2-Part Blog For Education Clients

Being a construction client or contracting authority in the UK education sector is challenging. With the right leadership and engagement, though, it is still possible to get successful outcomes.

Some school buildings are coming to the end of their design lives. College and university estate managers are dealing with the legacy of the COVID-19 pandemic. All subsectors are aiming for net-zero carbon. In short, new building work (including remodelling and refurbishment work) is urgently needed across the entire sector.

However, the capital funding required is constrained by unpromising economic headwinds in both the public and private sectors. Moreover, a raft of technical, regulatory and insurance issues are aggravating the overall procurement picture.

When educational outcomes are at stake, this is uncomfortable.

You have two major levers to make the best of it:

1. Plan: This means rigorously identifying and targeting your most important needs to balance immediate survival with long-term value.

2. Manage: Exercise whatever control you have to radically reduce procurement risks by getting every aspect of the project right the first time.

Manipulating these two levers judiciously will allow you to cut out waste and keep work laser-focused on meeting your organisational needs and policy imperatives.

This blog is in two parts.

The first describes the ways that you can plan to succeed, preparing the ground for desirable outcomes for building projects in the education sector.

The second sets the foundations for minimizing the risks associated with procurement, outlining the importance of tendering and the critical success factors for maximizing outcomes.

Part 1: Construction client success in education estates: planning for good value outcomes

Education estates have always needed to be maintained, updated and improved, but growing pressures in recent years have ramped up the extent and complexity of the building work required.

The sector is far from homogeneous, however. The many categories of learning providers – schools, colleges, universities, and so on – and the differences in how they are run and funded, are important factors, making it difficult to generalise across the board. You will need to take these differences into account on top of your specific circumstances - available funding, plot size, timing constraints, user needs, planning context, and so on.

In publicly funded schools, for example, the National Audit Office (NAO) recently reported that those built in the inter-war and post-war decades are either already beyond their design life or coming to the end of it. Reinforced Autoclaved Aerated Concrete (RAAC) is just one symptom of a much wider set of potential risks that include asbestos and certain kinds of building systems.

Despite funding constraints, policy guidance and generic briefs have compelled contracting authorities and clients in charge to actively improve provision (for example, by requiring new buildings to be net-zero).

As difficult as this is in the state-funded subsector, reaching for better, safer, and greener buildings is a policy imperative in the quest for good public value for money that simply cannot be ignored.

Elsewhere in the education sector, the pressures are different. In higher education institutions, for example, shifts to blended learning and hybrid working enabled by digital technology and accelerated by the COVID-19 pandemic have dramatically altered patterns of use and ‘dwell times’ in existing buildings, making parts of them potentially obsolete.

Similarly, organisations’ environmental, social and governance (ESG) commitments, especially when it comes to reducing Scope 1 and 2 carbon emissions and boosting student welfare, are putting their estate’s quests for net-zero carbon and provisions for safeguarding under increasing scrutiny.

In response, universities have been rethinking their entire estates, rationalising and redeveloping underused spaces and energy systems, either to further their own strategic goals, generate new income streams, or divest for capital gain.

In short, regardless of the category of education provider, there is currently an urgent need to transform many of the UK’s education estates by procuring building projects (and, indeed, whole portfolios) that go way beyond business as usual – all within tight budgets and amid an uncertain economic future.

So, how can you plan to succeed?

Preparation and planning

First, set sound strategic foundations. Your project must link back to, serve, and support your organisation’s wider objectives, whether that is a university’s stated mission, an independent school’s business plan, or the Government’s bundle of policies affecting publicly funded education provision.

Without this link, there can be no justification for a building project and no shared vision for what you want to achieve. Even in state-funded schools where options are heavily constrained by limited funding and generic output specifications, it is important to understand your school-specific needs.

More than just a ‘nice-to-have’, a shared vision is a requisite of good governance and leadership. It is your north star, giving you a simple way to articulate the rationale for your project and get everyone pulling in the same direction. Boiled down to a few specific, measurable, achievable, relevant, and time-bound (SMART) targets, it also helps you and, critically, members of your eventual project team, to make the right decisions. When the chips are down in the hurly-burly of project delivery, this will serve you well.

