Coping with Cuts

The main theme that we return to throughout this paper is the need to align decisions taken about estate efficiency (including cost reduction as a response to austerity) in a way that complements the values and mission of the college.  Colleges will have strategies around how many students they wish to recruit, which curriculum areas they wish to deliver and an approach to teaching, learning and the student experience that will be driven by their mission and educational character.  As with any other area of management in a college, the decisions and strategies adopted in relation to the estate must support these fundamental principles, and must inform management action.

Whilst a prolonged period of austerity presents particular challenges, all colleges will still be committed to improving (or at least maintaining) performance and many colleges may have plans to grow which will have implications for the renewal, upgrading or relocation of their estate. In addition, for colleges that have developed new build projects over the last 3-5 years, many of the initial working assumptions will have been overtaken by events.

Those changed assumptions are influenced, among other things, by the following:

• the impact of the economic downturn on property values (albeit with significant regional variations) has impacted upon the ability to dispose of assets as well as the level of capital receipt.
• material reductions in the unit of funding as well as the quantum of funding available.
• a greater dependence on increased fee levels to compensate for reductions in funding, as well as the impact of HE fee targets in a competitive market.
• EFA funding has also reduced, and colleges need to grow to move forward within a lagged model.

For both colleges the focus of any reduction has been on revenue, managing cash-flow and on reducing expenditure on the estate, where it does not significantly impact on teaching and learning, and wherever possible to implement estates rationalisation and consolidation as well as making appropriate staff efficiencies.

In order to ensure that decisions are taken that protect a college’s overall mission, estates issues must be considered first at a strategic level. This is not to say that colleges should not be reactive to change, or take advantage of opportunities where they arise. Rather it is that a robust strategy allows colleges to be both more efficient and responsive.

Since incorporation colleges have understood the need to hold an up to date property strategy, but this has often been seen as a precursor to an investment programme. Moreover, funding bodies have traditionally asked colleges to identify the strategic context in which new development, and any capital funding applications would sit. Whilst such a strategy rightly underpins investment, it should also be used to achieve the optimal integration of financial, educational and property considerations. In times of austerity it is even more important that colleges look carefully at these issues to ensure that both investment in the estate, and recurrent spending are strictly aligned to the colleges overall mission.

For colleges the key driver has to be to ensure that the financial constraints they are facing do not have a negative impact on student success, which could dilute the College mission. Therefore the focus needs to be on continuing to do more for less until the impact of the strategy delivers its final objectives, which include outstanding success rates.

We have identified three approaches towards property issues in a context of reducing funding. Firstly we look at whether investment is possible, and how it needs to be justified at a time of funding constraint. Our second approach is to consider how we can increase income, or reduce costs largely within the existing estate, and without significant investment. The third is to examine closely the optimum size of the estate given conflicting priorities, and if appropriate perhaps look to a smaller and lower cost estate.

These approaches are discussed in detail below, but all must be considered at a strategic level first, to ensure that funding reductions are accommodated within the strategic estates response, and that this is closely aligned with efficiency, strategies around improved educational performance and adopting new ways of working.

Spending on estates matters is usually the second highest cost centre after staffing, and there is a tendency to see many of the estates costs as fixed. But colleges usually have a degree of choice over aspects of the estate (eg. how much space, how many locations, opening hours, levels of planned maintenance) and such considerations need to be set alongside other priorities.

It is challenging, but the role of senior managers is to hold and lead a debate about priorities so that the college can most effectively protect its mission. For example, with funding reducing it is appropriate to examine whether the college can operate in a smaller estate at higher levels of utilisation, consequently saving money for other purposes.

Many colleges will, of course, have long term strategies based on desires to grow and/or improve performance and as part of those strategies there will be a desire to modify the estate. That might be to renew, reduce, upgrade, relocate or whatever is suitable. Even when colleges have been fortunate to develop new build projects over the last 3-5 years there have been many changes within the working and local environment that have impacted on the operations of the college which are different to those which were assumed prior to the implementation of the projects.

But all these considerations must be underpinned by an integrated approach to the wider mission of the college. It seems obvious to say but with resources constrained it becomes increasingly important to take good, fully thought through decisions. It is vital therefore that an effective business planning process is put in place that matches plans for curriculum development with financial forecasts, HR, IT, student services and estates developments.

Sharing that plan with all concerned in a transparent way, and particularly the rationale behind resource allocation decisions, is part of that building of management capacity and teamwork.

