797,955
Pathology 2361 m2 N 3,284,471 1,736,959
Pharmacy 1960 m2 N 2,010,021 –
Mortuary & Post Mortem 381 m2 N 650,016 41,016
Medical Photography 1 Dept N 267,973 –
Anaesthetics 1 Dept N 163,844 –
Satellite Dialysis Unit 8 Stations N 575,642 –
Rehabilitation 1823 m2 N 1,727,967 –
Day surgery 3 theatres N 3,053,506 555,083
Endoscopy 2 rooms N 1,317,777 543,166
Out-patients 4498 m2 N 5,238,786 376,714
Oral Surgery 4 dental chairs N 1,173,303 154,792
Ophthalmic clinic 10 rooms/bays N 824,075 –
Dermatology 1 dept N 70,916 14,354
ENT 3 consultants N 549,215 53,621
Audiology 1 booth N 424,752 39,352
Maternity clinic 1 clinic N 1,972,191 312,035
Children's resource centre 1 nr N 456,199 10,882
A&E 50000 attendances N 1,787,030 305,676
Obs ward 16 places N 852,947 –
Administration 4836 m2 N 3,888,726 1,231,926
Main entrance 1 nr N 550,008 42,500
Snack bar 1 nr N 141,765 23,942
Departmental entrances 4 nr N 762,030 94,635
Catering/dining rooms 300 meals N 302,349 –
Servery 300 meals N 204,240 –
Occupational health 1 centre N 228,705 30,115
Staff changing semi-automatic 1000 places N 631,898 70,168
On-call accommodation 7 rooms N 212,443 –
CSSD 2 sterilizers N 2,484,908 253,402
Telephone service 3 cabinets N 84,025 390,504
Catering 600 meals N 5,690,433 303,984
Boilerhouse 8800 kW N 992,832 –
Estates Department 400 beds N 815,437 69,657
External Storage 400 beds N 90,193 234
EMI Workshop 2 work spaces N 143,022 34,006

Less abatement for transferred equipment

if applicable (Nil…%)

Departmental Costs and Equipment Costs to OB1 Summary

82,835,367 19,360,207

This form completed by:………………..

Telephone No:.............…
Date:..........……........…

19
 HOW TO COST A HOSPITAL

OUTLINE BUSINESS CASE COST FORM OB3

TRUST/PROVIDER UNIT...................................... WHOLE HOSPITAL COST – DGH

SCHEME.............................................................. Whole Hospital including In-patient accommodation 75% singles & CFPU
PHASE...........................................................................................................

CAPITAL COSTS: ON-COSTS

Percentage of
Estimated Cost (exc. Departmental Cost
VAT)
%
1. Communications £
a. Space 13,957,759
b. Lifts 3,247,146
17,204,906 17,204,906 20.77%

2. "External" Building Works

a. Drainage 3,131,177
b. Roads, paths, parking 4,299,156
c. Site layout, walls, fencing, gates 2,178,570
d. Builders work for engineering 2,294,540
services outside buildings
11,903,442 11,903,442 14.37%

3. "External" Engineering Works

a. Steam, condensate, heating, hot 3,098,043
water and gas supply mains
b. Cold water mains and storage 1,780,960
c. Electricity mains, sub-stations, 3,843,561
standby generating plant –
d. Calorifiers and associated plant 1,275,665
e. Miscellaneous services 4,398,558
14,396,787 14,396,787 17.38%

4. Auxiliary Buildings 977,457 977,457 1.18%

5. Other on-costs and abnormals

a. Building 9,335,546
b. Engineering 4,166,619

13,502,165 13,502,165 16.30%

Total on-costs to Summary OB1

57,984,757 70.00%

This form completed by:………………..

Telephone No:.............…
Date:..........……........…

20
 APPENDIX 2 – DEPARTMENTAL COST ALLOWANCE GUIDE FORMS

OUTLINE BUSINESS CASE COST FORM OB4

TRUST/PROVIDER UNIT........................................................ WHOLE HOSPITAL COST – DGH

SCHEME.................................................................................Whole Hospital including In-patient accommodation 75% singles & CFPU
PHASE...........................................................................................................