Objectives should be based on an accurate and up-to-date analysis of the factors driving and shaping your school, college or university’s mission.

HM Treasury’s Green Book, the UK Government’s official guidance on how to appraise and evaluate publicly funded projects and programmes, recommends undertaking a PESTEL (political, economic, sociological, technological, environmental and legal) analysis.

Privately funded organisations may prefer to use different but similar tools, such as scenario planning, critical success factor analysis, or the Five Forces framework. The point is to investigate your organisation’s exposure to the wider socio-economic and policy context.

The resulting intelligence should help you to identify strategic threats and opportunities, which in turn will suggest a programme of work across your estate, most likely a series of projects.

Needless to say, the fact that these projects derive from and are nested under your strategic objectives means that you can be confident that they are necessary and sensible, allowing you to argue persuasively for funding.

Determining feasibility and the business case

At this point it is worth referring to industry-standard project outlines to guide your actions. Whether it is the RIBA Plan of Work or the CIOB’s Code of Practice for Project Management, these outlines give you a tried, tested and trusted formula for what to expect over the course of a project - even if you are a local authority or your project’s feasibility is being developed centrally by the Department for Education (DfE).

At the start of this journey – called RIBA Stage 0: Strategic definition and CIOB Stage 1: Identify needs and benefits – the idea is to determine the best value options for procuring your project. This will reveal your business case, preferably in line with the CIOB Client Guide: Leading Projects in the Built Environment and, if you are publicly funded, the Construction Playbook. Unless you are experienced, you are likely to need expert help to guide you through this feasibility process.

The Green Book prescribes the Five Case Model. Thus, as well as having a sound strategic rationale for the project, you must also be satisfied that its economic (or social value), commercial, financial and management dimensions stack up.

Consider the best solutions and the best methods of procuring them (i.e., the delivery model), and appraise their relative benefits against their likely cost and associated risks.

Developing a so-called ‘should-cost’ model can help in decision-making. This practice forecasts what an investment should cost over its whole life, rather than just its capital cost. Finding out that an apparently economical solution will be relatively costly to operate might justify choosing a more expensive option that is likely to be better value for money in the long run.

The Green Book advises publicly funded clients wherever possible to assign a financial value to non-market or social value benefits such as educational outcomes. If not possible, consider them alongside the financial picture and afford them appropriate weight in your appraisal.

As well as evaluating your options against each other, compare them to a minimum cost–benefit benchmark. This stops you from settling for a business-as-usual option, which, if your rationale for the project is sound, is unviable by definition.

As far as possible, acknowledge the technical, regulatory, financial, whole-life operational, and reputational risks of each option and weigh them carefully in your thinking. The less risky the option’s profile, the more attractive it is. You are likely to have to commission estimates, reports and surveys to help.

Beware optimism bias: many a project has come unstuck as a consequence of wishful thinking on the part of its client team, so much so that it is by now common practice to apply limits to even the most sober of financial projections.

Your business case will firm up iteratively over time as you evaluate new information and adjust your rationale, objectives and appraisal accordingly. Clients will typically go from a long list of choices to a shortlist, filtering for the best value until, finally, a preferred option is revealed.

Preferred option

Reaching this landmark marks the start of a defined project, giving you the green light to proceed to the next RIBA Plan of Work or CIOB life-cycle stage.

There is still much to do, of course. You must confirm funding, develop the design (including the school-specific design in publicly funded projects), secure planning permission, and, not least, build the building. All the while you must update your business case, monitor its overall health, and respond accordingly.

One of the important tasks is to tender for construction contractors. As the people who turn technical designs into physical assets, contractors are a critical and sometimes underestimated lynchpin in the overall success of a project.

Ensuring that they have both the requisite skills, knowledge, experience and behaviours (SKEBs) for your project and sufficient information to price it up accurately is no small feat. Smart clients will go beyond this bare minimum to optimise the tendering process and project management plan for project success.

