CAPITAL INVESTMENT POLICY

Transcription

1 CAPITAL INVESTMENT POLICY Document Profile Box Document Reference: Version: 0001 Ratified by: Trust Board Date ratified: March 2009 Name of originator/author: Duncan Sellers Name of responsible committee/individual: Trust Board Date issued: April 2009 Review date: March 2010 Target audience: Capital Management Group and other managers and finance staff involved in the capital investment process. Document owner: Duncan Sellers Authorised signatory:

2 Contents Section Page 1 Introduction and Scope 3 2 Aim / Purpose 3 3 Duties 3 4 Capital Investment Strategy 4 5 Equality Impact Assessment 6 6 Consultation, Approval and Ratification 6 7 Review and Revision Arrangements including Version Control 6 8 Dissemination and Implementation 6 9 Document Control including Archiving Arrangements 7 10 Process for Monitoring Compliance and Effectiveness 7 11 References and Associated Documentation 7 Appendix A Version Control Sheet 8 2

3 CAPITAL INVESTMENT POLICY 1. Introduction and Scope 1.1 This is in place to outline the overall capital evaluation and assessment process in operation within the Trust, which is used to underpin the decisions taken by the Trust and its investment partners to ensure that capital funds are being invested wisely in fixed assets for the future benefit of the Trust, its patients, its commissioners and its staff. 1.2 The key group within the Trust pertaining to capital investments is the Capital Monitoring Group. Its terms of reference are available and reviewed annually and to summarise it meets quarterly to formulate the capital plans, approve business cases and monitor the expenditure. Its minutes are formally reported to the Trust s Audit Committee and it routinely reports upon capital plans and progress against them directly to the Trust Board. Its membership contains the Trust s Executive Directors and a number of other relevant specialists. 1.3 This Policy will be reviewed at least bi-annually to reflect any changing business requirements. 1.4 This policy should be read in conjunction with the Trust s Standing Financial Instructions. 2. Aim / Purpose 2.1 The purpose of this policy is to outline the following:- The role of the Capital Monitoring Group and how it pertains to capital investments, The overall strategy for capital investments within the Trust, The Trust s approach to risk in relation to capital investments, and It cross refers to other more detailed guidance available. 3. Duties 3.1 The Board is responsible for approving the and monitoring compliance. 3.2 Director of Finance is responsible to the Board for all aspects of Capital Investment in the Trust with the operation of the policy delegated to the Head of Financial Management. 3.3 The Head of Financial Management is responsible for ensuring this procedure is operated. 3

4 4 Capital Investment Strategy 4.1 The Investment Strategy is an integral part of the and it recognises the need for: Reinvestment to replace existing assets, Investment in new additional assets, and An acknowledgement of the financial impact upon the Trust s revenue account. Each of these is considered in more detail below: Reinvestment to replace existing assets The Trust acknowledges that it has a varied asset base comprising vehicles, ambulance stations, Information Technology and other equipment. It is necessary to continue to reinvest capital resources to replace existing assets in pursuit of the Trust s overall aims and objectives. A large element of its asset base comprises a range of vehicles that enables the Trust to achieve its Key Performance Indicators (KPIs), including the A&E performance targets. A&E, Rapid Response and PTS vehicles are replaced within a rolling replacement programme. However specifications of the chassis and the hi-tech equipment can and do change over time to enable further improvements in response times and patient care to be achieved. The majority of the Trust s depreciation is due to vehicles and therefore a significant element of the ongoing capital investment will be in vehicles. The Trust is also investing in smaller ambulance stations in more favourable locations to help it to further improve its A&E response times and reduce its overall PTS journey miles. This requires disposal of some existing facilities and reinvestment in new ones. Aligned to the Ambulance Station replacement programme is a requirement to continue to ensure that its station stock remains fit for purpose in relation to legislative and other statutory requirements for its staff and other users. A condition deficiency budget is made available annually to ensure that these requirements are adhered to in a prioritised manner Investment in new additional assets The Trust has and will continue to invest in Information Technology infrastructure that will help to keep it at the forefront of Ambulance Services within the United Kingdom. It is also prepared to increasingly invest in capital schemes that are specifically designed to achieve recurrent expenditure savings and/or increase its income base, particularly if a short payback period (of less than 3 years) can be demonstrated or it can otherwise demonstrate a positive impact upon the Trust s financial ratings. 4

