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

2 Executive Summary

2.1 Introduction

2.1.1 On 4 July 2019, the Scottish Health Secretary announced that the opening of the newly built NHS Lothian Royal Hospital for Children and Young People (the “Hospital”), due to open on 9 July 2019, was to be postponed due to issues identified with the air ventilation system at the Hospital (the “Delay”).

2.1.2 The Scottish Health Secretary took the decision^[4] to delay the opening of the Hospital following final safety checks which revealed that the ventilation system within the critical care areas of the Hospital required further work in order to meet national standards.

2.1.3 KPMG LLP (“KPMG” or “we”) has been instructed by NHS National Services Scotland (“NHS-NSS”), to independently establish the facts surrounding the decision to delay the move to the Hospital.

2.1.4 The focus of our review has been to establish what decisions were made by NHS Lothian (“NHSL”) in relation to the air ventilation issues and any other material issues that led to the Delay. We have detailed our main observations in relation to this in Section 2.2 below, and provide further details on specific areas of our scope in Sections 2.3 to 2.5.

2.2 Summary of findings

2.2.1 The information available to us indicates that:

a) The key issue which led to the Delay was the non-compliance with the Scottish Health Technical Memoranda 03-01 (“SHTM 03-01” or the “Standards”) for air change rates in some of the Critical Care areas of the Hospital (the “Issue”). This Issue was brought to the attention of the NHSL Board on 1 July 2019 as a result of testing undertaken by a third party contractor, Institute of Occupational Medicine (“IOM”). This was as a result of IOM reporting the issue in relation to Critical Care to the NHSL Project Team^[5] on 24 June 2019. The actions taken by the Project Team before the Issue was reported to the NHSL Board are reported in Section 3.4. Further details as to the decisions that were made by NHSL once the Issue had been identified, when these were made, by whom and on what basis, are provided in Section 3 of this Report;

b) Throughout all stages of the Project we have seen references made to the requirements of the Project Co^[6] to adhere to the Scottish Health Technical Memoranda (“SHTM”), including specifically SHTM 03-01 relating to ventilation systems. However, notwithstanding any contractual obligations, it appears that there has been confusion between the parties as to the application of these Standards. This appears to have stemmed from a document which was contained within the Project tender documentation, a version of which was used throughout the Project, which included details on the environmental specifications of the Hospital, the Environmental Matrix (“EM”). Elements of the EM were inconsistent with SHTM 03-01 from the tender process (which commenced in late 2012) onwards. Further details in relation to design specifications and air ventilation standards are provided in Section 2.3 below;

c) We have seen evidence of professional and technical advisors being involved throughout the Project. This included specific involvement in relation to ventilation issues. However, we have seen no evidence that professional or technical advice identified the Issue prior to June 2019. Further details in relation to professional and technical advice are provided in Section 2.4 below;

d) The governance processes and procedures surrounding the construction and commissioning of the Hospital operated in line with the structure that was put in place. There was regular dialogue between NHSL and the Scottish Government (“SG”) throughout the Project, with evidence of escalation of issues where required, albeit this was more focused on financial rather than technical matters. Further details of the governance arrangements are provided in Section 2.5 below; and

e) Once the Issue in relation to air change rates was known to the NHSL Board, steps were taken to assess the impact of the Issue, resulting in the Delay (see Section 3.4).

2.2.2 Aside from the specific Issue referred to in this Report, other ventilation systems were identified by IOM as having some deficiencies. We understand that all these deficiencies were considered rectifiable by NHS-NSS, and NHSL have an action plan in place to address each issue.

2.3 Design specifications and air ventilation standards

2.3.1 Our specific instructions were:

To determine the extent to which the design specifications with regard to air ventilation complied with the SHTM standards, and specifically SHTM 03-01, being the ventilation for healthcare premises standards, at each stage of the Project. It was agreed that KPMG would not undertake a technical review in respect of this but confirm that the Standards were included within the design specifications.

2.3.2 A summary of our observations are detailed below, with further details provided in Section 4 of this Report.

2.3.3 Throughout all stages of the Project we have seen references made to the requirements to adhere to SHTM, and specifically SHTM 03-01 in respect of ventilation systems; in particular within the Board’s Construction Requirements

(“BCR”) document which is the primary document at both the tender and Project Agreement^[7] stages. The BCR stated that Project Co must comply with SHTM for the design of the Hospital and that all recommendations and preferred solutions contained within the SHTMs must be adopted as mandatory.