PROJECT DIRECTOR............................................................ 0

CAPITAL COSTS: FEES AND NON-WORKS COSTS

£ Percentage of Works Cost – Sub-total

%
1. Fees (including "in-house" resource costs)
a. Architects 7,041,006 5.00%
b. Structural Engineers 1,408,201 1.00%
c. Mechanical Engineers 2,816,402 2.00%
d. Electrical Engineers Included above Included above
e. Quantity Surveyors 2,816,402 2.00%
f. Project Management 1,408,201 1.00%
g. Project Sponsorship 1,408,201 1.00%
h. Legal Fees – 0.00%
i. Site Supervision 2,816,402 2.00%
j. Others (specify) – 0.00%
Planning Supervisor 1,408,201 1.00%
Client Advisor – 0.00%
In-House staff resourcing 704,101 0.50%
Total Fees to Summary (OB1) 21,827,119 15.50%

£
2. Non-Works Costs

a. Land purchase costs and associated legal fees 0

b. Statutory and Local Authority charges 1,408,201

(Non-VATable)
c. Building Regulations and Planning Fees Incl.
(Non-VATable)
d. Other (specify)
e.g. decanting costs

Non-Works Costs to Summary (OB1)

1,408,201

This form completed by:………………..

Telephone No:.............…
Date:..........……........…

21
HOW TO COST A HOSPITAL

Appendix 3 – Schedules of functional

content

22
 DCAG ECAG AREA BEDS
HCI Add 15% Ess Add 15% Ess m2
DCAG @ 360 Total @ 360 Total @ 395 ECAG 100 Total @ 100 Total @ 111 m2 add E&O no of beds D/ECAG
& op t & opt
15% 1.10 15% 1.11
01 In-Patient Services
01.01B.06 General Wards 224 beds 12,087,524 1,813,129 13,900,653 15,252,105 N/A 0 8,188 9,416 224 100/0
Children
01.02.01 Department 1 dept 157,074 23,561 180,635 198,197 11,656 1,748 13,404 14,879 158 182 93/7
01.02.04 In-Patient Ward 20 beds 1,164,350 174,653 1,339,003 1,469,183 81,067 12,160 93,227 103,482 993 1,142 20 93/7
01.02.12 Day Care Unit 8 beds 400,095 60,014 460,109 504,842 20,756 3,113 23,869 26,495 329 378 8 95/5
Elderly
01.03.01 N ursing Section Type A 96 beds 4,279,592 641,939 4,921,531 5,400,013 261,152 39,173 300,325 333,361 3,508 4,034 96 94/6
01.03.07 Day Hospital 40 places 872,375 130,856 1,003,231 1,100,768 44,898 6,735 51,633 57,312 721 829 95/5
01.03.19 Administrative Centre 200,000 population 124,858 18,729 143,587 157,547 13,689 2,053 15,742 17,474 135 155 90/10
Maternity
01.04B.15 LDRP standard 18 nr 618,966 92,845 711,811 781,015 283,626 42,544 326,170 362,049 702 807 18 68/32
01.04B.18 LDRP disabled 1 nr 38,780 5,817 44,597 48,933 16,427 2,464 18,891 20,969 45 51 1 70/30
01.04B.23 4 bed multi room 2 nr 108,686 16,303 124,989 137,141 13,226 1,984 15,210 16,883 110 127 8 89/11
01.04B.21 Single room 11 nr 189,882 28,482 218,364 239,594 18,315 2,747 21,062 23,379 176 202 11 91/9
01.04B.01 In patient acc Option 1 3,230,379 484,557 3,714,936 4,076,110 1,804,462 270,669 2,075,131 2,303,396 2,445 2,812 64/36
01.04B.26 Neonatal 10 cots 576,615 86,492 663,107 727,576 284,377 42,657 327,034 363,007 424 488 10 67/23
01.05.01 Intensive Therapy 6 beds 1,013,320 151,998 1,165,318 1,278,613 601,201 90,180 691,381 767,433 733 843 6 62/38
01.05.01 Cardiology 1 dept 1,013,320 151,998 1,165,318 1,278,613 601,201 90,180 691,381 767,433 733 843 6 62/38

