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The coalition鈥檚 decision back in 2010 to treble tuition fees to an eyewatering 拢9,000 a year, combined with a far weaker graduate jobs market, has prompted many young people to think more carefully not just about the quality of their university course, but also about the quality of the environment in which they will spend three years. And one person who understands the implications for university buildings better than most is Mark Swindlehurst, chair of the Association of University Directors of Estates (AUDE) and director of facilities at Lancaster University.

鈥淭hose who choose to come into higher education now know that they鈥檙e going to take on a debt and they鈥檙e very serious about that education and what it鈥檚 going to deliver for them once they鈥檝e got their degree,鈥� he says. 鈥淚t鈥檚 no longer good enough if you鈥檙e just investing in the latest research facilities or in accommodation. You鈥檝e got to make sure that whatever buildings you鈥檙e presenting are of the highest quality you can deliver because the expectation from students is there.鈥�

What鈥檚 more, the quality of a university鈥檚 estate and students鈥� attitudes towards the quality of their environment also has an impact on universities鈥� ranking in the various higher education league tables. Such publications have a huge impact on the desirability of an institution and now that the majority of funding comes from tuition fees rather than the Higher Education Funding Council, whose 鈥渘on-recurrent and capital budget鈥� has been cut by just over 拢1bn, anything affecting an institution鈥檚 ranking requires close scrutiny.

The increasingly globalised nature of higher education, in terms of attracting both students and leading staff, is also driving the push towards higher-quality estates.

鈥淢any corporate organisations justify investment in good work space as being about being able to attract and retain talent,鈥� says Swindlehurst. 鈥淚t鈥檚 the same in higher education. How are you going to recruit those people?

And what sort of facilities are you going to give them when they get here?鈥�

So, what does Swindlehurst believe are the implications of students鈥� new-found fastidiousness for university estates? And what opportunities do they present for the construction industry?

Growing influence

First off, the increased importance of the quality of university buildings has led to directors of estates such as Swindlehurst enjoying new-found power and influence within their institutions.

鈥淚t has become a more strategic agenda for estates professionals and you really didn鈥檛 see that 10 years ago,鈥� he says. 鈥淢ost directors of estates will have a seat at the management table. You鈥檙e involved from day one in any investment decisions that are being made.鈥� More tantalisingly for construction firms, however, is that the last three years has seen a significant increase in capital spend among the UK鈥檚 universities. AUDE represents around 160 higher education institutions, including all of the main universities, and collates data on how much its members spend on capital programmes. According to Swindlehurst, before 2010 AUDE鈥檚 members鈥� collective spend on capital projects came in at around 拢1.5bn on average each year. Since 2010, the average annual spend has risen to about 拢2bn. 鈥淵ou can see that more and more universities have put more and more money into their capital programmes because otherwise they鈥檙e going to be left behind,鈥� he says.

And the signs are that this increased spend is likely to continue, according to research commissioned by Wates and published earlier this summer. This research shows that 27% of universities expect their estates budget to increase in the current financial year, while 47% said it would stay roughly the same. A further 27% said they expect their budgets to decline, although just 6% said their budgets would reduce 鈥渟ignificantly鈥�.

Of course, the investment in university estates doesn鈥檛 come cheap and changes to university funding have not, overall, led to more money landing in bursars鈥� pockets. As a result, universities are increasingly looking at partnership arrangements that can provide the new buildings they require but without affecting their balance sheets too much.

Many corporate organisations justify investment in good work space as being about being able to attract and retain talent. It鈥檚 the same in higher education

At Lancaster, for instance, Swindlehurst entered into an agreement with University Partnership Programme, whereby the developer has provided and committed to manage around 4,500 bedrooms for 40 years. In comparison, the university itself was left with about 2,500 bedrooms to administer and refurbish, something that it has been doing for the last five years. 鈥淲e took the decision that we could go out and get somebody to provide us with 4,500 beds and then we don鈥檛 need to think about that,鈥� says Swindlehurst. 鈥淎nd we can then think about our academic and administrative provision and that鈥檚 allowed us to refurbish a significant amount of our estate.鈥�

However, Swindlehurst says that other institutions haven鈥檛 been so quick to buy into such private sector funding arrangements, although he predicts that institutions will increasingly look at a range of options for funding development.

鈥淪ome people have adopted PPPs and embraced them earlier than others,鈥� he says. 鈥淵ou鈥檝e got to look at your ambition and your borrowing capacity and your balance sheet and your cash, and then make your decisions on how you鈥檙e going to fund your investment. In future, I think that every avenue will be explored.鈥�

Swindlehurst says that universities are generally open to proposals from contractors and consultants as to how they can achieve cost savings and fund their ambitions for their estates. But he warns that in his experience many companies come forward with the same ideas and that it鈥檚 then about which firm can make their proposals as economic as possible. What鈥檚 more, he says that AUDE provides an invaluable resource in terms of finding out what has worked in the past.

鈥淎s an association we do a lot of sharing of information and the strength of the network is that it gives you access to your counterparts in other institutions,鈥� he says. 鈥淪o, if I was thinking about developing a sports centre I would talk to my cost advisers, but I can guarantee that I can go and find three other directors who have done similar developments recently. Being able to have that dialogue with them and to be able to be open about lessons learned is invaluable.鈥�

In terms of contractors, Swindlehurst confirms he has seen an increase in firms trying to enter the higher education market, but says that as a result of the recession other firms have also slipped off the radar. However, new entrant or not, he says that universities are fastidious in looking for companies that have a track record of delivering on time. This, he says, is crucial to universities. 鈥淭here鈥檚 a lot of salesmanship, but when it comes to higher education you鈥檝e got deadlines to meet: the start of term. It鈥檚 absolutely critical to have facilities open.鈥�

As the higher education sector matures, Swindlehurst says that directors of estates are also increasingly serious about their due diligence procedures, particularly when it comes to new entrants into the sector. 鈥淚t鈥檚 not just about whether they can do the job, it鈥檚 about how stable that contractor is,鈥� he says.

鈥淩eferences are key, but it鈥檚 also about really understanding the accounts of that company and the latest trading position as well. It鈥檚 pulling reports from Companies House, but it鈥檚 also about asking for a reference from their banks - a bit more detail about their current trading position. If they鈥檙e comfortable with their position they鈥檒l be happy to provide that.鈥�

Academic references

However, construction firms would be well-advised to check out the financial situation of their clients as well. After all, with increased competition for students and the tuition fees that accompany them, there will be losers as well as winners.

鈥淭here are a lot of people wondering about when [a university might go bust] and who is going to be the first,鈥� says Swindlehurst. 鈥淲e鈥檙e in a different place now, competing for students - and we really are competing. It鈥檚 no longer the case that one university will get enough and another will get more.鈥�

As to the future, Swindlehurst believes that UK universities鈥� concentration on the quality of their estates will only continue to grow, although he admits that if the sector is to keep up with international competition it will require some investment from the government. 鈥淚 think that we鈥檒l see the UK reshaping itself in order to reconfirm how the country鈥檚 higher education is leading the world in many areas,鈥� he says. 鈥淚f we鈥檙e going to get the scale right there needs to be a partnership approach. It can鈥檛 just be done by the institutions.鈥�

However, no matter what resources may or may not be available from a future government, Swindlehurst believes that increased university investment in capital projects is set to continue. 鈥淭here is a trend that there will be more investment to come, either as universities compete for position on the global rankings or as they just try to keep up,鈥� he says.

All of which should mean more work for construction firms - well, the trebling of tuition fees had to be good news for somebody.