It is these long-term decisions on the nature of the curriculum to be delivered, and how it will be delivered, that will have the greatest impact on student success and recruitment, and are a crucial consideration as to how the estate will develop over time.

For both Bradford College and Kirklees College, estates strategy decisions are at the heart of overall college strategies that are intended to deliver a transformation in performance. It is important for senior managers of whatever discipline to think about the estates strategy as a tool for delivering and enhancing significant change programmes. These transformational strategies have been delivered in a time of significant pressure on budgets, and have formed a significant response to those cuts.

Before we consider the more detailed aspects below there needs to be a note of caution. The assumption in this paper is that colleges can take actions to cope with cuts in income. That is clearly true and just like any organization colleges can and must trim their cloth according to the circumstances prevailing at the time. However we need to be mindful that there is a limit to which cuts can be made without storing up problems for the future.

Under-investment in planned and preventative maintenance is an area that is likely to be a regular area for short-term cost reduction. However careless short-term cost cutting can cause considerable problems in the future, as the maintenance will ultimately need to be addressed, quite possibly at a higher future cost, as particular issues will have deteriorated further.

Senior managers will need to give careful consideration to what investment can be delivered during a period of reduced expenditure. There will be tension between investing in the upkeep of the estate for longer-term viability versus investment required to meet the immediate needs of the curriculum plan.

Many colleges have seen that high profile investment in the estate brings with it improved student recruitment. In these financially strained times such investments will be more difficult to justify, and colleges should carefully establish criteria for deciding where funds should be invested.

Where investment will need to come mainly from the college’s own resources, the college must be satisfied that it will either see a financial return on its investment, or reduce future costs or obligations, and ideally both.

For example an investment targeted on particular curriculum areas (either under- performing, or a growth opportunity) would need to see an income benefit over time, appropriate to the investment.

Alternatively investment may enable the more efficient use of resources, or avoid expensive statutory requirements, and the resulting cost reductions would re-pay the investment over time.

As well as using their own resources colleges may be able to access capital grant funding from various sources, and under these circumstances, most colleges would take advantage of such funding to improve their estate. To do so colleges need to be conversant with the funding sources that might be available to them and also the priorities of those funders. It will be a priority to maximize the alignment of the college and funder objectives to increase that opportunity to secure additional funding.

The main funding source at the time of writing is available via the Local Enterprise partnerships (LEPs), (see other papers in this best practice series) but there may be sources of funding from other bodies such as the European Union, SFA, or EFA or HEFCE.

It is essential for colleges to keep pace with the requirements of the LEP.  It is these bodies that will set the agenda for training and skills requirements and will direct revenue and capital resources to meet these perceived priorities.  Colleges that fail to work closely with their LEP will find they miss out on funding opportunities and the chance to develop projects with others including employers.

It will become increasingly important for colleges to align their strategies to those of the LEP to ensure that they can identify projects which meet the needs of the wider region and economy should they want to bid for a wider range of funding streams in the future.

Most colleges would be pleased to access significant LEP capital funding, but even here a few words of caution are appropriate in this harsh funding climate

• Will the LEP funded project enable other changes elsewhere in the estate? If not, the college may well see its estate expand, with increased future running costs
• If so, are the other changes likely to lead to a reduced future running cost?
• And, will the college need to invest in its estate to realize such benefits? Can the college afford this consequential investment, or ideally see it funded externally?

Occasionally there may be a case for investment in the estate where the capital requirement requires financing. This is usually best achieved by bank finance, and most colleges can obtain loans on comparatively favorable terms.

Sometimes it may be appropriate to use a third party such as a developer or landlord, with the college entering into leasehold arrangements. Colleges need to remain open-minded about such options, although the scale of lease payments is often comparable to loan repayments. The evaluation of such options is a detailed question in itself, usually requiring specialist input, but they can occasionally deliver better value for money. In such circumstances it is vital to make a full investment appraisal, considering all capital, revenue and value implications.

In this section we discuss aspects of financial efficiency and estate management that are not necessarily dependent upon making the estate smaller – whether good practice in estate management can create financial efficiencies. We look first at benchmarking, then raising income, and then reducing cost.

It may be that the scale of financial efficiency available from such measures is comparatively limited compared to more major estates change, but it may also be capable of being implemented relatively easily, and like all recurrent savings, the cumulative benefit increases over time.

