School place planning – Secondary

School Expansions

Decision to be taken by: Assistant City Mayor Children, Young People and Schools

Decision to be taken on: 21 November 2016

Lead director: Frances Craven

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Useful information Ward(s) affected: All Report author: Rob Thomas, Head of Education Sufficiency and Admissions Author contact details: rob.thomas@leicester.gov.uk 0116 454 6203 Report version number: 2.2

1.0 Purpose of report

1.1 To update the Executive on progress made since 14 April 2016 report ‘School place planning and Children’s Services capital investment requirements 2016-2020 – update report’.

1.2 To seek approval for the release of capital funding to enable additional secondary school capacity in eight schools across the City.

2.0 Summary

2.1 This report updates on the progress of the secondary school expansion options as set out in April 2016. In the report presented to Executive in April, feasibility studies at the secondary schools had been commissioned to eight schools and it was anticipated that a further report would include conclusions from the feasibility studies together with estimated capital costs to for completion of detailed designs, procurement and construction of the expansion projects.

2.2 The feasibility studies have now been completed. This report describes progress to date and sets out a timeline for future decisions on options and expenditure.

2.3 In previous progress reports, we reported on the accuracy of the summer 2015 projections. The projections still look reliable when we take account of more recent data including our validation of the January and May census data and admissions applications, allocations and pupils attending school at the start of term in September. Further validation will be possible once the recent October census data is available and fully analysed.

2.4 The reports sets out action to address the need for additional secondary school places. Our current projections evidence the following main challenges:

An absolute shortage of secondary places at year 7 (secondary transfer). Projections show the need for the equivalent of a whole new (1000-1200 place) secondary school every year from 2018 to 2021, with a risk of shortages in 2016 and 2017.

A shortage of places in years 8 to 11, again for all years from 2016.

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2.5 This report provides an update on the development of plans which we expect to contribute to the resolution of the first challenge. The second requires continued support from our existing secondary schools – to date, for this academic year the secondary schools have increased capacity by approx. 400 places. Additional capacity is being discussed for the remainder of this year and for 2017/18.

3.0 Recommendations3.1 To note the progress made to date on the secondary school expansion options

for the eight schools.3.2 To note the gateway approvals and decisions required in section 13.0 of the

report3.2 To release £920,000 (£460,000 for Non PFI schools plus £460,000 for the PFI

schools) from the basic needs capital policy provision to fund works in Stage 1 of the Non PFI and PFI schools as set out in paragraph 13.2 of the report

4.0 Free Schools4.1 Executive received a briefing paper at its meeting on 01 September 2016 on the

expected applications for new free schools in the city. 4.1 In summary, local authorities can no longer open new schools. These must be free

schools and can be established in one of two ways: a ‘Free School Presumption’ competition, where the authority seeks proposals and

submits these to the DfE for approval; or through encouraging potential sponsors to apply directly to the Free Schools Unit of

the DfE. The Unit advertises ‘waves’ for applications in March and September each year.

4.2 Wave 12 closed on 28 September 2016. The DfE Free Schools unit has subsequently advised the local authority that 11 applications to establish new schools have been received – eight within the city and 3 applications for schools in the county.

4.3 The breakdown of applications is as follows:

five applications for city secondary schools (11-16) three applications for city all-through schools (4-16) one application for county primary school (4-11) one application for county special school (4-19) one application for county alternative provision school (4-19)

4.4 In addition, there are two applications already approved from previous waves – a post 16 provision from Beauchamp College and an all-through school (4-16) from Avanti Schools Trust.

4.5 The approval process for the 11 applications in wave 12 will not be completed until March 2017. The LA will have opportunities to comment on applications received and the phasing of opening of the new schools.

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4.6 The majority of the applications in wave 12 had indicated a preference to open their schools in September 2018. However, given the requirement to find a suitable site, design, procure and construct any approved new schools, it is highly unlikely that any schools would open until September 2019.

4.7 Any approved Free Schools are not guaranteed to open until the Secretary of State signs the funding agreement with the Academy Trust, which will be a considerable period into the pre-opening stage, and in some circumstances will be only a few months before the school opens.

4.8 The council is responsible for ensuring that every pupil in the city has an offer for a school place. Availability of new free school places cannot be assumed until the funding agreement is signed and a confirmed opening date is given.

5.0 Current Position of Expansion projects

5.1 Given the LA statutory duties to ensure sufficiency of school places, the validated forecasted demand for places and the relative uncertainty of when and how many free schools are approved, it is essential that we proceed with the next stages of expansion plans at the eight secondary schools.

5.2 Four of the eight schools are managed under existing Private Finance Initiative (PFI) arrangements. These schools are:

Crown Hills Community College Judgemeadow Community College Soar Valley College The City of Leicester College

The other four schools (referred to in this report as “Non-PFI Schools”) are:

Babington Community College English Martyr’s Catholic School Rushey Mead Academy St Paul’s Catholic School

5.3 A summary of the proposed works at each school is provided in section 6.0 of the report.

5.4 All schools are proposed to increase in capacity by 300 for Years 11-16 (which is an increase in Pupil Admission Number of 60), except Soar Valley which increases by 325 and Rushey Mead which increases by 378. This makes a total of 2503 places across the eight schools. This is the equivalent to over 16 Forms of Entry (FE) or the equivalent of 2 new secondary schools.

