Building an Exemplary Business Case

This paper has been developed under the AOC Best Practice Programme. The aim of this paper is to demonstrate how one College of FE (Kirklees College) went about developing a business case to present to the Leeds City Region Local Enterprise Partnerships (LCRLEP), as part of the College’s application for Skills Capital Funding. The business case was given special mention, by LCRLEP, in their evaluation feedback.

The business case required by a LEP is significantly different from that which has been required by the SFA in the past. Whereas the SFA was largely concerned with estate condition, utilisation, referenced against a cost model, based on educational need, Local Enterprise Partnerships (LEPs) are concerned with economic impact, skills needs of employers and job creation.

As such, the scope of activity and the methods used to build a business case that can successfully demonstrate the need for a skills capital project are different to those that many colleges have been used to undertaking in the past. It is hoped that this case study can help other colleges to understand how some GFEs are starting to develop best practice business cases for the new LEP audience.

The first round Skills Capital Funding has seen the majority of the 39 Learning and Enterprise Partnerships (LEPs) across England call for FE Providers to submit proposals for capital projects that might be eligible for capital funding from Government’s Local Growth Fund via their LEPs. The Government announced in July this year that the first £6 billion of local projects has been agreed as the first wave of local Growth Fund capital allocations. This includes the complete allocation of £2 billion from the Local Growth Fund for 2015 to 2016 for Skills Capital Funding.

The process for bidding for Skills Capital funding has been slightly different for each LEP, with many using the process (and much of the same information requirements) as the SFA did under its recent ERG3 and CCIF grant schemes.

However, there is a significant change in the context of how this funding is to be used. BIS capital funding from 2015-16 for the FE sector is now allocated to projects via the LEPs, rather than via the SFA, although the SFA has established a formal advisory role on capital matters with most LEPs. This change has been brought about to ensure that LEPS are able to target FE college and other skills providers more directly to local skills needs, driven by employers.

The LEPs are formalised partnerships between local authorities and businesses, with a board of directors. They have been created to determine local economic priorities and lead economic growth and job creation within its area. The LEPs have been given responsibility for the development of a locally-based growth strategy for their individual areas that utilise public funding These strategies take the form of a Strategic Economic Plan (SEP), which lays out the growth plans, objectives and targets for economic growth. Crucially, the SEP also outlines the ‘priority sectors’ for economic growth, i.e. those economic sectors which the LEP thinks offer the best opportunity for economic growth and impact in their area.

As an example, many LEPs have identified sectors such as Advanced Manufacturing, Business and Finance, Health & Social Care or Biosciences as being their ‘priority sectors’ and have also identified priority geographic areas for growth .

In a number of cases, LEPs have also developed (or are developing) a ‘Skills Strategy’ that supports the SEP. These Skills Strategies often looks at current (baseline) skills provision in the relevant areas and map this against projected employment and skills requirements, based on the growth projections in the SEP.

To that end, a LEPs’ Skills Strategy points towards any Priority Sector ‘Skills Gaps/Requirements’ in a sub-region, providing FE and Skills providers context against which they might set their curriculum strategies.

In order to draw down Skills Capital funding, an FE provider will need to evidence ‘business case’ or the ‘strategic fit’ of the project, demonstrating how the project proposals will support the delivery of the SEP and the skills strategy. This case study looks at how one FE College, Kirklees College, Huddersfield has developed a business case to support its capital application to its LEP for Skills Capital Funding.

The applicant will also be asked to demonstrate that projects are responding to the needs of both employers and learners. This builds on the projections provided by the LEP on sector growth and (potentially) in the Skills Strategy on future skills requirements. This aspect of the project will need some level of employer engagement by the college. The extent to which employers have been part of the project design process is likely to be a significant factor in determining those projects most likely to meet the selection criteria.

As economic growth is the result of employer activity, be it in job creation or upskilling of the existing workforce, the impact of Skills Capital funded projects will need to demonstrate in quantitative and qualitative terms clear pathways and progression for learners. Colleges will need to demonstrate how learner cohorts, created by the project, will go on to either employment or higher levels of education.

To that end, the role of employers in determining future skills needs will become increasingly important, as will the need for FE providers to increasingly engage with, and form strong commercial relationship with, those employers.

The key areas of consideration when developing a business case for a Local Enterprise Skills Capital bid.

This increased priority on employer engagement and consultation is, therefore, one of the most critical components of the new FE funding landscape. Many colleges do, of course, have relationships with employers, often with a significant number of apprenticeships attached. However, most colleges will still need to do more to develop new employer links and create new training and employment pathways.

In essence, the College will need to be able to map future skills and labour requirements and identify and prioritise the key opportunities for skills and employment provision. This can also help the college to define a clearer ‘vision’ of what the college wants to provide, where and how, moving forward.