02 Main Operating Facilities

Operating suites
02.01.01 Theatres 6 theatres 2,326,213 348,932 2,675,145 2,935,228 545,223 81,783 627,006 695,977 1,601 1,841 81/19

03 Diagnostic and Treatment Facilities

Radiodiagnostics
03.01.01 RD rooms 9 r o o ms 1,791,924 268,789 2,060,713 2,261,060 1,495,190 224,279 1,719,469 1,908,610 1,420 1,633 54/46
03.01.12 Ultra sound 5 suites 337,975 50,696 388,671 426,459 175,575 26,336 201,911 224,121 265 305 66/34
03.01.13 Computed Tomography 1 suite 194,694 29,204 223,898 245,666 1,686,549 252,982 1,939,531 2,152,880 168 193 10/90
03.01.14 Nuclear medicine 1 suite 192,186 28,828 221,014 242,501 284,943 42,741 327,684 363,730 165 190 40/60
03.01.15 MRI 1 dept 357,078 53,562 410,640 450,563 1,683,207 252,481 1,935,688 2,148,614 244 281 17/83
Pathology 0
03.03.02 Haematology 1 dept 480,116 72,017 552,133 605,813 268,989 40,348 309,337 343,364 375 431 64/36
03.03.01 Chemical pathology 1 dept 446,679 67,002 513,681 563,622 447,007 67,051 514,058 570,604 335 385 50/50
03.03.03 Histopathology 1 dept 422,756 63,413 486,169 533,436 240,900 36,135 277,035 307,509 315 362 63/37
03.03.04 M icrobiology 1 dept 701,346 105,202 806,548 884,962 339,651 50,948 390,599 433,565 445 512 67/33
03.03.05 Shared Accommodation 1 dept 552,096 82,814 634,910 696,638 64,173 9,626 73,799 81,917 585 673 89/11
Pharmacy 0
03.04.14 Assembly 1 dept 212,512 31,877 244,389 268,149 N/A 218 251 100/0

APPENDIX 3 – SCHEDULES OF FUNCTIONAL CONTENT

03.04.15 Quality Control 1 dept 239,643 35,946 275,589 302,383 N/A 0 220 253 100/0
03.04,16 Purchase & distribution 1 dept 462,705 69,406 532,111 583,844 N/A 0 627 721 100/0
03.04.03 Out-patients Remote 67,546 10,132 77,678 85,230 N/A 0 65 75 100/0
1 area
Radiopharmaceuticals
03.04.18 Preparation: Open Procedure 99,133 14,870 114,003 125,087 N/A 0 80 92 100/0
03.04.01 In-patient Dispensing 450–600 beds 511,433 76,715 588,148 645,329 N/A 0 494 568 100/0
Mortuary & Post-mortem
03.05.01 Body viewing 1 suite 48,344 7,252 55,596 61,001 1,700 255 1,955 2,170 40 46 97/3
03.05.02 Body store 30 nr 189,040 28,356 217,396 238,532 14,912 2,237 17,149 19,035 125 144 79/21
03.05.03 Deep freeze 5 stores 24,737 3,711 28,447 31,213 1,723 259 1,982 2,200 12 13 93/7
03.05.04 PM suite 1 nr 253,027 37,954 290,981 319,271 13,796 2,069 15,865 17,611 155 178 95/5
03.06.01 Medical Photography 1 dept 212,373 31,856 244,229 267,973 0 0 130 150 100/0
03.07.01 Anaesthetics 1 dept 129,849 19,477 149,326 163,844 0 0 160 184 100/0
03.13.01 Satellite Dialysis Unit 8 stations 456,205 68,431 524,636 575,642 0 0 436 501 100/0
Rehabilitation
03.08.01 Departmental accommodation 1 small unit 1,369,440 205,416 1,574,856 1,727,967 0 0 1,585 1,823 100/0
03.09.01 Day surgery 3 theatres 2,419,950 362,993 2,782,943 3,053,506 434,848 65,227 500,075 555,083 1,507 1,733 85/15
03.10.01 Endoscopy 2 rooms 1,044,358 156,654 1,201,012 1,317,777 425,512 63,827 489,339 543,166 792 911 71/29
23
24

