THE BOARD DECISION
A board is not approving a floor plan. It is approving an investment, a risk position and a delivery strategy.
A healthcare clinic project can have strong clinical support and a sound strategic rationale, yet still lack the information a board needs to approve it.
At board level, the decision is broader than design and construction. Directors need to understand why the project should proceed, whether the demand and financial assumptions are credible, what could change the outcome and whether the organisation can deliver it.
A good business case will not remove uncertainty. Its job is to make the evidence, assumptions, dependencies and remaining gaps clear enough for an informed decision. It also provides a reference point for delivery, so the clinic that is designed and built remains connected to the investment the board approved.
The business case must explain why the project should proceed
Start with the problem or opportunity the investment is intended to address. The organisation may need more capacity, a presence in a new market, a new clinical service, replacement of an unsuitable clinic or consolidation of several locations.
That need has to connect directly to the organisation’s strategy. The case also has to show which options were considered. A new clinic may not be the only response. Expanding an existing site, staging the investment, changing the service mix, selecting a different property or deferring the project may all be credible alternatives.
The preferred option needs evidence behind it, including demand, referral patterns, patient access, workforce, competition and the proposed operating model. The detail will vary with the size and risk of the investment, but the board needs to see why this option was selected.
Make the assumptions visible
A project can look convincing while its most important assumptions remain spread across the financial model, design brief, property negotiations and delivery program.
Operating assumptions may include patient volumes, the rate at which activity will build, hours of operation, staffing, clinician availability, service mix and expected capacity. Project assumptions may include site condition, landlord contributions, approvals, equipment selection, infrastructure, procurement and the proposed opening date.
List the assumptions, where they came from and who is responsible for confirming them. Where evidence is still developing, state the level of confidence and test what happens if an assumption changes.
Sensitivity analysis is particularly useful when a small change in activity, staffing, capital cost or timing materially affects the return. It shows the board where the investment is most exposed.
The approved assumptions must carry into delivery
Once the project is approved, the key assumptions need to be carried into the project brief and checked as the design, cost plan and program develop.
Expected activity informs the capacity required and how clinical and support spaces are planned. Staffing and workflow assumptions influence the layout and support spaces. Equipment choices need to align with building services and procurement timeframes. The opening date must allow for construction, commissioning, recruitment and operational readiness.
Those connections can be lost one decision at a time. A room is reduced, a service is deferred, an infrastructure allowance is excluded or an approval takes longer than expected. Each change may be reasonable by itself. Together, they can materially alter the clinic that was approved.
At agreed points during design and delivery, the project needs to be checked against the business case. If capacity, cost, timing or service scope changes, the effect on the expected return needs to be understood before the change is accepted.
Cost confidence depends on what the number represents
An estimate, a project budget and a fixed price commitment mean different things. Each can be appropriate at a different stage, but the board needs to know which one it is being asked to rely on.
The cost position must state the design stage, base date, inclusions, exclusions and allowances. Boards also need to see landlord works, equipment, professional fees, authority costs, technology, commissioning, relocation, escalation, contingency and the working capital required before the clinic reaches its expected activity.
The lowest figure is not necessarily the strongest offer. Proposals can only be compared properly when they use the same scope, assumptions and allocation of risk.
Contingency is not poor planning. It recognises that uncertainty remains. The important questions are whether it is proportionate, transparent and linked to identified risks rather than being used to cover an incomplete scope.
The opening date is a commercial assumption
An opening date is often entered into the financial model before the delivery program is sufficiently developed. Revenue, lease costs, recruitment, equipment finance and transition plans may all depend on it.
The business case needs to explain what must happen before revenue can begin, which activities sit on the critical path and which assumptions depend on landlords, authorities, equipment vendors or other parties. Any uncertainty needs to be reflected in both the program and the financial model.
Where the date is not yet firm, a range or milestone-based program is more useful than a single date presented as certain. The board also needs to see the financial effect of a delay and the decisions required to protect the proposed opening.
