The following protocol should be read in conjunction with the related chapter in the main body of this document (on page 44). I
It is important to reiterate that a project should not considered approved until such time as formal notification has been provided by the Finance Directorate.
INTRODUCTION
Following the transfer of responsibility and authority for the Health Services Capital Expenditure Programme to the HSE from the Department of Health and Children, it is necessary to put in place protocols to ensure that there is proper governance of capital projects. It is also important to ensure that the protocols will enable the efficient management of capital projects.
The HSE is required as part of the service plan to “indicate any capital plans proposed by the HSE” for the approval of the Minister for Health. The HSE also requires the written permission of the Minister to enter into any agreement or arrangements in respect of capital spending or an undertaking if the total amount spent on the undertaking would exceed an amount that may be specified from time to time by the Minister with the consent of the Minister for Finance.
The Directorate of the HSE has delegated to the CEO approval of contracts other than those in excess of €10m.
The Estates Directorate will manage the capital programme on behalf of HSE Corporate and regionally. The HSE Capital Planning Group has been established to formulate and coordinate the Capital Plan. The group consists of representatives of the NHO and PCCC service pillars, Estates and Finance Functions. Approval Procedures
The following sets out the approval procedures with which HSE Areas must comply with prior to committing Capital Funding to a project. The guidelines for the Appraisal and Management of Capital Expenditure Proposals in the Public Sector issued by the Department of Finance in January 2005 shall also apply. The projects are divided into different categories depending on the capital cost of the project:
Band Project Cost
A less than €500,000
B €500,000 - €5,000,000
C €5,000,000 - €20,000,000
D greater than €20,000,000
The capital cost of a project is the total project cost including VAT. The total project cost includes construction costs, design fees, equipment costs and miscellaneous costs associated with the project.
Band A (minor capital and projects less than €0.5m)
Band A projects will include all Minor Capital projects and projects with a total project value of less than €500,000. A list of these projects will be submitted to HSE Corporate for approval within the Capital Plan and once the list of projects is approved no further approval is required.
Topic 1; Capital Projects Approval Protocol … Continued
This approval is subject to the following conditions
1 Expenditure on the list of projects cannot exceed the allocation for that year.
2 The maximum carryover of contractual commitments cannot exceed 50% of the current year’s allocation
3 Any substitutions on the list must be agreed with the Network Manager (NHO) or LHO Manager (PCCC) and Area Assistant Director of Estates.
4 Any variation on projects must be approved by the Area Assistant Director of Estates. 5 All public procurement directives/guidelines must be complied with.
6 All stages of the projects must be agreed locally and approved by the Area Assistant Director of Estates.
The Assistant Director of Estates shall, at the end of each calendar quarter, submit to the National Director of Estates a report on the list of projects indicating progress and cost performance. Updated cash flow forecast will be part of this report.
Band B (€0.5m to €5m)
Projects with an estimated total project value exceeding €500,000 but not exceeding €5,000,000 The HSE Area must apply to HSE Corporate for approval for all projects in this category. An individual submission is required for each project. The submission must include the following:
• Project Brief
• Option Appraisal study that justified the proposed investment as part of the preferred option for the required service.
• Estimated final project cost for the project (Q Cost).
• Year by year cashflow forecast of expenditure.
• Project Programme
• Revenue costs and WTE associated with the project.
HSE Corporate will issue an approval for the project subject to consideration of service priorities and available funding N 14. No further approvals will be required subject to the following conditions. 1 Total expenditure on the project cannot exceed the approved allocation.
2 Yearly expenditure should be within 10% of projected cash flow.
3 Any variation on projects must be approved by the Area Assistant Director of Estates and within the approved allocation for the project.
4 All public procurement directives/guidelines must be complied with. This includes complying with EU procurement directives where appropriate.
5 All stages of the project must be agreed with the local service (i.e. Hospital Network or LHO) and Area Assistant Director of Estates.
The Area Assistant Director of Estates shall, at the end of each calendar quarter, submit to the National Director of Estates a report on the project indicating progress and cost performance. Updated cash flow forecast will be part of this report.
Band C (€5m - €20m)
Projects with an estimated total project value exceeding €5m but not exceeding €20m.
The HSE Area must apply to HSE Corporate for approval for all projects in this category. An individual submission is required for each project. The submission must include the following:
• Project Brief
• Option Appraisal study that justified the proposed investment as part of the preferred option for the required service.
N14
Notification of project approval (letter of approval) must be provided by the Finance Directorate (National Director of Finance or relevant Assistant National Director of Finance)
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Topic 1; Capital Projects Approval Protocol … Continued
• Estimated final project cost for the project (Q Cost).
• Year by year cash flow forecast of expenditure.
• Project Programme
• Revenue costs and WTE associated with the project.
