THE £18m redevelopment of the Friarage Hospital in Northallerton is the first project to be contracted out under a national "value for money" scheme.

South Tees NHS Trust has chosen Interserve Project Services as its construction partner for the project.

The scheme aims to create a patient orientated environment at the hospital, with modern facilities for patients and staff.

It will have a new children's ward, outpatients unit, women's health department, pathology unit and kitchens, plus a refurbished maternity department and day case/endoscopy unit.

The contract for the work is the first to be awarded under the national roll-out of the NHS ProCure 21 programme, a five-year scheme covering all non-Private Finance Initiative construction projects in the health service costing more than £1m.

It aims to deliver better quality healthcare buildings and improved value for money.

Interserve Project Services was involved in the pilot of ProCure 21, which took place in the north and west Midlands last year.

The Berkshire company's £13m contract with South Tees Hospitals NHS Trust covers the design and construction of the facilities, plus the refurbishment of existing buildings at the Friarage.

John Vyse, Interserve director, said: "Having won the first contract in the pilot, it is great that we've had the same success in the national programme.

"The new Friarage Hospital will provide a valuable service to the local population - we are proud to be making it possible."

Planners at Hambleton District Council gave the project the go-ahead in December and work should be completed in the summer of 2006.

Enabling work is under way and building work is expected to start in summer.

Margaret McGloin, assistant director of facilities and planning at the NHS trust, said: "The new facilities will allow us to provide the highest standards of care and comfort for patients in a modern and welcoming environment.

"Extensive consultation has already taken place with staff from the departments involved to develop the design and these will continue during the course of construction."