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Report 99/51

Funding for poor estates

Feedback on 1999-2000 bids and invitation to bid for 2000-01

Executive summary

1. Purpose

2. This document provides feedback on the second round of bids for HEFCE funds to improve poor estates, in the financial year 1999-2000, and invites bids for the third round for the financial year 2000-01.

   Key points

3. There were 36 successful institutions in 1999-2000 (41 bids), to which we provided £93 million in project funding.
4. We expect to allocate £70 million in 2000-01, using the same assessment criteria as last year.

   Action required

5. Bids for 2000-01 must be returned by midday on 25 October 1999. The original and five double-sided unbound copies of the application form and annexes should be sent.

   Background

6. To help universities and colleges improve poor estates, we are providing £250 million for the five years from 1998-2003. Details of the initiative were given in consultation paper 3/97; successful projects for 1998-99 were announced in HEFCE 98/26, and successful projects for 1999-2000 were announced in HEFCE 99/22.

   Feedback

   Size and type of project

7. We received 144 bids for funds from 102 institutions, requesting a total of over £282.5 million. Projects varied in size from £222,000 to £34.1 million, as shown in Table 1 below.

   Table 1 Project size of bids in 1999-2000

   

8. The total net area of successful bids was 243,185 m², being on average over 10 per cent of those institutions’ net estate. The bids affected buildings that ranged from 423 m² to 45,250 m².
9. We funded twice as many refurbishment/adaptation projects as new-build.
10. A wide variety of projects were submitted: the most popular being for general teaching, which accounted for 59 projects as shown in Annex B.
11. There were 36 successful institutions in 1999-2000, of which 13 were also funded in the 1998-99 round of the initiative.

    Assessment

12. The main criteria applied in assessing the projects were impact: need, coherence with the institution's strategy, value for money, estate management achievements and resources previously allocated to estates. The assessment procedure also took account of projects that could show particular benefits, such as improving student access, scope for collaboration, or better cohesion of an institution on several sites. Wherever possible, bids were assessed using quantified data, modified by qualitative information supplied by institutions in their bid document. Proposals containing more quantified data did better than those which were more ‘wordy’.

    Impact

13. 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 that submitted projects that affected most of their students and a significant area were likely to fare better under this criterion.
14. On average, the funded projects affected over 70 per cent of the institution's staff and students, and over 21 per cent of the estate. For all institutions that bid, the average percentage of staff and students affected was 53 per cent and over 5 per cent of the estate. The staff and student impact figures relates to either a single campus or the distinct campus of a multi campus site.
15. Over 160,000 staff and students will be affected by the successful bids in 1999-2000.

    Need

16. 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:

    A. As new.

    B. Sound, operationally safe, exhibiting only minor deterioration.

    C. Operational, but major repair or replacement needed soon.

    D. Inoperable or serious risk of failure or breakdown.

17. The average estate condition for the sector is now 35 per cent in condition C and D. The average for the projects funded was 42 per cent. Table 2 shows the overall condition of the estate of institutions that submitted bids in 1999-2000. There was wide variation: from those with virtually all their estate in categories A and B (in some cases with up to 86 per cent in category A); to those mostly in categories C and D (some with 82 per cent in C and 80 per cent in D).

    Table 2 Condition of estates for institutions bidding in 1999-2000

    

18. The improvement in the condition of the funded buildings was as shown below:

    Condition of project building	A	B	C	D
    Before	4.7%	33.6%	36.6%	25.1%
    After	56.2%	40.54%	3.1%	0.16%

    Estates strategy

19. The information provided to show coherence with the institution's strategy was variable. Successful bids tended to be those where there was a readily identifiable link between the strategy and the project. Most estate strategies (63) were due to be updated in 1999-2000.

    Value for money

20. 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 range of building construction costs per m² gross floor area is set out in Table 3.

     

    

    Previous allocation of resources to estates

21. We used data provided by the sector through finance returns to the Higher Education Statistics Agency (HESA) to ensure that institutions that have failed to invest in their estate are not rewarded. Institutions funded under the initiative had committed an average of 16.5 per cent of income to their estates over the previous three years. This compares with a sector average of 13 per cent.

    Achievements

22. This year the questions on achievements in estate management were more precise to allow greater comparisons between institutions. Institutions fared better where they could quantify achievements.
23. Achievements were variable in the sector but, for figures for the funded bids, covering the five years from 1993 to 1998, were as follows.
    1. Average increase in space utilisation: 33 per cent.
    2. Average reduction in energy costs: 8.5 per cent.
    3. Average reduction in estate management costs: 9 per cent.
    4. Average reduction in condition C: 35 per cent.
    5. Average reduction in condition D: 56 per cent.

