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Education

UK Construction Intelligence Report

Overview

Education remains a key sector not only to the UK construction industry, but to the future prosperity of the UK. It is essential to nurture our young people to become an educated and diverse resource to build our future prosperity and competitiveness. Furthermore, our universities continue to be leading institutions with world renowned research and academic leadership. In financial terms construction accounts for approximately 10% ~(c£90bn) of the UK GDP. Education construction spend represents approximately 17% (£12bn) of this with Schools and Colleges representing 65% (£8bn) and Universities 35% (£4bn)

There were increasing challenges in 2018, and many will continue to test institutions throughout 2019, brought about through changing demographics and national uncertainties including Brexit, student fees and increased competition. Sector economic commentaries suggest 2017 saw a reduction in overall investment than 2016, with approximately 21% fewer project lets, which has impacted on overall expenditure figures for 2018. However in the first half of 2018 education contract let figures have risen and forecasts of an 11% rise on the 2017 figures are reported. The longer term forecasts for economic investment across the sector is for a ‘flat line’ over the next two years with an increase in 2020/21. The fluctuation in investment has a greater focus in the higher education sector, likely due to organisations holding back on investment decisions due to the pressures noted above, scaling back schemes to balance the risk of future investment exposure, availability of competitive loan rates and awaiting the publication of the Augar Report, which is reviewing the post 16 education landscape including University fees and course content.

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Talking point

Special Educational Needs and Disability

Special Educational Needs and Disability (SEND) continues to be a growing focus. The period between 2015 and 2018 has seen an increase of 30% with a further forecast increase of 17% over the next two years.

The current rise in numbers is ‘stressing’ the mainstream school provision and in some instances young people are having to travel long distances or not have teaching environments that meet their needs. Given the statutory obligation on local authorities to ensure adequate provision they are needing to increasingly use private provision. The increase in private provision is forecast to grow by around 2200 places in the next two years which equates to something like an additional £80m per annum. Given the pressure on local authority budgets, this is not a sustainable strategy. Therefore, there is likely to be an additional focus on SEND places over the coming period. OFSTED are currently reviewing their school review criteria and this may help existing mainstream education providers to increase their SEND provision.

Schools

  • England

    The Education Skills Funding Agency (ESFA) have maintained funding commitments across their key programs (Priority Schools Building Program (PSBP), Free Schools, Academisation, Capital Improvement Funding and devolved formula capital allocations,) however with planning harder to achieve and land cost rising, progress in some areas has been challenging. The PSBP2 programme seeks to mitigate these issues as it focuses on expansions rather than new builds, but free school completions, although still a focus, are slower in delivery. The level of investment in the school's sector remains high, however there is still a reported c£14bn investment required to bring the existing school stock to a good condition rating from its current condition. The ESFA are currently well advanced with their Schools Building Survey Program and the returned data will support an updated view. However, compare the £14bn estimated investment required to the current c£2bn p/a investment in Condition Improvement and condition allocation, there is still investment to be made over the foreseeable future. The ESFA have always shown themselves to be driving improvement and delivering value for money. This continues to be the case with their move to modular / volumetric school designs. ESFA suppliers appointed to the new contractor frameworks will have to embrace these new Modern Methods of Construction to deliver on the ESFA cost and time expectations.

    Government are also continuing with the Technical (T Level) education curriculum, striving for an equivalence between technical and academic learning paths. Around 50 'T Level' providers have been selected to kick off the programme in September 2020. Initial subjects are Construction, Digital and Childcare. Technical colleges have started to review requirements in terms of estate and teaching to accommodate the new requirements. There may therefore be a funding and building requirement for providers to meet the T Level aspirations in coming years. As public departments draft their budget requirements for the new Spending Review (SR) period, education will remain an important sector for investment, but will likely have to battle harder against health and social care.

  • Wales

    As the Band A school construction programme with an overall spend of £1.4bn draws to a close in Wales, councils are looking towards their Band B projects, which is a programme estimated in the region of £2.3bn. The Band B funding will comprise two funding streams: traditional, and a new PPP model called the Mutual Investment Model, to enable private investment into the education sector. With some parts of Wales experiencing a population boom local councils are continuing to juggle the allocations between Welsh Medium and English Medium schools due to the increase in demand generally for school places but particularly for Welsh medium education. Band B also looks to address the inefficiency in the systems through addressing the condition of the existing education stock and offsetting the backlog maintenance costs through newbuild.

    The Band B funding will comprise of two funding streams, traditional and a new PPP model, Mutual Investment Model for private investment into the education sector. Band B funding will be available to councils from April 2019.

    This significant Welsh Government investment in social infrastructure is a driver to grow local project opportunities and support SME and main contractor supply chains.

