=The Capital Task Group (CTG) was initiated as an action group with a short term of tenure considering the impact on the sector of the withdrawal of grants. This report on cost and how to achieve savings’ is one of the areas that the CTG at the initial meeting held on the 10th July 2009 felt was required to compliment the report on financial matters. Two meetings have been held 10th and 23rd July 2009 and reports for those meetings are available.

This report is the output from all the meetings held with Consultants (framework and beyond), contractors (Leadbitter, BAM, Millers, Balfour Beatty, Vinci and UK Constructors Group) and other interested parties (RIBA/Client Forum) who have all contributed in providing points of view on how costs and cost saving can be achieved in major building or refurbishment programmes/projects.

The content within the report is to provide guidance, as an additional reference for the tool box when approaching programmes/projects. The report is primarily focused on construction programmes/projects however this is not exclusively the case, many of the principles contained within this report can support you in other types of programmes/projects.

Any building programme new or refurbished must follow the necessary due diligence of an estates strategy which understands the needs and long term goals of the organisation and board. The strategy should understand the needs of the client base (the students) and the ability for the staff to have the tools and environment which will allow them to deliver a quality educational experience.

One of the prime considerations when considering a major building or refurbishment project is the overall impact on the entire educational establishment including impact on staff, timetabling and overall resource management, through to working practises and long term educational provision. Knowing what you want to achieve is half the battle of knowing what you can build and why?

Saving costs in any development is achievable at any stage of the design. The level of saving is dependent on what you the client are willing to agree to and where in the design process or delivery process you currently are. Most projects can achieve savings through Value Engineering (VE), standardisation of products, collaboration with other developments in the area to maximise buying power (economies of scale) and/or conservative design from the outset. The level of saving can vary and be as much as 30%. Through this document the LSC cost model has been used as the reference £/m2 rate as a guide for costs, but it is the client who agrees to whether this amount of expenditure is used. Also some developments will have an unusual amount of abnormal costs above the level included in the LSC cost model. Therefore the context of savings is dependent on the client and the expectations of the development.
Within this report detail of how the reader can approach maximising cost savings is discussed however, there is further work required over the life of the programme to assess cost savings on a project by project basis and with the involvement of key technical and delivery experts. Any approach undertaken should be an all inclusive approach to ensure that all concepts of cost saving is both financially and technically viable.

To achieve cost savings the following should be considered when reviewing your individual projects;

Simplification of design will maximise potential savings, for example: the space will be maximised if the design has no intricate wall designs, 900 angles in corners, supports maximum use of space. Areas to consider include; Standard bay sizes in support of the external elevation design and common column spacing throughout, as far as possible. Materials for the internal walls, standardised doors, standardised light fittings (note these areas also effect the long term operational costs post completion), use of glass internally, type and number of lifts, style and type of stairs.

Significant examples include;
The Mechanical and Electrical (M&E) design, this can be as much as 30% of your construction costs, if you are able to make a 30% saving in the design and subsequent material costs and labour costs for the installation, you make a 10% saving on your overall construction bill.

Also the use of demountable walls (these can cost circa £35k per wall), replacing that same space with a permanent wall will cost circa £7k, how many times can you knock a hole in that wall the same size as a demountable wall and then reinstate the wall.

Potentially you could change this out every 5 years and see 25 years of life for the same cost of a demountable wall?).

Life costs of materials used – know in broad terms what you will use a space for and appreciate the types of materials used, it is not worth paying 50% more for a type of material that has a life expectancy of 10-15 years when you will possibly change that space out in 5 years time, flooring material is a typical example of this.

The inclusion of IT is to be considered carefully. IT provides a number of additions to a College; meeting the needs of students in the future and their method of learning, but also the use of the IT infrastructure to manage a building more intelligently as an example. All of the IT uses come at a tangible cost. There are examples of success in the use of IT and savings can be made by the inclusion of technology to run a building, however, there is the loss or burden factor to be considered.

When taking on all the additional IT facilities available question whether you have internally the skill set to maximise the facility and therefore receive the savings that potentially is available. You therefore incur an initial and recurrent training overhead for staff to ensure maximisation of savings potential. Audio Visual Aids are another area which currently is maximising IT, but again, are staff trained sufficiently to maximise the potential. Maximising technology should not be a burden to the organisation; a robust IT infrastructure must provide flexibility for the future without the prospect of higher long term support costs.

