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Consultation Paper 3/97

Funding for Poor Estates and Laboratory Refurbishment

To: Heads of HEFCE-funded Institutions
       Heads of DENI-funded Universities

Of interest to: those responsible for Estates and Finance

Reference: CP 3/97

Publication Date: June 1997

Response by: 18 August 1997

Enquiries to: John Rushforth
Tel: 0117 931 7416
E-mail: j.rushforth@hefce.ac.uk

or Alice Frost
Tel: 0117 931 7123
E-mail: a.frost@hefce.ac.ukn

Executive Summary

1. This consultation paper invites comments from institutions on proposals to provide HEFCE funds for
  • poor estates
  • refurbishing laboratories.
It seeks views on the desirability of such programmes and the priorities, criteria and processes we should use in implementing them.

We would like responses by 18 August 1997.

Background

3. In February 1997 (Consultation paper 1/97), we asked whether we should provide funds to address the problems of institutions with a poor estate and whether this should be through a formula or bid system. Of the responses received, 75 per cent supported such a scheme, and 85 per cent of those preferred a bid system. We therefore intend to provide £30 million a year for this purpose for three years from 1998-99.

4. Under the dual support system, we are responsible for the infrastructure for research in higher education institutions, including premises. In 1996 we commissioned a survey of research equipment in UK universities from PREST at the University of Manchester. The survey noted the importance of investment in the current stock of research equipment, to maintain high quality, leading-edge research departments. It also noted that the stock of equipment could not be looked at in isolation from the more general laboratory environment. Responses to that report stressed the importance of investment in the infrastructure. It therefore seems timely to support a research laboratory refurbishment programme, as a counterpart to its research equipment initiatives. We intend to provide £30M a year for this purpose for three years from 1998-99.

5. We would like the views of institutions on how these programmes should operate.

Poor Estates

6. An initiative for poor estates could address a range of needs. Some institutions need to undertake capital refurbishment works as a matter of urgency, for example to deal with cladding and system building failure. Others need to replace buildings because of restructuring, obsolescence or inefficient operation. Increasingly, institutions have to spend money on their estates to meet statutory requirements, such as the proposed European Union Fire Regulations and legislation to be introduced by the Health and Safety Executive.

7. The amount of work to be done far outweighs the funds available. We therefore have to prioritise. As a general principle, institutions should normally fund work to comply with legislation, unless Government makes specific sums of money available. They should also fund general maintenance and improvements to building stock where there is a clearly identifiable return on the investment, such as better energy efficiency. Accordingly, we intend to give priority to bids that have a major impact on the estate. These will normally be capital refurbishments or projects related to restructuring.

8. We invite comments on the proposal that:

We should provide funds for poor estates, targeted at major capital refurbishment and projects related to restructuring.
9. One of the concerns about funding poor estates is the risk that it will reward institutions who have managed their estate less effectively than others. We propose to invite institutions to support their bids with evidence of previous good management over a period (say five years). This could include evidence of:
  • increased space utilisation
  • reduced running costs
  • improved condition
  • use of KDK and Hunter funds.
10. Some assessment of the institution's financial resources is also desirable, to target funding to areas of greatest need. We will need to consider therefore:
  1. The level of cash backed general funds.
  2. Capital and backlog maintenance funds.
  3. Levels of recurrent funding.
11. We invite comments on our proposals that:
We give preference to institutions that demonstrate effective estate management and relatively lower levels of funding over the last five years.

Research Laboratories Refurbishment

12. The PREST survey identified specific subjects which may need investment in laboratory refurbishment. However, there are likely to be refurbishment needs in most laboratory-based subjects in different institutions.

13. We invite comment on our proposals that:

  1. We should conduct a research laboratory refurbishment programme.
  2. This programme should be open to bids in any laboratory-based subject.
14. Our policy is to fund research selectively. We therefore believe that quality in research should be an important criterion in allocating funds in this initiative.

15. Laboratory refurbishment constitutes a significant investment in future research activity, so we propose to take account of future research strategies and plans. We will consider the views of project funders, notably Research Councils, charities and industry, in assessing future strategies.

