Annual State of the NHSScotland Assets and Facilities Report for 2012
A review of asset and facilities management performance in NHSScotland, identifying the current state of the estate and facilities management, highlighting areas of best practice and areas for improvement.
3.0 The Annual Cost of Assets and Facilities Services
The revenue and lifecycle costs associated with asset ownership and use represent a considerable burden on NHSScotland budgets. This section of the report provides a summary of the annual cost of asset ownership and associated facilities management services.
3.1 Property Assets and Facilities Services - Annual Costs
There are significant annual revenue costs that are directly associated with property asset ownership including:
- Property Maintenance (regular day to day maintenance - excluding capital expenditure on upgrading/refurbishment and backlog works)
- PFI Facilities Management Costs (primarily Hard FM)
- Rent and Rates
There are also a range of facilities management services costs that are closely associated with property asset ownership including:
- Laundry and linen
- Waste disposal
The table below provides an analysis of these costs for the Hospital Sector of NHSScotland (250 hospitals) in 2010/11.
|Annual Property Asset and Facilities Services Costs|
|Expenditure £ 2010/11||Percentage of Total|
|Property Maintenance (capital and revenue costs)||113,949,249||18%|
|PFI Facilities Management Costs||101,674,478||16%|
|Rent and Rates||60,303,082||9%|
|Laundry and linen||34,164,405||5%|
1) Excludes capital charges and depreciation on property asset
2)Excludes costs associated with Community and Family Health Services
3) Energy costs exclude costs associated with environmental taxes and levies e.g. EU ETS Payments
The table below shows the distribution of these costs across Boards and clearly demonstrates the differences in the size of Boards.
|Board||Annual Property Ownership and Facilities Services Expenditure £||Board total as % of overall NHSScotland total expenditure on Property Asset and Facilities Services|
|NHS Greater Glasgow||173,062,909||27%|
|NHS Ayrshire and Arran||41,036,177||6%|
|NHS Forth Valley||30,469,941||5%|
|NHS Dumfries and Galloway||15,665,212||2%|
|NHS Western Isles||4,715,299||1%|
Interestingly, further analysis of these asset ownership and facilities services costs shows that, irrespective of the Board's size and other unique features, on average they represent around 11% of each Board's total hospital sector operating costs.
3.2 Property Assets - Lifecycle and Backlog Maintenance Costs
In addition to the regular day to day maintenance costs included in the annual property maintenance figures shown above, property assets require regular expenditure on lifecycle replacement of building and engineering elements of the estate. Historically, NHSScotland has invested too little on these lifecycle replacements, hence the build up of a significant backlog maintenance expenditure requirement (currently £948 million). However, over recent years Boards have had a particular focus on reducing backlog through targeted expenditure on high and significant risk backlog and rationalisation of the estate. This has resulted in a £62 million reduction in the backlog expenditure requirement since 2011.
In addition, NHSScotland's substantial capital investment programme over recent years has reduced the backlog expenditure requirement through new-build projects which replace old buildings and refurbishment schemes which incorporate backlog within the works.
Estimates of the future expenditure required on backlog maintenance and replacement of the estate are provided later in this report (Section 5: Future Asset Investment Requirements).
3.3 Vehicles - Annual Costs
NHSScotland's estimated annual expenditure on its vehicles assets is shown in the table below.
|Annual Capital and Revenue Expenditure on Vehicle Assets|
|Description||£||% of Total|
|Leasing costs - Cars||£20,000,000||36%|
|Maintenance - owned vehicles||£ 8,000,000||14%|
|Insurance ( including brokerage and accidental damage)||£ 7,000,000||13%|
|Leasing costs - Commercial vehicles||£ 3,000,000||5%|
Note: excludes capital charges and depreciation on owned fleet.
In addition to the above, many NHSScotland staff use their private vehicles for official business and claim fuel and running costs through expenses claims.
3.4 Medical Equipment - Annual Costs
The annual expenditure (capital and revenue) on medical equipment by Boards is shown in the table below.
|Annual Capital and Revenue Expenditure £ on Medical Equipment Assets|
|Description|| High Value
| Low Value
|Total £||% of Total|
|Maintenance and servicing||5,639,329||15,178,286||20,817,615||33%|
|Leasing and revenue expenditure on equipment||3,996,802||2,870,364||6,867,166||11%|
|Capital expenditure in year on equipment replacement and acquisition||8,028,685||26,876,758||34,905,443||56%|
Note: excludes capital charges and depreciation on owned equipment
As with property assets, there is a need to invest in the lifecycle replacement of medical equipment, particularly as equipment life is relatively short (often less than 15 years). Technical obsolescence can reduce the operational life of equipment even further because new technology can often offer improved patient care, reduced radiation doses and reduce costs. However, equipment vendors do now offer technology refresh pathways at the time of initial purchase of the equipment. Annex J provides more detail on the national medical imaging programme.
3.5 IM&T - Annual Costs
The annual expenditure on IM&T equipment is shown in the table below.
|Annual Expenditure (Capital and Revenue) £ on IM&T Assets|
|Description|| Infrastructure -
|Equipment - Desktop and mobile||Total £||% of Total|
|Maintenance and servicing||12,278,295||8,947,000||21,225,295||54%|
|Leasing and revenue expenditure in year||1,865,966||1,258,375||3,124,341||8%|
|Capital expenditure in year||12,941,632||1,992,000||14,933,632||38%|
The above costs exclude any backlog maintenance expenditure requirement in respect IM&T infrastructure such as cabling and servers.
3.6 Summary of Total Annual Asset and Facilities Costs
The chart below provides an analysis of the combined total asset and facilities annual expenditure.
1) Excludes capital charges and depreciation costs associated with asset ownership
2) Excludes any annual expenditure on lifecycle replacement and backlog maintenance
Email: James H White
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