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5.5 Further to the previous report, feasibility studies have been completed on all eight schools. Each study includes a preferred and costed option, in the opinion of the commissioned architects.

5.6 All of the eight schools have been consulted regarding the expansion proposals and are aware of the preferred options. All but one school have expressed approval to the feasibility study proposals, in principle and to the preferred expansion option as stated in the reports. In the case of English Martyrs, there are two very feasible options, one of which is more expensive, and it is this more expensive option that is preferred by the school. This is considered further within the cost section of this report.

5.7 The Council framework project management consultants, Arcadis, have been commissioned to deliver these school expansions (subject to approval to proceed with the programme). Arcadis has provided the estimated costs and procurement proposals contained within this report, as well as other supporting technical information. The ex-head teacher from Judgemeadow School continues to support the Council as an education consultant and is now working with officers and Arcadis.

5.8 Semperian, which owns the two Special Purpose Companies (SPCs) that financed, built and now operate the PFI schools, has been informed about the expansion programme so that they can begin to put the resources in place to respond to a change request on the four PFI schools.

6.0 Summary of the Proposed Works6.1 A summary of the proposed works at each school from the feasibility studies is

described below, in alphabetical order.

6.2 Babington The proposed expansion includes the construction of a new single storey changing room extension to the existing sports hall building, a single storey dining room extension and limited internal remodelling to the kitchen areas. Additional teaching space will be provided in the form of 2No 2 storey extensions, one to each end of the existing main building.

6.3 Crown HillsThe preferred option at Crown Hills comprises of a new stand-alone dining building. Teaching space will be increased through the construction of 1No 2 storey teaching extension, 1 No 2 storey infill extension, and another 2 storey extension comprising 1 storey of teaching space and 1 storey of expansion to existing changing facilities.

6.4 Judgemeadow

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The proposed expansion to Judgemeadow is relatively straightforward and comprises a single storey changing room extension, a single storey dining extension, with teaching space provided in a single 2 storey teaching extension to the main school. The 2 storey teaching extension extends off the end of a teaching wing which houses a plant room at basement level. As such, this will involve creating an under croft below the extension to maintain access to the plantroom.

6.5 Rushey MeadThe expansion proposed at Rushey Mead includes for a single storey changing room extension, and a single storey dining room extension. Additional teaching space will be provided through the construction of 2 additional building extensions, a 2 storey general teaching extension, and a single storey science extension.

6.6 English MartyrsThe expansion proposal for English Martyrs involves the demolition of an existing single storey teaching block to make way for a new teaching block extension at 2,404m2. This does require the re-provision of some existing teaching facilities in addition to the new expansion. Additionally the proposals include a single storey sports extension and a new detached SEN block. Externally, there is also the proposal to provide a new 3G sports pitch due to an under-provision of external space.

6.7 City of Leicester CollegeThe proposals for the expansion at The City of Leicester College are for a 2 storey extension incorporating changing facilities and an activity studio. There are then 4 additional 2 storey extensions incorporating the expansion requirements for each of the subject groups; maths, english/languages, science/technology, and arts (including a dining room expansion). The nature of the building and the required adjacencies for subject groups results in the need to extend in 5 zones in this case, rather than one or two larger extensions.

6.8 St Paul’sThe proposals at St Paul’s are for a single storey extension to provide additional changing rooms and an activity studio. 3No existing classrooms will be converted to provide 2No science laboratories and a prep room, the existing SEN area will be remodelled to provide additional general teaching space. The existing dining space and kitchen will require demolition to enable a new 2 storey extension which will comprise general teaching space and the re-provision of dining space, kitchen and SEN facilities lost through the internal re-modelling. Additionally a 3G pitch is proposed due to the impact of the extension on external space.

6.9 Soar Valley

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The proposals at Soar Valley include a new single storey dining room extension with mezzanine, provision of a new 2 storey changing room block, provision of a single storey music/arts store extension and remodelling of the existing music and arts provision. A science extension at second floor level is also proposed, along with 2No 2 storey general teaching extensions. Similar to the City of Leicester College, the layout of the existing building results in a number of smaller extensions rather than a smaller number of large block extensions.

7.0 Procurement Strategy7.1 There are 6 procurement options for the Non-PFI schools. These are:

OJEU open tender route Scape Framework Education Funding Agency (EFA) Contractors Framework EFA Regional Framework LHC Framework Leicester City Council Framework

7.2 The PFI schools have to be considered separately from the Non-PFI schools as the PFI provider does not have the same options available. For example, they are not able to use the EFA Frameworks, as they are not a public body. It is currently proposed by Semperian that they will procure a contractor via public advertisement, in accordance with European regulations, rather than using a framework. Semperian has provided an indicative programme on this basis, which has been used for the purposes of this report. Should the proposed or agreed procurement route change, this may cause a change to the stage cash drawdown indicated in section 13.2 of this report.

7.3 Having reviewed the options with the procurement team, the suggested route is the EFA Regional Framework (as opposed to the Contractors Framework) for the Non PFI schools. Both EFA Frameworks score more highly than the other options considered. However, the EFA Regional Framework would be a better choice as it was created for expansion and refurbishment work in a way that the Main Framework was not. Therefore, it should be easier to negotiate the right price and it can more readily be demonstrated to the schools that the procurement route is suited to their needs.

