Sector Focus Bulletin

Watts Articles

Watts Sector Focus Bulletin - Higher Education

In the wake of last year’s Comprehensive Spending Review, universities and further education colleges are being faced with a 25% reduction in their public funding by 2015. This, combined with the threat of new immigration limits, reducing the flow of international higher education students coming to the UK, presents a real test for the financial management of colleges and universities. As a result, the upkeep and maintenance of higher education buildings is likely to be brought into even sharper focus to establish whether further reductions and efficiency savings can be made to assist in reducing overheads.

Watts’ specialist higher education team has led, reviewed, managed and supported numerous projects and programmes in which our diverse experience in retail, leisure and commercial sectors has been brought to bear in diversifying income streams; our energy audits, PPM and functional usability surveys have also been used to minimise or target expenditure (in the medium term). By working in partnership with our clients, we are able to inform and transform the way that services are delivered, ensuring cost effective and sustainable solutions.

This bulletin tackles some of the key issues now being faced by estates managers and others responsible for specifying, occupying and managing higher education buildings. On the following pages we address those aspects of project provision that could and should be carefully considered by higher education providers to ensure they are delivering the best possible services to their customers, whilst at the same time meeting budgetary requirements and addressing the sustainability agenda.

Daniel Webb

Director, Project Consultancy Group, Watts Group PLC

Watts Sector Focus Bulletin - Higher Education

HE sector investing for future despite funding cuts

In a survey of 42 university estates directors, more than half confirmed they are currently undertaking capital projects worth more than £5million, with 40% of those polled saying they are planning to get new projects off the ground by 2015.

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The research, carried out by Wates Construction last year, revealed that despite funding reforms and the replacement of the grant system by tuition fees, three quarters of universities expect their estates budget “to remain steady or improve”. Priority areas for future development include teaching areas such as lecture theatres; research and leisure facilities and communal areas, with facilities to promote collaboration with business, libraries and student accommodation being given lower priority.

These findings are backed by research from Deloitte, which details the current priorities and concerns of university finance directors from 35 UK higher education institutions. According to Julie Mercer, head of education consulting at Deloitte, only one of the finance directors approached for the survey said that investment plans had been scaled down in the last 12 months. Instead, the HE sector appears to be concentrating on “diversifying income streams” in particular by focusing on philanthropic income – something that is a relatively new phenomena in the UK education sector, unlike that in the USA where this constitutes a key source of income for colleges and universities. Having been relatively cautious in recent years, nearly half of those surveyed told Deloitte that they felt the climate was now favourable for considering new investment.

Nicola Hart, head of universities at leading law firm Pinsent Masons commented that the findings “certainly chime with our experience”, saying there is now “a sense of buoyancy following a period of …prudence”. In Hart’s experience too increasing capital expenditure and identifying alternative revenue streams, such as issuing bonds or opening campuses overseas is now taking precedence over cost cutting. Pinsent Mason’s own research found that 67% of the universities they approached were more likely than ever before to establish an overseas presence as a result of current government policies on immigration and fees.

For further information about the Higher Education sector investing for future despite funding cuts, contact Daniel Webb, Director at Watts’ London office on 020 7280 8000.

Have you been effected by Higher Education funding cuts? If so, we would like to hear from you on Watts’ Twitter page or join the Watts Bulletin group on LinkedIn.

The Watts Bulletin is the technical companion to the Watts Pocket Handbook, the essential guide to property and construction, as used by professionals since 1983.

Watts Bulletin editor: Trevor Rushton.