Evaluation of the GP Super Clinics Program 2007-2008

7.2.4 Value for Money

Page last updated: 2012

The value for money assessment in the capital component of the GP Super Clinics Program determined that six of the GP Super Clinics were outside the criteria for value for money. If the extra-ordinary circumstances of three of the GP Super Clinics had been factored into the value for money assessments, it is likely that they would also have otherwise met the value for money criteria leaving three remaining sites as out of range of acceptable value for money.

There has been considerable debate in the property development industry as to the appropriate criteria for the measurement of value for money outcomes of construction projects. In a recent example, the BER Implementation Taskforce used a methodology that defined value for money “as a product of three elements that the Taskforce and its Industry Advisory Panel saw as essential”:

  • Quality
  • Time
  • Cost.37
In assessing cost, this Taskforce used a “regionally adjusted” (for remoteness from the major population and industry centres) $ cost per m2 of gross floor area (GFA), noting GFA is a term defined by the Property Council of Australia.

This evaluation does not, however rate either quality or time in the value for money measurement; the former because such an assessment would have required extensive and detailed inspection of those 18 GP Super Clinics projects completed at the time of survey. It would also have created insurmountable difficulties in comparing value for money on completed projects with those still in construction and those on which construction had not yet started.

Time was not included as a measure of value for money because, unlike the BER program where the projects were on land always already owned by the schools and with little or no requirement (except in relation to the private and independent school projects) for Council approvals, the GP Super Clinics have been subject to a multitude of varied, additional development stages that would again have created insurmountable difficulties in comparing, for example, a project that required land acquisition and full Council approvals with one on a university campus that might have required neither.

The one other element of a value for money assessment that may well be valid to both the BER and GP Super Clinics Programs is whether or not the buildings delivered under the program meet a need, or meet that need in a sensible way. This assessment is not canvassed in either the BER Taskforce Report or in this evaluation. By way of illustration in the GP Super Clinics context, one could validly ask, subjectively, whether or not the addition of a 700m2 second storey to an existing GP Clinic for a cost of over $4 million represented value for money in comparison with, say, an alternative development on a “Greenfield” site. The relatively simple evaluation of this project on a $ cost per m2 GFA suggests that it does, by a margin of only $67 per m2, but the more subjective evaluation of meeting need may conclude otherwise.

The measurement and assessment of value for money aligned with construction industry approaches. The measurement was reliant on data provided by funding recipients in the survey responses in relation to cost elements, including breakdowns to be used in the value for money assessment. These elements were not readily available in most funding agreements; hence there was reliance on self-reported survey data.

The value for money assessments did not include evaluations of two significant components of the development costs of these projects:

  • Professional fees
  • Land Purchase cost.
Professional fees were not assessed as part of value for money because a number of the projects, to varying degrees, were carried out under “Design and Construct” contracts with many of these professional fees, therefore, incorporated in the overall construction cost per m2. In addition the range of professional services required by particular projects and, therefore, the cost of the professional fees, varied considerably across projects. As an example, complex property acquisitions requiring re-zoning will inevitably attract more fees (e.g. for legal advisors, surveyors, planning consultants) than simple developments on “Greenfield” sites zoned for the required land use. Given these variations any uniform or standardised assessment tool would have affected the accuracy of assessments by either under- or over-representing the value for money.

Land acquisition value can only be properly assessed on an individual, site-by-site basis, using registered land valuers and industry accepted valuation techniques. Such assessment was beyond the terms of this evaluation.

It was not, nor are tools available for, a broader assessment in the context of primary care. In the longer term its assessment in terms of the contribution to evidence-based quality of care, patient access and experience, and clinician experience will be a more ultimate assessment of value for money.

37Building the Education Revolution Implementation Taskforce: Final Report. Canberra: Australian Government: Building the Education Revolution Implementation Taskforce;2011.