2.3.4 It appears that there has been confusion between NHSL and Project Co as to the application of these Standards throughout the Project. This appears to have stemmed from the EM, details of which were inconsistent with SHTM 03-01 from the tender process, as we describe below.

2.3.5 A version of the EM was included within the BCR at both the tender and Project Agreement stages. The EM was referred to within the tender document as detailing “…the room environmental condition requirements of the Board required within each department / unit / space / area [of the Hospital]^[8]. The room environmental conditions included air change rates. There are inconsistencies within the tender process documentation in relation to the EM, with the BCR stating that bidders should “…provide the Works to comply with the Environmental Matrix”^[9] and the tender submission requirements stating that whilst bidders were required to “undertake their own design, the Board [has] provided a draft Environmental Matrix” ^[10] and that “bidders must confirm acceptance of the Board’s Environmental Matrix, highlighting any proposed changes on an exception basis” ^[11].

2.3.6 Our work has identified issues within the EM, including inconsistencies with SHTM 03-01 and discrepancies within the document itself. Specifically:

a) The version of the EM document provided by NHSL to bidders as part of the tender process, and referred to in the BCR as detailed above, included reference to both the single bed cubicles and four-bed rooms in Critical Care as requiring four air changes per hour^[12] (“ac/hr”). We understand this was not in compliance with SHTM 03-01 and should have been 10 ac/hr. This reference remained in subsequent versions of the EM; and

b) The guidance note at the front of the EM document, provided at the tender and Financial Close^[13] stages of the Project, suggested that all Critical Care areas should be in accordance with SHTM 03-01, being the relevant part of the standards relating to ventilation, and “10ac/hr Supply”^[14]. This is inconsistent with the content of the matrix, as detailed above. We note that this inconsistency appears to have been removed after Financial Close by the insertion of the words ‘for isolation cubicles’^[15], suggesting that only ‘isolation cubicles’ in Critical Care should have an air change rate of 10 ac/hr. However, we were informed by NHSL that this change was made by the Project Co, but was not flagged to NHSL (see paragraph 4.4.10 for further details).

2.3.7 We have not been instructed to consider how the inconsistency made its way into the initial matrix. However, we have seen no evidence that any party to the Project identified the issue, specifically in relation to the incorrect air change rates having been applied to Critical Care rooms, until June 2019 (see paragraph 3.4.7 to paragraph 3.4.14 for further details).

2.3.8 NHSL told us they had not reviewed the EM in detail from a technical perspective and they reviewed it for ‘operational functionality’, as detailed in the Project Agreement (as referred to further in paragraphs 4.4.6 and 4.4.7 below). It was assumed by NHSL that any changes to the EM would be highlighted by Project Co for discussion with them, and that it would be in compliance with SHTM 03- 01, as detailed in the BCR. Despite this, the “exception-basis” approach to highlight proposed changes, referred to at paragraph 2.3.5 above, may have contributed to an assumed position that the original document, provided as part of the tender process, was correct.

2.3.9 Despite our understanding that NHSL and its advisors did not consider that they had an obligation to review the EM in detail from a technical perspective, we have identified multiple instances of comments being provided by the ‘Board’^[16] on particular sections of the EM. These included those elements which specifically related to the four-bed rooms in the Critical Care department. However, at no point did these comments refer to there being incorrect air change rates for those rooms.

2.3.10 Through correspondence between NHSL and Project Co regarding the EM, we have seen evidence of Mott MacDonald (on behalf of the Board) reminding Project Co that they must comply with the BCR and SHTM and that the “Board not commenting, does not remove that obligation on Project Co”^[17].

2.3.11 In addition to all of the above, in January 2019, the Board asked Integrated Health Services Lothian Limited (“IHSL”)^[18] for specific assurance that all critical ventilation systems were to be “inspected and maintained in line with 'Scottish Health Technical Memorandum 03-01: Ventilation for healthcare premises” ^[19]. IHSL confirmed in their response that all ventilation systems had been designed, installed and commissioned in line with SHTM 03-01^[20].