HOW TO COST A HOSPITAL

04 Out-patient Services
Out-patients
04.01.01 CE rooms 42 nr 4,031,356 604,703 4,636,059 5,086,787 256,669 38,500 295,169 327,638 3,801 4,371 94/6
04.01.02 Plaster 1 room 62,183 9,327 71,510 78,463 6,217 933 7,150 7,936 59 68 91/9
04.01.03 Colposcopy CE 1 room 31,042 4,656 35,698 39,169 18,475 2,771 21,246 23,583 31 36 62/38
04.01.04 Primary analysis facility 3 work stations 27,236 4,085 31,321 34,367 13,754 2,063 15,817 17,557 20 23 66/34
04.03.01 Oral surgery 4 dental chairs 929,860 139,479 1,069,339 1,173,303 121,263 18,189 139,452 154,792 560 644 88/12
04.04.01 Ophthalmic clinic 10 rooms/bays 653,092 97,964 751,056 824,075 0 0 581 668 100/0
04.05.01 Dermatology 1 dept 56,202 8,430 64,632 70,916 11,245 1,687 12,932 14,354 55 63 83/17
04.06.01 ENT 3 consultants 435,261 65,289 500,550 549,215 42,006 6,301 48,307 53,621 373 429 91/9
04.06.02 Audiology 1 booth 336,622 50,493 387,115 424,752 30,828 4,624 35,452 39,352 234 2 69 92/8
Maternity clinic 1 clinic
04.09B.01 Entrance 1 nr 123,045 18,457 141,502 155,259 432 65 497 551 71 82 99 / 1
04.09B.03 Ante/Post Natal Clinic 8 c/e rooms 573,369 86,005 659,374 723,480 61,397 9,210 70,607 78,373 480 552 90/10
04.09B.14 Scanning rooms 2 nr 237,922 35,688 273,610 300,211 141,520 21,228 162,748 180,650 198 228 62/38
04.09B.20 Day Assessment Unit 1 c/e rooms 279,517 41,928 321,445 352,696 28,652 4,298 32,950 36,574 246 283 91/9
04.09B.31 Early Pregnancy Unit 1 Day unit 349,138 52,371 401,509 440,544 12,445 1,867 14,312 15,886 301 346 97/3
04.07.02 Children's resource centre 1 nr 361,545 54,232 415,777 456,199 8,525 1,279 9,804 10,882 322 370 98/2
04.08.01 A&E 50,000 attendances 1,416,248 212,437 1,628,685 1,787,030 239,464 35,920 275,384 305,676 1,165 1,340 85/15
01.01B.01 Obs ward 16 places 675,973 101,396 777,369 852,947 450 518 10 100/0

07 Administration Services
Administration
07.01.01 Offices 225 work stations 2,070,002 310,500 2,380,502 2,611,940 883,986 132,598 1,016,584 1,128,408 3,076 3,537 70/30
07.02.01 Health records 15 work stations 217,888 32,683 250,571 274,932 70,046 10,507 80,553 89,414 235 270 75/25
07.02.02 Health records library 750,000 case notes 793,984 119,098 913,082 1,001,853 11,049 1,657 12,706 14,104 895 1,029 99/1
07.03.01 Main entrance 1 nr 435,890 65,383 501,274 550,008 33,294 4,994 38,288 42,500 353 406 93/7
07.03.03 Snack bar 1 nr 112,351 16,853 129,204 141,765 18,756 2,813 21,569 23,942 90 104 86/14
07.04.01 Departmental entrances 4 nr 603,920 90,588 694,508 762,030 74,136 11,120 85,256 94,635 500 575 89/11