Compare delivery partners by the risks they can manage
Whether a proposal is described as design and construct, construct only or project management tells the board little about how the team will perform. The important question is whether it can turn the clinical and operating requirements into a coordinated design, cost plan and delivery program.
For a healthcare clinic, that includes managing the interfaces between the operator, landlord, consultants, equipment vendors, authorities and construction team. The team also needs the experience to recognise when a change in one area will affect capacity, cost, program or readiness elsewhere.
A specialist healthcare design and construction partner may bring clinical planning, healthcare compliance, equipment coordination, approvals and commissioning experience into the project earlier. A general builder may also deliver successfully when those capabilities are available within the wider team and responsibility for coordinating them is clear.
Relevant projects are useful evidence, but the board should look beyond the portfolio. It needs to understand what the partner was responsible for, how cost and program changes were managed, how issues were escalated and whether the proposed people have the experience required for this project.
Accountability must be clear
No one party controls every approval or outcome, and no delivery partner can guarantee the timing of an external authority. Responsibility for managing each interface can still be clear.
The case needs to define who prepares each submission, who provides information, who coordinates responses, who makes decisions and who reports emerging risks. One project lead may coordinate and escalate issues even though statutory decisions remain with the relevant authority.
Governance also covers how scope changes are approved, how contingency is accessed, how cost and program are reported and which decisions return to the board or its delegated committee.
What should a board-ready business case include?
Before approving the investment, the board needs clear information across the following areas:
- Strategic rationale: What problem or opportunity is being addressed, and how does the project support the organisation’s strategy?
- Options considered: What credible alternatives were assessed, including the option to defer or not proceed?
- Service and demand: What activity, referral, workforce and operating assumptions support the proposed clinic?
- Financial case: What capital, operating cost, working capital, revenue and return assumptions underpin the investment?
- Supporting information: Has the clinical, operational, property, cost and program information needed to support the business case been identified and tested?
- Alignment through delivery: How will the approved assumptions be carried into the project brief, design, cost plan and program, and when will they be checked?
- Scope and cost basis: What is included, excluded or allowed for, and what level of cost confidence has been achieved?
- Program and readiness: Are the delivery, commissioning and operational milestones realistic and linked to the financial model?
- Risk and sensitivity: Which changes in cost, activity, staffing or timing would materially affect viability?
- Delivery model and accountability: Who owns each key responsibility, how will performance be reported and how will decisions be escalated?
- Success measures: How will the organisation determine whether the clinic delivers the expected strategic, clinical, operational and financial benefits?
A board may approve the project, approve it subject to conditions, request further work, defer it or decide not to proceed. The business case should support an informed decision rather than assume approval is the only acceptable outcome.
PUTTING IT INTO PRACTICE
A board-ready business case should give decision-makers a clear view of the strategic rationale, operating model, financial assumptions, project risks and delivery responsibilities. It should also establish the assumptions against which the project will be tested after approval.
Carrying those assumptions into the project brief, design, cost plan and delivery program allows changes in capacity, scope, cost or timing to be assessed against the expected benefits before they are accepted.
When engaged early, Perfect Practice works with clients and relevant specialists to identify and test the clinical, operational, property, cost, program and delivery information needed to support the business case. The team can then coordinate the interfaces between the client, landlord, consultants, equipment suppliers, authorities and construction team, helping keep the approved objectives and operational requirements connected to the project from planning through delivery.
AUTHOR: JOHN O’BRIEN, National Lead, Healthcare Advisory & Partnerships
John has more than 22 years of clinical, operational and commercial experience in healthcare. Clinically trained as a nuclear medicine scientist, he has held senior operational and executive leadership roles within a national medical imaging group. His experience spans clinic operations, new site developments, refurbishments, service expansions and the integration of acquired businesses across a national network.
At Perfect Practice, John works with clients and project teams to bring healthcare projects together, helping translate their objectives and operational requirements into a coordinated pathway from planning through to delivery.
John holds qualifications in Nuclear Medicine and an MBA.
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