7.4 Therefore, this report recommends that the EFA Regional Framework is used to deliver the Non-PFI Schools. The proposed procurement route for the PFI schools is to be agreed, although it is expected that it will follow a traditional single stage Design and Build procurement route with open European advertisement to meet OJEU regulations. The costings and indicative programme for the PFI schools is based on this procurement route.

7.5 To expedite the programme for the Non-PFI Schools, “Soft Market Testing”, via the EFA has been carried out. This is a necessary part of the EFA process and indicates the level of interest from the Framework Contractors (called the “Framework Members”). The framework is divided into regions. The relevant region for Leicester is “Region 2”, the East of England. The “Framework Members” within this region are:

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BAM Construction Limited Bowmer & Kirkland Limited G F Tomlinson Building Limited ISG Construction Limited Kier Construction Limited Wates Construction Limited and Willmott Dixon Construction Limited

7.6 The EFA have advised that 6 of the 7 contractors responded positively to the opportunity. At this stage, this is considered to be a very positive result.

7.7 Under the framework rules, due to expenditure limits, the four schools will need to be delivered in two batches (of two schools). Therefore the schools may be delivered by two different contractors.

7.8 Subject to the recommendations in this report to proceed, an “Access Agreement” will need to be entered into between LCC and the EFA. The Access Agreement is a standard EFA form agreement. The EFA state within the agreement, the “EFA requires any Framework User who wishes to procure Deliverables through the Framework enters into this Agreement to regulate the use and operation of the Framework.” It further goes onto say that “The Framework User shall not do anything to prejudice the integrity of the Framework, and in particular the Framework User shall not amend any of the Key Documents unless such amendments are for project specific reasons and as indicated and permitted therein”. The framework has been reviewed with the EFA and is considered to be suitable to be used on this basis.

8.0 Programme and Timeline8.1 An indicative master programme for the Non-PFI schools has been prepared.

This shows the LCC approvals and procurement process. If these timescales can be delivered, with the EFA procurement route, it is predicted to allow a commencement of construction mobilisation in October 2017. This is subject to potential risks and issues (see later in this report). A copy of the key activities programme is included in Appendix 1. The key activities and assumed dates from this programme are as follows.

ID Activity Estimated Time period(s)

1 Executive approval November 2016

5 Prepare tender documents for EFA Regional Framework in readiness for issue

October to November 2016

13 Carryout surveys - establish requirements and obtain approval

Mid-November 2016 to mid-February 2017

18 Contractor Competition period November 2016to

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December 2016

23 Contractor Feasibility Period January 2017to April 2017

27 Secure Planning Approval and complete tender

April 2017 to August 2017

33 Tender review and approval and Contract signing

August 2017toOctober 2017

40 Construction mobilisation commences October 2017

41-44

On-site construction work commences (with variable end dates depending on the sites)

From November 2017

8.2 For the PFI schools, Semperian has provided an indicative programme. This programme predicts a later commencement of construction mobilisation, compared to the Non-PFI schools. However, this programme is yet to be agreed, so for the purposes of this report, an assessment has been made of potential dates for delivery through Semperian (as set out in the Decisions Requested section of this report). A copy of the key activities programme is included in Appendix 2. The key activities and assumed dates from this programme are as follows.

ID Activity Estimated Time period(s)

1 Executive approval November 2016

13 Agree terms of commencement with PFI Company

November 2016

15 RIBA Stage 2 Concept Design Part 1with surveys as required

November 2016 to January 2017

16 RIBA Stage 2 Concept Design Part 2 with surveys as required

January to February 2017

17 RIBA Stage 3 Developed Design February to May 2017

19 RIBA Stage 4 Technical Design May 2017 to July 2017

21 Tender Period August to September 2017

23 Tender review and approval and September to November

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Contract signing 2017

26 Construction mobilisation commences December 2017

27-30

On-site construction work commences (with variable end dates depending on the sites)

From January 2018

8.3 Arcadis has further looked in more detail at the potential block and construction sequencing for the various different proposed extensions for each of the schools. The final construction programmes will be different and will be based on the selected contractor's methodology, as further information becomes available, and in consideration of the schools operation, and health and safety requirements. The final programmes could be shorter or indeed longer. However, they will be agreed by Arcadis and LCC before proceeding, to make sure that they are reasonable.

8.4 In order to deliver the programme, it is proposed that some survey work is carried out at the schools. Following an initial site visit to the schemes and a review of existing information obtained, a survey matrix has been developed. The matrix highlights those surveys recommended for completing as soon as possible to help mitigate risk and impact on programme and those that should be carried out once the results from the initial surveys are received and the contractor has been appointed. Provisional allowances have been included within this report. Arcadis is in the process of obtaining final scopes and firm prices for delegated LCC approval before commencement. Some of the surveys are proposed to be delivered by the contractor on the Non-PFI schools, such as ground investigation. On the PFI schools, the surveys are expected to be procured through Semperian, cost and proposals for which have been requested.