In state-funded projects, of course, this burden is often simplified. Contractors come pre-qualified on frameworks, and employers’ requirements are to a large extent standardised. Even so, as Part 2 of this blog shows, there are opportunities for marginal gains that, taken together, will protect your project plan, avoid process waste, and lead to better long-term value.

Part 2: Construction client success in education estates: procuring for project success

This is Part 2 of a blog looking at how, with the right leadership and engagement, construction clients and contracting authorities in the UK education sector can plan and manage projects for success.

Part 1 described the ways that you can plan to succeed, preparing the ground for desirable outcomes.

This second part sets the foundations for minimizing risks through good procurement practice, outlining the importance of tendering and the critical success strategies for construction project management in the education sector.

Once again, what type of education provider your organisation is matters. The more your project is privately funded, the more control and influence you have – particularly during the tendering process.

In state-funded projects, options are more constrained, with framework procurement routes and specifications for what you build being comparatively restrictive.

Even so, the lessons set out here are relevant and worth applying to the extent possible.

A coincidence of macro-economic, regulatory and insurance factors is making construction procurement in the education sector difficult in 2023. It is hard to secure the necessary capital funding and planning consent for building work. It is challenging to attract competent contractors for the right quality of outcomes, especially in compliance with the Building Safety Act 2022 and the new duties it imposes on you. Although crucial, the design means nothing if it is not also built well. What’s more, even a high-quality build can be soured by unexpected costs and delays.

Given this context, it makes sense for clients and contracting authorities to exert whatever influence and control they have to overcome these factors to maximise the chances of project success.

With avoidable errors adding significantly to project costs and ongoing duties of care to the building’s users, you have every motivation to stack the odds in your favour. There are opportunities for doing so throughout the construction phase but especially at tender and project initiation.

Tendering: de-risk the process for bidders

The purpose of tendering is to procure the best value service provider for your project. When it comes to finding a competent building contractor, this can be complex – especially outside of publicly funded routes. Your team must summarise all your planning, feasibility, design, technical and business case research into a comprehensive tender package that bidders can use to understand their risks and liabilities, propose a method for delivering your building, and price it up accordingly.

When you are not constrained by generic output specifications, you have the freedom to tailor this information as you see fit. Although it involves a lot of complex technical and legal work, you can still optimise it for success. You can customise the evaluation criteria, choose the contract you want, hand-pick your contractors for financial stability, competence, and quality, and begin to set the general tone for teamwork and behaviours right from the start.

Sometimes the added work involved is too onerous, especially if you are a contracting authority obliged to comply with the Public Contracts Regulations 2015. In that case, you are likely to want simply to ‘call off’ contractors who have already proven their credentials to undertake projects like yours under a framework arrangement such as the DfE Construction Framework.

Just because you tender a contract it does not mean that you will get any takers. In 2023, the triple whammy of soaring cost inflation, latent risks (not least RAAC), and a difficult market for professional indemnity insurance exacerbated by construction’s new regulatory regime is scaring off bidders.

Added to pre-existing disincentives, not least some parts of the education sector’s restricted budgets, the cost of bidding and, in design and building procurement routes, the liabilities arising from assuming the client’s risk, taking on these challenging contracts can sometimes be less attractive.

All this emphasises the good sense in actively wooing bidders through your tender. To do this, put yourself in contractors’ shoes and address their concerns. For example:

• Without affecting your due diligence, can you arrange your procurement route differently to lessen the cost of bidding?

• Could you switch to a different contract (an alliance contract, for example), the better to align project team objectives and assign risks more equitably?

• Does your project brief, including for design and information management, clearly set out your scope, so there can be no surprises or room for disputes later?

• Have you mapped expected roles and responsibilities?

• Is information about the budget, pricing, payment, and formulae for varying prices and scope fair and transparent?

• Has your programme, for example, to minimise disruption during term times, been properly emphasised?

• Have you included your SMART targets for project outcomes and KPIs for service delivery so that bidders can easily understand your priorities?

• Do your tender evaluation criteria properly account for whole-life value rather than just the lowest price?