The key stages of developing a property strategy and business case:

The Key Stages in developing a Property Strategy, in the context of the new LEP Skills Capital Funding Landscape:

Case Study: Kirklees College – The National Process Manufacturing Centre

Kirklees College (The College) is a major GFE College, based in Huddersfield, West Yorkshire. The College came into being in August 2008 through a merger between Dewsbury College and Huddersfield Technical College. Kirklees College is now one of the biggest colleges in the country.

Kirklees College (KC) key facts:               

• KC is a large specialist vocational training college with a turnover of £42 million
• KC has approximately 1,000 staff (700FTE)
• KC is the official education partner of Huddersfield Town AFC
• KC has 18,000 students, including approximately 4,000 full time learners

In August 2012, Kirklees College also opened the doors to the specialist engineering and motor vehicle centre on Turnbridge Road, off St Andrew’s Road in Huddersfield.

The Engineering Centre boasts state of the art learning facilities for teaching the most up to date engineering and motor vehicle practices.

The 5,800 square metre building is two storeys high and provides a modern and well equipped facility for maintenance and fabrication workshops, as well as a motor vehicle department. Students will be able to develop their skills in an inspiring learning environment with new classrooms, demonstration areas, offices and excellent student facilities.

In 2013, the College was approached by a group of companies in the chemical engineering sector, in association with their sector membership organisation, Yorkshire Chemical Focus (YCF).

The employer’s group were becoming increasingly frustrated by the lack of local, specialised skills provision for their sector. While there were two established skills providers in the sector, they were located on the East Coast and the Wirral, leaving companies clustered around Leeds, Huddersfield and East Manchester with little in the way of local skills training provision.

The distance between training venues and employers not only caused operational difficulties, with regard to the viability of commercial, short-course training but was also causing an issue, with regard to the retention of younger learners, who didn’t function well when spending long periods away from home.

As a result, this core group of employers looked to Kirklees College, who were already providing a trusted engineering skills provision, to develop a process manufacturing offer, with a specialised process manufacturing skills training facility.

After lengthy consultation, it was agreed that the College would look to secure capital funding towards the development of a new process manufacturing facility, to be located on the same site as the College’s existing engineering training centre.

Around this time, an announcement was made that Skills Capital Funding would be available, on a competitive basis, as part of the regional Growth Capital allocations.

The College appointed AA Projects to coordinate the application to the LEP, including the development of the business case, employer and stakeholder consultation, strategic review, estate strategy and the development of the application narrative.

In 2014, The College secured an allocation of £3.1m towards the construction of The National Process Manufacturing Centre, from the Leeds City Region Enterprise Partnership which will be located on the College’s existing Engineering Centre at its Huddersfield campus. This case study reviews the stages the College went through in developing a business case and also how it revised its Property Strategy to support the application for capital funds for the new centre.

Kirklees College completed development of a new £74 million central campus in 2013, following a major relocation project from outdated, obsolete premises elsewhere in Huddersfield.

In addition, the College developed a new Engineering campus located a couple of miles from the main campus, in a part of Huddersfield that has traditionally housed manufacturing and engineering businesses. The site is next to the Cummings Engineering site on St Andrew’s Road.

The engineering campus provides state-of-the-art teaching and learning facilities with a mix of computer aided classrooms, workshops and housing-specialised skills training and engineering equipment. The engineering campus is widely regarded (by industry and other skills providers) as being a world-class engineering training facility.

Many of the manufacturing businesses (from in and around the Leeds City Region) that currently work with the college on engineering apprenticeships operate in the process manufacturing sector. These companies approached[1] the College with a desire for specialist process manufacturing training facilities to be provided in the City Region.

The following is a summary of the project, the project aims and objectives and the targeted outcomes:

Project Overview

• New build / fit-out of 871 m2 to create new learning facility providing specialist training in Process Manufacturing and Process Control
• The project is led by the College and a group of major employers in chemical, pharmaceuticals and food manufacturing industries, from across the Leeds City Region.

Aims and objectives:

• Develop a world-class learning facility (National College) for the Leeds City Region in the Advanced (Process) Manufacturing sector.

Targeted outcomes:

• 466 new jobs created
• 441 new apprentices
• 200 Traineeships
• 25 further FTE Jobs created
• 800 additional new learners (over first 4 years of operation)
• 6 Major regional supply-chains in chemical and food & drink sectors
• 200 businesses supported
• 200 Jobs Safeguarded
• Growth in sector contribution to GVA
• Reduction in skills shortages / gaps

The table below summaries the impact on learner numbers targeted by the project:

The ‘core group’ of employers was originally Syngenta (formerly ICI), NuFarm, Dr Reddy’s and BASF. However, the College is now engaged with around a dozen companies who constitute the ‘Sponsor Group’ and a further 60+ companies through wider engagement. However, this is set to increase significantly (to well over 100 employers) as the College develops a supply-chain initiative around the supply-chains of the sponsor group.