2.3.12 We have not been instructed to opine on the accountability of individuals or organisations in respect of the failure to identify the Issue and it is not within our area of expertise to consider the contractual implication of the failure. However, through our identification of the above matters, the following relevant observations have also come to light:

a) Lack of clarity in the Standards

Our work has identified that consideration of the Standards on a standalone basis, in relation to air change rates in rooms within the Critical Care areas of the Hospital, could be open to interpretation. Specifically, our review has identified that there is no definition of “Critical Care” in the Standards, and the extent to which “Critical Care” includes all types of rooms within that area of a hospital. Further, there is no explanation of the hierarchy which should be applied where different areas of the hospital overlap, for example, which standard should be applied to a ‘clean utility’ within a Critical Care unit.

However, the Project Agreement documentation, and specifically the BCR, referred to in paragraph 4.3.8 below, includes Clinical Output Based Specifications for each department. We note that the Critical Care Clinical Output Based Specification makes reference to the areas included in Critical Care with, for example, references to single cubicles, four bedded bays, isolation cubicles and clean and dirty utilities.

b) Opportunities to identify the Issue

It is our observation that, notwithstanding that the initial version of the EM issued by NHSL at the tender stage contained the inconsistency which ultimately resulted in the Delay, NHSL and its advisors did not regard the EM as their document and did not consider it their responsibility to ensure compliance with SHTM 03-01. Instead, NHSL considered the EM to be the responsibility of Project Co. NHSL considered it their responsibility to approve it for ‘operational functionality’^[21] and it was for Project Co to highlight any inconsistencies between the EM and the Standards.

We have seen evidence that NHSL and its advisors did challenge and seek explanations in relation to certain aspects of the EM relating to specific rooms in Critical Care, but this did not include specific reference to the air change rates.

Regardless of the contractual responsibilities, our work identified at least three specific instances where errors regarding the details of the air change rates relating to the four-bed rooms could have been identified by either NHSL (and their advisors) or Project Co:

• November 2016: Correspondence between the Board^[22] and Project Co referred to the air extraction of the four-bed rooms in Critical Care via the en-suite facilities. The specific comment noted by the Board was “1-B1- 063 Stated as supply of 4 ac/h, extract via en-suite, this room does not have en-suite facilities” ^[23]. Project Co’s response was “Room extract rate added” ^[24]. This suggests that both parties were in correspondence regarding a room in Critical Care (on the basis that rooms starting ‘B1’ were defined on the cover sheet of the EM as being located in Critical Care), which contained reference to four air changes an hour.
• July 2018^[25]: A document entitled ‘Multi Bed - Ventilation Amendment Proposal to Achieve Room Balance [pressure]’ was provided by Project Co, and subsequently approved by an individual from NHSL. Whilst this document was focused on the pressure regime, it stated “Retain the

supply ventilation at 4ac/hr…”^[26] as part of the proposed solution against each of the four-bed rooms. This included rooms located in Critical Care, albeit this was not directly referenced on the document; and

• February 2019: As a result of a number of ongoing issues in dispute between NHSL and Project Co, an agreement was signed between the NHSL Board and IHSL on 22 February 2019 (the “Settlement Agreement”). The Settlement Agreement states “The resolution of the Dispute submitted by Project Co through the Schedule Part 8 (Review Procedure) and agreed by the Board, is for 14 No 4 bed rooms to be balanced or negative to the corridor at 4 ac/hr”^[27]. This wording was approved by both parties.

Furthermore, we also identified one example of comments provided to the Project Co by Mott MacDonald^[28] (on behalf of NHSL) referred to as “…initial technical comments on draft 1 of the Environmental Matrix”, dated 13 October 2014^[29]. This document included 12 comments, one of which specifically refers to ventilation standards in respect of bedrooms stating “Bedrooms 4ac/hr, SHTM says 6 ac/hr” ^[30]. Whilst this comment was not specific to a Critical Care bedroom, this suggests that comments other than those relating directly to ‘operational functionality’ were raised by NHSL.

c) Role of the Independent Tester (“IT”)

The IT advised KPMG that its role was to certify that the design had been built in accordance with what had been agreed between the parties. This is reflected in the IT’s scope of work, as set out in paragraph 4.7.2. The EM had been used as the basis for this agreement between the parties and, as such, the IT did not consider that it was responsible for reviewing its accuracy.