8.5 Under the PFI contracts, procurement of the schools expansion programme is triggered by the Council issuing High Value Change Notices (HVCN) to the two PFI Companies (which in practice means to Semperian, the owners). The HVCN sets out the requirements of the change. Semperian will respond by submitting their proposals in increasing levels of detail, subject to LCC approval gateways along the way. Given the programme challenges, the HVCN was issued to Semperian in October so that the change has officially commenced. The Council will fully fund the capital costs of the extensions through Basic Need funds (i.e. the PFI ‘mortgage’ on the original builds will not be increased).

8.6 The HVCN initially requires that the PFI company (Semperian) to provide what is called a ‘Stage 1 Proposal’ which sets out the proposed basis for proceeding with delivering the change. This proposal has not yet been received but an allowance has been made for how long this will take to receive and approve, given that some work has already commenced towards this. Although a timescale is suggested within the PFI contract for the receipt of the Stage 1 Proposal, it is not binding, and has to be agreed between the parties. Should

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this take longer than allowed, to receive or agree, the drawdown profile, cost and timescales set out in this report may change and this represents a risk to the programme.

8.7 The expectation is that the PFI change will proceed with commencing the next stage design work, commencing the surveys required, and commencing the legal process.

8.8 The impact on PFI Schools is far more complex than for the Non-PFI Schools. This is because any change on a PFI contract, particularly of this magnitude, impacts on the on-going Facilities Management costs, future life cycle costs and the risk profile of the PFI companies, their lenders/funders and the Council. And the four schools in question are also made more complex as they are under two PFI contracts (being two different phases) which are different in some significant respects and involve different lenders/funders. The process will involve the different lawyers representing; the Council, the two PFI Companies, the various Funders and the FM provider (G4S) agreeing on the detailed aspects of the change. The impact of the changes will also need to be agreed with Capita, the ICT Managed Service Contractor at City of Leicester and Crown Hills (via LMEC, the BSF delivery company, through which the initial five year BSF ICT contract is routed). Semperian has provided an outline of the process to agree the legal change process, known as the Deed of Variations (DoV) on each of the two PFI contracts. This places a significant time risk to the delivery of the PFI schemes, as well as the legal costs involved. However, if the necessary agreements can be reached within an 8 month timescale, the DoV can be agreed without delaying construction, by running concurrently with the construction procurement and design process. Risks are further considered in separate section within this report.

9.0 Costs9.1 Arcadis has produced an Order of Cost Estimate following receipt of the Mabers’

feasibility study information for each school. Cost estimates have been revised for each school based on the current brief as set out in the preferred option for each site. The overall position for the programme of works can be seen below;

Name of School Current Forecast

Babington Community College £4,834,070

English Martyrs Catholic School £8,157,480

Rushey Mead Academy £5,852,090

St Pauls Catholic School £6,939,920

Judgemeadow Community College £4,731,060

Crown Hills Community College £4,810,050

Soar Valley College £5,036,770

City of Leicester College £6,249,790

Gross Project Cost £46,611,200

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Further to the summary above, Arcadis has also provided further detail in the summaries below and has split the summaries to show the costs for the four Non-PFI schools and the four PFI schools separately. The costs as detailed in Summary 1 below represents an overall development cost for the Non PFI schools that is felt reasonably achievable for the schemes based on the research concluded within the feasibility study.

Summary 1 – Non PFI SchoolsPROJECT COST SUMMARY

NON-PFI SCHOOLS

Babington

Community College

English Martyrs Catholic School

Rushey Mead Academy

St Pauls Catholic School

TOTAL NON-PFI SCHOOLS

Gross Internal Floor Area (GIFA) 1,723 2,404 1,891 2,000 8,018Addition Pupils 300 300 378 300 1,278

Element Total Total Total Total Total £/m2

CONSTRUCTION WORKS £3,291,647 £5,786,386 £3,997,881 £4,893,048 £17,968,962 £2,241

OTHER COSTS (Inflation, Fees and Contingency) £1,392,424 £2,221,096 £1,665,212 £1,896,870 £7,175,602 £893

CONSTRUCTION COST TOTAL £4,684,071 £8,007,482 £5,663,093 £6,789,918 £25,144,564 £3,136

LOOSE FF&E £150,000 £150,000 £189,000 £150,000 £639,000 £80

FORECAST TOTAL PROJECT COST £4,834,070 £8,157,480 £5,852,093 £6,939,918 £27,319,860 £3,145

Cost per m2 £2,806 £3,390 £3,095 £3,470 £3,216 Cost per pupil £16,114 £27,192 £15,482 £23,133 £20,175

Area per additional pupil place (m2) 5.74 8.01 5.00 6.67 6.27

The costs as detailed in Summary 2 below represents an overall development cost for the PFI schools that is felt reasonably achievable for the schemes based on the research concluded within the feasibility study.

