Across the higher education sector, real estate procurement is changing. In a shift away from the traditional procurement model, with its risk of overruns and cost uncertainties, institutions are embracing design and build (D&B) as a faster, more effective alternative.
One of the main reasons for this shift is the growing trend among universities for taking real estate in larger metropolitan areas. We understand that by expanding into other areas these institutions can establish a presence beyond their base, attracting students from outside the UK onto their courses and campuses.
Universities wishing to enhance their visibility, particularly among international students, have also seen success in increasing their annual intake. Higher education and universities are quickly becoming one of the top occupiers in the capital as more regional institutions set up their sites in London.
To successfully penetrate these markets, regional institutions need to acquire and convert property at pace. With a dearth of appropriate building stock in popular city locations, universities are increasingly targeting ex-commercial spaces for their growing student populations. Given the need for efficiency and speed, traditional procurement methods are ill-suited to these ventures. Only through precise and analytical D&B strategies can institutions combine rapid changes in use with certainty of cost and delivery.
For students and institutions alike, September is a critical month. For the academic year to begin well, campus building projects must end well – on budget and on time. September is certainly the month that defines and frames the academic calendar. With so much riding on a smooth start to the new term, building fit-outs or refurbs must be complete to accommodate the incoming student cohort.
Academic bodies are governed by the “September hard stop” and devise procurement strategies that ensure all work will be delivered to schedule. By moving away from traditional procurement and into D&B, academic institutions can avoid costly delays and keep their project on track. Rather than making property decisions a whole year in advance, design and build allows universities to have greater scheduling flexibility and focus on the outcomes of the project. Interior fit outs can be planned in parallel with design, which again saves time in tender document preparation.
D&B procurement also allows for clear communication through one dedicated provider who has ownership of the entire project. Removing the hassle and friction that often come with managing multiple contractors, this arrangement enables a more harmonious and streamlined experience. This further increases the likelihood of meeting the September deadline.
For academic institutions looking to convert ex-workspace and commercial properties, certain key processes need to be incorporated into all planning. The most important of these involves a mandatory switch in uses, from a B1 (or E) to an F1 use class, which needs to be understood and factored into project timelines.
A B1 use class refers to an allowable business use under the Use Classes Order and comprises three key elements:
In England, on 1 September 2020, the B1 use class was revoked following changes to the Use Classes Order. All B1 uses are now subsumed into a new Class E, which unites some use classes under the categories Commercial, Business and Service. Class E developments serve the needs of visiting members of the public, and/or are suitable for town centre areas. Class E also allows for extensive mixed-use development, recognising that buildings may serve multiple functions simultaneously.
Class F1 was also introduced alongside Class E as part of the Business and Planning Act 2020. According to Planning Aid England, Class F1 comprises “schools, museums, galleries (not for sale), libraries, halls, places of worship, church halls, law courts, non-residential education and training centres (all former Class D1 uses)”.
Higher education buildings now fall under ‘learning and non-residential institutions’ within the F1 category. While planning permission is not required for changes of use within the same use class, it is needed when switching from one class to another. So, for academic institutions looking to convert former commercial buildings, planning permission is essential to enable the shift from Class B1/E to F1.
Getting the financials right is a key part of successful project delivery. But historically, via traditional procurement routes, cost creep has made for a lack of clarity, with the risk of additional finances being required at short notice.
By switching to a D&B procurement model, academic institutions can prevent unforeseen cost increases by establishing a fixed contract price from the outset. While construction projects generally are associated with time and cost overruns, D&B minimises these impacts.
With a single point of responsibility for both design and construction, there is less expenditure and engagement required on professional fees. Contractors also usually work for an agreed lump-sum price and stick to it. So long as the client doesn’t demand major changes to the brief, certainty of cost can be assured throughout.
By providing greater cost certainty and faster delivery, D&B solves two of the major issues that have bedevilled construction projects for decades. Time and cost are two of the most important performance criteria within the construction industry.
Adopting the D&B model, regional universities can now make successful inroads into metropolitan markets. This provides a unique opportunity to reach new students, access deeper talent pools and drive up intake. What’s more, by providing education in areas that were previously inaccessible, they become more competitive within the education landscape.
A presence in major cities also enables regional institutions to build new research partnerships and relationships. In this way, they can deliver long-term benefits to students while enhancing commercial growth through the sale of research and data. Opting for the D&B procurement method, higher education can achieve these gains with greater speed and cost efficiency, opening a world of new possibilities.