    Invitation to bid

    Key points

24. This is the third round of the poor estates initiative, which supports major refurbishments, projects to make more efficient use of space, and new build.
25. We will normally fund 50 per cent of project costs, although exceptionally we may agree higher levels of funding.
26. The first two years of the initiative have been heavily over-subscribed. We expect to distribute £70 million in 2000-01, and intend to limit the cumulative funds awarded to individual institutions to £8 million with a maximum for any one year of £4 million. The assessment criteria are the same as last year, but there are minor modifications to the bid document.

    Action required

27. There will be a single-stage bidding process. Submissions, using the project definition form at Annex A, should be returned by midday on 25 October 1999.

    Eligible projects

28. Poor estates funding is directed towards major refurbishments, projects to make more efficient use of space, and new-build.
29. We will give priority to large-scale projects which will make a significant difference in enabling institutions to develop. We are not looking to fund small-scale marginal developments. We will therefore not fund work on residences; and would not normally support projects that only ensure compliance with legislation, are predominantly maintenance works, or are self-financing, such as projects to improve energy efficiency.
30. Projects must have started on site after 1 April 1999 and usually before September 2001.
31. We will normally fund 50 per cent of project costs, although a higher level of funding may be agreed in exceptional circumstances. Matched funds can be drawn from any source, and external funding is encouraged. We may require some institutions to repay grants over a period of up to 10 years. Repayment provisions may be included within the terms of any grant.

    Bids

32. A maximum of two bids may be submitted.
33. To ensure that the initiative is directed at key projects that cannot readily be funded from elsewhere, the value of the overall project should be at least £500,000 or 5 per cent of 1997-98 recurrent income, whichever is the lower. Grants to an individual institution are unlikely to exceed £4 million in any single round of the initiative.
34. Institutions should submit six copies of their bids using the project definition form at Annex A and, if they wish, up to four A4 sheets of location and floor plans. Any additional material will be disregarded.
35. This document and the form are available on the Internet at http://www.hefce.ac.uk under ‘Publications’.
36. In assessing bids, we will take account of previous grant allocations under the poor estates initiative.

    Assessment criteria

37. Bids will be assessed against the following criteria:
    • impact on the estate, measured in terms of the number of students and the floor area affected by the project relative to the institution as a whole, or, where appropriate, to an individual campus
    • overall condition of the estate, favouring institutions with the worst estates, and projects which significantly improve the condition of affected buildings
    • coherence with the institutional and estate strategies, and the significance of the project for example in enabling the institution to achieve its mission
    • overall value for money of the project
    • the level of previous institutional investment in the estate, with priority given where such investment has been high
    • achievements in estate management
    • additional criteria that support the project (see Annex A paragraph 17).
38. An advisory panel drawn from the HEFCE Board and the sector's representative bodies (CVCP and SCOP) will review the projects. Successful projects
39. We will announce the outcome of bids in March 2000. Offers will be made subject to confirmation that:
    • an investment appraisal has been conducted conforming to criteria specified by the Council
    • procurement will be undertaken in accordance with good practice
    • project funding is in place, and details of financing and expenditure cash flows are provided.
40. In certain cases, grants may also be conditional on a site visit.
41. We will fund successful bids on the basis of cash flow projections and known contract sums. At the end of the project, institutions must submit audited statements that all funding has been used for the approved purpose.

    Timetable

42. We have extended the timetable for the third round, to allow more time for preparing and assessing bids.

    Invitation to bid	July
    Bids received	Midday on 25 October 1999
    Screening process	November and December 1999
    Panel assessment	January 2000
    Panel review meeting	early February 2000
    Final decision	24 February 2000
    Announcement of grant awards	March 2000

    Date of return

43. Six copies of the project definition form should be returned by midday on 25 October 1999 to:
    Sam Smith
    HEFCE
    Northavon House
    Coldharbour Lane
    Bristol
    BS16 1QD
44. We will not consider late bids, but bids posted first class and postmarked on or before 23 October 1999 will be eligible.

Annex A

Project definition form

The original, and five double-sided unbound photocopies of the completed application form and annexes, must be returned by midday on 25 October 1999 to:

Sam Smith
HEFCE
Northavon House
Coldharbour Lane
Bristol BS16 1QD

Institution _________________________________________________________________

Date of submission _______________________Contact name _______________________

Telephone ______________________________ e-mail_____________________________

Title of project ______________________________________________________________

Total project value _______________________Grant requested_____________________

Synopsis of the project (maximum 20 words) _____________________________________

_________________________________________________________________________

_________________________________________________________________________

1. Brief description of the project. (Maximum 200 words.)

2. Please confirm that a preliminary option appraisal has been undertaken. As a minimum this should compare the costs and benefits of the proposal with doing nothing, and show that the proposed project produces a net present value (NPV) which is positive or at least more favourable than the do nothing option.

