The current state of play with the government’s controversial programme
After a series of delays, work has now started to be released to market under the Priority School Building Programme (PSBP), the government’s largest school building programme.
However, there have been a series of changes to the programme since it was originally envisaged, including, most recently, the decision revealed last week to switch of £1bn of work away from a privately financed model.
So what is the current state of play of the programme? Here, we answer 10 key questions.
1. How many schools are included in the programme?
The PSBP covers 261 schools which will be wholly or substantially rebuilt. The scheme covers secondary, primary and SEN schools.
2. What work under the PSBP will be capital funded?
Currently £700m of capital funding has been confirmed, covering 78 schools grouped into 12 batches.
Eight of these batches, containing 51 schools and worth a total of £400m, are already in procurement. These are:
- North east 1: £57m, nine schools (Sir Robert McAlpine appointed)
- Midlands 1: £38m, six schools (Wates)
- London: £75m, seven schools (Bam)
- Midlands 2: £28m, four schools (Bam)
- North west 1: £47m, eight schools
- South: £30m, seven schools
- North west 2: £21m, four schools
- East: £33m, six schools
On 10th May 2013 the government announced that a further £300m would be spent on 27 schools to be released in four batches. These are:
- West Midlands (£39m, eight schools)
- North-east 2 (£63m, seven schools)
- East of England 2 (£60m, six schools)
- North-west 3 (£48m, six schools)
In addition, the Education Funding Agency intends to use capital funding to procure approximately a further 146 schools worth circa £750m, which were originally due to be built using private finance. The EFA has said that capital funding for these projects is subject to confirmation in this June’s spending review.
3. What will be funded using the PF2 private finance model?
Five batches containing a total of 46 schools, with a capital value of around £700m, will be procured using a version of the PF2 model which is being called the “Aggregator model”. The model will use an “Aggregator” organisation to provide debt funding for all batches, rather than each batch having to secure its own funding. This is a reduction from £1.75bn of work which was previously intended to go through the PF2 route.
- The batches will be:
- Hertfordshire, Luton and Reading (£122m, seven schools)
- North-east (£94m, 12 schools)
- North-west (£93m, 12 schools)
- Yorkshire (£97m, seven schools)
- Midlands (£122m, eight schools)
The Education Funding Agency has said it will “assess the performance” of the mdoel with a view to using it for future schools work not covered by the current programme.
4. How likely is it that the 146 schools whose projects now depend on the outcome of the June spending review will receive funding?
The Department for Education cannot confirm funding for these schools before the spending review, as the money is not contained within its current budget.
However, although officials have said clearly that the funding is dependent on the outcome of the spending review, it is highly unlikely that the DfE would have made this announcement before the review without private assurances from Treasury that the money would be made available.
Of course, nothing is set in stone until the announcement itself on June 26th, but given the political damage that could be done by cancelling schools projects across a large number of constituencies, the work looks relatively safe.
5. How will the capital funded batches be procured, and what are the timeframes involved?
All the capital funded batches announced so far will be procured through the Education Funding Agency’s existing contractor framework. Preferred contractors on the four remaining batches covered by the original capital funding - north west 1, south, north west 2 and east - are expected to be appointed by the end of May 2013. All are currently down to two bidders.
The four batches covered by the fresh £300m of capital funding are expected to come to market “within six months” according to the Education Funding Agency.
The timetable and procurement route for the schools whose funding is subject to the spending review will be confirmed after that review, but it is thought likely the EFA will continue to use its own frameworks for the work.
6. How will the PF2 funded batches be procured, and what are the timeframes involved?
Contractor-led teams will be procured through OJEU for the PF2 schools, with the government running a separate OJEU to procure a financial organisation to act as the “aggregator” providing private financing for the programme.
The procurements will run in parallel, but the EFA intends to appoint the aggregator before it appoints a contractor to its first batch. The aggregator will supply funding down to individual batches, but the contractor-led bidders will also need to put some of their own funding in and secure a credit rating.
An official tender notice for the first batch - Hertfordshire, Luton and Reading - will be published on OJEU in June, with a bidders’ day being held on 28th May. The remaining four batches will be brought to market within the next 12 months.
7. What will be the impact for schools and construction firms of the switch of £1bn of work from PF2 to capital funding?
The impact for schools should be that they get their buildings quicker. The PF2 model which the government was intending to use for the schools was untested, and the difficulty of finding a financial model that would appeal to investors but meet the Treasury’s value for money criteria means that PF2 procurement has already been delayed by around a year from that originally envisaged by the market.
A smaller PF2 programme is easier to get going, as it requires less input from private finance organisations. In the meantime, the £300m of extra capital work can progress using an established procurement method, which means procurement of these schools will be completed faster than it would have been under PF2.
For firms, in the short term this means more work to market faster - although larger players may be concerned about the ongoing viability of the programme given that PF2 is still untested and - despite last week’s injection of capital funding - spending resources within government remain extremely constrained.
8. Will the Priority Schools Building Programme be extended beyond those schools already in the programme?
The PSBP received three times as many applications as the number of schools that it was able to include, highlighting the clear potential for the programme to be extended. However, any expansion will be subject to future spending review decisions.
The Education Funding Agency’s Property Data Survey Programme, due to report in October, will create a database of condition of every school in England, and this is set to inform allocations under any future extension or alternative programme.
9. How closely will contractors and architects be expected to follow baseline design guidance issued by the Education Funding Agency?
The EFA has emphasized that its baseline designs, which give suggested layouts for schools of various sizes and specialisms, are only intended as a start-point for designers and contractors. However, these designs are compliant with the EFA’s set of “output specifications” - criteria for school buildings which the EFA says will be rigidly applied to designs put forward by bidders.
Even here, however, head of capital Mike Green has said in an interview with Building that he will listen to “any sensible” suggestions for derogations.
10. How much standardisation of designs is expected from firms working on the programme?
According to the EFA the designs put forward by contractors for the first schools in a batch must be “capable of being replicated for subsequent schools in the batch…without the need for whole new designs.” However, this does not necessarily require exact replication of the schools.
Approaches considered acceptable include: entire standardised schools or parts of schools; a kit of parts approach with standardised components; standardised dimensions and grids; standardised approaches to procurement including FF&E; and a common supply chain.
If you would like to register your interest for the Herts, Luton and Reading Bidders Day on 28 May then please email your Name, Title, Organisation, Contact Number and Email Address to PSBP.HLR@education.gsi.gov.uk