Education Construction Market Report - UK 2007

SUMMARY

AMA Research has recently published the 2nd Edition of its overview of Education Contracting Market in the UK, focusing on key market trends, structure and change within the primary, secondary and higher education sectors, major education contractors and procurement issues. This report continues a series of shorter ‘Insight’ on key areas within public sector construction. Other completed reports include higher education sector and student accommodation market, an analysis of the Building Schools for the Future Initiative and the Procure21 and NHS LIFT forms of procurement in healthcare construction. -

Key Areas Covered:-

• An overall review of the state education system in the UK.
• Procurement of work by contractors, including consortia formed to bid for education work.
• An analysis of PFI and the Building Schools for the Future and Academies Programmes.
• Analysis of public sector funding for education facilities in both schools and universities.
• Detailed analysis of capital investment in the education system, an update of construction progress and an assessment of contractor's output of work in the education market.

Areas of particular interest include:-

• The Government is providing an unprecedented level of capital investment in both primary and secondary schools and the school building capital programme has increased more than 7 times since 1996-07.
• Reviews the progress of the PFI and Building Schools for the Future and Academies Programmes and provides a detailed analysis of schemes under waves 1-6 of BSF, together with projected investment in the Programme, bidding consortia and anticipated timescales for completion.
• Review of the structure of and reform in the higher education sector, including the impact of rising student numbers on university infrastructure developments.
• Analysis of the increasing use of university endowments to fund capital programmes.
• An in-depth analysis of the growing market for student accommodation.
• Education expenditure beyond April 2008 will be set within the framework of the next 2007 Comprehensive Spending Review, which is expected to see investment in the education sector slow to 2.5% per year.
• Key drivers and future prospects for the education contracting market.

Key areas of coverage in the report include:-

STATE OF THE EDUCATION MARKET IN THE UK

• Structure of the state education system in England, Scotland, Wales and Northern Ireland including types of schools in operation.
• Structure and Responsibilities of Local Education Authorities.
• State education spending in the UK, including total education spending and DfES budgets.
• Analysis of DfES expenditure by function including spending on schools, young people, further education, skills, lifelong learning and higher education.

THE HIGHER EDUCATION SECTOR IN THE UK

• Structure and size of the higher education sector in the UK.
• Impact of new universities on infrastructure developments within the sector.
• Key sector drivers including rising student numbers and the impact of tuition fees.
• Sources of higher education funding and allocations by the major funding councils in England, Scotland and Wales.
• Funding for science and research in higher education institutions.
• University endowment funds.

CONTRACTORS OUTPUT IN THE EDUCATION SECTOR

• Value of construction new work output.
• Construction output by sector in 2006.
• Construction output in 2007 and Beyond.
• Analysis of contractors output in the public education sector.
• Outlook for education construction work. Capital expenditure in the schools sector and types of capital funding.
• Education Work Output - Government Targets & Progress to Date.
• PFI in the education sector including an in-depth analysis of the Building Schools for the Future and Academies Programmes.
• Capital expenditure in the higher education sector and university capital building programmes.
• Analysis of developments in the student accommodation sector.

CONTRACTOR PROFILES

• Structure and size of the contracting industry.
• Key construction companies and contractors.
• Private sector consortia in education.
• Contractor profiles - key contractors operating in the education market.

TABLE OF CONTENTS

1. INTRODUCTION

2. SUMMARY

3. ECONOMIC ENVIRONMENT

• 3.1 GDP
• 3.2 INFLATION & INTEREST RATES
• 3.3 UNEMPLOYMENT
• 3.4 HOUSEHOLD CONSUMPTION
• 3.5 HOUSING & CONSTRUCTION
• 3.6 POPULATION PROFILE
• 3.7 CONCLUSIONS

4. THE STATE EDUCATION SECTOR IN THE UK

• 4.1 STRUCTURE OF THE STATE EDUCATION SECTOR
  • 4.1.1 England and Wales
  • 4.1.2 Scotland
  • 4.1.3 Northern Ireland
• 4.2 TYPES OF SCHOOL IN THE UK
• 4.3 LEAS - STRUCTURE & RESPONSIBILITIES
• 4.4 STATE EDUCATION FUNDING IN THE UK
  • 4.4.1 Total Education Spending
  • 4.4.2 DfES Funding
  • 4.4.3 Spending by Function

5. THE HIGHER EDUCATION SECTOR IN THE UK

• 5.1 OVERVIEW & STRUCTURE
  • 5.1.1 Impact of the ‘New Universities’ on Infrastructure Development
  • 5.1.2 Student Growth
  • 5.1.3 Tuition Fees
• 5.2 HIGHER EDUCATION FUNDING
  • 5.2.1 Sources of Funding
  • 5.2.2 Funding Councils
  • 5.2.3 2007 Budget
  • 5.2.4 SRIF/Research Funding
  • 5.2.5 Endowment Funds

6. CONTRACTORS OUTPUT IN THE UK EDUCATION SECTOR

• 6.1 TOTAL CONSTRUCTION OUTPUT
  • 6.1.1 Value of Output - Construction New Work
  • 6.1.2 Construction Output by Sector
  • 6.1.3 Construction Output in 2007 and Beyond
• 6.2 CONTRACTORS OUTPUT IN THE EDUCATION SECTOR
  • 6.2.1 Outlook for Education Construction Work
• 6.3 CAPITAL EXPENDITURE IN THE SCHOOLS SECTOR
  • 6.3.1 Capital Expenditure Levels
  • 6.3.2 Types of Capital Funding
  • 6.3.3 Education Output - Government Targets and Progress to Date
• 6.4 PFI IN THE EDUCATION SECTOR
• 6.5 BUILDING SCHOOLS FOR THE FUTURE PROGRAMME
  • 6.5.1 Background & Overview
  • 6.5.2 Investment in BSF
  • 6.5.3 How BSF Works
  • 6.5.4 Scheme Update/Progress to Date
  • 6.5.5 Problems with BSF
  • 6.5.6 Construction Consortia
  • 6.5.7 Future of BSF
• 6.6 ACADEMIES PROGRAMME
  • 6.6.1 Programme Overview & Progress to date
  • 6.6.2 Completed Academies
  • 6.6.3 Construction Consortia
  • 6.6.4 Problems with the Academies Programme
• 6.7 CAPITAL EXPENDITURE IN THE HIGHER EDUCATION SECTOR
  • 6.7.1 Capital Expenditure Levels
  • 6.7.2 University Estates
  • 6.7.3 University Capital Building Programme
  • 6.7.4 University Infrastructure - Student Accommodation

