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Primary school contracts set to grow

Construction contracts under the Primary Capital Programme are set to grow in size as local authorities seek to benefit from economies of scale, according to an expert.

Lend Lease Projects head of education Chris Spiceley said councils were realising that bundling primary school jobs together was more cost effective than individual contracts.

The £9 billion PCP, announced by the Government in 2005, commits to renewing at least half of all primary school buildings by 2022-23.

Up to now much of the work has been delivered by individual contracts. But Mr Spiceley – who has advised several local authorities on how to manage their PCP projects – said this could be set to change.

“I think we will see larger size contracts,” he said. “I would like to see more work being batched as we will start to see efficiencies.”

The comments raise the prospect of the PCP beginning to operate more like the lucrative £55 billion Building Schools for the Future project.

Mr Spiceley added: “We are keen to demonstrate we can deliver efficiencies at primary level as with secondary level. The challenge to local authorities should be to deliver a rolling programme.”

Education projects offer a rich vein of work for 2009 and 2010, with the BSF scheme to rebuild or refurbish every secondary school in England by 2023, and a new four-year £4 billion framework to deliver academies.

Mr Spiceley said small and medium-sized contractors had every opportunity to take a slice of this cash.

“Historically, small firms have delivered schools, and it’s a case of getting the right size contractor for the authority,” he said.

“Some deals will be for five schools, and the client needs to know it is still number one on that contractor’s list. There are opportunities for £200 million to £300 million [turnover] contractors to get involved.”

He added: “We advise authorities to make sure there is a balance. A client should ensure they have a contractor who makes them their number one priority.”

However, the rich opportunities in the education sector – and the dearth of projects elsewhere – was making the sector very competitive, warned Mr Spiceley.

He said there would be a huge number of contractors wanting to get on the academies framework, and that Bovis was likely to be looking at it closely.

Up to 12 contractors will be appointed for each of two regions under the framework. “I would be highly unsurprised if every big name was interested and looking at tendering,” he said.

BSF margins were likely to suffer as well, as more and more contractors piled in with offers.

“Hopefully authorities are looking for value for money, but ultimately firms will have to look at the rates they are going in at,” Mr Spiceley admitted.

THE PRIMARY CAPITAL PROGRAMME EXPLAINED

The aim of the Primary Capital Programme is to create primary schools that are equipped for 21st-Century learning, and are at the heart of their communities.

Key targets include: rebuilding or taking out of commission 5 per cent of the worst-condition schools; and rebuilding, refurbishing or remodelling at least 50 per cent of primary schools overall.

The project is due to ramp up dramatically from next month. While there was just £150 million invested in 2008-09, this rises to £650 million in 2009-10 and £1.1 billion in 2010-11.

It is anticipated that at least £500 million will be invested each year from then until 2022-23. Local authorities are also expected to join their primary capital funding with other capital funding streams.