THE RCVS Annual Reviewdescribes 2011 as “Another year carefully handled”. The worry for many, given the uncontrolled over-spends on a number of major projects within the RCVS, is that the “careful handling” refers to manipulation of the PR face of the RCVS, rather than the actual management of the college.
On 10th June at 12.09pm, the communication department for the RCVS sent out a draft press release to RCVS Council. This described some of the events relating to overspend on the IT project. At 2.40pm a correction was issued stating that the “original budget was £178,000”. By 4.30pm the whole of council had been informed that this correction was in itself incorrect: the actual original budget figure should have been £150,000 – which was then increased to £170,000 (the figure of £178,000 was always a typo and had been corrected at a council meeting in 2008).
Despite this error being acknowledged by the president and council not agreeing with the issuing of the press release, the figure of £178,000 had been rushed out to the press and formed the basis of the lead story in Veterinary Times.
On 19th June, the author, in an e-mail copied to council members, asked why the erroneous figure had not been corrected – especially when RCVS’s own advice to vets who make a mistake is to “own up and apologise”. No reply came from the officers and no correction has been issued to the press.
Advice from RCVS’s own professional conduct department was obtained upon a hypothetical situation where a veterinary surgeon acting in good faith gave misinformation to the press and how he or she should act once the error became known to him or her.
The department quite rightly stated that the veterinary surgeon should know how to act in an ethical manner and if he or she chose to fail to correct the misinformation, then RCVS would probably regard the matter very unfavourably. So it appears there is one rule for veterinary surgeons being judged by the RCVS and another one for RCVS staff and officers.
The handling of two recent major projects has led many to question whether the RCVS hierarchy has become complacent, or has even developed a disregard of good financial management.
The “lower ground floor”
It was decided that additional meeting rooms were needed and that the lower ground floor (LGF), or basement to you and me, could be redeveloped to provide these.
The original figure for the LGF work presented for the 2009 budget was £190,000. This was then revised to £366,000 in May 2010 to include the increased building costs, audio-visual (AV) equipment and furnishings. The Planning and Resources Committee
(PRC) had asked for prices to be obtained on a simpler and much cheaper system using a large screen and Skype instead of full-blown AV equipment – but I can’t find any followup on that request.
The budget was then revised to £401,000 in October 2010 to allow for IT connection to the rest of the RCVS network. A further £5,000 was added to allow for “refreshment making facilities” (some kettle!) and signage. Yet another £18,000 was added for an induction loop system (a legal requirement). In February 2011 a further £60,000 was added to the budget as “difficulties” were encountered with the ceiling.
The final cost came in at £484,000 – yet another £60,000 in addition to the costs shown above – because of “extra work to provide power to the kitchen” (again – some kettle!), 50 extra power sockets, and an uninterruptible power supply for the IT kit and soundproofing, etc.
It is important to note that shifting the budget figures as you go along does not mean you are keeping close to your budget, any more than shifting the goalposts makes me a star striker. So claims of “only 14% overspend” need to be viewed in light of the original budget and the figures adjusted accordingly.
RCVS Council has been assured that “the rooms are in constant use”, but analysis of RCVS’s own booking sheets showed a maximum of 15% occupancy. It appeared that the creation of these new rooms saved the RCVS less than £3,000 in external room hire over six months (when disciplinary meetings were held). As far as I am aware, only two external bodies have “hired” the rooms (an income source cited to help offset the costs of the building works) – but they have not actually been invoiced.
The changes to the budget were “approved”, according to the PRC papers available to the public, but dig deeper and you find that this was disputed at council and finally it became “the extra costs were noted” by PRC – rather than “agreed”.
Digging deeper is complicated by the fact that the recent council minutes themselves are currently not available on the website (just the preparatory papers). The older council minutes are available on the expensive new website – just not the recent ones dealing with these financial fiascos.
The Registrar commented that officers (including herself) were empowered “to deal with urgent business and approve expenditure from the contingency fund, arising between Council and Committee meetings, reporting to the Council or the relevant Committee and seeking ratification, as necessary” – but the total RCVS “contingency fund” is only £40,000 – not the considerably greater sums used here.
