P.A.L.M. - physical asset lifecycle modelling in the healthcare sector

A Private Finance Initiative (PFI) is a way of establishing Public-Private Partnerships (PPP) by funding public infrastructure projects with private capital investment. The election in 1979 of a Conservative government under Margaret Thatcher marked the start of a still-continuing shift of activities away from the UK public sector. PFI was implemented in the UK for the first time in 1992. HCP is an award winning PFI asset-management company and, as part of the EngD course, the researcher has spent a large amount of time based at HCP. HCP stands for Healthcare Projects, and this thesis presents an alternative, combined-methods research approach to one of the most mechanically complex asset types under HCP’s management, in its largest healthcare facility. The research presents a risk-based approach to the operational lifecycle planning of 113 air-handling units at a central London hospital. The two components to the project are engineering risk (How likely is the asset to fail?) and contractual risk (What are the financial implications of such a failure?). Currently, these assets are modelled by HCP on a ‘strategic’ level, but using CIBSE- recommended guidance and part-failure data collected from six other UK-based hospitals, the Physical Asset Lifecycle Model (PALM) produces a funding profile for the replacement of the 1,247 internal components, as opposed to 113 bulk assets. The numerical model has also been visualised through the extraction of 3D BIM geometry into a geometrical-modelling tool (Rhino5) and computational plug-in (Grasshopper) to connect to the lifecycle model and visualise the replacement strategy proposed. The qualitative part of the combined-methods approach involved interviewing HCP Management board members as to their views on the models. The current profile adopted by HCP for the management of the air-handling units involves a £6.045m spend during the remaining 33-year concession period. The main findings of the PALM lifecycle model are that, based on a component-level replacement approach, this figure can be reduced by more than £1m based on a recommended replacement profile (£4.709m). Such a reduction can be based on how HCP currently manages its assets, and the engineering survey conducted showed that three air-handling units currently being life-cycled by HCP either had no components or were decommissioned prior to construction. The main findings of the PALM geometrical model (based on thematic-interview analysis) are that such a tool has largely been unseen in the industry before and it displays major translatability to other complex mechanical assets with component parts. It can also be integrated into HCP business propositions for new and existing clients in the future because of its clarity and ability to produce transparent lifecycle modelling from a decision-maker’s point of view. The research concludes that while the PALM model provides a glimpse as to how lifecycle modelling may be conducted in the future, a number of barriers to its implementation remain (namely data availability in a competitive environment, the time versus income generated business-case paradigm and a generational ability to change and accept technological advancements amongst senior decision-makers).