5 It is also prepared to invest in service development proposals that might require some capital enabling measures in support of the Trust s service development aims and aspirations Financial impact upon revenue (income and expenditure) account Overall, investments that minimise the adverse financial impact on the Trust s revenue account will be favoured over those that have a greater adverse impact (assuming the same level of non-financial benefits). However it is acknowledged that individual asset replacement programmes will always have some financial impact upon the Trust s revenue account as collectively they are self funding through the Trust s depreciation charges. 4.2 The Trust has generally adopted a risk averse attitude historically in line with many other public sector organisations. This has been endorsed by the need for proposed capital investments to be supported by robust business cases that are prepared and approved prior to the commitment of significant capital expenditure sums. 4.3 Business Case Guidance (Procedure No. GEN 219) exists and is available for prospective project sponsors/owners to guide them through the process of developing a business case and securing approval for it. Business cases are prepared using the 5-case model, which considers the following 5 cases: The strategic case, The economic case, The financial case, The procurement case and The management case. There are specific business case templates available as appendices to that guidance, which are to be used depending upon the likely value of the capital expenditure. The level of detail required in business cases is directly related to the size of the proposed capital investment and fits with the delegated limits in operation within the Trust as follows: Between 5k and 50k, Between 50k and 1m, and In excess of 1m. 4.4 The Capital Monitoring Group will determine whether to support and/or approve the individual business cases although subject to the Trust s overall scheme of delegation. 4.5 Uniquely numbered capital requisitions will be used for all approved capital schemes to ensure evidence of appropriate signatures, to identify an agreed capital sum, to enable unique capital scheme referencing, to aid financial and progress monitoring of individual schemes and to reduce the scope for financial coding errors. 5

6 4.6 External guidance from the Department of Health and/or Monitor will be referred to when major schemes are being considered to ensure that the Trust operates within its delegated limits. 4.7 Schemes will be subject to Post Implementation Review as appropriate and template documentation exists according the level of review required, which is also linked to the size and nature of the capital investment. 5 Equality Impact Assessment 5.1 is committed to ensuring that where reasonably practicable, the way we provide services to the public and treat our staff reflects their individual needs and does not discriminate against individuals or groups on any grounds. 6 Consultation, Approval and Ratification 6.1 Consultation Process The policy has been reviewed by the Capital Monitoring Group, The Executive Team and the Audit Committee as part of the wider review of the Trust s Capital Business Case evaluation and approval process. 6.2 Policy Approval Process This Policy shall be approved by the Trust Board. Any amendments to the Policy will be approved at the next available Trust Board. 6.3 Ratification Process Ratification of the policy by the JCC Policy Sub-group is not required. 7 Review and Revision Arrangements Including Version Control 7.1 Review and Revision Process The shall be reviewed at least bi-annually by the Head of Financial Management. The Trust Board shall approve the Policy thereafter. All reviews and revisions to any procedural document must be approved according to the process described in section 7 of this document. 7.2 Version Control A Version Control sheet shall be maintained with the document. See Appendix B Version Control Sheet. 8 Dissemination and Implementation 8.1 Dissemination Once approved, this document shall be circulated by to appropriate staff within the organization including Financial Services staff, Financial Management staff and Budget Holders. The document will also be supplied to the Quality Assurance Officer to include within Docuviewer. 6

7 8.2 Implementation Implementation shall be carried out by the Financial Consultant. 9 Document Control including Archiving Arrangements 9.1 Register / Library of Procedural Documents The Trusts will be stored on the Trusts document database Docuviewer which can be accessed via the Trusts intranet. This is a secure database maintained by the Quality Assurance Officer. Documents are given a unique reference number and are only updated on the database following full ratification process. 9.2 Archiving Arrangements The policy shall be reviewed on an annual basis and older versions of the Policy shall be retained by the Quality department. Copies of previous versions of the document can be obtained on request from the Quality Assurance Officer. 10 Process for Monitoring Compliance and Effectiveness The effectiveness of the Policy shall be monitored by the Capital Monitoring Group on a periodic basis via the quality of capital business cases that require consideration and decisions. 11 References and Associated Documents References Risk Evaluation in Investment Decisions Monitor (Feb 2006) Delegated Limits for Capital Investment Department of Health (Nov 2007) NEAS Standing Financial Instructions Associated Documents Capital Monitoring Group Terms of Reference Replacement Capital Expenditure process Business Case Guidance GEN219 and associated templates Capital Requisition Process Post Project Review of Capital Schemes Guidance and associated templates 7