The problem

NHS Digital needed to be able to capture the full cost of delivering each one of our products and services because otherwise we cannot:

1. accurately assess value for money of our investments and compare the cost of alternatives
2. accurately assess the costs incurred in building /improving our digital assets that need to be capitalised on our balance sheet
3. assess cost trajectories over time to monitor for efficiency
4. demonstrate transparency to our commissioners and stakeholders. Predecessor organisations had concerns raised from Public Accounts Committee hearings and National Audit Office audits regarding poor financial management of the national technology programmes in the NHS.

The challenge

• How might we develop a charging model so that we can capture an accurate full cost of our products and services and compare them with the cost of alternatives?
• How might we reconfigure our financial and corporate systems so that they can enable full cost capture and reporting in an organisation of agile, multi-disciplinary teams working in a matrix environment?
• How might we develop a resource model so that we can analyse and understand how are resources are deployed across the organisation, helping us to answer questions like: How does actual resource usage compare with our plans/ forecasts? And what resources are particularly stretched, or underutilised?

The outputs

• A central repository for recording and displaying all the projects, programmes, services, and corporate functions (and associated details including cost centre) of our organisational portfolio of delivery.
• A tool where all resources in the organisation (permanent and temporary) were planned against delivery activities and data on how our resources have been utilised to understand what resources are particularly stretched or under utilised.
• A standard rate card utilised across the organisation for costing delivery activity.
• Reporting of actual costs on a full cost basis for each of our delivery activities.
• Reporting of forecasts and budgets on a full cost basis for each of our delivery activities.
• Supporting evidence for capitalisation of all our intangible assets.

The outcomes

Activity based reporting continues to be a valuable tool across NHS Digital. Benefits arising from the development are:

• improved cost segmentation – additional transparency on what we spend our funding on
• assets being captured on the balance sheet at their true cost
• billing to commissioners (DHSC, NHSE, UKHSA etc) according to the real time needed for project and service delivery
• learning from the past. After completing a project, we can see how much time we spent on its execution and utilise this in future investment decisions.