Benchmarking – Knowing where you stand

It is useful for college managers to understand the comparative efficiency of aspects of their estates operation by comparison with other colleges, although it may also be necessary to look beyond the sector for innovative examples from elsewhere.

The e-Mandate benchmarking tool has been available in the FE sector since 2006. It does provide good high-level information to inform estates related decisions. Estate and finance managers will probably want to review areas where the college is not in the lower quartile. Focus should also be given to the areas where significant costs can be saved i.e. looking at the big spend areas where the college is delivering below a good standard.

Of course there may well be reasons why a college is performing poorly against its peers and it is important to look holistically at the data. For example it may be that running costs per square metre look reasonable, but the area of the estate is significantly over sector norms.

One limitation of e-Mandate is that the data is not necessarily up to date i.e. the data available as at September 2014 related to data collected in 2012, although more up to date information is currently being sought. . Nonetheless the data set is a good starting point for estates managers to begin to formulate a strategy.

There are also other benchmarking tools available. Both Kirklees and Bradford Colleges used independent benchmarking tools tailored to their requirements. Kirklees College has worked with ICCA (formerly Tenon) to compare support, running and staffing costs over a range of FE colleges. This information has been used over a two-year period to guide decision making and direct cost reduction as well as providing assurance in some areas that college expenditure is equal to or below the median for those participating in the data set. The use of benchmarking gives senior management confidence that their plans for cost reduction are not unnecessarily risky, and can be useful to reassure corporations that particular aspects of decision taking are in line with others across the sector.

There will also be management information available to support estate managers in their role. As mentioned above estates managers will need to work with finance, HR, student records and MIS managers to establish good quality information on the following:

• Timetabled and actual use of rooms
• Disparities between room and class size
• Occupancy data
• Staffing costs, absence details and shift patterns
• Non-pay costs
• Student perception data (particularly where related to resource issues if available)
• Student recruitment, retention and achievement data

By reviewing such data during the business planning process estate managers can offer suggestions that may reduce estates costs, but may also assist with staff deployment generally and student recruitment and success.

Increasing Income

Many colleges hold quite large estates, and all colleges should understand how well they use their space (utilization), and whether there is spare capacity. If so, the college may consider reducing the overall area of the estate, but this is not always straightforward. There may be good reasons why a particular building or site cannot simply be closed, even if the college has spare capacity.

In such circumstances colleges might consider sharing their space with suitable partners, and gaining a contribution to costs.  Alternatively, and where appropriate, colleges can sometimes let spare space for rental income.

It is preferable that there should be a close alignment of the tenant with the education strategy of the college. While this might be a straightforward commercial arrangement for the renting of, say, office space, it is likely to be more sustainable if there is a good fit with mission. For example businesses or community partners who can interact with students to provide them with services, or organisations that can provide management or administrative services to the College.

Many colleges operate a number of semi-commercial facilities within the estate (eg training restaurants). These are usually primarily educational facilities from which income can be obtained, as opposed to full-scale commercial operations where the educational component is secondary, and colleges must carefully consider where their overall interests lie.

It is certainly appropriate to consider whether space can be used for commercial activities that can be undertaken when teaching is not happening.

This could be full cost training; the use of facilities such as restaurants and hair and beauty salons that are common in many Colleges; hire of facilities for functions including weddings where suitable settings are available; sports hall hire etc.

But whilst it may be possible to seek an increased commercial component with income benefits, the impact on the training provision, and the commercial risks need to be fully explored.

Reducing Costs

In hard times it is unlikely that only the estates function will be singled out for budget reductions. Estates will be as affected as other departments and should be prepared to respond positively to the changes being implemented across the college. It is important for colleges is to find ways of clearly explaining the reasons for cost reductions to the work force so that staff and sometimes the public understand the rationale for decisions, and that colleges find other ways to motivate and support the workforce so that the overall performance of the college does not deteriorate. It is equally important that where internal services are reduced everyone understands that there will be some aspects of the operation which will be reduced.

Many colleges have a number of service contracts for facilities management (eg catering) and estates and finance managers will want assurance that contracts are delivering best value for money. Even if re-tendering is not due according to the college’s financial regulations it would be opportune when faced with budget reductions to reassess at least the major spending lines.

