The Education Sector is hugely important to the construction sector, representing a significant percentage of total infrastructure investment within the UK. Many of OBAS clients are heavily reliant on the education sector for their own operations so we thought we'd have a look at how eduction performs.

 

In 2011 this infrastructure investment was worth around £2.5bn. Of this £2.5bn, the bulk (around £2bn) went into the development of universities covering both maintenance and new developments – the remaining £500m went onto further education.

 

This investment in the sector is actually a drop on previous years which had sat at around £4bn in 2009. On a positive note figures from 2012 showed a small increase and although the data is still coming in it looks as though 2013 was still on track to show growth.

 

This has been supported by December 2012’s announcement of £270m of extra capital funding for FE colleges which has now started to trickle through and in addition the Skills and Enterprise Minister Matthew Hancock announced on the 27 March this year that 22 colleges will invest £194.3million (£113.8m in grants from government matched by £80m to be sourced locally). This will see the sector building new state of the art facilities which will also include the building of specialist construction centres, advanced engineering facilities and cutting edge design departments across the country.

 

The construction industry is one of the main beneficiaries of the growth in the education sector and it’s clear there is still a significant amount of development required. The Higher Education estate still has a way to go to redress the lack of development in the 80s and 90s although the boon of the 2000s property development following the relaxation of the university sector in the late 90s.

 

Many estates are made up of the types of properties that had been built in the 60s and 70s and many of these buildings are no longer fit for purpose and those organisations are facing increased competition as more and more students are entering the system with many of them perceiving the quality of their facilities a major sales point.

 

Additionally sustainability is driving growth in the sector, both through pressure from the government however also through the need to become more energy efficient in the face of rising energy costs.

 

The majority of opportunities appear to be in the creation of new teaching spaces, however there will be a variety of opportunities for the construction sector with the biggest winners being in London, the South-East and the North.

 

The changes in the way education is financed (with a reduction in the amount of finance being sent out centrally) sees institutions approaching the mainstream banking sector to back development projects. This in-itself could be positive news for smaller and medium sized operators in the construction sector as it’s likely more projects (especially maintenance and smaller development projects) will move outside contract frameworks and fall onto the open markets as value becomes even more important in the procurement process.