The University sector continues to transform its estate to meet the demands of teaching and research in a digital 24-hour learning environment but keeps its costs at a three-year low. These cost savings are made despite an extraordinarily challenging political environment, according to the Association of University Directors of Estates’ (AUDE’s) recently published annual report.
The publication, Higher Education Estates Management Report 2017 spans the academic year 2015-16, and details the evolving profile of the university estate in the UK.
The UK university estate is managing an additional 500,000m2 (from 21,400,000 to 21,900,000m2) of space as well as the comprehensive refurbishment of older buildings. Despite this increase in the size and complexity of the university estate, directors of estates have worked to keep costs down, and total property cost (revenue spending) has remained relatively level for the third year in a row at £2.04 billion.
Capital expenditure in UK university estate reached £3 billion a year for the first time, with funds spent on refurbishing old buildings and also on building newer, more carbon efficient premises to decrease running costs long-term.
Despite the large expenditure figure, the experience of most universities with capital investment will be much more modest, with many directors of estates having to make difficult decisions about what they invest in.
These decisions will only become more difficult, according to Mike Clark, AUDE’s Chair, and Director of Estate & Facilities Management at the University of Brighton.
He said: “Smaller institutions will be keeping a very close eye on their bottom line, choosing between refurbishing older buildings to cut backlog maintenance costs or creating entirely new more carbon-efficient spaces. While it’s likely these decisions cause sleepless nights already, with the threat of further decreased income as a result of the Teaching Excellence Framework’s sanctions, and a historic low in those available to recruit to university, more turbulent times are almost certainly ahead. For many institutions, the challenge will be to develop capital programmes to update their estate whilst student numbers remain level, or for some, even reduce.”
The demographics of the UK show that the number of people available to go to university will continue to reduce for the next four to five years to a historic low, before numbers start to recover again.
Clark added: “Alongside the uncertainty of Brexit, and studying in the UK a potentially more difficult process than ever before for overseas students, driving efficiency, reducing costs, improving service and increasing the commercial income from the estate will be vital for the survival of many institutions.”
A key driver for the investment is the age of the university estate: approximately one third of the estate was built between 1960 and 1979 and will be at the end of its design life soon, continuing to need substantial refurbishment or replacement and demanding continued capital investment. Overall, however, with investment over recent years, the age of the university estate is now getting younger.
According to the report, the overall figure of healthy expenditure levels may be misleading – with 20 institutions with the largest capital spend of 2015/16, spending 50 per cent of the total capital expenditure. Similarly, 80 per cent of the capital was expended by 54 out of the 154 institutions, and four of the biggest institutions spent a £100 million a year each on new buildings – these were the University of Cambridge, Imperial College, University College London and University of Edinburgh.
The cost of running the university estate amounts to over £2 billion per year, with the largest costs being:
- Repairs and maintenance – £701 million
- Energy costs – £376 million
- Cleaning costs – £244 million
- Security costs – £154 million
- Management costs – £304 million
Sir Ian Diamond, Principal and Vice-Chancellor of the University of Aberdeen commented on the report, he said: “The university estate is today, so much more than it has ever been. It is comprised of everything from innovative and impressive learning, teaching and research facilities, social spaces, entertainment venues, sports facilities, restaurants and cafes, theatres, libraries, hospitality and residential accommodation to space for start-up companies, enterprise space and collaboration spaces with business and companies. Universities will continue to evolve and be dynamic in the face of changing demographics, funding and political upheaval, and directors of estates will strive to provide excellence in facilities alongside world-class education.”