Too many NHS capital projects encounter financial shock late in design, not because costs suddenly increase, but because blind spots were embedded from the beginning. Drawing on insights from Kelvin Moulding, Managing Director at Health Spaces, and Kevin Breen, Director at Hive Projects Limited, this article explores how Trusts can eliminate cost blind spots by defining a clear North Star, engaging cost and contractor expertise from day one, and embedding dynamic financial modelling that tracks design in real time.
Historically, healthcare capital projects have fallen into two categories when determining project costs and programmes. For major healthcare projects requiring an external business case, the project budget is determined after the clinical brief has been defined and the design developed to an early RIBA stage. At this point, costs remain uncertain and estimates can be optimistic, with this uncertainty often reflected in risk and optimism bias provisions. These provisions are frequently challenged during funding applications, resulting in reductions that place greater pressure on the available budget.
For smaller schemes, which often rely on annual capital allocations, budgets can be set before any design work has been undertaken and before the clinical brief is fully understood. Decisions may be based on assumptions such as, “I did one of these five years ago and it cost me this much”, with past experience used to establish a new budget. Kevin Breen, Director at Hive Projects Limited, explains that while reliable benchmarks and previous experience are essential for demonstrating value, they do not always account for changes in economic conditions, technology, safety, compliance and sustainability requirements, all of which have changed significantly in recent years. Some healthcare schemes still even rely on outdated cost data, such as HPCGs, which are more than 15 years old and no longer reflect the costs of delivering modern healthcare facilities, particularly within existing hospitals.
Kelvin Moulding, Managing Director at Health Spaces, describes the problem simply:
We still design too much in the dark, and the consequences extend beyond the initial estimate
Without a clear understanding of cost and programme implications, teams risk developing schemes that prove unaffordable or undeliverable, with limited options for resolving the problem once substantial design work has been completed. Revisiting the scheme at this stage can disrupt the original brief, delay delivery and place further pressure on the available budget.
The problem is structural. As Moulding notes, “Eighty to ninety per cent of a project’s cost is defined at the earliest stages.” By the time a project reaches later RIBA stages, many decisions shaping its financial outcome have already been made. Cost does not suddenly increase at Stage 4; it simply becomes visible.
Greater cost certainty depends on who is best placed to develop and manage those estimates. For NHS Trusts, Public Sector Procurement principles and governance can make early contractor involvement difficult to justify when demonstrating value for money, but being able to provide greater confidence in costs and budgets, alongside clear commercial routes to achieve the desired outcome, can strengthen the case for engaging a contractor early.
For Breen, this reflects a well-established principle in risk management: “risk should be transferred to those best placed to manage it”. The same principle could apply to the costing of complex healthcare projects, with responsibility for developing accurate estimates supported by those best placed to determine and manage them. The New Hospitals Programme has recognised the benefits of this approach by introducing early contractor involvement as part of its Alliance model.
Establishing a clear North Star to guide decision-making
Every successful project begins with a shared, disciplined understanding of purpose. The North Star provides that anchor: a set of principles, priorities and constraints that inform every choice from the very first conversation. It ensures that decisions are shaped by clarity rather than convenience, and that scope, cost and programme are never allowed to drift apart. In practice, a North Star defines what matters most, articulating the outcomes a Trust needs the building to deliver, the operational realities that must be supported, and the financial guardrails within which the project must remain. It also ensures that all stakeholders are aligned not just on what is being built, but why and what must be protected as decisions evolve.
Without this early alignment, teams are left navigating ambiguity. Priorities change, assumptions multiply and decisions are made in isolation. A clear North Star acts as the reference point that keeps a project stable even as clinical needs evolve, market conditions fluctuate and design solutions develop.
Eliminating cost blind spots through early, integrated thinking
Most cost blind spots emerge because projects begin in silos. Designers design, clinicians describe needs, cost consultants estimate and contractors join weeks or months later. Each discipline sees only part of the picture, and no one fully tests the implications of early decisions until it is already too late.