The College’s estate is a combination of owned and leased properties. Curriculum and educational programmes are delivered from a number of ‘Centres’ across Kirklees. In addition, the College also rents a number of properties to provide more ‘local’ delivery.
In the recent past the College has benefited from significant capital investment which facilitated the development of its new Waterfront campus. In addition, the College has been managing a progressive reduction in its overall floor area by vacating and/or disposing of surplus property.

The proposed new National Process Manufacturing Centre (NPMC) is the culmination of efforts between a cluster of around 12 ‘project sponsor’ employers (operating in and around the Leeds City Region in the process manufacturing sector), Leeds City Region LEP and the College. Working in partnership, this group of employers have been central to developing the design specification for an operational process manufacturing plant, workshop and other specialised teaching facilities, that will be used to train the next generation of process engineers, operatives and maintenance engineers.

In Leeds City Region, this has been an acute problem, with no local skills provision in this sector. In addition, the sector is currently employing an aging workforce, with many employees aged 55 and over. The need to replace those employees with suitably trained labour is an imperative in maintaining the City Region as a key player in the process manufacturing sector.

In working with the core employers’ group, the College identified specific competencies and skills that would be required, at all levels and across all business functions. This exercise, culminated in a set of broad specifications against which both the new curriculum and the new training facility (a fully functioning process manufacturing plant) could be designed.

The development of a training offer that was designed to be future-proofed would require the in-depth involvement of a broad range of employers and technical design partners. The College went to great lengths to break down the complex process manufacturing cycles to individual ‘modules’ or ‘cells’ of technology. Each of these elements requires specific competencies and a new, detailed curriculum is being designed and developed, in close partnership with employers, to ensure that training is appropriate and best-practice, leading to learners with the right level of skills, in the right technologies, produced at the right time.

The College is also working with other training providers to ensure that curriculum content is aligned and integrated with the wider skills provision. Dialogue between the College and their University partners, other private sector training providers and employers themselves, is ensuring that curriculum content is designed collaboratively, with some elements shared between delivery partners to avoid duplication of effort and ensure curriculum consistency.

Finally, the fast-moving pace of technological advancements in process manufacturing requires a level of flexibility to be built in to the design of the plant and buildings. The nature of process manufacturing plant is that it is a modular system, driven by highly technical process controls. The provision of state-of the art technology (from manufacturers and other employer ‘sponsors’) was key to ensure that the plant design was relevant for the current market requirement. However, the design team also took future flexibility in to account when designing the building itself, the layout, access and services. This should enable the NPMC to adapt over time, to ensure that the skills provision can remain relevant to employer needs for some time to come.

The development of the plant was only one part of the challenge faced by the College. Perhaps more difficult is the development of an appropriate and effective curriculum. In order to do this, the college and the project sponsors believed that understanding the exact training needs of employers is critical in developing a curriculum which services those needs. To this end, the College embarked on a comprehensive employer consultation exercise, gathering data on the training and employment requirements of participating employers.

The College worked with the original cohort of key employers to identify supply-chain providers (many of them local SMEs) that the College could approach, as part of the consultation exercise. In total, over 100 employer organisations have assisted the College in this consultation.

The employer consultation exercise took a series of forms:

• 5 Employer Workshops
• 1-2-1 Meetings and interviews
• Over 60 Telephone interviews
• An online survey

At the heart of the process was the training and employment needs survey, developed by the College. This survey allowed the College to gather data in a standard form, enabling some level of analysis on training needs and employment opportunities across the cohort.

In addition, the College used Employer Census (and other) information, provided by RCU, using the AoC Market Intelligence Data Exchange Service (MIDES[1]). The output of this review yielded meta-data regarding the employment and skills needs of employers in the engineering and process manufacturing sector. This more generic employer needs data was then overlaid with the data captured as part of the College’s employer consultation programme.

The output of this exercise was then used to inform the curriculum team within the College who are now using this information to frame the development of the curriculum strategy and also to look at links to other areas of the College’s existing curriculum (for example, STEM and business innovation).

Having undertaken the employer consultation exercise, the College had developed a picture of the kind of skills and competencies that would need to be addressed by any future curriculum. The College was now in a position to assess the existing skills provision in the sector to better understand what kind of skills training was available, where and from whom.

This review was undertaken using AoC’s ‘Vector’[2] analysis tool. Vector provides a detailed analysis of the post-16 learner market within a given area, including what students are studying, where and where they are travelling from.