The IT strategy should not be built around what are the latest and sexiest tools available, but it should be built on requirement/necessity as opposed to wants! The strategy also needs to acknowledge the requirement to be future proof, which can be easily accommodated during the design stage by creating the appropriate trunking/ducting system in a new build to facilitate this expansion in infrastructure.
The consideration of cost is explored further within the detail of the report and the above is to provide you with an indication of areas to be considered when looking at your individual project for a new build.

The area of refurbishment is slightly more complex but again should be tied into a clear estates strategy. Refurbishments will require a surveyor to assist in the consideration of your current estate. Refurbishments can cost between 30% and 75% £/m2 of a new build depending on what your approach is. The building to be refurbished needs to be completely appraised as age will provide you with an appreciation of the work that will need to be undertaken. Another advantage of a refurbishment is the impact/lot less onerous with regards to planning or not as the case maybe in some instances and will be dependent on local feeling towards your buildings; are they listed, of significant interest to the community, how much refurbishment you require to undertake. All of this determines the level/limitation to planning.

During the review of refurbishment viability consideration of whether the building conforms to current building regulations and legislation will provide a clear picture of what your commitment (costs) might be. Have you an asbestos register for the building and is it extant, is the electrical wiring up to date or will the building require a new re-wire. Is the structure of the building sound, will you take it back to the frame and build out? All of this determines the cost you will incur, along with the logistical requirements of keeping the campus operational during the refurbishment. i.e. temporary accommodation etc? In the section on refurbishment this is discussed in further detail.

Refurbishments can become an endless pot of money if the building and subsequent development is not fully interrogated and understood. As mentioned, major refurbishments must be based on a clear strategy rather than fire fighting short term needs of the organisation.

Cost saving is an emotive subject as this will impact on the expectation of the client and other stakeholders. Your vision of your College’s buildings for the future will be impacted upon. There are areas that Government are pressing for standards and regulations, such as the green issue and its expectation of the future. The need to become carbon neutral for all public sector buildings in the up and coming years. Local authorities expect all new buildings to be BREEAM ‘excellent’ rated and that in the future all building will be retro fitted to ensure carbon neutralisation. This area alone requires further discussion with DBIS/LSC/SFA/LGA/YPLA/DCSF etc.

With the changing environment for learners and the manner in which they learn the challenge of whether the current space calculations are correct and as such should this area be further considered/changed. The use of space and the amount of space allocated determines the cost of the building. It is noted that the space calculations for FE learners massively differs from that applied in the HE sector, this is evidenced through the manner in which HE learners learn, academically vs. vocationally. However, the space required in a practical workshop should be managed on health and safety grounds the area of classroom work can be managed differently. Clearly space and space norms are an area for further thought.
Other areas to assist are the approach to the governance of a programme/project. Governance measures provide you the client with the mechanism to understand the challenges before, during and after. The types and frequency of reports, risk and change management, how this is applied and the change in approach as the design is developed through to delivery and into operation. Governance is your area of influence and control and therefore your ability to reduce costs through effective communication and management.

It is acknowledged that the level of understanding of programmes and projects for developments varies from reader to reader and as such the information held within the report is to provide guidance assuming a reader with limited or no knowledge.

There is a benefit to you the reader and the sector to be a more intelligent client in the area of development and whilst not being a professional practitioner in development programmes or projects this intelligence will enable you to maximise on cost reduction and be in a position to challenge your professional team throughout the process.

The ability of the client to understand the process and to be able to challenge the professional team around you, ensures that you take over a new or refurbished building that meets expectations, is completed on time and within agreed budgetary parameters and with a quality that all stakeholders (Students/Staff/Corporation Members/Local Community as examples) can be proud of.

This report provides general assistance in reviewing the cost and procurement of FE schemes but ultimately it is likely that the following will be required:

1.
The capital handbook is re-written to provide the appropriate guidance to support the reader to become the more intelligent client for future new builds or refurbishments, and

2.
Estates Strategies be reviewed and where required re-written to meet the changing financial climate and re-focused expectations on capital investment.