Exclusive: The Education Funding Agency has responded to inflation in the construction sector by increasing its cost per square metre budget for schools work.
EFA director of capital Mike Green told Construction News it has allowed for an inflationary increase in its cost per sq m target of “approximately 5 per cent”.
Before the inflationary increase, contractors were required to design and build schools on the Priority School Building Programme to a maximum of £1,113 per sq m for the school building (excluding costs such as fees and external works) and for an all-in total of £1,465 per sq m, set in 2012.
The all-in cost per sq m requirement will rise to around £1,538. The increase will apply to the EFA’s national £4bn Contractors’ Framework, and the 10 firms that were appointed to it last November.
On the £5bn Regional Framework, which launches this week, an adjusted cost per sq m requirement will be set, taking account of inflation.
Construction News understands some contractors on the main Contractors’ Framework had been advising the EFA of rising material and labour costs in the construction industry, particularly in London, for more than six months.
Earlier this year, Bam Construction was forced to hand five schools back to the EFA from its £75m PSBP London batch, due to failure to reach an agreement on costs for two of the schools.
Speaking in London last week, Bam Construction’s frameworks director Keith Rayner said: “We’re entering a very dangerous period for main contractors and the industry generally – we’re in a rising market, we’re seeing very high increases in certain parts of the country.
“We’re highly committed to education and to the [EFA’s national] framework, but we’re very nervous about the future,” he added.