Royal Hospital for Children and Young People: independent assessment of governance arrangements

An independent assessment, by KPMG LLP, of the governance arrangements surrounding NHS Lothian's Royal Hospital for Children and Young People.

3 Background to the Project and the Delay

What decisions were made by NHSL, when these were made, by whom and on what basis these decisions were taken in relation to the air ventilation issues and any other material issues that led to the Delay.

3.1 Introduction

3.1.1 In this Section, in considering the facts surrounding why NHSL made the decision to delay the opening of the Hospital, we set out the chronological background to the Project, based on information communicated to us and documents provided to us.

3.1.2 Whilst this summary provides a high-level introduction to the Project and its timeline, the summary focuses on the timeline of events that led to the Delay and, in particular, the period between the signing of a Settlement Agreement by NHSL and IHSL on 22 February 2019 (the “Settlement Agreement”) [31] and the planned opening of the Hospital on 9 July 2019.

3.1.3 In preparing this summary, we have considered the decisions taken by NHSL in relation to the air ventilation issues (and any other material issues that led to the Delay), when these were made, by whom and on what basis these were taken.

3.2 Pre-financial close

3.2.1 The NHSL Board approved a capital-funded business case for the Hospital in 2008. This business case was approved by SG for a Children’s Hospital only.

3.2.2 In November 2010, SG announced a Non-Profit Distributing[32] (NPD) funding route, not only in relation to the Children’s Hospital but also the Department of Clinical Neurosciences (the DCN). Various enabling works were required to be performed before construction could commence.

3.2.3 As a consequence of this preparation work, NHSL did not go to the market for a partner for the Project until November 2012. The Project was advertised in the Office Journal of the European Union (the OJEU), published on 5 December 2012. The NHSL Board proceeded to engage with three bidders during a nine- month competitive process. This process began in March 2013 and ended in December 2013. The winning bidder selected by the NHSL Board would then form an NPD company to deliver the Project.

3.2.4 Supporting the NHSL Board throughout this process were a group of professional advisors which included Mott MacDonald (technical advisors and project managers), MacRoberts (legal advisors) and Ernst and Young (Financial Advisors). The NHSL Board delegated responsibility for oversight of the Project to the Financial & Resources Committee (“F&R Committee”) which established the Programme Board which had day-to-day responsibility for managing the Project (the “Programme Board”) and a smaller team (the “Project Team”).

3.2.5 The Programme Board comprised the Project Team as well as representatives from clinical and operational areas, the Director of Finance, the Director of Communications, an NHSL Non-Executive Director and other stakeholders.

3.2.6 In March 2014, the NHSL Board appointed IHSL as its preferred bidder. IHSL’s team comprised Macquarie Capital[33], along with IHSL’s subcontractors; Brookfield Multiplex (“Multiplex”), Bouygues Energies and Services (“Bouygues”) and HCP Management Services Limited (“HCP”) (collectively for the purposes of this Report referred to as “Project Co”).

3.2.7 The NHSL Board entered into a Project Agreement with IHSL for the design, build, finance and maintenance of the Project on 13 February 2015. It was a requirement for the Project design, installation and operation to comply with guidance issued by HFS. Further details of the standards issued by HFS[34] is set out in Section 4.2.

3.2.8 The planned scheduled opening date for the Hospital was July 2017.

3.2.9 As required by the Project Agreement, an IT was appointed by the NHSL Board, IHSL, and IHSL’s funders, as an advisor to provide certain services independently, fairly and impartially in connection with the Project. Arcadis NV was appointed to this role in February 2015[35].

3.2.10 We understand that, at the time of financial close in February 2015, being the date when the conditions of the financial agreement are fulfilled prior to the funds being made available (“Financial Close”), the designs for the Hospital had not been fully developed. This included issues relating to the design of the ventilation systems, including comments on the pressure regime which would be in operation in the Hospital and whether this was in compliance with the relevant standard (Scottish Health Technical Memoranda 03-01 (“SHTM 03-01” or the “Standards”).

3.3 Construction phase

3.3.1 In early 2017, it became clear that the Hospital would not be opening on time, as originally planned in July 2017. Three specific issues were identified at that stage:

a) The design of the high voltage power resilience mechanism;

b) Ventilation issues (pressure regime[36]); and

c) An issue with the provision of a Magnetic Resonance Imaging (“MRI”) room.

3.3.2 Throughout the remaining period of 2017, discussions with Project Co on a) and

b) above, and other emerging issues, continued without resolution. This ultimately resulted in both parties seeking legal advice and contemplating court action in order to resolve the issues in dispute.

3.3.3 It is our understanding that, in early 2018, the parties entered into a process of negotiated settlement. This included a number of technical workshops held in order that all of the unresolved issues could be raised and resolutions sought. At the workshops, which were held to consider the ventilation issues, there were detailed discussions regarding the required pressure regime in four bedded rooms.