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Summary 2 PFI SchoolsPROJECT COST SUMMARY

PFI SCHOOLS

Judgemeadow

Community College

Crown Hills Community

CollegeSoar Valley

CollegeCity of

Leicester College

TOTAL PFI SCHOOLS

GIFA 1,530 1,498 1,317 2,071 6,416Addition Pupils 300 300 320 300 1,220

Element Total Total Total Total Total £/m2

CONSTRUCTION WORKS £2,973,659 £3,059,293 £3,231,563 £4,069,438 £13,333,952 £2,078

OTHER COSTS (Inflation, Fees and Contingency) £1,607,406 £1,600,759 £1,645,203 £2,030,356 £6,883,724 £1,073

CONSTRUCTION COST TOTAL £4,581,065 £4,660,052 £4,876,766 £6,099,794 £20,217,676 £3,151

LOOSE FF&E £150,000 £150,000 £160,000 £150,000 £610,000 £95.07

FORECAST TOTAL PROJECT COST £4,731,060 £4,810,050 £5,036,770 £6,249,790 £20,827,670 £3,246

Cost per m2 £3,092 £3,211 £3,824 £3,018 £3,246 Cost per pupil £15,770 £16,034 £15,740 £20,833 £17,072

Area per additional pupil place (m2) 5.10 4.99 4.12 6.90 5.26

9.2 In order to arrive at the estimates above, a combination of EFA Framework cost guidance and Arcadis internal benchmark data and knowledge has been used. Costs have been built up for each area of expansion and includes cost allowances for new construction works, remodelling, connection to the existing school, external works and ‘abnormals’ associated with each individual school.

9.3 In addition, ‘soft market testing’ with contractor organisations (framework members) to understand the interest from the market has also been undertaken. Based on the responses, the projects are an attractive proposition to the market and there has been positive interest in tendering for the works. This has provided confidence that costs will be competitive and the cost plan is robust.

9.4 The above costs include for ‘abnormals’ as classified under the EFA Framework, which includes such items as an allowance for temporary accommodation, working on a constrained site, working in multiple site locations, service diversions, demolition works and allowances for retaining structures where required. These allowances are based on the initial appraisal of the feasibility studies and further work will be required in the next stage to test the assumptions.

9.5 Costs have also been included within each estimate with consideration of the interfaces with the demolition and enabling works, site logistics, the likely programme for the works, as well as appreciation of the quality expectations.

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9.6 Costs have also been included to each school to allow for uplift to the EFA standard cost per m2 rates in order to ensure the existing specification at each individual school is maintained.

9.7 Professional fees are included in the non-PFI schools based on the EFA Framework allowance of 12% of the construction cost for the contractor design team, and an allowance of the construction cost for the Arcadis project management team. Allowance is also included for internal council project fees within the above allowances.

9.8 Professional fees are included in the PFI schools based on the costs provided by Semperian for their contractor led design team and the estimated SPC margin, as well as an allowance of the construction cost for the Arcadis project management team. Allowance is also included for internal council project fees within the above allowances.

9.9 Inflation allowance has been included within these costs based on the BCIS “All in Tender Price Index”. The costs have been uplifted to the mid-point of construction as detailed on the current construction programmes for each school.

9.10 The costs also include for client contingency/risk allowance at 5% and design development contingency at 5%. These allowances are based on the current status of the design and are in line with EFA guidelines as well as benchmark data.

9.11 The overall price per pupil for the Non-PFI schools is high when compared to current EFA benchmarks and this is mainly driven by the works proposed at English Martyrs School and St Paul’s School. The proposals for these schools require further review (see paragraphs 9.15 – 9.19 below).

9.12 Likewise the gross internal floor area per additional pupil for both the English Martyrs School and the St Paul’s School is high in comparison to the other non-PFI schools. This has a direct correlation with the higher costs for these two schools.

9.13 The overall cost per pupil for the PFI schools is in line with current benchmarks. The only exception to this is the City of Leicester College. The overall cost for the City of Leicester College is the highest amongst the PFI schools and this is driven by the proposed area for this project being higher than for the other schools. A check review of the design brief for this school is required to validate or change the area required as part of the next stage of the design development.

9.14 Costs reported are exclusive of VAT. Advice has been sought and it has been confirmed that VAT will be recoverable on this programme of works as it is for Basic Need education provision.

9.15 The comparatively high cost of St Paul’s, The City of Leicester College and English Martyrs is considered in further detail below.

9.16 In the case of St Paul’s this is predominantly due to the requirement for the existing kitchen and dining space to be demolished to allow for the extension of the new teaching spaces, and as such this facility is required to be re-provided in the new extension. But given this constraint, the preferred feasibility study option (option 3) is recommended to be the solution to proceed at this stage,

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given the needs of the school. However, this will be reviewed at the next stage to consider if an alternative option is available.

9.17 The nature of the existing building at the City of Leicester College results in expansion being provided in 5 different locations, with the additional costs associated with having several “sites” and numerous interfaces with the existing building. Also the floor area is higher per pupil compared to the other schools. Again, given this constraint, the preferred feasibility study option (option 3) is recommended to be the solution to proceed at this stage, given the needs of the school. However, this will be reviewed at the next stage to consider if an alternative option is available.

9.18 With regard to English Martyrs, the feasibility study considers 3 options. Option 1 is discounted as the school do not wish to build on the quad which would remove a large area of hard external space and block views over the city. Options 2 and 3 are offered as potential options and are both are considered feasible. Option 3 is the option supported by the school as they do not wish to extend the St Mary’s block over concerns about the overall massing of the building becoming too large and that circulation may be an issue with an increase in pupil numbers moving through the building.