  • Scotland

    The Scottish Government has three key themes:

    • Ensure children and young people get the best possible start in life
    • Raise standards in our schools and close the educational attainment gap
    • Create opportunities for all through widening access to higher, further and vocational education

    Schools for the future programme

    In November 2017, the Scottish Government reached a significant milestone to deliver the key themes above as work commenced on the 100th school as part of the £1.8 billion Schools for the Future Programme.

    The programme, launched in 2009, will see the construction or refurbishment of 116 schools by March 2020, benefitting over 60,000 pupils. A total of 75 schools have been completed and opened to date. The Scottish Government is providing £1.13 billion towards the Schools for the Future programme, with local authorities contributing the remaining funding.

    The Schools for the Future programme is co-ordinated, managed and facilitated by the Scottish Futures Trust. They manage the programme to help local authorities achieve the very best value from their investment in new schools Building on the success of the Schools for the Future Programme.

    The current focus of the Scottish Government is the delivery of an Early Learning and Childcare (ELC) expansion programme worth a capital value of £476M. This programme will almost double parents’ entitlement to free childcare delivering the increased entitlement of 1,140 hours a year by August 2020. The grant allocation was awarded in May 2018 with all 32 local councils now embarking on developing their ELC requirements prior to the due date of August 2020.

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Talking point

The Welsh Government

The Welsh Government are now imposing the requirement for the use of Project Bank Accounts as a condition of funding for all Band B school capital funded projects that receive investment funding approval after the 1st of January 2019. This has resulted from the historically slow payment process to lower tier suppliers, which could be as much as 100 days. The intention of using PBA’s is to assist small and medium sized businesses in their cashflow, reduce the impact of main contractor insolvency and implement good practice of fair and prompt payments in accordance with Principle 5 of the Code of Practice – Ethical Employment in Supply Chains.

The PBA WG Policy was effective from January 2018 for projects over £2m, with limited exemptions, including where compelling reasons exist for the project not to include a PBA, where the project or contract is shorter than 6 months or where the successful bidder is self-delivering over 75% of the contract value themselves. Tier 2 or lower tier suppliers who account for a contract value greater than 1% of the main contract award must join the PBA, where as those under 1% should be allowed to request to join the PBA.

From research undertaken by the UK fair Payment Working Group, it is considered that a PBA can deliver savings of around 1% of contract value through reduced subcontractor pricing to reflect the reduced risk of delayed or non-payment. It is however acknowledged that the main impact of PBA’s will be to the main contractors who will see a reduction in working capital.

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Project showcase

Southampton City Council

Springwell Primary School

Springwell is a primary school for children aged 4-11 years with complex learning difficulties. It has been identified by Southampton City Council for expansion to allow this successful school to take on a greater number of pupils to cope with existing need and the consideration to future requirements.

The work to expand the school is split into 2 phases;

  • Phase 1: Designed and managed by Capita and Southampton City Council, completed Summer 2017
  • Phase 2: New build construction of further classrooms, main hall and related education support accommodation, plus external works.

F+G was appointed under the PAGABO Framework to provide multi-disciplinary consultancy services to take the phase 2 project from the planning application at outline design stage through to completion.

Springwell has been identified by Southampton City Council for expansion to allow this successful school to take on a greater number of pupils to cope with existing and projected need .

The new secondary school includes:

  • New Sports Facilities, including a 3G Pitch and multi-use games areas
  • Teaching Spaces –Including innovative science, technology, engineering and maths facilities
  • Beautifully landscaped areas for drama and the arts

The team was also required to manage a multi-discipline design team and championed working with modern methods of construction, including the impressive glulam frame to the double height spaces of the building.


Higher education

Creating a better, more efficient, university estate

UK Universities occupy more than 27 million square metres and spend approximately £2 billion per year on managing and maintaining their estate. With Total Property Costs remaining stable over the last three years despite an increase in footprint of more than half a million square metres, it's clear to see that there is a pressing need to look at the whole picture before committing University resources on capital investment. Backlog maintenance and obsolescence are challenges that will continue to face the sector and whilst the average age of the estate is reducing, more than 30% is nearing the end of its design life.

It’s a highly competitive market where students often pay around £9,250 per year. Not surprisingly, Students’ expectations have shifted significantly over the last 5 years, driving much higher expectations in learning environments, teaching standards and employability. Universities are competing to attract and retain the best staff and students so capital investment must continue for institutions to differentiate themselves. This is against a backdrop of Brexit and the inevitable effects on EU student recruitment, research income and staff recruitment.

Whilst the sector’s capital investment runs at around £3 billion per year, half of that investment comes from just 20 Institutions. Many Universities, particularly those with limited funds, will inevitably need to adapt their facilities to reflect changes in demand, courses, technology and learning environment – future-proofing accommodation and building flexibility in at the start is essential. Driving efficiency, reducing costs, improving service and increasing commercial income from the estate will be vital for the survival of many institutions.

