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2013 Preview: Education

The new year starts on a more positive note for the education sector after it was boosted by announcements in December on a new private finance model and £1bn in new money for free schools and academies.

Procurement of the £400m capital part of the Priority School Building Programme is under way, and the Department for Education will reveal this month how it intends to spend the additional £1.17bn for the sector, announced in the autumn statement.

Of the new money, just £275m will be spent in the next financial year, but procurement will ramp up as the year goes on, with building work for the first schools expected to start in autumn.

Treasury officials said the new money would equate to around 100 schools; however, the exact make-up of new-build and repair schemes is yet to be decided.

With the new private finance 2 model of private financing now agreed, all eyes will be on work packages coming to the market for the £2bn programme, of which £1.75bn is to be spent in construction.

It will be interesting to see how contractors approach the new private finance model, which could see those who have been relatively quiet in education, or those who didn’t secure a place on the academies framework, increase their presence in the sector.

Who you need to know

Education Funding Agency director of capital Mike Green has expressed his frustration at the length of time it has taken to make progress on the Priority School Building Programme since his appointment was announced in February.

But progress is being made, finally, with the new private finance model now enabling the £2bn programme to start in earnest. Contractors will expect reduced returns on the new PF2 model compared with PFI, but this is unlikely to lead to a scarcity of bidders.

Keeping contractors satisfied that they can make decent margins, local authorities and schools satisfied they are still getting excellent schools at a cheaper cost, and maintaining recent progress on procurement such as the increased speed of awards through the academies framework, will be among the big challenges.

There is a renewed optimism in the sector and after big contractors cut education staff in 2012, increased confidence will hopefully lead to the right skills being allocated to the sector at a time when contractors will be under greater pressure than ever to perform with more limited resources.


More than 200 schools will start to be built through private finance in 2013, with bidding already under way for batches of capitally-funded schools worth around £100m in the North-east and Midlands.

A package of academies worth £54m in London will be next, followed by five batches with the remaining £250m of government funds, with two in the North-west and one each in the South, East and Midlands still to come.

Bam Construct, Wates and Sir Robert McAlpine were the first shortlisted firms for academies in the North-east and Midlands.

Contractors will be paying attention to their expected reduction in cost and waste, including 15 per cent “reduction in wasted space” for secondary schools and 5 per cent for primary schools compared with BSF, with target of 30 per cent overall cost savings against the scrapped £55bn programme.

Writing for CN in November, Wates head of education Stephen Beechey said reducing delivery times, staying within a tighter budget and providing the “most innovative designs possible, within financial constraints” will be high on the sector’s priorities for 2013.

Universities and student accommodation deals are proving a steady stream of income and major schemes being eyed at the moment include the Mace project-managed £150m redevelopment of the University of the West of England, which is at pre-tender stage.

There was £310m allocated towards further education colleges in the autumn statement, and £290m of that will be spent within this, and the next financial year.

Contracts:

January Invitations to tender to be issued for the London batch of capitally funded priority schools worth up to £54m

February Contract to be awarded for the £100m Desertcreat College Programme in County Tyrone, to replace existing training facilities of the police service, prisons, fire and rescue

February Preferred bidder to be appointed to £200m City of Glasgow College between Bam and Sir Robert McAlpine-led consortia

Q1 First schools under the £2bn privately financed priority schools come to market.

Q1 Contractors for £288m design-and-build framework, primarily for education, from Cambridgeshire and Northamptonshire county councils to be announced

Q1 Kilmarnock College to appoint a team to build a new £50m college campus at the Former Johnny Walker Factory, Hill Street in Kilmarnock

Q1 Department for Education to reveal how it will spend £270m allocation for University Technical Colleges from the autumn statement

Q1 Contractor to be appointed to Birmingham City University’s new £45m city centre campus development

April Contractor appointed to the Scape framework, expected to be worth more than £1bn and include education projects across the UK

Q2-Q3 First contracts signed under extra £1bn for free schools and academies announced in the autumn statement, with schools to begin construction in autumn


Procurement will continue in 2013 for university campus extensions at locations across the UK including in London, Manchester and Swansea and are expected to lead to capital investment worth more than £2bn for these three alone.

The Hampshire County Council-led Improvement and Efficiency South East framework is one of several procuring batches of schools worth tens of millions at a time; local jobs continue to keep contractors ticking over, with local relationships and repeat work key to success.

Education secretary Michael Gove has taken heavy criticism from opposition politicians for his free school policy but, with the backing of his prime minister, it is continuing apace.

However, job cuts at the DfE – expected to mean 1,000 civil servants losing their jobs over the next two years – will be closely monitored, as the Education Funding Agency needs to increase recruitment substantially to cope with the Priority School Building Programme.

North of the border, work being carried out by Scottish Futures Trust is not going unnoticed either, with a £1.3bn programme of schools to be built over the next five years.

Wales meanwhile is continuing with its 21st Century Schools programme, which while slimmed down is still worth more than £1bn.

In December 2011, CN revealed an announcement of the first priority schools on the then £2bn programme had been delayed until the new year.

It would eventually be May before the list of schools to be funded under the programme would be revealed. A year later, there were still no contracts awarded.

But with a boost for the sector in the autumn statement, and the industry waiting for details of new spending, including batches for privately financed priority schools, the picture is looking significantly brighter than this time a year ago.

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