9.19 The reasons for the high cost at English Martyrs, for both options 2 and 3, is the requirement for a significant amount of demolition of the retained estate to enable the construction of a new expansion block, which results in a significant level of re-provision of existing facilities, in addition to the expansion. Furthermore, the complexity of the proposals and amount of demolition required result in the elongation of the programme. This will require the programme for this site extending to January 2019, resulting in additional costs through the provision of temporary accommodation on the site.

9.20 Arcadis has estimated that the difference in cost between the options 2 and 3 is circa £1.5m or £5,000 per pupil space. Option 2 is circa £8.2m (with 2,404m2 new build for the main teaching block) and option 3 is circa £9.7m (with 3,074m2 new build for the main teaching block). This represents an increase in cost of 18%. Given the comparatively high cost of this school for both options, it is recommended that option 2 is progressed at this stage. Accordingly option 2 has been included for cost purposes in this report. It should be noted that it is understood that the school has does not support option 2, and there is therefore a risk that the school will withdraw their support for the expansion if their preferred option is not taken forward. However, like St Paul’s and City of Leicester, options will be reviewed and considered further at the next stage.

10.0 PFI Operational Expenditure (OPEX) and Life Cycle estimate of increased costs

10.1 Semperian has provided an initial estimated level of increase in ‘Opex’ costs for the four PFI schools. This is essentially to cover expansion of the on-site facilities management and maintenance provided by G4S.

10.2 Arcadis has commented that the estimated Opex costs of £300k per annum for the four schools appear to be within their benchmark range for a comparable Hard & Soft FM services (excluding any Utilities costs) at similar education facilities. The benchmark range would suggest total Opex costs in the range of

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£275k to £350k for all 4 schools, and therefore the proposed costs are slightly lower than the benchmark mean.

10.3 In addition, provision needs to be made for the ‘lifecyling’ or on-going capital maintenance of the new/extended facilities. The Lifecycle Costs will be subject to detailed PFI modelling by Semperian and as such this has not been done at this early stage. They require a detailed understanding of the design proposals. However, this is not considered to be a high risk matter as the resultant calculations will have to be justified by Semperian and will be reviewed by LCC and Arcadis against existing contract data and will also be compared against benchmark information to ensure a robust review is carried out.

10.4 More detailed Opex and Lifecycle costs will become available from Semperian following the issue of HVCN.

10.5 These on-going opex and lifecycle costs will be added to the annual payments due for the remaining life of the 25 year PFI contracts (to 2034 and 2038), and hence the Council’s on-going liabilities will be increased. The schools will contribute from their delegated budgets (as they will have more pupils and hence more funding) and the balance is intended to come from increasing the PFI factor values in the overall Schools Budget. Further details of how the PFI factor values might operate within a national funding formula are being sought from DfE. The position is not expected to be materially different should schools convert to academy status, as the Council will still hold the PFI contracts, albeit with more formal backing off to the academy trusts. The Council could choose to use Basic Need funds to pay the additional lifecycle costs up front; it is suggested that this is reviewed as the programme develops.

10.6 The Council may also have to accept some of the risks arising from the new construction works, e.g. insolvency of the main contractor before completion, latent defects that may appear in the future, any impact on the existing buildings and construction warranties, or impact on the running of the school site during construction. The PFI companies and the lenders/funders will not wish to take additional risks, unless they are either paid to do so or are able to take out additional insurances for which they will need to be reimbursed.

11.0 Interim Expansion Requirements – now until September 201811.1 There will be a shortage of school places during the next two academic years

before the additional capacity is delivered as proposed within this report. Following an EIP meeting on the 20 September, officers have been meeting with all of the Head Teachers individually across the City to discuss possible solutions. This may involve temporary accommodation in some cases but that is not certain at this stage. A clearer picture will be available by the end of November.

11.2 This report does not include any costs for interim expansion.

12. 0 Risks and Mitigation12.1 As with all projects and programmes, they involve uncertainty and risk. The key

risks on this programme are considered to include the following. A simple categorisation of high, medium or low risk is given to each at this stage.

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i. Delay or issues arising from reaching agreement with the PFI companies on the DoVs and associated costs for the PFI schools. This could also be impacted by on-going discussions regarding other aspects of the PFI contracts and payment mechanisms. The Council is effectively in a weak position if the PFI companies or their lenders/funders seek to delay. (High).

ii. Insufficient interest from the market for both the PFI and Non-PFI schools (Medium). This may result in a revised procurement route being adopted. The risk for the PFI schools may be higher, as the market for contractors willing and able to take on the additional risks of extending PFI schools is understood to be more limited.

iii. Risk of unknown ‘abnormals’ from surveys having an impact on time and cost (High) requiring redesign.

iv. Risk of schools not agreeing to the works proceeding. This will obviously impact on the provision of additional places, but also abortive design costs will be incurred, potentially to very significant sums if a disagreement arises later in the process. This could a particular issue for various reasons - for example, where the school is an Academy (such as Babington or Rushey Mead); or an Own Admission Authority ( English Martyrs or St Paul’s); and at the PFI schools (as the BSF PFI Governing Body Agreements will require formal amendments, including changes to on-going costs and risks) (Medium to High)

v. Re-design or value engineering (or cost reduction) requirements prolong the programme (Medium)

vi. Phasing requirements prolong the programme (Medium)vii. The works interfere with the running of the schools such that school or

the construction work has to be suspended (Low)viii. A health and safety issue arises for the schools, due to the close

proximity of the construction works (Medium)ix. A planning application for a school is not approved (Low)x. Quality of the finished product is not up to the standard expected (Low)xi. Delays or issues in reaching agreement with the PFI schools and Schools