Consideration should be given to joining framework agreements in order to reduce time spent on procurement and to potentially reduce direct costs themselves. It may also be worthwhile considering joint procurement exercises with other organisations e.g. schools, local authority, local NHS, universities and neighbouring colleges.

Elsewhere colleges may consider outsourcing some of their management services, or procuring them on a shared service basis with other comparable institutions. This could be a shared services opportunity with either other colleges or education providers, other public sector organisations or any business with HR, finance or generic back office functions. Such an arrangement is again not likely to be an estates department controlled project as there are major legal and HR issues to resolve. Whilst this can appear an attractive idea in principle, it is not always easy to achieve a sufficient scale of saving to warrant the work or cost in resolving the range of complex issues involved.

Finally colleges may consider the use of premises owned by others. In so doing the college may not necessarily reduce its overall space requirement significantly, so much as exchange some freehold space within its estate for leasehold accommodation owned by others. In so doing the college will be looking to reduce cost overall, so care needs to be taken that real savings or disposals can be achieved in the owned estate, whilst relocation and rental costs are kept low. There will also be other locational, HR and educational aspects to consider.

The space to be leased may be owned by an employer, a commercial landlord, another public sector institution (perhaps using the One Public Estate initiative) or another training provider.

For such an exercise to succeed the college must be sure that it can obtain the new space at a sufficiently lower cost to make the project worthwhile. Again this can be an attractive idea in principle, but a full investment appraisal will be needed to fully test the proposition, and careful consideration given to the wider, non-financial aspects.

Efficiency and Utilisation

Having looked at opportunities for investment and greater financial efficiency, the remaining option for colleges is to explore how much might be saved by reducing the estate. This can be beneficial in 3 ways

• Recurrent running costs can be reduced, year after year
• Colleges will most likely choose to vacate their worst buildings, so significant future maintenance or upgrade costs can be avoided, and perhaps pressing statutory compliance issues avoided
• It may be possible to dispose of the building or site vacated, with a capital receipt resulting

In order to make such a saving a college needs to target more efficient use of the space it will be retaining. In a modern college this is typically made up as follows

• About half the floor space will be teaching and learning accommodation
• Around a quarter will be support space (staff space, student services, catering etc)
• About a quarter will be balance space –corridors, plant rooms, toilets etc.

Because the balance space is actually proportionate to the usable (net) space, achieving greater efficiency means using the 2/3 of the net space that is teaching and learning at higher rates of workplace utilization, and squeezing the 1/3 that is support as much as possible.

Colleges that underwent significant rationalization in recent years were often required to achieve minimum workplace utilization targets as a condition of funding, and may feel that there is little capacity to increase utilization further.

But as an illustration, a college operating at 33% workplace utilisation, (not untypical after rationalisation) might wish to make a 15% reduction in its overall estate. This would require the utilization rate to rise by 15% from 33% to 38%. As an average, a 38% utilization rate means for example that a teaching room would need to be in use for around 80% of a 40 hour week, and when in use, to be just under half full.

This over simplified example hides a range of complex factors needing further explanation, but nonetheless illustrates that even space efficient colleges can consider options to operate more effectively.

College managers sometimes declare an aspiration to increase utilization, mistaking the subtle point that utilization is not a goal in itself, but the out-turn of two other factors, namely the volume of available space and the demand for space by the various users. If a college wishes to reduce cost by reducing the size of its estate it must consider options combing two factors to varying degrees.

• Firstly, it can take space out of the estate, reducing the supply area and forcing utilization to rise
• And secondly it can reduce the demand for space, thereby enabling the area to be reduced without necessarily increasing the utilization rates

Supply – reducing the estate size

To make a meaningful reduction in costs colleges are likely to have to consider closing whole buildings and ideally eliminating them from the estate. Simply closing floors or wings of a block is unlikely to save much money. In so doing colleges are likely to target the campuses and/or buildings in worst condition, and/or that can be disposed of for a capital receipt.

The users that were previously housed in the closed building must then be accommodated elsewhere in the estate. This may be relatively straightforward if some mobile classrooms are being decommissioned, and the users can be re-housed in other classrooms. Such a move might require little more than re-timetabling.

But if the college’s cost reduction needs are best served by, for example,  closing a motor vehicle workshop, it will not be straightforward to re-house this provision in other buildings unless suitable space exists elsewhere in the estate. This rather obvious example underlines the importance of considering options at a strategic level, balancing a range of factors that may include.

