Consultation 98/37

Funding for poor estates

Feedback on 1998-99 bids and consultation on funding for 1999-2000

Respond by 11 September 1998

Executive summary

Purpose

1. This document provides feedback on the first round of bids for HEFCE funds to improve poor estates, in the financial year 1998-99, and invites comments on proposals for the second round, in 1999-2000.

Key points

2. We would like comments on the priorities, criteria and processes we should use in distributing funds, to ensure that they are practical, promote value for money, and meet the needs of the sector.

3. Issues for consultation are highlighted throughout the text, and summarised in Annex A.

Action required

4. Please send responses, using the form at Annex A, to arrive by 11 September 1998. We welcome comments on any or all of the issues raised; more extensive comments can be attached on separate sheets.

Background

5. To help universities and colleges improve poor estates, we are providing £105 million for the three years from 1998-2000. Details of the initiative are given in consultation paper 3/97 and successful projects for 1998-99 were announced in HEFCE 98/26. The first year of the initiative has provided a number of useful lessons, and we want to improve the process for 1999-2000.

Feedback and proposals

Size and type of project

6. We received 230 bids for funds, requesting a total of over £289 million. Some institutions submitted bids for up to six separate projects. Bids varied in size from £16,000 to over £20 million. Requests for funds varied similarly, as shown in Table 1 below.

7. It is in everyone's interest that the bidding process is as focused as possible, while at the same time ensuring that institutions are not artificially constrained in developing bids that reflect their priorities. In this respect, three issues arise: whether we should set limits on the number of bids from each institution, the size of bid submitted, or the grant awarded.

We invite comment on proposals that:

• we should limit institutions to two bids
• bids should be no smaller than £500,000 or 5 per cent of recurrent income, whichever is the lower
• grants to an individual institution should be no more than £4 million in each round of the initiative.

8. A wide variety of projects were submitted; the most popular were general teaching areas (32 refurbishments and eight new-builds), learning resource centres and libraries (18 refurbishments and 14 new-builds), and teaching laboratories (23 refurbishments) - see Annex B for more details. In the second round, we could target specific types of project, say learning resource centres, teaching laboratories or physically poor buildings. Alternatively, we could retain a wide scope to attract the best projects.

We invite comment on the proposal that we should not target any particular type of project.

Assessment

9. In the first round, each bid was supported by at least the six-page bid document, and many institutions provided a substantial amount of additional material. In the next round, any additional material will be explicitly excluded.

10. The criteria applied in assessing the projects were impact, need, coherence with institution's estate strategy, value for money, estate management achievements, likelihood of project completion, and levels of resources previously allocated to estates. Wherever possible, bids were assessed using quantified data, modified by qualitative information supplied by institutions in their bid document. Although this provided useful analysis and insights into the projects, we think the criteria should be modified this year.

Impact

11. The primary data used in assessing the impact of the project were the number of people affected and the area of the project. However, this was modified by evidence that the project might have a high visibility, affect morale in a particular way, or have some other impact. Nevertheless, institutions which submitted projects that affected most of their students were likely to fare better under this criterion. On average, the funded projects affected nearly 50 per cent of the institution's staff and students, and 15 per cent of the estate. Projects to improve poor buildings that were used by limited numbers of students, or in institutions with disaggregated campuses, were at a disadvantage.

We invite comment on the proposals that:

• In assessing the impact of the project, we should focus on improvement in the overall condition of clearly identifiable and geographically distinct campuses.

Additional comment is invited on how the impact of the project should be defined as a criterion and what data should support it.

Need

12. The primary information used to assess need was the condition of the buildings. Institutions were asked to describe the condition of their total estate using the standard Royal Institution of Chartered Surveyors (RICS) Building Maintenance Information definitions:

1. as new
2. sound, operationally safe, exhibiting only minor deterioration
3. operational, but major repair or replacement needed soon
4. inoperable or serious risk of failure or breakdown.

13. Table 2 shows the overall condition of the estate of those institutions that submitted bids in 1998-99. This shows the divergence between those that have virtually all their estate in categories A and B, in some cases with up to 80 per cent in category A; and on the other hand those that have virtually all their estate in categories C and D.