3. Please summarise the benefits and returns indicated by the preliminary option appraisal. We would expect this to cover items such as lower energy and maintenance costs, higher utilisation rates, improved condition, and other benefits, quantified wherever possible. Institutions unable to quantify likely changes in annual running costs are unlikely to receive funding. (Maximum 250 words.)

Impact

4. We will assess the impact of the project on the campus where it is situated. If a project is not on a particular campus, it should be treated as if it is part of the nearest campus. The primary measures of impact will be the number of students and floor area affected by the project. We need both gross and net space to calculate the appropriate indicators. Other impacts should be identified as part of Other benefits, paragraph 17.

5. Number of clearly distinct campuses

6. Name and address of relevant campus

7. Please state which departments are affected by the project.

8. Who will benefit from the project? Please complete using full-time equivalent numbers.

Condition

9. Please give your best estimate of the condition of the non-residential estate, using the Royal Institution of Chartered Surveyors (RICS) Building Maintenance Information standard definitions: grades A, B, C and D. Please state when the last comprehensive condition assessment was carried out. We will weight categories A B C D as 1:2:4:6, to reflect the greater negative impact of category D space.

Date of last formal, comprehensive condition survey ____________________

Undertaken by__________________________________________________

Coherence with institutional and estate strategies

10. How does this project help to deliver key quantified institutional aims and objectives as set out in the institution’s corporate strategy, annual operating statement, estates strategy and academic strategy? (Maximum 250 words.)

11. Set out below relevant extracts, with references to the document, demonstrating that the project is consistent with institutional planning. Where the project has not previously been referred to in institutional planning documents but is desirable because of an unexpected set of circumstances, please demonstrate that the project is in keeping with the strategic direction of the institution. (Maximum 250 words.)

Value for money

13. To assess the value for money delivered by the project, we would like an analysis of your estimated component costs. We have simplified the RICS Building Cost Information Services standard analysis to help us make consistent judgements; these will take into account cost per m² and cost per person affected.

* At prices current on or around 1 October 1999.

14. Please list any special factors that will affect building costs, such as site conditions, restricted access, the storey affected, town planning constraints and special requirements, quantified where possible. (Maximum 150 words.)

Previous investment in the estate

15. We will take into account the level of previous institutional investment in the estate, with priority given where such investment has been high. We will use the Higher Education Statistics Agency (HESA) finance data (on repairs and maintenance, major and minor works and total income) as a basis to determine how much institutions have spent on their estate over the previous four financial years 1995-98. However, the HESA record has difficulty in capturing some of the more innovative forms of investment. If this applies to your institution, please provide supplementary information on additional estate investment not captured through HESA. (Maximum 150 words.)

Estate management

16. We are keen to ensure that effective estate management is rewarded. Please provide the data indicated (if available) using the definitions set out in the ‘Estate management statistics project’ (HEFCE 99/18). If this data is not available please provide other relevant data.

1. Change in the level of space utilisation achieved during 1999, expressed as a percentage of 1993 performance.

   	Utilisation %	Percentage change (+ or -)
   1993
   1999

2. Change in energy consumption per m² in 1999, expressed as a percentage of 1993 performance.

   	Energy consumption kJ/m²	Percentage change (+ or -)
   1993
   1999

3. Change in total estate management costs per m² since 1993.

   	Total estate management costs £/m²	Percentage change (+ or -)
   1993
   1999

4. Reduction in backlog maintenance, as shown by reductions in the percentage of the non-residential estate in conditions C and D since 1993.

   	1993 %	1999 %	Percentage change (+ or -)
   Condition C
   Condition D

5. A list and brief description of the five most significant successful projects or initiatives since 1993. (Maximum 150 words.)

    

    

    

    

    

    

    

    

    

    

6. Progress since 1993 in developing estate records and other systems to promote efficiency. (Maximum 150 words.)

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

Further criteria

17. We will also support projects that deliver the following benefits:

• improved student access
• stronger ties with the local community
• a small impact but critical effect, for example by providing a much needed facility
• high strategic value, for example enabling a new course to be set up
• scope for collaboration
• funds levered from other sources
• environmental benefits
• better use of a building poorly suited to HE use
• improved cohesion of a geographically dispersed institution.

Please focus on the three most relevant issues and describe how any of these benefits are delivered, quantified where possible. (Maximum 150 words.)

18. We also need to establish the likely call on our funds. At this stage, this information is only indicative and will not form part of the project assessment.

Annex B