16. In our new research funding method, we have highlighted the importance of collaboration in achieving value for money and contributing to research vitality. We therefore believe that the bid's contribution to the overall higher education research infrastructure should be a criterion in assessment.

17. Institutions themselves are responsible for ensuring that their estate, including their research estate, is maintained. Our assessment of bids should consider the institutional strategy for maintaining the estate, the fit of the investment with future institutional plans, the soundness of the building, and the financial plan for the specific project.

18. We will also have to satisfy ourselves that the investment represents value for money.

19. We invite comment on our proposals that the criteria for selection of bids for funding should be:

  1. Quality in research.
  2. The robustness of future research strategies and plans for use of the refurbished laboratory.
  3. The contribution to the sector's research infrastructure, including plans for collaboration and sharing.
  4. The soundness of the institutional strategy for maintaining the estate, and of the building and financial plans for the specific project, and the fit of the project with future institutional plans.
  5. The level of matched funds from the institution, and the overall value for money of the bid.

Implementation

20. To satisfy ourselves that funds are used for the purposes intended, without placing a heavy bureaucratic burden on institutions, we propose a two stage bidding process. We will invite institutions to submit a brief outline proposal along the lines given at Annex 1, and then rank bids using the criteria suggested in this paper. We will give approval in principle to some institutions, and ask them to prepare a detailed project plan and cash flow statement to form the basis of payment. A reasonable level of virement will be allowed and at the end of the project the institution will have to submit an audited statement that funds have been used for the appropriate purposes.

21. To promote good practice, we will require institutions to submit with their bid:

  • a condition assessment of their estate (which they can produce themselves)
  • a maintenance plan
  • if appropriate, evidence of good practice in space management (such as surveys of use, central timetabling and remodelling exercises).
22. As with other capital programmes, we propose to ask institutions for 50:50 matching funds. Bids requesting a higher contribution will be eligible, but we will consider the level of matched funds in our assessment. The institution's matching contribution may come from any source.

23. We invite comments on our proposals that:

  1. A two-stage bid process should be adopted.
  2. Outline bids should be based on the information set out in Annex 1.
  3. Institutions should demonstrate that they have adopted good practice in estate management.
  4. We should ask institutions to contribute 50:50 matching funds as the norm in the first year of the programme.

Timetable

24. The timetable for the scheme is as follows:
Consultation on programmes June-August
Report to HEFCE Board on results of
consultation and any revisions to the scheme   		 October
Invitation to bid November
Assessment of bids January
Report to Board on successful bids February

25. Please send comments and responses by 18 August 1997 to:

John Rushforth
HEFCE
Northavon House
Coldharbour Lane
Bristol
BS16 1QD

Annex 1

Basis of Outline Bid for Poor Estates and Laboratory Refurbishment

1. Proposals may be made for both programmes. Each proposal should consist of no more than six pages.

Both Programmes

2. Institutions should refer to:
  1. A description of the proposal, including estimates of cost which allow for inflation and contingencies over the period of the contract.
  2. An outline project plan that sets out key dates for approvals (including governing body, planning and building regulations approvals), obtaining matched funding, the procurement process, and works.
  3. How the proposal fits with the institution's current estate strategy (institutions should provide an up to date version of the strategy if appropriate).
  4. Evidence of effective estate management over the last five years, which could include:
    increased space utilisation
    reduced running costs
    improved condition
    use of KDK and Hunter funds
  5. The method of procurement to be adopted.
  6. The institution's best assessment of the condition of its estate
  7. Sources of matched funds.
  8. Confirmation that:
    • an investment appraisal has been conducted in accordance with Treasury Green Book standards
    • the institution has considered whether a private finance solution is practicable
    • the institution has an effective long-term and routine maintenance plan (we may review such plans before giving any final approvals).

Poor Estate

3. In addition, proposals for poor estates should quantify the impact of the project on the provision and use of space in the institution.

Laboratory Refurbishment

4. Proposals for laboratory refurbishment should also include:
  1. Future research strategy and plans.
  2. Views of project funders, notably Research Councils, charities and industry.
  3. Opportunities for collaboration and sharing, and the contribution that the bid will make to the higher education research infrastructure.