14. Since category D is substantially worse than the others, these proportions were weighted. We used weightings for A:B:C:D of 1:2:4:8, but preliminary discussions have suggested that 1:2:6:10 might be preferable. This assessment was modified by other factors identified by institutions, such as a one-off opportunity or shortage of a specific type of space. Again, this criterion operated at an institutional level, so that an institution with an average estate but one very poor building would not do as well as an institution with a generally poor estate. For the institutions funded under the initiative, the average proportion of the estate assessed as C or D was 63 per cent, compared with a sector average of 38 per cent.

We invite comment on the proposals that:

• the primary determinant of need should be an institution's condition assessment (using RICS BMI definitions with a weighting of 1:2:4:8 for categories A:B:C:D)
• as above but using weights of 1:2:6:10
• need should be assessed at a campus level, rather than an institutional, group of buildings or individual building level.

Estates strategy

15. The information provided to show coherence with the institution's estate strategy was variable. Some strategies were prepared at a high level, and therefore the link with the individual project was not apparent. One way to deal with this might be to modify this criterion.

We invite comment on the proposal to introduce a criterion based on the extent to which the project will help to deliver key quantified institutional aims and objectives, as set out in the institution's corporate strategy, annual operating statement, estates strategy or academic strategy. Where the project could be considered opportunist or did not appear within planning documents, institutions would have the opportunity to demonstrate that the project is in keeping with the strategic direction of the institution's plans.

Value for money

16. Value for money information provided by institutions was generally limited to cost data, plus general indications of other benefits such as the possibility of rationalisation. For the most popular types of project submitted, the building construction cost per m² gross floor area is set out in Table 3 below.

We invite comment on the proposal to ask institutions to provide project cost data similar to last year, plus an outline investment appraisal indicating the returns achieved by the investment. Institutions would need to identify any factors that would increase building costs.

Previous allocation of resources to estates

17. We used data provided by the sector through finance returns to the Higher Education Statistics Agency (HESA) to ensure that institutions who have failed to invest in their estate are not rewarded. Institutions funded under the initiative had committed an average of 14.3 per cent of income to their estates over the previous two years. This compares with a sector average of 11.5 per cent. However, there were queries about the consistency of the HESA data: some institutions were shown to have exceptionally high levels of spending on the estate; and there are problems with the HESA record in capturing some of the more innovative forms of investment. A separate data return is a possibility, but that would represent an increased burden on institutions. We would prefer to use HESA data as a base, but offer institutions the possibility of providing information on additional investment not captured through HESA.

We invite comment on the proposal that we should use HESA finance data as a base, but offer institutions the opportunity to provide supplementary information as appropriate.

Achievements

18. We deliberately did not specify how institutions should describe their achievements in estate management. As a result, submissions varied from a detailed quantified list of achievements, including a list of projects successfully completed, to assertions that the estates strategy had been complied with. Further guidance could be given, and a possible format is set out at Annex C. However, for this to be a useful criterion, institutions would have to comply with whatever common format was adopted. If no consensus emerges as to the data that should be provided, it may be more realistic not to use this criterion.

We invite comment on whether we should continue to ask for information on achievements in estate management, and if so whether the suggested format at Annex C is appropriate.

Additional criteria

19. We could add criteria to the assessment process to favour projects that:

• have a small impact but critical effect, for example the provision of a much needed facility
• have high strategic value, for example enabling a new course to be set up
• help institutions with limited financial reserves, but this could not take into account non-public income
• take advantage of good, and possibly unforeseen, opportunities
• provide scope for collaboration
• lever funds from other sources
• strengthen ties with the local community
• provide environmental benefits
• pilot innovative or environmentally sensitive construction techniques
• improve the cohesion of a geographically dispersed institution
• improve the utility of a building poorly suited to HE use

We invite comment on whether these or other criteria should be incorporated into the assessment process:

• in their own right
• or as part of a general criterion which would allow a bid to be considered against all the above. Since some of the criteria would not be applicable in all cases, a bid would not need to rate highly against all the component criteria in order to attract a high mark.