The IT database
The old RCVS database certainly required updating to accommodate changes in the records being kept and also to allow webenabling. However, the management of the project is undoubtedly open to question.
The budget papers presented to council (November 2008) state under “capital budget”: “The original provision of £150,000 in the capital budget for the database has been increased to £170,000 in line with costings obtained by Corporate Services dept”.
In June 2008, the council was told that the project would be completed in October/November 2009. In February 2009 the “evaluation” was undertaken. In October 2009 the system was “installed” and council was told that it would be “live” on 17th February 2010. By March 2010 the “live date” was moved to May 2010. In May 2010 it was reported to PRC that “the iMIS database project is still going to plan” [my emphasis]!
The PRC papers of 14th October 2010 show that there “had been problems” – but everything would be hunky-dory for the 2011/12 fee cycle. It was also noted that “officers were closely monitoring progress”.
Finally, in March 2011, RCVS council was told the project had gone live on 16th December and was on target to enable online payments of retention fees (due 1st April). However, in the council papers for June 2011 it was stated that there was an overspend of £225,000 and probably a further £20,000 required to complete the project.
Interestingly, the RCVS claims to have used PRINCE2 methodology for specifying the IT project. As I understand it, this method means that the precise specification of the project is clearly set out prior to work starting. Time, scope and costs are all agreed in advance. There is also precise documentation throughout the project, so any deviation (i.e. RCVS changing its mind on what is needed) will be clearly identifiable. It certainly seems odd that the RCVS is paying some £245,000 extra for late delivery of the system if it was correctly specified.
The treasurer has attempted to deflect the concerns about the overspend on the IT system by illustrating how complex a project it is, having to print labels and the like. He has also stated that the RCVS normally budgets £60,000 per annum for updating the database – so this saving can be offset. What he didn’t mention is that the annual licence for the BASIC version (is that the one installed?) of the new software is £39-£40,000 per annum (before any updating work is charged).
Most veterinary practices now have practice management systems installed. These cover a massive range of complexity, a variety of reminders being sent out, clinical records stored, links to PACs systems for image retrieval, SMS texting, web-linkage, multiple ownership, cumulative accounts or third party payments, e-commerce, even printing labels.
Given the easily available wealth of expertise on database management, it is a wonder that RCVS could not have been better informed. One might now assume that everything in the garden is rosy, having paid all this extra money, but apparently this is not the case.
One would also assume that thought had been given to ensuring that the RCVS database functions were integrated across its roles. However, this is also not the case – the professional conduct department’s database doesn’t link to the new one and a whole new database project will be entered into at some time when the dust has settled from this fiasco.
The VAT issue
To the great consternation of RCVS council, the real cost of these projects has not been made clear to the profession that is paying for them.
All the figures quoted have been ex-VAT. Most veterinary businesses are VAT registered and simply reclaim the VAT – so it doesn’t actually seem like a real cost, but the RCVS is different: 81% of the VAT it is charged has to be paid and cannot be reclaimed.
As VAT rates have changed it is slightly complex to produce an accurate final figure but reasonable estimates would be to assume a 17.5% rate for the building project and (given the timing) a 20% VAT rate for the database. Therefore, the real cost (money we actually have to spend) of the LGF meeting rooms will be of the order of £552,000 and the cost of the IT database is approximately £482,000.
Reviews
At RCVS Day on 1st July, the outgoing president announced a review on these two major projects. “That the work was required was not in question,” he said – devotees of Yes, Prime Minister will recognise that defining the outcome of a review before it starts is an essential part of carefully handling any situation.
The president continued: “But that expenditure over the extended timescale of both projects rose above initial budgets is both to be regretted and subject to analysis as to cause.”
One would hope that Professor Bill McKelvey’s review team will extend its enquiry beyond the proposed purely financial terms of reference. I hope it will look at the “senior management structures of the RCVS and the current decision making processes and develop recommendations for any changes required to ensure that the structures are ‘fit for purpose’ for at least the next decade” – which was the meat of the motion I put forward at the last council meeting.
One thing is for certain: without significant change it is only a matter of time until the next crisis hits the RCVS.