To eliminate blind spots, cost and programme conversations must begin on day one and remain central to decisions throughout the project. As Moulding points out,
Scope, cost and programme must be triangulated continuously, not reviewed in isolation
Integrating disciplines early allows the project team to design to a cost, cost to a programme and scope to a strategic purpose, all simultaneously. This allows creative solutions to be considered alongside their financial and operational implications, reducing the risk of costly redesign when affordability issues emerge later. When scope, cost and programme evolve together, they remain aligned. When they evolve separately, blind spots form.
Building continuous financial visibility through dynamic modelling
Dynamic financial modelling keeps the project team aligned on forecast costs and the available budget throughout a scheme’s development. The cost plan is developed early and refined as the design progresses, giving the client an ongoing view of affordability. Design decisions can then be assessed as they arise, while there is still time to make changes.
On a project for an NHS Trust, a detailed quantity-and-rate cost plan was prepared when the design reached the 1:200 drawing stage. The team set out its specification allowances transparently and discussed areas of risk and appropriate contingencies with the client. As the design developed, the cost plan was refined, providing a clear benchmark against which to assess changes in scope and specification.
The value of this approach became clear when the Trust wanted to introduce enhanced ventilation to futureproof some clinical rooms. By reducing the specification of the lighting controls system, the team was able to accommodate the additional ventilation requirements within the available budget.
Cost certainty improved further during pre-construction, when multiple site surveys provided a better understanding of the existing building’s condition. This gave the client confidence to reduce contingency allowances and extend the scope to include much-needed external works, keeping the scheme within budget.
Maintaining a shared understanding of forecast costs throughout the process also meant that formal business case submissions could report an established financial position, with the project team already aligned on the figures. Dynamic modelling therefore supported more than cost control: it gave the Trust a clearer basis for making design decisions, managing uncertainty and getting the most from its available capital.
Using intelligent benchmarking and early supply chain insight to build real certainty
In healthcare construction, benchmarking is both essential and frequently misapplied. When used generically as a simplistic cost-per-m² exercise, it creates false confidence, ignoring the realities that truly determine cost: clinical purpose, patient flows, infrastructure demands, technical complexity and site conditions.
Reliable benchmarking depends on understanding these factors and how they affect the cost of an individual scheme. Data provides a useful starting point, but it must be interpreted in the context of clinical requirements, operational needs and site-specific constraints. This is particularly important when assessing abnormals, which can be defining cost drivers rather than simple adjustments to a baseline. Early benchmarking should therefore inform a living cost model that develops alongside the project, not serve as a box to be ticked.
Supply chain intelligence must also be brought into the process early. Contractors and specialist trades understand buildability, logistics, sequencing and market volatility in a way that cannot be replicated through desk-based analysis. Their insights ground early cost planning in the realities of delivering the scheme, ensuring it is robust and practical.
Ultimately, reliable cost planning depends on using clinical, commercial, design, delivery and supply chain insight to test the assumptions behind the numbers. Each perspective helps clarify whether benchmarks, abnormalities, sequencing and delivery risks reflect the realities of the scheme, so decisions can be made with confidence.
A more transparent and disciplined future for healthcare capital projects
NHS Trusts must make difficult choices about how to allocate limited capital across ageing buildings, changing clinical needs and competing demands on services. Uncertainty over project costs makes those decisions even harder, increasing the risk of significant, often costly changes once design work is well advanced.
That is why Trusts need a reliable view of costs from the outset, kept up to date as the design develops. This provides a stronger basis for investment decisions and a clearer picture of what their projects require, what can realistically be delivered and which compromises could undermine the intended outcomes. This supports better use of available capital, balancing immediate service needs with the longer-term demands of the NHS estate.
Above all, the sector must move away from designing without a clear picture of the financial consequences. With sound principles and the right expertise informing decisions, healthcare projects can be shaped by evidence, realistic cost estimates and foresight, rather than assumptions and costly late-stage corrections.
