‘Backlog’ is the amount of repair and maintenance work needed to bring property up to certain standards of physical condition.
The NHS in Wales wished to improve the consistency with which its property holding bodies established backlog maintenance costs and managed risks in relation to repair and maintenance activity. This would help them make more well-informed, evidence-based decisions on prioritising expenditure on property assets.
In December 2004 Welsh Health Estates (WHE) introduced new guidance to help NHS bodies determine and manage their backlog maintenance more effectively. The guidance was entitled A Risk Based Methodology for Managing Backlog Maintenance and was produced by NHS Estates in England.
The approach advocated in the guidance document built on existing and well-established methodologies used by the NHS Wales. But it went further by introducing a model for measuring and categorising risks. In addition, the guidance introduced the concept of Risk Adjusted Backlog (RAB) costs, promoting a distinction between critical and non-critical risk elements and emphasising the need to prioritise critical risk elements in estate investment planning, while taking account of ongoing maintenance requirements.
The standard methodology involves assigning a ‘consequences’ score (from insignificant to catastrophic) and a ‘likelihood’ score (from rare to certain) to a potential compliance or performance failure, to then calculate a ‘risk score’. From this score a simple ‘risk category’ (low, moderate, significant, high) is assigned. Some property holding bodies in the NHS have refined the standard methodology to further prioritise risks and better target financial resources. Using the methodology, risk adjusted backlog costs can be calculated, for particular works and sites, and for aggregation at organisational, regional and national level.
The Welsh Assembly Government funded a two-year programme (2006-07 to 2007-08) to encourage NHS Wales property holding bodies to address some ofthe most serious estate risks. WHE managed this Major Risk Framework (MRF) programme. The bidding mechanism for programme funding required bodies to use the standard risk-based methodology.
The risk-based approach to managing repairs and maintenance, further enhanced by the RAB cost measurement, has helped property holding bodies focus their priorities on key risks, while not ignoring day-to-day requirements. Against the background of a real terms decrease in total unadjusted backlog maintenance costs, the risk-based approach has helped bodies to stabilise risk adjusted backlog maintenance costs in real terms and as a proportion of total unadjusted backlog costs.
The projected costs of addressing backlog maintenance in NHS Wales have increased in cash terms by £74 million: from £431 million in 2001-02 to £490 million in 2008-09 (although the 2008-09 figures quoted do not include backlog costs ofjust under £15 million at the Welsh Ambulance Services NHS Trust which were reported for the first time in 2008-09). And, overall, Welsh Health Estates has estimated that backlog maintenance costs have fallen by £120 million in real terms over the same period.
Using the RAB approach the total backlog maintenance figure, for the high and significant risk categories, was around £251 million in 2008-09 (excluding £6.5 million at the Welsh Ambulance Services NHS Trust). This compares with the RAB figure for 2005-06, the first full year of using the method, of £243 million.
The Assembly Government and WHE consider the risk-based approach to provide a more realistic assessment of backlog maintenance across the NHS Wales estate. This in turn helps bodies improve the value for money of their spending on repairs and maintenance.
The NHS Wales plans to make significant inroads into reducing backlog maintenance costs further through targeted capital investment under the all-Wales capital programme and individual bodies‘ discretionary capital allocations.
Contact name: Peter Wiles