3.3.4 In moving towards resolving this issue, a proposed solution was put forward in relation to the pressure in single bedrooms. This involved an adjustment of the air change rate from 6 air changes per hour (“ac/hr”) to 4 ac/hr with 2 ac/hr natural ventilation, which we understand from NHSL meant this still achieved 6 ac/hr, but through a ‘mixed mode’.

3.3.5 However, an issue remained regarding the pressure regime in multi-bed rooms. NHSL required 14 of the multi-bed rooms to be adjusted to have balanced or negative pressure. Four of the rooms considered as part of this process were located within the Critical Care areas of the Hospital[37]. Reference was made in the proposed resolution of this issue to an air change rate of 4 ac/hr.

3.3.6 During this period, it became apparent that, whilst some of the earlier issues appeared to be resolved or solutions proposed, there were a significant number of other technical issues emerging at the Hospital which required the attention of various project teams.

3.3.7 On 22 February 2019, the Settlement Agreement was signed by NHSL Board and IHSL with the ultimate aim of resolving all known issues and opening the Hospital in July 2019.

3.3.8 The Settlement Agreement set out a total of 76 issues identified by the parties that required resolution. These 76 issues consisted of (a) 73 known issues where a solution had been agreed[38] (the “73 Issues”); and (b) three technical issues, being:

a) Void detection;

b) Heater batteries; and

c) Drainage.

3.3.9 The Settlement Agreement included an agreed resolution to the ongoing issue relating to ventilation pressure in four-bed rooms (one of the 73 Issues) and also included reference to the agreement made in relation to the single bedroom pressure change.

3.3.10 In the context of achieving the air pressures required by NHSL, this agreed resolution stated “…agreed by the Board, is for 14 No 4 bed rooms to be balanced or negative to the corridor at 4 ac/hr. The remaining 6 No 4 bed wards remain as per the environmental matrix…”[39]. Of these 14 rooms, four of these 4- bed rooms were located within the Critical Care area of the Hospital.

3.3.11 We discuss the background to this agreed resolution in further detail in Section 5.3.

3.3.12 In relation to the other three technical issues (i.e. not the 73 issues), listed at paragraph 3.3.8 above, solutions were agreed and a programme of work planned to implement the solutions prior to the opening of the Hospital in July 2019.

3.4 Operational phase

3.4.1 The IT provided a “Certificate of Practical Completion” on 22 February 2019. This meant that the construction phase of the Project came to an end and the Project entered into its operational phase. At this point, NHSL began payment of the annual services payment to IHSL.

3.4.2 During this operational phase, a significant number of outstanding works were required to be carried out by Project Co. In accordance with the Settlement Agreement, these works were performed in parallel with the NHSL Board’s commissioning activities[40] for the Project.

3.4.3 Under the requirements of SHTM 03-01, a report on the ventilation system commissioning should be provided to the ‘user department’, ‘infection control (where required)’ and ‘estates and facilities’, following the commissioning[41]. In January 2019, the Project Team provided the Infection Prevention & Control (the “IPC”) team with a copy of the proposed validation checklists that Multiplex was due to complete in respect of validating the ventilation system in the theatres.

3.4.4 This was in order to ascertain if the checklists would be sufficient to meet the report requirements set out in SHTM 03-01[42].

3.4.5 In May 2019, following ongoing correspondence with the Project Team, the IPC confirmed that they were of the view that validation checklists in the format submitted by Multiplex were not sufficient for the purposes of the requirements and instead requested that the Project Team arrange a third party validation of the ventilation systems in order to obtain the required report.

3.4.6 On 30 May 2019, the Project Team contacted the IOM, a third party firm of specialist validation experts with experience in hospital ventilation. The firm that NHSL typically used for validation for hospital ventilation was conflicted from undertaking this testing, as it was used by IHSL[43].

3.4.7 On 5 June 2019, IOM attended a site visit and familiarisation at the Hospital and testing commenced on 17 June 2019. IOM’s testing involved the validation of critical ventilation systems at the Hospital, which focused on a list of critical areas provided to them (including theatres, isolation suites, Critical Care areas and recovery areas). We understand that, at the time of testing, some elements of remedial work were still ongoing, which restricted IOM’s access to particular areas of the Hospital. Mott McDonald helped to facilitate IOM’s testing.

3.4.7 SHTM 03-01 states that an air change rate of 10 ac/hr is required in Critical Care areas[44]. On 18 June 2019, IOM identified that some areas within Critical Care were not achieving 10 ac/hr. This was queried by IOM with Mott MacDonald and further testing was subsequently performed which was completed on 21 June 2019.

3.4.8 On 24 June 2019, IOM verbally informed the Programme Board of the ventilation issues that had been identified, in that the readings in terms of air change rates were not in line with SHTM 03-01, particularly in relation to operating theatres, isolation areas and Critical Care. This was followed by a written report dated 25 June 2019, which was circulated to the Programme Board, incorporating an issues log, which showed:

a) 12 issues with Operating Theatres;

b) 12 issues with air handling units; and

c) One issue with Critical Care (referred to as “HDU” by IOM).