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Talking point

Higher Education

UK universities generate £95 billion for the country’s economy. The sector's importance to the UK economy is well-understood and the potential of a no-deal Brexit has raised significant concern, particularly for the Russell Group Universities. Concerns over research funding, student and staff recruitment are high on the agenda and the impact of a no-deal Brexit could be catastrophic for those Institutions and the UK economy.

Value for money will maintain its high priority in 2019 and so presents a significant challenge against a backdrop of demand for high-quality learning environments. Great facilities inevitably form part of the selection criteria and cannot be detached from student satisfaction feedback. Universities must continue to drive better whole-life value from their estate and investments. This isn’t always about lowest cost - value needs to be driven through insightful planning, better delivery, using modern methods of construction and lean delivery methods.

Adaptability of the asset to meet changing needs of education is an important consideration that should feature at the strategic planning stage. In certain instances, disposal of assets or facilities that are no longer fit-for purpose or representative of the Institutions wider ambitions may be a better solution than extensive refurbishment and remodelling. This can help release funds for better, more efficient and lower maintenance facilities.

Faithful+Gould were Cost Consultants for the Royal Birmingham Conservatoire, the multiple award-winning project for Birmingham City University. The Conservatoire is an example of how the disposal of a former, obsolescent asset can be the catalyst to deliver a truly unique facility, a building with no precedents, a challenging budget and a fixed deadline.

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Project showcase

Royal Birmingham Conservatoire

Striking and unique, the Royal Birmingham Conservatoire provides a once-in-a-generation, world-class, conservatoire for the digital age. Birmingham City University's gem has won numerous awards and provides an inspirational environment for BBC's Young Musician of the Year, Lauren Zhang.

This is no average building: It is a complex, three-dimensional jigsaw of spaces, blending higher education teaching and performance space into one. The resulting building is architecturally stunning and acoustically magnificent. Teamwork, innovation and hard work have produced world-class facilities for current and future generations of musicians: a superb 500-seat concert hall, 146-seat recital hall, 100-seat organ studio and 80-seat jazz club, alongside 70 practice rooms accommodating up to 650 students.

Royal Birmingham Conservatoire was technically challenging and had to be constructed within a tight budget. It was a tough job for the team, to balance aspirations, the building’s performance and its affordability, against a backdrop of peak supply chain demand in the city centre.

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The impending demolition of the existing building in the city core was a significant challenge for the team, as was the need for a fully operational conservatoire for 2018. No new conservatoires had been built in the digital age and this project therefore had no directly comparable precedents, for technical specification, for combined usage, or for cost benchmarking. It would take significantly longer to build than a typical teaching facility of its size, and was to be located on a relatively small plot in the Curzon regeneration area.

Selecting suppliers based solely on price would have been disastrous—this project demanded a fresh approach. An innovative procurement strategy laid the foundations for success. This meant extensive engagement with the prospective supply chain, carefully pre-selecting two teams with a proven track record, and then focusing on value for money.

The performance of the venue was an absolute priority, so we carefully scrutinised each cost opportunity to ensure no adverse impact on audience and performer experience. The team worked exceptionally hard to deliver lower cost, high-quality, future-proof design solutions without compromising the integrity of the project.

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Birmingham City University

Birmingham City University, the largest provider of creative courses outside of the South East , has invested over £260m in its facilities over the last ten years and the award-winning conservatoire is the latest component of its City Centre Campus. Its awards include RICS West Midlands Project of the Year 2018; RICS National award for Design through Innovation 2018 and RIBA West Midlands project of the Year 2018.

Julian Lloyd Webber, Principal, Royal Birmingham Conservatoire - Our programme benefits thousands of young people from diverse communities across England. Our new home will become the central hub of all of these crucial activities.

Background

Higher Education continues to play a crucial role in the creative industries which continue to make incredibly important role and contributed £84bn in 2014, accounting for 5.2% of the UK economy.

Birmingham City University is a major stakeholder in the local area and the completion of the conservatoire is complementary to its student demographic with a significant proportion of its 24000 students engaged in Arts. It provides a natural presence for Birmingham City University on Jennens Road and further reinforces its position as primary tenant/owner in this significant regeneration area. Creating strong and regular footfall with help the City build on its plans for the local area. The Curzon HS2 masterplan's wider ambition to create 36,000 net jobs; 4000 new homes; 600,000 m2 employment space and £1.4Bn economic uplift; Royal Birmingham Conservatoire contributes to the ongoing vision and contributes significantly to the vibrancy of the neighbourhood.

  • Terry Stocks

    Director - Head of Public Sector and Education - UK & Europe