• Considering overall space utilization in a strategic context, across all categories of teaching and learning space
• Considering which properties have most to offer in terms of running cost savings, upgrade costs avoided and possible disposal receipts
• Considering how the user demand will be relocated, in which other buildings and at what probable cost
• The practicalities of putting such a plan into place such as disruption, and de-cant space
• Effective timetabling and best practice in space allocation
• The wider teaching and learning implications, such that the colleges wider ‘mission’ is not put at undue risk. It would gain little for a college to achieve estates savings, only to find income reduced by an impaired educational provision.

Whilst it is entirely right to consider the benefits of greater efficiency, it is vital that balance is maintained through an integrated strategic approach

Demand – Reducing the need for space

It may be that different approaches to teaching, learning and working in college have much to contribute to a reduced pattern of demand for space. If the college can achieve helpful reductions in demand, then this may enable the estate to be reduced without utilization rising to exceptional levels. Nonetheless, similar decisions to those outlined above will still need to be taken, and a strategic approach to reducing the estate must be maintained at all times.

Colleges may wish to consider the following options in reducing the demand for space

• Overall activity levels – with increasing pressures on public spending and a demographic profile that across many parts of the country sees a reduction in student numbers, many colleges will face reductions in activity levels in coming years.  The most obvious impact on this is the overall utilisation level of the estate will fall meaning increased costs per learner are directed to estates matters if action to improve utilisation is not improved.
• Attendance and hours – The traditional approach to space utilization isbased on a 40 hour week. This therefore focuses on the use of the estate for less than 25% of the week. Whilst it may be attractive to use the estate 24/7 it is unlikely that large numbers of students will be attracted outside the traditional core hours. However even a small extension of core hours can help to reduce demand. But bringing timetabling forward from 9am and pushing back into twilight sessions will raise concerns over student expectations and safeguarding. These must be taken into account seriously and appropriate adjustments catered for.  However, for many occupations for which colleges train, early starts, late finishes and even weekend working will be the norm not the exception.
• New methods of delivery – In a similar vein consideration should be given to likely future delivery methods. From a strategic point of view it looks likely that the continued move towards apprenticeships, as opposed to full time courses, will continue. Study programmes and traineeships allow for activity such as work placement to take place off site.

So, estates demands in the future are likely to reduce (subject to the local position on the growth in student numbers). Colleges can respond to this by modeling the impact on developing curriculum models. Estates managers will need to work closely with student record/MIS managers and senior curriculum staff to ensure this modeling is a challenge to the status quo, and is also achievable and workable.

Co-ordinated cross-college approaches to timetabling and class size are essential if a real impact is to be made.

With employability high up the agenda there can be more opportunities for students to study outside of the college environment, combined with blended learning strategies, that will contribute to a more flexible use of a smaller estate.

New Pedagogical Approaches  – Many of the new college developments in recent years have been predicated to varying degrees on moving away from a traditional model of delivery. A move from a teacher led didactic delivery style has given way to a more participative student centered approach.  FE colleges have been at the forefront of this change over decades, and in addition the balance between classroom based activity, and practical delivery, has always had an impact on the FE estate.

Estates Managers should feel confident in talking to senior curriculum staff to identify the changes planned in the way the curriculum will be delivered, and testing the impact this will have on the estate.

For example, the move to ‘flipped learning’ is one that has a potentially significant impact on space requirements and the numbers of traditional teaching spaces needed. Students go through learning materials prior to class. They can do this singly or in small groups. This activity will probably (but not necessarily) use on-line resources. Students could carry out these activities in an appropriately equipped learning space. This space need not be a classroom, but could be an open learning area of even a social learning space, only using a more traditional learning environment when the teacher brings the group back together to check that learning has taken place.

The Use of Virtual Learning Environments (VLE) and Online Learning  – Recent developments in online learning look set to continue apace and this will certainly have an impact on space requirements and building design. The recent FELTAG report (See Appendix) identified the potential for up to 50% of vocational curricula to be delivered on-line. All estates managers need to be aware of this and the impact a move in this direction will have on space requirements. The ministerial response to this recommendation is one of acceptance and encouragement.  Given the reduced costs of delivery of on-line versus face-to-face delivery, the sector is braced for an impact on funding rates which will be a driver to move to more online delivery.

Across the sector there will be a continued demand for face to face activity and the work we do in FE to prepare people for the world of work will require this. However the need for access to IT resources will change.

