Hitting the NHS Capital Departmental Expenditure Limit (CDEL)
NHS Estates and Capital Project Departments have never been under so much pressure. Since March 2020, the Government’s response to COVID-19 has included substantial Capital spending. Trusts have been faced with creating additional bed capacity, increasing Critical Care capacity, repurposing Operating Theatres and upgrading infrastructure to support site wide extended medical gas provision or similar.
The burden and impact of this increased workload for Trust Project Managers was part of the NHS COVID-19 emergency response and therefore bypassed normal Capital Planning processes. The workload was not resourced ahead of time or risk assessed as part of Prior Year Pipeline Planning – there was no crystal ball. It is likely that Trust Investment Governance and HMRC Five Case Model stages were suspended, with sign off at Full Business Case only. The additional capital project programme focused on an immediate need - it was fast and pressurised, with many unmitigated risks.
With only limited weeks remaining within the financial year, G&T’s strategic healthcare team met to discuss what issues may be faced by NHS Trusts, STPs and CCGs in meeting their 2021 Capital Departmental Expenditure Limit (CDEL) and how any risks can be monitored and mitigated.
G&T’s Joanne de la Porte shared her knowledge and lessons learnt from her experience over the past ten years as a Capital Programme Manager for a large Trust with a CRL/CDEL ranging from £30 - £80million. She explained that the monitoring of cashflow and what is influencing the expenditure path in months 11 and 12 will be the truest indicator of whether a Trust will be meeting the CDEL – it is not just about the number or checking whether expenditure is meeting the forecast. Over promising and under delivering is always a risk in the final quarter. Here, Joanne shares Ten Tips for monitoring both the programme and individual projects and actions that can be taken to mitigate risks to meeting the CDEL – feel free to use it as a checklist!
Top Ten Tips to hit the Capital Programme CDEL!
- Resourcing - Do you have resources to monitor both the projects and the whole programme in M11 and M12 and to push it to FYE? Are all those that form the project governance chain aware of the actions that they need to take?
- Data - do you have the data that you need to fully understand your budget and spend to date numbers? Does your finance ledger record all paid invoices (PI) and goods receipted (GR) or just paid invoices? If PI only - check your finance systems for receipts that may not have been captured as committed funds. Have a clear record of your purchase orders and what their status is against both the individual projects and the capital programme. If invoices are taking too long to receipt, ask yourself why. Escalate asap. If you do not already have individual project highlight reports for monitoring project expenditure, plan a system and process for next financial year.
- Governance - alert anyone in the governance chain of what actions need to happen to meet the CDEL. If sign off/approval is needed or purchase orders need to be authorised or receipted as part of the critical path, then give notice. If someone is sitting on something vital to the success of a programme, chase, chase, chase and then escalate to the SRO or project board.
- Individual project programmes – VALIDATE - if the balance of purchase orders do not match the cash flow forecast to FYE then either you need to raise the purchase orders asap, or the FYE/Final Account estimate is wrong!
- Spend to Date - Check your Month 10 individual project Forecasts against Actual expenditure - did they match? Did you underspend? If so, why and what assurance is there that the contractor will catch up? If not - how much is at risk? Get a site valuation asap.
- Provisional Sum Risk monitoring - does your FYE figure include any provisional sums? If so firm up these costs now - you are running out of time to re-profile your cost plan if these Provisional Sums are over/under the allocated budget.
- Contingency Sum (CS) and Optimism Bias (OB) Risk Monitoring - does your FYE figure include CS or OB? You have less than two months......what is the value remaining? Do you need it? If you do, why can you not mitigate this risk? Have you valued all of the project AIs? How does this sit next to your change control record? Why does your design team feel that this reserve is needed? How will you manage this budget element if you do not need it at FYE? Ideally at the start of M11 OB and CS should be ZERO.
- Group 1 equipping - what is your delivery date? What date will you commission the kit? If you have delivery dates scheduled for the last weeks of the financial year, you must add this value to the Capital Programme Risk Register.
- Chase delivery dates for Group 2 and 3 items - if a purchase order is yet to be placed, place it. If there is an item on your list without an anticipated delivery date, then get the date confirmed asap. If you have deliveries due the last weeks of the financial year, you must add this value to the Capital Programme Risk Register. One item may only be £150 but 50 late deliveries could be as much as £100k.
- Accrual management - have a Responsible Person to record accruals - evidence will be needed so keeping this information in one place will ease the process. Do any items meet the criteria for an accrual under a Vested Interest Certificate for equipment/goods off site? Liaise with your procurement leads and do not leave this until the last week.
Finally……………if you have checked 1–10 above and you are yet to be assured of meeting the CDEL, ask yourself the following:
- For an overspend: what can you slow down? What is the impact on your next Year Capital Programme and pipeline plan?
- For an underspend: What is on your pipeline for next year? What work elements can you bring forward? What is the impact on your next year Capital Programme and pipeline?
G&T can help you to meet your CDEL – getting the best out of your projects and making sure the picture presented to the regulator is accurate – reflecting what has really been done, not just what has been reported. Our team understands both the pitfalls and the opportunities. If you think we can help you, get in touch.
Joanne de la Porte - email@example.com
Miles Delap - firstname.lastname@example.org