HSE Corporate will issue written approval to the commencement of the project of the basis of the foregoing data subject to consideration of service priorities and available funding. The commencement covers
• Selection of a Design Team and proceeding with design to Stage 2 (Sketch Schemes). The HSE Area must obtain HSE Corporate approval for Stage 2 of the project before proceeding with developing the project further. The Stage 2 submission will include equipment schedules which will also be approved at this stage.
After receiving approval for Stage 2 the HSE Area may advance the project up to and including the preparation of the tender documents. All stages of the project must be agreed with the local service (i.e. Hospital Network or LHO) and Area Assistant Director of Estates. The HSE Area must obtain HSE Corporate approval to seek tenders for the project. The submission seeking approval must include the following:
• Reports on the tender process proposed.
• If the restricted process is proposed a report on the selection process used to finalise the list of tenderers.
• A cost check based on completed documentation reconciled with the original estimate upon which the commencement approval was based.
• A statement that the tender documents have been examined by the Area Assistant Director of Estates and that the documentation is considered satisfactory.
After receipt of the tenders for the project, the Area Assistant Director of Estates must submit the tender report to HSE Corporate for approval to accept the tender. Please note that the approval of the Directorate of the HSE is required to accept tenders in excess of €10m.
Approval to accept the tender is subject to the following conditions.
1 Total expenditure on the project cannot exceed the approved allocation. 2 Yearly expenditure should be within 10% of projected cash flow.
3 Any variation on projects must be approved by the Area Assistant Director of Estates and must be within the approved allocation for the project.
4 All public procurement directives/guidelines must be compiled with. This includes compliance with EU procurement directives where appropriate.
The Area Assistant Director of Estates shall, at the end of each calendar quarter, submit to the National Director of Estates a report on the project indicating progress and cost performance. Updated cash flow forecast will be part of this report.
Band D (greater than €20m)
Projects with an estimated total project value exceeding €20m.
The HSE Areas must apply to HSE Corporate for approval for all projects in this category. An individual submission is required for each project. The submission must include the following:
• Project Brief
• Option Appraisal study that justified the proposed investment as part of the preferred option for the required service.
• Estimated final project cost for the project (Q Cost).
• Year by year cash flow forecast of expenditure.
• Project Programme
Topic 1; Capital Projects Approval Protocol … Continued
The HSE is obliged to make a submission to the Directorate of the HSE and to the Minister for Health to obtain approval to proceed with the project.
The submission will include
• The reasons why the particular project is considered a priority.
• Complies with overall strategy for the provision of a service.
• Estimated revenue or operating cost consequences of the proposal.
• A statement that the project is affordable within the Capital Plan.
The HSE is also obliged to seek the advice of the National Development Finance Agency on the optimum means of financing the cost of the project.
On receipt of written approval from the Department of Finance the HSE Chief Financial Officer (or nominee) will issue written approval to the commencement of the project of the basis of the foregoing data subject to consideration of service priorities and available funding. The commencement covers
• Selection of a Design Team and proceeding with design to completion of Stage 2.
The HSE Area must make a submission for written approval for each of the following design stages.
• Detailed Sketch design including equipping list (Stage 3)
After receiving approval for the Stage 3 the HSE Area may advance the project up to and including the preparation of the tender documents. All stages of the project must be agreed with the local service (i.e. Hospital Network or LHO) and the Area Assistant Director of Estates.
The HSE Area must obtain HSE Corporate approval to seek tenders for the project. The submission seeking approval must include the following:
• Reports on the tender process proposed.
• If the restricted process is proposed a report on the selection process used to finalise the list of tenderers.
• A cost check based on completed documentation reconciled with the original estimate upon which the commencement approval was based.
• A statement that the tender documents have been examined by the Area Assistant Director of Estates and that the documentation is considered satisfactory.
The HSE is obliged to make a submission to the Department of Finance to obtain approval to proceed to tender. On receipt of approval from DoHC, the Chief Financial Officer (or nominee) will issue a letter to obtain approval to proceed to tender.
After receipt of the tenders for the project, the Area Assistant Director of Estates must submit the tender report to HSE Corporate for approval to accept the tender. Please note that the approval of the Directorate of the HSE is required to accept tenders in excess of €10m.
Approval to accept the tender is subject to the following conditions.
1 Total expenditure on projects cannot exceed the approval allocation. 2 Yearly expenditure should be within 10% of projected cash flow.
3 Any variation on projects must be approved by the Area Assistant Director of Estates and must be within the approved allocation for the project.
4 All public procurement directives/guidelines must be compiled with. This includes compliance with EU procurement directives where appropriate.
The Area Assistant Director of Estates shall, at the end of each calendar quarter, submit to the National Director of Estates (and copy to the Assistant National Director of Finance, Capital) a report on the projects indicating progress and cost performance. Updated cash flow forecast will be part of this report.
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