08 Staff Facilities
08.01.01 Catering/dining rooms 300 meals 239,616 35,942 275,558 302,349 0 0 335 385 100/0
08.01.02 Servery 300 meals 161,863 24,279 186,142 204,240 0 0 120 138 100/0
08.03.01 Occupational health centre 1 centre 181,252 27,188 208,440 228,705 23,592 3,539 27,131 30,115 160 184 88/12
08.04.02 Staff changing – semi-auto 1000 places 500,789 75,118 575,907 631,898 54,969 8,245 63,214 70,168 767 882 90/10
On-call accommodation 7 rooms 168,364 25,255 193,619 212,443 N/A 0 147 169 100/0

09 Service Facilities
09.01.01 CSSD 2 sterilizers 1,969,327 295,399 2,264,726 2,484,908 198,513 29,777 228,290 253,402 1,320 1,518 91/9
Telephone service
09.02.01 Operators' suites 3 cabinets 66,591 9,989 76,580 84,025 3,283 492 3,775 4,191 80 92 95/5
09.02.03 Telephone equipment 1000 extensions – 0 302,635 45,395 348,030 386,314 – – 0/100
Catering
CFPU 1 dept 3,005,329 450,799 3,456,128 3,792,141 160,234 24,035 184,269 204,539 1,600 1,840 95/5
End Kitchen 600 meals 1,504,425 225,664 1,730,089 1,898,292 77,905 11,686 89,591 99,446 685 788 95/5

10 Hospital Engineering and Works Services

10.01.01 Boilerhouse 8,800 kW 786,834 118,025 904,859 992,832 0 0 0 470 541 100/0
10.02.01 Estates Department 400 beds 646,246 96,937 743,183 815,437 54,569 8,185 62,754 69,657 715 822 92/8
10.02.02 External Storage 400 beds 71,479 10,722 82,201 90,193 183 27 210 234 245 282 99/1
10.02.17 EMI Workshop 2 workspaces 113,347 17,002 130,349 143,022 26,640 3,996 30,636 34,006 100 115 81/19

TOTAL 65,648,282 9,847,242 75,495,524 82,835,367 15,166,633 2,274,995 17,441,628 19,360,207 52,803 60,724 418 81 / 19
 Add On Costs 70% 57,984,757
Sub Total 140,820,123
Fees 16% 21,827,119
Non-works costs 1% 1,408,201
Equipment costs 19,360,207
Planning contingency 12% 18,200,745

Total 201,616,396

Incl in-patients & CFPU

DCAG ECAG
DCAG 82,835,367 19,360,207
Cost/m2 1,364 319
Cost/bed 198,171 46,316

+ On-costs 140,820,123
Cost/m2 2,319
Cost/bed 336,890

+ all Add-ons 182,256,189 19,360,207

Cost/m2 3,001 319
Cost/bed 436,020 46,316

Total cost 201,616,396

Cost/m2 3,320
Cost/bed 482,336

Area/bed space 145 m2

APPENDIX 3 – SCHEDULES OF FUNCTIONAL CONTENT

25
HOW TO COST A HOSPITAL

References

DEPARTMENT OF HEALTH PUBLICATIONS NHS ESTATES PUBLICATIONS

The Capital Investment Manual Quarterly Briefing (four issues per year). NHS Estates.
Overview. NHS Management Executive, (contains Departmental Cost Allowance Guides)
The Stationery Office, 1994. (http://www.nhsestates.gov.uk/publications_guidance/
Project organisation. NHS Management Executive, content_set.asp?content_ID=quarterly_briefing)
The Stationery Office, 1994.
Private finance guide. NHS Management NHS PROCURE21
Executive, The Stationery Office, 1994. http://www.nhs-procure21.gov.uk
Business case guide. NHS Management Executive,
The Stationery Office, 1994.
Management of construction projects.
NHS Management Executive, The Stationery Office,
1994.
Commissioning a healthcare facility.
NHS Management Executive, The Stationery Office,
1994.
IM&T guidance. NHS Management Executive,
The Stationery Office, 1994.
Post-project evaluation. NHS Management
Executive, The Stationery Office, 1994.