Funding

Prior Expenditure

20. The quality of bids received was such that a number of major worthwhile projects did not receive support, even though need was high. We would not wish to penalise institutions that decided to go ahead with such projects using their own resources. We could achieve this by allowing institutions to bid for projects that were currently underway, but with a time limit, so that only expenditure incurred in the 12 months preceding the closing date for bids would be eligible for support.

We invite comment on the proposal that some elements of prior expenditure should be eligible for funding.

Distribution of funds

21. The first year of the initiative was heavily over-subscribed. To distribute funds more evenly across the sector, we could limit the cumulative funds awarded to individual institutions under successive rounds of the initiative. We could set a cap on an institution's total potential grant, expressed as a percentage of income, or the amount of previous funding could become a criterion. However, this approach might prejudice the quality of projects supported.

We invite comment on the proposal that we should take account of previous allocations in awarding grants.

Timetable

22. We propose to extend the timetable for the second round, to allow more time for preparing and assessing bids.

We invite comment on the following proposed timetable.

23. Please send comments and responses on the form at Annex A by 11 September 1998 to:

John Rushforth
HEFCE
Northavon House
Coldharbour Lane
Bristol
BS16 1QD

Annex A

Improving poor estates: proposals for funding in 1999 - 2000

Response form

Name of institution…………………………………………………………………………………….

Name of compiler/contact…………………………………………………………………………….

Position…………………………………………………………………………………………………

Telephone number………………………………….e-mail…………………………………………

Please return this form by 11 September 1998 to:

John Rushforth
HEFCE
Northavon House
Coldharbour Lane
Bristol
BS16 1QD

Paragraphs 6-7: Number and size of bids

(Please complete one box only)

General comment on paragraphs 6-7:

Paragraph 8: Type of project

General comment on paragraph 8, including ideas for targeting if appropriate:

Paragraph 11:Impact

General comment on paragraph 11, and alternative views on how the impact should be defined as a criterion, and what data should support it:

Paragraphs 12-14: Need

General comment on paragraphs 12-14, and alternative views on how need might be determined:

Paragraph 15: Estates strategy

General comment on paragraph 15:

Paragraph 16: Value for money

General comment on paragraph 16:

Paragraph 17: Previous allocation of resources

General comment on paragraph 17:

Paragraph 18: Achievements

The following information should be supplied (see Annex C):

General comment on paragraph 18, including suggestions for further information which might be included in the common format:

Paragraph 19: Additional criteria

We should incorporate the following criteria into the assessment process, either in their own right or as part of a general criterion which would allow a bid to be considered against all the component criteria. Since some of the criteria would not be applicable in all cases, a bid would not need to rate highly against all the component criteria in order to attract a high mark.

General comment on paragraph 19, and suggestions for other criteria to be included in the assessment process:

Paragraph 20 : Funding prior expenditure

General comment on paragraph 20:

Paragraph 21: Distribution of funds

General comment on paragraph 21:

Paragraph 22: Timetable

If appropriate, please indicate how you would like it changed:

What are the two most important time constraints for your institution in respect of the initiative to improve poor estates?

Are there any other points you would like to make in relation to the initiative?

Thank you for your assistance.

Annex B

Types of project submitted in 1998-99

Annex C

Achievements in estate management

We propose to ask institutions to submit the following information, in a standard format. We are primarily interested in outcomes, so the information is results oriented. However, there would be provision to comment on the figures and give details of the processes used in delivering these results.

1. Increased level of space utilisation expressed as a percentage against 1993 performance.

2. Reductions in energy consumption per m², as a percentage against 1993 performance.

3. Reduction in overall net space per full time equivalent (FTE) student as a percentage against 1993 performance.

4. Reduction in backlog maintenance as evidenced by reductions in the percentage of the estate in conditions C and D since 1993.

5. List of five most significant successful projects or initiatives since 1993.

6. Change in total estate management costs per m² since 1993:

7. Progress since 1993 in developing estate records and other systems to promote efficiency in the estates operation.