Instead, the IT stated that it expected both parties to the Project to have undertaken a detailed review of the EM.

2.4 Professional and technical advice

2.4.1 Our specific instructions were:

To understand what professional and technical advice was given to the NHSL Board, in particular when derogations were proposed, who agreed them and the risk assessments that were undertaken to reach a final decision.

2.4.2 A summary of our observations are detailed below, with further information provided in Section 5 of this Report.

2.4.3 A number of professional and technical advisors were involved throughout the Project. Specifically, in respect of the Issue pertinent to the Delay:

a) From the various documents we have seen, and the discussions we have held, there is evidence that, in arriving at the agreed resolution in the Settlement Agreement in respect of the changes required to the pressure regime to 14 of the four-bedded rooms, advice and support was provided to the Project Team by both technical advisors and internal clinical advisors, which was visible to the NHSL Board; and

b) We have seen evidence that Mott MacDonald was involved in the Project on an ongoing basis, specifically in respect of reviewing and commenting on the EM.

2.4.2 We have not been instructed, and it is not within our area of expertise, to consider the responsibility of external professional or technical advisors to identify this Issue. However, despite the extensive internal and external technical advice received in relation to the Project, the Issue was not spotted.

2.5 Governance arrangements

2.5.1 Our specific instructions were:

To establish the governance arrangements that were in place in relation to the Project and the line of sight of NHSL and SG, along with the escalation arrangements to NHSL and SG.

2.5.2 A summary of our observations are detailed below, with further information provided in Section 6 of this Report.

2.5.3 From the information we have seen, the governance structure surrounding the construction and commissioning of the Hospital was operating in line with that described to us and issues were being escalated through the appropriate channels.

2.5.4 Oversight of the Project had been delegated by the NHSL Board to the Finance & Resources committee (the “F&R Committee”), which included four executives from the NHSL Board. The F&R Committee established a Project Programme Board which had day-to-day responsibility for managing the Project (the “Programme Board”). The Programme Board did not report directly to the F&R Committee. Instead, any key issues arising on the Project would be reported to the Director of Capital Planning and Projects (the “DCPP”) or one of the Project’s Executive Leads who would, in turn, escalate this to the NHSL Board and also inform the F&R Committee if the issue had an impact on the financing of the Project or its duration. As there was overlap between members of the various committees and boards, this facilitated the executive leaders of NHSL being kept informed of progress and issues.

2.5.5 Throughout our review, we have seen evidence of these governance arrangements operating in practice and it appears that, at each stage of the Project, personnel with the appropriate technical and clinical skills and experience were involved.

2.5.6 Further, where appropriate, external advice and guidance was sought. An example of such external advice being commissioned is the instruction of an independent third party to carry out checks following concerns raised by the Infection Prevention & Control team (the “IPC”) in relation to the reporting format for ventilation checks. A further example is in relation to changes to the design requirements where we have seen evidence of the involvement of technical specialists such as Mott McDonald, as well as clinicians and medical professionals from relevant departments within NHSL.

2.5.7 In addition to the governance processes within NHSL itself, we understand that there was regular dialogue between NHSL and SG throughout the Project, with escalation of issues where required, albeit this was typically more focused on financial rather than technical matters.

2.5.8 The timeframe for moving to the Hospital was set in February 2019 when the Settlement Agreement was signed. At this time, it was known that significant work was still required in order to complete the Hospital, including a number of critical areas which were required to be completed before the building could be considered habitable. Such works continued into July 2019, including a significant amount of post-completion works. As such, the time available for rectification of any identified problems, prior to the scheduled opening date of the Hospital of 9 July 2019, was challenging and left little margin for error. The governance process established in order to implement the required actions, set out in the Settlement Agreement, is discussed in Section 6.4.

2.5.9 Once the Issue which led to the Delay had been identified, steps were taken by NHSL to notify SG of the Issue which led to the decision by the Health Secretary to delay the opening of the Hospital. We note that, due to the urgency of the matter, the ultimate escalation of the ventilation issues was made direct to the NHSL Board and not through the normal governance structure.