The NHS Plan. Department of Health, The Stationery

Office, 2000.
(http://www.dh.gov.uk/PublicationsAndStatistics/
Publications/PublicationsPolicyAndGuidance/
PublicationsPolicyAndGuidanceArticle/fs/en?CONTENT_
ID=4002960&chk=07GL5R)

Delivering the NHS Plan: Next steps on investment,

next steps on reform. Department of Health, The
Stationery Office, 2002.
(http://www.dh.gov.uk/PublicationsAndStatistics/
Publications/PublicationsPolicyAndGuidance/
PublicationsPolicyAndGuidanceArticle/fs/en?CONTENT_
ID=4005818&chk=zN/Moe)

The NHS Improvement Plan: Putting people at the

heart of public services. Department of Health, The
Stationery Office, 2004.
(http://www.dh.gov.uk/PublicationsAndStatistics/
Publications/PublicationsPolicyAndGuidance/
PublicationsPolicyAndGuidanceArticle/fs/en?CONTENT_
ID=4084476&chk=i6LSYm)

26
About NHS Estates guidance and
publications

The Agency has a dynamic fund of knowledge which it
has acquired over 40 years of working in the field. Our
unique access to estates and facilities data, policy and
information is shared in guidance delivered in four
principal areas:
Procurement & Property
These are documents which deal with areas of broad
strategic concern and planning issues, including capital
and procurement.

Design & Building Examples of titles published under this heading are:

These documents look at the issues involved in Estatecode

planning, briefing and designing facilities that reflect the How to cost a hospital
latest developments and policy around service delivery. Developing an estate strategy
They provide current thinking on the best use of space,
NHS Estates Policy Initiatives
design and functionality for specific clinical services or
non-clinical activity areas. They may contain schedules In response to some of the key tasks of the
of accommodation. Guidance published under the Modernisation Agenda, NHS Estates has implemented,
headings Health Building Notes (HBNs) and Design project-managed and monitored several programmes for
Guides are found in this category. reform to improve the overall patient experience. These
publications document the project outcomes and share
Examples include:
best practice and data with the field.
HBN 22, Accident and emergency facilities for adults
Examples include:
and children
HBN 57, Facilities for critical care Modernising A & E Environments
HFN 30, Infection control in the built environment: Improving the Patient Experience – Friendly healthcare
design and planning environments for children and young people
Improving the Patient Experience – Welcoming
Engineering & Operational (including Facilities
entrances and reception areas
Management, Fire, Health & Safety and
National standards of cleanliness for the NHS
Environment)
NHS Menu and Recipe Books
These documents provide guidance on the design,
The majority of publications are available in hard copy
installation and running of specialised building service
from:
systems and also policy guidance and instruction on
Fire, Health & Safety and Environment issues. Health The Stationery Office Ltd
Technical Memoranda (HTMs) and Health Guidance PO Box 29, Norwich NR3 1GN
Notes (HGNs) are included in this category. Telephone orders/General enquiries 0870 600 5522
Fax orders 0870 600 5533
Examples include:
E-mail book.orders@tso.co.uk
HTM 2007, Electrical services supply and distribution http://www.tso.co.uk/bookshop
HTM 2021, Electrical safety code for high voltage
Publication lists and selected downloadable publications
systems
can be found on our website:
HTM 2022 Supplement 1
http://www.nhsestates.gov.uk
Sustainable development in the NHS
For further information please contact our Information
Centre:
e-mail: nhs.estates@dh.gsi.gov.uk
tel: 0113 254 7070

27
 Core guidance feedback

Please complete this feedback form and return it to NHS Estates. The information
provided will help in the assessment of the value of this document and in the
planning of future Agency guidance.

Title:
.....................................................................
Series and series number if applicable (eg Health Building Note 57):
.....................................................................
1. How useful is this document to you/your organisation?
1 2 3 4 5 6
Not at all useful Very useful
2. Are you aware of other sources of the information contained in this document?
Yes No
If Yes, please state below:
.....................................................................
3. Did you feel the content was:
Too prescriptive?
Too ambiguous?
About right?
4. Was the amount of technical content in the document:
Too high?
Too low?
About right?
5. How would you rate the length of the document?
Too long
Too short
About right
Please return this form to:
Standards and Knowledge Management
NHS Estates
Windsor House
Cornwall Road
Harrogate
HG1 2PW Thank you