Separate cluster rooms will need to be carefully justified for all but IT related courses and an ability to deliver IT to any point in the college building will be vital. Mobile devices have significantly improved over recent years and most students will now be familiar with accessing learning materials on-line through their school VLEs. Access to these on-line learning materials can take place outside of college as long as rigorous tracking methods are in place, and this can free up both space and valuable resources.

More mobile working – This could see staff working from home or sharing desk space. Many administrative functions can be performed using IT systems only i.e. do not require any physical presence in the office. For many teachers their timetable will keep them away from their desk for well over half of the working week and it is self-evidently not efficient to allocate a single workspace to an individual in such circumstances. Such considerations have become commonplace in the commercial world, where home working and hot-desking are by no means unusual.

There are IT issues to take into account here as well as HR matters.  Again this is not a project just for the estates team.

Staffing Levels – As one element of a recent estates strategy review Bradford College worked with consultants Turner and Townsend to develop a model for its estates staffing. The output was a spreadsheet tool that could offer an analysis of staffing levels per building and for the overall estate. It compares current deployment against benchmark performance and allows a what-if scenario to be modeled and compared against current and benchmarked practices. The benchmarks used were taken from nationally available data sets (sources inserted here) although the model allows these inputs to be varied as desired. The tool was used as a fundamental part of a strategy that has seen staffing levels reduced by 40% against an estates reduction of 28%.

The possibilities we have set out above cannot be considered in isolation. They require an integrated and strategic approach combining educational, financial, HR, property and IT considerations. The degree and pace of change in these areas, and the pace, is difficult to forecast, but it is inconceivable that colleges will be able to avoid engaging with such issues.

Implementing any estates change plan is a vast subject in itself, and well beyond the scope of this paper. But as senior college managers we wanted to offer some observations on the process of implementing change, both from the estates perspective, and from a wider college perspective, drawing on the experience of both colleges

Estates Considerations

Data – As with all aspects of college management, effective estates planning needs to be based on accurate data and sound management information.  Colleges will need

• Accurate area data on buildings and the space use categories within them
• ILR and GLH data
• A full understanding of the condition and suitability of the estate
• Geographic profiling
• User feedback and student satisfaction data

Property Strategy – We have strongly emphasized the need for an integrated and strategic approach, and an up to date property strategy is the primary tool for under-pinning lower estates costs. Working closely with specialist consultants can be important, but the college must be able to set the strategic context.

Feasibility – Property is a practical business, and can be slow and expensive to change. Having established a preferred strategic approach, it is important to establish sufficient detail about the necessary changes before project are put into action. In particular, validating assumed costs is vital.

The costs of taking buildings out of the estate, disposing of them (or mothballing and securing them) and the time involved needs to be fully considered.

Implementation – Whatever changes are envisaged, the estates team will need to oversee a professional project implementation process, working with appropriate consultants and contractors, and engaging with the full college community.

Wider College Considerations – The Practicalities and Realities

For many institutions changing or reducing provision in a particular area might have unintended consequences. What may look rational on paper might generate a response from students, communities and employers that is counter to the best interests of the college. This is why it is essential to align estates decisions with the educational character, mission and strategy for the college as a whole.

Where such decisions are inevitable then the strategy needs to be one that is sensitive to local feeling. The process should not be delivered as an estates project (although that will be an element to it) but more of a holistic approach that involves public relations elements and suitable phasing to allow existing students to finish their programmes.

Moreover, there are real practical difficulties that mean the above thinking needs to consider a local context and the risks that each college faces. The risks highlighted below have been experienced and managed by both colleges as they have delivered their estates and wider transformation Strategies. Even if smaller scale interventions were taken what follows is a useful checklist in any event.

Maintaining Investment in Staff – Maintaining Morale

The starting point for all of us now in the public sector is that we have experienced significant reductions in spending and can anticipate this trend continuing. Given that the maintenance of staff morale is vital, open communication about plans for the future and the impact of cuts is important. Staff will want to have faith in their senior colleagues, and having access to shared information about the impact of cuts will assist with this (but should of course be sensitively handled).

