Probability distributions of facilities management costs for whole life cycle costing in acute care NHS hospital buildings

Abstract

Whole life cycle costing (WLCC) can provide a valuable insight into the economic efficiency of National Health Service (NHS) acute care hospital buildings. The costs of the facilities management function form an integral part of that process. However, the nature of facilities management cost data collated by NHS Estates informs the analyst little about the relationship between the physical characteristics of hospital buildings and the facilities management costs. The data can only be used to benchmark trusts total facilities management spending, but what the NHS now requires is a way of being able to model the facilities management costs for particular buildings. The purpose of this paper is to demonstrate, using a case study, a methodology for modelling stochastically the facilities management costs in NHS acute care hospital buildings. The data used in this research were obtained from NHS Estates on the facilities management costs of over 450 acute care NHS Trusts in England and Wales. The data were analysed to obtain the parameters of the theoretical distributions that best describe the facilities management costs for a ward block building in a large university acute care teaching hospital. The accuracy of these distributions was then validated using various hypotheses and goodness-of-fit tests. The result of this work provides analysts with a framework whereby the facilities management costs in acute care hospital buildings can be modelled as stochastic assumptions in the modelling of WLCC. The paper also reveals that for acute care hospital buildings with a similar gross floor area to that of the building used in the case study (that is approximately 20% of the entire acute care hospital estate), the underlying distribution of costs is likely to belong to the loglogistic distribution