Assad Maqbool analyses the implications of new spending announcements for schools in the recent Budget.
The spring Budget announced further spending on schools: capital investment in schools continues to be a priority. At the same time, the Department for Education’s executive agency, the Education Funding Agency (EFA), is procuring the entirety of its construction framework, and so contractors, especially small and medium-sized companies, have a great opportunity to meet the need for new and refurbished school buildings.
The chancellor announced in the Budget that a further 110 new free schools would be funded during this Parliament, on top of the current commitment to 500. A further announcement was the additional investment in existing schools of £216m over the next three years. By the chancellor’s reckoning, that takes total investment in school condition to more than £10bn in this Parliament.
The two main streams of capital funding are the Free Schools programme and the Priority School Building Programme.
Free Schools are government funded schools which are not run by local authorities. The building programme also includes University Technical Colleges, which specialise in subjects like engineering and construction along with business skills and information technology. Studio Schools are also included in the programme and are small schools delivering mainstream qualifications.
“The Priority School Building Programme is focused on rebuilding and refurbishing school buildings in the worst condition and its second phase, PSBP2, includes individual blocks at 277 schools which are to be rebuilt and refurbished using capital grant.”
The Free Schools programme is known for the diversity of sites, the choice of which is often restricted in light of the need for a new Free School to be delivered in a specific area. This has led to a diverse range of construction projects and has contributed to the need to set up the DfE’s new property company, LocatED, tasked with finding and acquiring sites for Free Schools.
The Priority School Building Programme is focused on rebuilding and refurbishing school buildings in the worst condition and its second phase, PSBP2, includes individual blocks at 277 schools which are to be rebuilt and refurbished using capital grant.
The EFA’s plan is for all PSBP2 schools to open their new or refurbished buildings by the end of 2021: the EFA’s track record on the first phase of the programme would suggest that the delivery date will be met.
Part of the success of the delivery of Free Schools and Priority Schools has been the streamlined way in which the EFA has procured the consultants and contractors for the projects. Much of the work of the EFA in streamlining the programme has been the very difficult task of standardising its approach to risk across a diverse range of projects across the country, including setting up its own frameworks with consultants and contractors with standard contract terms.
The contracts are either based on the JCT suite or, in relation to high-value projects, on its own standard form contract which has its roots in the old standard form of project contract SOPC4 and was used and developed through the academies and Building Schools for the Future programmes and through the first phase of the Priority School Building Programme.
Unsurprisingly given the need to ensure that the contract management of a vast number of idiosyncratic projects does not become entirely unwieldy, the EFA is loath to amend its standard form contracts, once signed up to under a framework. To ensure that aim is achievable, its contracts share risk on a reasonably market-standard basis.
Currently, the EFA is re-procuring the entirety of its construction framework. Since a prior information notice for the £6bn framework was issued by the DfE on 19 May 2016, the EFA has been running a series of market engagement events to gather feedback from contractors, trade associations and industry groups in relation to the design of and the procurement strategy for their new construction frameworks.
Part of that has again been engaging on contract forms and standard risk positions which are acceptable in the market. The EFA will continue to procure construction projects on a two-stage basis with a pre-construction services agreement covering the design stage.
The bespoke risk positions that the EFA have refined over a number of years include the requirements for safeguarding of children, the risk in relation to judicial review of projects, the need to stop projects during exam periods, and delay risk linked to the start of term periods and half term breaks.
However, the greatest change in the procurement strategy has been the way in which the lots are to be organised in the new construction framework. The lots will be distinguished by value of project: high band, medium band, and low band.
The high value band will have a few contractors in each of the north and south regions carrying out the largest individual schools projects, The medium value band will split the country into a number of regional lots, and the low value band lot will further split the country into a number of smaller regions.
The framework re-procurement represents a vital opportunity for contractors to carry out school projects over the next four years and the EFA’s strategy would clearly suggest that small- and medium-sized contractors will have a much greater chance of winning a place on this panel.