De-risking the tender for bidders in these (and other) ways generates confidence. It sets up a better collaborative spirit in the project team, thereby reducing the likelihood of downstream friction and claims for loss and expense and/or extensions of time. This is very much in your interest.

Project initiation: deploy critical success strategies

Research by the Get It Right Initiative (GIRI) back in 2015 found that direct costs of avoidable errors in construction were roughly 5% of project value, equating to approximately £5 billion per annum in the UK.

When GIRI factored in unmeasured and indirect costs, they estimated that the situation was much worse, comprising as much as 25% of total project costs. Providers and suppliers pay for some of this in reduced margins, but a good deal of the cost is, of course, borne by you, the client.

While the GIRI report pointed the finger mainly at systemic failings in how project team professionals interact, it also gently implicated clients on several counts. They suggest that clients could significantly improve how projects fare through good leadership, robust governance, and targeted management oversight.

These findings were amplified in the 2017 Cole Report, published by the City of Edinburgh Council in the wake of the serious collapse of a wall at Oxgangs Primary School. While the report found evidence of poor building work in the state-funded school estate, it concluded that this risk could have been mitigated with better procurement practices.

It recommended that contracting bodies should have the expertise and resources to act as an ‘intelligent customer’ and to bear in mind that, even if all risk is transferred to the contractor, clients cannot delegate duties owed to eventual building users.

Extrapolating from GIRI data and the recommendations for procurement in the Cole Report, the critical strategies (beyond mere regulatory compliance) are as follows.

When setting up and resourcing the project, perhaps with the help of an experienced client adviser*, you should:

• Invest comprehensively in initiating the project in consultation with your project team to:
  • Empower your key project champion to make decisions in a timely and effective way
  • Promote trust, open communication, mutual respect and teamwork through good leadership
  • Prime them on SMART quality targets for successful project outcomes
  • Agree and articulate project KPIs
  • Agree and articulate project risks and how they should be monitored
  • Confirm commitment to the project’s scope, programme, and organisation, being clear about roles and the boundaries of their respective responsibilities (especially for design management and compliance), and the system for stage sign-offs
• Insist on consistent information management, for example, by adopting the ISO 19650 family of standards
• Allow enough time for the project team to complete the various stages – especially early on to minimise the risk of errors and variations

When establishing the project team, you should:

• Promote good collaboration by aligning contractual interests across the project team
• Afford project team professionals adequate opportunity to coordinate their outputs and involve them early if necessary

When running the project, you should:

• Stay engaged in the project throughout the construction phase:
  • Monitor and control costs and risks,
  • Monitor progress against SMART targets and KPIs, and
  • Avoid late changes to decrease the likelihood of delay, errors, and extra cost
  • Respond quickly and decisively to queries and problems
• Implement a robust system for making changes (allied to your SMART targets) and empowering project team members to use it
• Implement a system for ensuring, as far as reasonably practicable, that the project and its resulting building complies with all relevant legislation, including concerning health and safety
• Inspect construction work regularly to ensure that it is built right the first time and that what is delivered accords with what was specified

With up to 25% of project costs – and all their attendant stress and disruption – at stake and with your ongoing duties of care to students, staff and members of the public in mind, it is sensible to exercise this influence to the fullest extent possible. Doing so is a golden opportunity to lift your project from the inefficient, costly, stressful muddle-through that characterises some projects to something much better.

Of course, the impact of deploying these strategies is only partially under your control. Much depends on the attitude, enthusiasm and staying power of your contractor. To this end, during selection, it will pay you to scrutinise not just bidders’ technical skills, knowledge and experience but also their behaviours, especially under stress. Contractors who adhere to a code of professional conduct – as CIOB members do – are likely to have a greater commitment to the behaviours required in a fast-moving project environment.

As the holder of the purse strings and chief decision-maker, you have the power to influence good outcomes. Make sure you use it.

*Client Advisers come from a variety of backgrounds. If you think you need help from someone with an architectural background the RIBA holds a list of Client Advisers here:
https://www.architecture.com/working-with-an-architect/client-adviser