Efficiencies, Targets: FM’s Response

15 July 2009

Prof Ilfryn Price

FMGC, Sheffield Business School

Some background

• Operational Efficiency Programme • http://www.hm-treasury.gov.uk/vfm_operational_efficiency.htm

consistent, comparable data – organisations need consistent, comparable data to be able to benchmark their performance against others to know whether the services they deliver constitute good value for money. Both public and private sector best practice should be used to raise standards

• ERIC (and similar) are not consistent and comparable as to cost (B Williams pers com)

• Cost (per m2) encourages inefficient asset utilisation (Price)

The Lean Asset™

• Businesses need to focus on enough asset to deliver needed outcomes

• Compare Toyota and General Motors. GM focussed on cost per unit produced, Toyota on cost per unit sold. Toyota produced the same volume, at higher quality, with 38 % less space.

• Conventional asset management makes the same mistake

• Asset appraisals on indicators of outputs per unit of space such as income, patient suitability, customer attractiveness, staff productivity, occupancy effectiveness

• Peer reviewed theory @ http://digitalcommons.shu.ac.uk/fmgc_papers/

Keep what is needed to the standard needed. Dispose of what is not needed

The Lean Asset™

• GM ended up with low cost production but went bust

• c.f the (NHS, and others) who still end up with a large portfolio of low quality, underutilised space and a back log maintenance bill

• They then over estimate the new space needed and pay too much per unit area to construct it! (Price and Williams in preparation)

Cost

Area

=

A different approach

• How much space have you got?

• How much should you have for the size of business?

• Where is the excess?

• What should the rest cost?

Meta-perfomance (ERIC)

Foundation trusts & applicants

Large Acutes, T Hospitals and Specialists

As before with Acute specialist trusts removed

Teaching trusts outside London

Occupied area within departments

The challengeRemoving 55,000 m2 (15 wards' worth) of space from the total without affecting the patient area raises the

RHQ relative efficiency to 100% relative to other teaching Trusts outside London

Preliminary data analysis

Directorate FTE staff NIA (m2) m2 per FTEChief Nurse 102 1131 11Service Development 262 4519 17Estates 216 7873 36Finance 222 6520 29Medical Director 112 6447 58Chief Executive 26 1258 48Human Resources 1453 30318 21

2394 58066 24

Good corporate and government HQ environments achieve 10 to 12 m2

Best achieve ca 7 m2

Pitfalls and problems

• ERIC data (now getting worse)• Carparks, residencies, operational service

buildings• Can make old, cramped space look efficient

(especially ? Mental Health)

• Trust estates databases do not categorise space by service-line (which is hindering specific benchmarking trials)

• Goodhart's law

The future should be clinical comparisons

What should be there

What is currently included but not separated out

• Residencies

• Multi-storey car parks

• FM Operations (Power, workshops, launderies, catering units)

• Leased / detached office premises

• Conference / education Centres

Data Needed: Trust LevelFIELD RESPONSE

Name of Trust

Gross internal area of trust (m2)

Occupied floor area (m2)

NHS estate occupied floor area (%)

Patient occupied floor area (m2)

Non-patient occupied floor area (m2)

Unoccupied floor area (m2)

Main circulation area (m2)

Multi story car parks for patients (m2)

Multi-story car parks for staff (m2)

Residencies (m2)

Conference / education centres (m2)

Estates/FM operational buildings (m2)

Buildings awaiting demolition but in last year's ERIC return (m2)

Data Needed: Building LevelFIELD Building 1 Building 2

Name of building

Site

Gross internal area of building (m2)

Occupied floor area (m2)

Patient occupied floor area (m2)

Non-patient occupied floor area (m2)

Unoccupied floor area (m2)

Main circulation area (m2)

Directorate 1 occupied floor area (m2)

Directorate 2 occupied floor area (m2)

Data Needed: Building Level

FIELD Directorate 1 Directorate 2

Name of directorate

Occupied floor area (m2)

Patient occcupied floor area (m2)

Non-patient occupied floor area (m2)

Number of full time equivalent (FTE) staff

Total income (£)

Physical space, the most important and least appreciated tool in

contemporary knowledge management (Peters)

An estates strategy must support, but can contribute to, a business

development strategy.