3.4.9 On 25 June 2019, IHSL assured NHSL that all of the issues identified by IOM could be resolved.

3.4.10 Between 25 June 2019 and 1 July 2019, various meetings were held by the Programme Board, together with representatives from the IPC team, Mott MacDonald, IOM, IHSL and Multiplex. These meetings focused on operating theatres and sought to establish:

a) Whether the readings for ventilation found by IOM were correct;

b) Whether the readings related to a sample or the whole area;

c) Whether the readings were taken correctly;

d) Whether the issues found could be resolved; and

e) The minimum requirement for compliant operating theatres to allow the hospital to open.

3.4.11 As well as pursuing solutions to operating theatre ventilation, meetings were also held to try and establish, in relation to IOM’s first reports regarding the Critical Care ventilation, whether:

a) IOM’s measurements were in fact correct;

b) How extensive the results were across Critical Care;

c) What the air handling units could actually deliver if they were adjusted; and

d) The legal and contractual position in relation to these issues.

3.4.12 At 10am on 28 June 2019, a ‘Joint Steering Group’ meeting was held with NHSL, Multiplex and IHSL to discuss the emerging issues and the detail of IOM’s report in relation to operating theatres. We understand that, detail of the Critical Care ventilation issues was not provided for this meeting and that the discussion focused on operating theatres. This was followed by a conference call later the same day to mobilise the necessary engineers to resolve issues with the operating theatres. At 4pm on 28 June 2019, IHSL informed NHSL that the operating theatre issues could be resolved from the following Monday (1 July 2019) but that the work required could not commence until the required engineers were available.

3.4.13 Additionally, on 28 June 2019, we understand that IOM informally provided more detail to the Programme Board regarding the issue of Critical Care air change rates. At this time, IHSL was asked whether Critical Care could, in fact, achieve the required rate of 10 ac/hr and IOM was asked whether the existing ventilation equipment could deliver 10 ac/hr.

3.4.14 On 1 July 2019, IOM provided more detail of the Critical Care ventilation issues it had found which indicated that the equipment was not capable of delivering 10 ac/hr. We understand from NHSL that on the same day, IHSL and Multiplex responded verbally that 10 ac/hr could not be achieved.

3.4.15 At 4:30pm on 1 July 2019, a meeting was held, called by the NHSL executive management team and the Project Team, which included the IPC Lead Nurse and Consultant Microbiologist, the Medical Director, the Children’s Services Director and Associate Medical Director, and the Programme Board with two representatives of Multiplex, one representative of IHSL and one representative of IOM, to discuss the air ventilation issues in the operating theatres. Critical Care rooms were not discussed in this meeting as the NHSL Board required the opportunity to discuss this element of the issue internally first given its significance and that IHSL had confirmed that same day that 10 ac/hr could not be achieved using the current system.

3.4.16 Following this meeting, the Programme Board informed a representative of the NHSL Board of the issues with the air change rates within the Critical Care areas of the Hospital. This is the first time that the issue of Critical Care air change rates was escalated to a member of the NHSL Board.

3.4.17 On the evening of 1 July 2019, the issues with Critical Care were shared with other members of the NHSL Board which resulted in an urgent internal meeting being called at 9am on 2 July 2019. The Hospital was due to open only one week later, on 9 July 2019, and it was clear that the issues in Critical Care would not be resolved by this time. As such, attendees were tasked with investigating potential courses of action to address this situation. Attendees reported back at 1pm that day and a list of potential options was generated.

3.4.18 During 2 July 2019, the NHSL Board also briefed the Director General of Health & Social Care at SG and the Chief Performance Officer at NHS Scotland on the situation and the options.

3.4.19 Additionally, a conference call was arranged for 3 July 2019 between NHSL, HFS and Health Protection Scotland (HPS). HFS and HPS concluded that there was not enough information available to give assurance that the planned move to the Hospital should go ahead on 9 July 2019.

3.4.20 At 2pm on 3 July 2019, the NHSL Board met with the Chief Performance Officer for NHS Scotland in order to discuss the options available. This was followed by an email setting out the respective options.

3.4.21 A communications plan was created by NHSL on 3 July 2019 and press and staff briefings were scheduled for 4 July 2019.

3.4.22 On 4 July 2019, it was decided by SG that in order to ensure consistent and up to date briefings were provided to staff, patients and the wider general public, all announcements would be routed through the Cabinet Secretary.

3.4.23 At 4pm on 4 July 2019, the postponement of the move to the new site was announced by the Cabinet Secretary.

3.5 Summary

3.5.1 Whilst there were significant issues relating to ventilation throughout the life of the Project, the specific issue (being air change requirements in Critical Care areas not complying with the SHTM 03-01 standard) which gave rise to a decision to delay the opening of the Hospital was not identified to the NHSL Board until 1 July 2019. Indeed, this issue only became apparent to any member of NHSL when IOM completed its testing of the ventilation system and reported the issue in relation to Critical Care on 24 June 2019.



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