7. CONTRACTOR PROFILES

• 7.1 STRUCTURE AND SIZE OF THE CONTRACTING INDUSTRY
• 7.2 KEY CONSTRUCTION COMPANIES AND CONTACTORS
• 7.3 PRIVATE SECTOR CONSORTIA IN THE EDUCATION SECTOR
• 7.4 CONTRACTOR PROFILES

8. CONCLUSIONS & FUTURE PROSPECTS

TABLES AND CHARTS

• TABLE 1 SUMMARY OF MAJOR CAPITAL SPENDING PROGRAMMES IN THE PUBLIC EDUCATION SECTOR
• CHART 2 INTEREST RATES AND INFLATION (CPI) FROM 1990-2009
• CHART 3 PDI & SAVINGS RATIO AT CURRENT PRICES 1990-2009
• CHART 4 AGE DISTRIBUTION OF THE RESIDENT UK POPULATION 2001 (‘000)
• TABLE 5 EDUCATION ESTABLISHMENTS BY TYPE IN THE UK - 2006
• CHART 6 VALUE OF TOTAL UK EDUCATION EXPENDITURE 2004-2010 (£ BILLION)
• TABLE 7 DFES SPENDING 2003 - 2008 (£BN)
• TABLE 8 DFES SPENDING BY FUNCTION 2002 - 2008 (£M)
• TABLE 9 TOTAL NUMBER OF HIGHER EDUCATION INSTITUTIONS IN THE UK - 2006
• TABLE 10 NUMBER OF STUDENTS IN HIGHER EDUCATION IN THE UK 1998-2010
• TABLE 11 SOURCES OF UNIVERSITY FUNDING - 2004-05 AND 2005-06 (£M)
• CHART 12 SOURCES OF FINANCE FOR UNIVERSITIES AND COLLEGES -INCOME 2005-06
• TABLE 13 HEFCE FUNDING FOR UNIVERSITIES 2005-06 TO 2007-08 (£M)
• TABLE 14 HEFCE ENGLAND FUNDING 2007-08 - TOP 10 UNIVERSITIES
• TABLE 15 SFC SCOTLAND FUNDING 2007-08 - TOP 10 UNIVERSITIES
• TABLE 16 SRIF ROUND 3 FUNDING 2006-08 - TOP 10 UNIVERSITIES
• TABLE 17 TOP 10 UNIVERSITY ENDOWMENT FUNDS 2005 (£M)
• CHART 18 VALUE OF CONSTRUCTION OUTPUT NEW WORK 1999-2009 (£ BILLION)
• CHART 19 VALUE OF CONSTRUCTION OUTPUT NEW WORK BY SECTOR - % BY VALUE 2006
• TABLE 20 CONTRACTORS' OUTPUT OF EDUCATION SECTOR WORK (PUBLIC/PRIVATE) 1996-2006 (£M)
• CHART 21 UK EDUCATION CAPITAL EXPENDITURE 2004-2008 (£ BILLION)
• TABLE 22 CONSTRUCTION ACTIVITY IN THE UK EDUCATION SECTOR - PROGRESS TO DATE APRIL 2007
• TABLE 23 FINANCIAL ALLOCATIONS UNDER BSF 2005-2008 (£M)
• TABLE 24 BUILDING SCHOOLS FOR THE FUTURE - CONTRACT STATUS (AS OF APRIL 2007)
• CHART 25 PROJECTED NUMBER OF BSF SCHOOLS OPEN 2007-2014
• TABLE 26 PROJECTED* NUMBER OF BSF SCHOOLS OPEN WAVES 1-7
• TABLE 27 BUILDING SCHOOLS FOR THE FUTURE - PREFERRED BIDDERS AS OF APRIL 2007
• TABLE 28 ACADEMIES OPENED IN 2006
• TABLE 29 TOP 10 CAPITAL ALLOCATIONS TO HIGHER EDUCATION INSTITUTIONS 2006-07 (£M)
• TABLE 30 UNIVERSITY ESTATE & CAPITAL BUILDING PROGRAMMES - 2005-06
• CHART 31 TYPES OF STUDENT ACCOMMODATION IN THE UK - APPROXIMATE SHARE BY SECTOR 2006
• TABLE 32 PROVISION OF STUDENT ACCOMMODATION AT MAJOR UK UNIVERSITIES 2005-06
• TABLE 33 LEADING COMMERCIAL OPERATORS OF STUDENT ACCOMMODATION IN THE UK
• CHART 34 ESTIMATED NUMBER OF NEW STUDENT BED SPACES BUILT PER YEAR - 2000-2010
• TABLE 35 MAIN PRIVATE CONTRACTORS - BY NUMBER OF EMPLOYEES 2006
• TABLE 36 UK'S TOP 20 CONTRACTORS BY GROUP TURNOVER 2005/2006
• TABLE 37 LEADING EDUCATION CONTRACTORS AND PRINCIPAL PRIVATE SECTOR CONSORTIA