ProCure21 offers several methods of controlling cost ensuring that value for money is achieved. These are;
- Guaranteed Maximum Price
- Open Book Accounting
- Audit Trail
- VAT Recovery
The client and PSCP must come to an agreement as to the final cost of the scheme before any construction takes place. Following the approval of the OBC the PSCP works with the client to produce the Full Business Case (FBC) and the Guaranteed Maximum Price (GMP). The GMP includes net cost for design and construction in its gross margin. If the out-turn cost on completion of the whole works are less than GMP, any savings are shared in accordance with the contract. If the out-turn cost is more then the burden is suffered by the PSCP.
Due to the limited nature of the design in the initial scheme phases where only functional content may be known, the target setting approach leads itself to calculating the target price based on the Departmental Cost Allowance Guide (DCAG) and the associated on-costs.
Clearly many schemes incorporate many other complexities such as brief changes and not least the element of risk. The Guaranteed Maximum Price will include a risk management schedule where the organisation best suited will manage associated risks. A series of DART workshops will ensure risk is managed effectively.
This process rewards PSCPs who are able to innovate and work efficiently whilst imposing a cap on the cost of the scheme to the client.
The PSCPs and their PSCM Supply Chain are subject to open book reviews to ensure their compliance with the framework agreement. Each PSCP is allocated an audit consortia, managed centrally via a ProCure21 Audit Controller within the ProCure21 team. The Audit Controller monitors the development of the audit frameworks ensuring that their fundamental beliefs are not diluted. Any areas of the concern raised by the audit consortia are addressed by the Audit Controller and the ProCure21 team to ensure a subsequent resolution is quickly made and the relevant parties are notified.
ProCure21 have appointed two specialist VAT advisors to do all Trust VAT calculations free of charge to ProCure21 schemes. The free VAT service saves the Trust having to employ external VAT advisors and therefore has saved over £2m in fees to date.
The advantages of centralised approach to VAT recovery are the establishment of a consistent methodology, speeding up of the recovery process and the improved relationship with HM Customs and Excise leading to cost savings for Trusts.