Forum about how the additional on-going costs will be financed and any changes in the balance of risk. This could be compounded by uncertainties about the new national schools funding formula. (Medium)

xii. The risk that the Free Schools Programme promises to deliver additional places such that the places in this report may not be needed, or schools are insufficiently confident that additional pupils will materialise to fill and pay for the additional running costs of extended premises (this applies to the PFI and non-PFI schools, albeit the PFI schools will have less room for manoeuvre as the additional costs will be contractually committed). This could lead to abortive design costs and/or insufficient places in at least the short to medium term. (Medium)

12.2 In terms of mitigation, these can generally be grouped together as follows:i. Risks impacting on time. Facilities for the school places are required to

be in place for the start of school term in September 2018. If some of the new facilities are not available in time, some form of temporary accommodation or facilities will need to be in place. The solution will

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partly depend on the time period required and the nature of the requirement. To reduce cost and disruption, where possible, part of the new build works should be planned to be used (under a sectional completion), or existing facilities should be used, even if they need to be temporarily adapted to suit the need. Where this is not possible, traditional type temporary accommodation will need to be installed and hired for the period required, until the new permanent facilities are completed. Such contingency measures will be developed during the course of the programme, with key dates established.

ii. Risks impacting on cost. These will be mitigated as far as possible, for example through cost reduction initiatives, and will be detailed on the risk register.

iii. Risks impacting on cash drawdown. These will be mitigated as far as possible, for example through acceleration initiatives, and will be detailed on the risk register.

iv. Risks impacting on the operation of the schools and health and safety. Robust measures will be expected from the successful contractors to manage health and safety on site and minimise and prevent issues arising. This will be a key requirement in the tender process.

v. Risks impacting on quality. The specifications will be agreed during the tender process and quality will be monitored through construction and on completion.

12.3 A detailed risk register will be prepared. This is will be a live document and will be updated regularly by the team through the course of the programme.

13.0 Gateway approvals and Decisions Requested13.1 The following gateway approvals are shown based on the current programme

for the expansion of the schools. At the end of each gateway, a report will be brought to Executive to update on the progress of each stage and seek approval to expend the next part of capital resources required. Approvals are separately requested for the non-PFI Schools and the PFI schools as the procurement routes are different. For the Non-PFI schools, the contractor is selected first and then the design work commences, whereas in the PFI schools the design is developed before the contractor is appointed.

13.2 Non-PFI Schools

Ref Gateway Stage Estimated time period

(Rounded) Cost

Estimate £

Key Risk

1 Contractor competition period (when a single contractor is selected)

(including allowance for

November 2016to December 2016

460,000 Insufficient market interest

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carrying out surveys)

2 Contractor feasibility period (when the contactor agrees the concept design)

(including allowance for carrying out surveys)

January 2017to April 2017

930,000 Anticipated tender costs exceed estimate

3 Secure planning approval and complete tender (when the Contractor submits the planning application and finalises his tender with more detailed proposals)

April 2017 to August 2017

730,000 Planning refused, costs exceed estimate,

4 Tender review and approval and contract signing

August 2017ToOctober 2017

370,000 Quality not approved or Contract terms

PFI Schools

Ref Gateway Stage Estimated time period

(Rounded) Cost

Estimate £

Key Risk

1 Part 1 of concept design through Semperian and LCC technical review and approval: review requirements, prepare revised layouts, test feasibility on survey information, cost checking

(including carrying out surveys)

(including progressing DOV process with Legals)

November 2016to January 2017

460,000 Cost check exceeds estimate

2 Part 2 of Concept Design through Semperian with LCC technical review and approval: finalise concept design, factor in further survey information, update cost plan

(including carrying out any remaining survey work)

(includes continuing to

January 2017to February 2017

510,000

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progressing DoV process with Legals)

3 Developed Design through Semperian and LCC technical review and approval and submit for planning approval

(including progressing DOV process with Legals)

February 2017to May 2017

370,000 Updated cost check exceeds estimate

4 Technical Design through Semperian and LCC technical review and approval

(including progressing DOV process with Legals)

May 2017 to July 2017

560,000 Planning refused, updated costs exceed estimate, quality not approved

5 Tender period

(including progressing DOV process with Legals)

August 2017toSeptember 2017

370,000 Insufficient interest in the market reduces completion and raises cost

6 Tender review and approval by Semperian and LCC and Contract signing follows

September 2017 to November 2017

360,000 Quality or price not approved or Contract terms not agreed

13.3 In respect of the PFI schools, the profile of the drawdown may change, as referred to in 8.6 of this report, if the agreement of the HVCN Stage 1 Proposal takes longer than allowed in order to expedite the delivery of the change process with Semperian

13.4 Irrespective of the above gateway stages, the works can be stopped on one or more schools at any time in between these stages and the valuation of work would be calculated on a fair and reasonable basis, under the appointment rules.