Vector analysis also provides information on which learning providers are providing what kind of course (subject) at what level. Undertaking Vector analysis allowed the College to develop a comprehensive picture of existing sector-specific skills provision across the UK. It also helped the College identify potential delivery partners, especially smaller (niche) private sector providers, often well known in the employer market for delivering specialist training.

By undertaking this analysis, the College was able to identify:

• Other training provision
• Geographical spread of existing provision
• Potential training delivery partners
• The need for a central, coordinating force to bring cohesion to skills provision in the sub-sector of Process Manufacturing.
• Learner patterns, demography and travel to learn times

Having gathered and analysed comprehensive data on employer needs, existing provision and learner profile, the remaining aspect of the development of the business case (for the College) was to demonstrate the ‘strategic fit’ of the project.

The College undertook a comprehensive review of National, Regional and Sectoral strategies to identify how the project could be shaped in order to most effectively support those strategies.

As an example, the review of existing provision (in the process manufacturing sector) showed that there was a need for a more cohesive partnership between existing providers, the majority of whom are private sector providers, operating to serve small and limited clusters of employers. This has led to the College working to develop close bonds with this network of providers to develop a ‘National College’ for the Process Manufacturing Sector.

The College was also able to demonstrate a number of aspects to the project that supported wider strategic programmes, for example the provision of support to local SMEs providing a channel for future EU (ESIF) funding, supply-chain opportunities etc.

In the new skills funding landscape, it is critical that colleges engage with a broad range of stakeholders, in order to develop robust and sustainable business cases for curriculum and estate development.

In providing the LEP with a strong review of the strategic fit of the project, Kirklees College was able to:

1. Demonstrate how the project supported the strategic aims and objectives of the LEPs economic and skills strategies;
2. Demonstrate significant commitment, levels of engagement and the buy-in of a large number of significant regional employers, modelling the levels of job creation, job safeguarding and the economic impact of the project;
3. Demonstrate how the National Process Manufacturing Centre was a project of regional (if not National) strategic importance;
4. Develop a curriculum plan that responded directly to the needs of employers and that could identify the number and type of learners the centre could accommodate;
5. Work with employers to identify and replicate the characteristics and functions of the real-life working environment and;
6. Determine the function, size, specification and cost of the building(s) that would be required and get real contributions from employers towards the capital cost of the project.

The key to meeting future skills challenges is to ensure that the needs of employers, in terms of the specific skills and competencies they will need, when, where and at what level, form the basis of a college’s strategic planning.

To that end, comprehensive employer engagement is critical to providing the correct baseline upon which a college can build an appropriate curriculum, skills and training assets and learning environments that will help learners gain the specific experience that they will need.

Ensuring that the curriculum offer fits with sub-regional strategy is also crucial, should the college want to ensure that the funding remains available into the future. Delivering relevant skills is a core function of the economic growth which LEPs have set out in their strategies and colleges play a crucial role in delivering the training and education needed for a workforce to meet the future growth opportunities in a region.

These considerations were the starting point of the development of the business case for Kirklees College. The resultant business case has been recognised as exceptional by the Leeds City Region LEP and provides a blueprint that other colleges and skills providers could use to ensure a rigorous and responsive approach.

The future sustainability of FE Colleges, their curricula and their estates will increasingly depend on external consultation and the need to ensure that their business is aligned with the strategic direction of local, regional and national skills markets. To that end, developing a strong business case is not simply a matter of best practice when applying for funding, but in optimising the future sustainability of a skills provider’s business as a whole.

If your College is likely to seek funding from the LEP, it is critical that you understand your role, both as a strategic skills provider in the region and consider the economic and skills priorities that will be required, moving forward.

In order to do that, the College needs to gain a full understanding of the LEPs strategic (sub-regional) growth strategies as well as those at national and sectoral level. Consultation with a broad range of stakeholders is important, including:

• Sector skills Councils
• Local Authorities
• The LEP
• National Skills Academies
• HE providers
• FE providers, including private sector providers
• Employers

As economic growth is likely to be driven by growth in the private sector, it is private sector employers that need to be most actively engaged. Not just in terms of understanding training and competency needs, but also to provide the pathways to employment that College’s will increasingly need to provide as the sector moves to a more ‘outputs-based’ funding model.

Of course, some questions still remain:

• What will College’s do when they have an underlying estate need that is not aligned with LEP priorities?
• How does the alignment of a college’s curriculum (and delivery mode)l with LEP priorities overlay with FE sector guidance on Structure and Prospects Appraisals?
• What will happen with the revenue skills budget, moving forward? Will this also come under the control or influence of the LEP?

The sector is undergoing significant change and the need for college’s to fully understand their role in the landscape of Skills provision has never been greater. The development of a strong alignment with the skills priorities set out by the LEP, and regional employers, should help Colleges to secure a sustainable future and the development of a strong business case is the key to success.