There are many strategies that can be adopted including

• Developing schemes to up-skill and retain staff
• Ongoing investment in Staff Development
• Innovative but cost effective ways of celebrating and recognising staff success
• Find ways such as extra holiday and one off payments to offset the lack of a pay award
• Manage non-performance to ensure that those effective staff remain motivated and that underperformance is dealt with swiftly
• Implement schemes that encourage staff to reduce hours, buy extra leave, and consider job sharing before resorting to redundancy

Maintaining Investment in Students – Just as staff morale needs to be maintained, so we need to address how students are feeling. It is especially difficult for those students who will not benefit from the estates strategy but who have to bear the disruption of change during their time in college. It is still possible for students to have an outstanding experience in an aging estate as it is the teaching and learning that the students experience, and access to resources, which is key to success. It is important that where a college has a mix of estate investments wherever possible they are spread across the board.

Building Management Capacity and Teamwork – During these difficult times it is essential that everyone in management leads with a professional and team focused approach. Investment in management development and coaching programmes that have a directly beneficial and visible effect on the college is to be applauded.  Hard working, project based development activities that get colleagues across the College involved are more likely to engender a sense of team work and participation.

Coping with Cuts/Other Changes Mid Strategy – In particular for longer term estates strategies there is likely to be some change in circumstances throughout the period of design and delivery of the project. This could include changing property markets, rise in building costs, contractor default or a change in interest rates.  Moreover, changes in LEP or government priorities need to be anticipated to ensure the project remains on track to deliver against them.

Risk – An agile and responsive approach to managing risk is essential.  The estates manger should ensure that any senior level project sponsor for a major capital project has a focus that includes not only the estates elements of the project but the wider range of issues that might be affected by the project. The Project Sponsor should also ensure that their executive colleagues and the governors overseeing the project view the risks in a holistic way, as part of the overall delivery of a change agenda and not simply as a building project.

The Impact of Cash-flow Mid Development – Given that any project is likely to push a college to its financial limits, senior managers (and in fact managers generally) will need to get used to managing cash-flow in a closer way, and will need to recognize the impact that cash-flow will have on decisions outside of the project.  For both Bradford College and Kirklees College, cash-flow management took up a significantly higher proportion of management attention than it had done in previous periods.  Of course had the background been one of rising budgets and funding this would not have been such an issue.

Kirklees College and Bradford College Position

Kirklees College received approval from the LSC in 2009. The Capital proposal was one of the final number to be approved by the LSC and was based on an application to relocate its main campus from New North Road in Huddersfield to a new build on a brownfield site in Huddersfield and a smaller Engineering Centre within the engineering quarter.  The College was awarded an intervention rate of 64%.

At the time of the submission of the application in detail the College was commencing a merger with Dewsbury College and inherited an aging estate with an in principle acceptance that a new build in the near future would be necessary to deal with quality and capacity issues in North Kirklees.

The project was to be funded by a loan sourced through the Local Authority, plus access to short term borrowings from the Local Authority and the College’s bankers, Lloyds TSB, the remainder would come from projected growth, disposal of estate and efficiencies in running costs and an overall reduction in the size of the estate.

Bradford College – The College had long recognisedthe excessive size of its estate. It felt this impact on inefficient deployment of resources with a knock on impact on student satisfaction.

The College developed a long term estates strategy c2005 to rebuild a smaller fit for purpose estate to allow for student success, satisfaction and recruitment; efficiency in estate running costs and general staff efficiency.

Phase 1 was delivered with de-minimis LSC intervention at 10% (£20m budget).

Phase 2 was aborted under LSC but re-started in a radically modified way under SFA. The strategy review declined both refurbishment and a phased approach suggested by SFA for a single phase new build.

Even prior to the austerity measures of the last few years the strategy identified a requirement to reduce expenditure by £3m pa to allow for repayment of investment.

The project received SFA consent at time Freedoms & Flexibility was introduced. SFA intervention was 0% so the project was self-funded,financed by college cash and a  Lloyds Bank loan.

“Sweat the asset” was a requirement from Governors which was shared by the Executive. The financial limit of the project was £50m and the space requirement was determined to be c24,000m2. The College developed its own space modeling tool which envisaged core hours extended to early starts and late finishes.

Procurement took place in the depths of recession and this allowed the college to take advantage of a depressed contractor market yielding a good cost rate and low interest rates. The project was procured as a two stage Design &Build under Competitive Dialogue which meant a very detailed design prior to contract close. The project ended with its contingency intact. The budget did not require disposal proceeds.

External Link-

Further Education Learning Technology Action Group – Paths forward to a digital future for Further Education and Skills