14.0 Next Steps14.1 Specifically for the Non-PFI Schools, the next steps are:

Sign the Regional Framework Access Agreement with the EFA

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To issue the tender documents for the Local Competition, under the framework, this will lead to selecting the contractor (or contractors) for the four schools.

14.2 Specifically for the PFI Schools, the next steps are:

Receive and agree the HVCN Stage 1 Proposal Progress design work for tendering purposes

Commence the DoV legal agreement process

Commence discussions with the schools about the variations to the Governing Body Agreements

14.3 For both Non-PFI and PFI Schools Continue School engagement

Proceed with site surveys as required

15.0 Financial, legal and other implications15.1 Financial implications

The Council has uncommitted Basic Need and Capital Maintenance allocations from the DfE of £10.3m in 2016/17, £25.4m in 2017/18 and £59.9m in 2018/19, a total of £95.6m (of which £6.8m was originally allocated for capital maintenance although this is not ring-fenced).Total project scheme cost estimate is £46.7m which if the schemes go ahead would leave £48.9m of funding still available.Of the DfE allocation £10.3m has been allocated to Children’s Services as a policy provision in 2016/17 and there is an existing policy provision for basic need of £1.2m, a total of £11.5m. This report is requesting using £0.92m of this provision for the initial design costs as outlined above.Martin Judson, Head of Finance

15.2 Legal implications

PFI SchoolsIn relation to the PFI school extensions the PFI contract for Soar valley and

Judgemeadow expires on the 31 May 2034 and the contract for Crown Hills and Leicester College in 2038. Termination before expiry would be in exceptional circumstances only due to the contractual consequences.

Within the PFI contracts there are provisions which allow for the parties to agree high value changes to the scope of the PRF. This is a complex change control procedure with various steps.

The PFI works are understood to be largely extensions to the existing buildings which would cause difficulties in passing responsibility under the PFI Facilities

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Management Contract. This approach will therefore allow for responsibility to easily pass to the PFIs for maintenance under the contract with the existing site with a reflective increase in the monthly charge.

For the reasons outlined above it is not advisable to proceed other than suggested within the report as a separate procurement for an alternative contract would cause difficulties with the FM contract and not be necessarily result in any better value for money. Discussions with procurement and legal have concluded that the proposed variation would be permissible under Regulation 72 of the Public Contract Regulations 2015 (b) and/or (c) depending on finer detail. Both require a notice to be published as to the modification and this will be discussed and advised upon further by legal and procurement as the matter progresses. In both cases there is a requirement that the variation must not be more than 50% of the original contract value, which is the case in this instance.

Non PFI Schools / EFA Framework As a non-LCC framework formal approval of the use of it must be sought from the City

Barrister. Though the principle is acceptable the terms of use and call off have not been seen and will need to be reviewed by legal services and authorisation sought thereafter.

The Framework will only be an acceptable procurement route provided that the terms of use are followed and any competition thereunder is carried out as required and in accordance with them. Whilst it is a compliant route to market it should be noted that market conditions have changed since the procurement of this framework and it may not be the most cost effective route for the Council in procuring the works.

Emma Horton, Head of Law (Commercial, Property & Planning)

15.3 Climate Change and Carbon Reduction implications

The Council has a corporate target to reduce its own operational emissions, including those from school buildings, by 50% by 2025, based on 2008/09 levels. Increasing the size of the secondary school estate will increase energy use and carbon dioxide emissions. However, the new build areas and any refurbishment to the existing buildings will be completed to the environmental standards required by Building Regulations. If the development requires planning permission it may also be subject to planning policy CS2, incorporating sustainable construction, renewable energy, decentralised energy and Sustainable Urban Drainage.

- Mark Jeffcote, Environment Team x372251

15.4 Equalities Implications

15.4 Equalities Implications There are two equalities considerations that need to be addressed during the early

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stages of the process described in the report. The first is a reminder to each school’s Governing Body of their statutory responsibility to develop an Accessibility Plan for improving physical accessibility to the school and ensuring it is fit for purpose during and at the completion of the proposed new build/renovations due to take place. The second equalities consideration is ensuring that the council’s inclusive design standards are a requirement for each school’s design considerations to ensure that the resulting building provides maximum access to and throughout the building. These inclusive design standards complement the Accessibility Plan in ensuring maximum flexible access throughout the school environment for disabled and non-disabled pupils and staff alike. If both these considerations are not undertaken at the beginning of the design process, it is only with great difficulty and cost that they can be retrofitted afterwards – particularly if the school is later challenged for non-compliance of its equality duty by the parents/carers of a disabled pupil.

Irene Kszyk, Corporate Equalities Lead, ext 374147

16.0 Summary of appendices: Appendix 1 – Non PFI schools high level programmeAppendix 2 – PFI schools high level programme

17.0 Is this a private report (If so, please indicated the reasons and state why it is not in the public interest to be dealt with publicly)? No

18.0 Is this a “key decision”? No

18.1 If a key decision please explain reasonN/AIn determining whether it is a key decision you will need consider if it is likely: to result in the Council incurring expenditure which is, or the making of

savings which are, significant having regard to the Council’s budget for the service or function to which the decision relates.

to be significant in terms of its effects on communities living or working in two or more wards in the City.

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