DfE heading for £180m overspend in Priority School Building Programme, report reveals

The government is heading for an £180 million overspend on just one phase of a major school rebuilding project – with warnings of delays in delivering its multi-billion pound scheme.

The cabinet office has published details of all its major projects today, which included an annual update on the progress of the Department for Education’s (DfE) £4.4 billion Priority School Building Programme (PSBP).

The report showed the project’s first phase is currently heading for an £178.2 million overspend, from cost expectations released in January 2015.

The project, to rebuild or refurbish 260 schools in the worst condition across the country, has also seemingly been delayed, with the end date pushed back from January 2019, to April 2020, the report showed.

It’s also bad news for the second phase of the project to rebuild or refurbish another 278 schools.

The report says that although the project is still at an “early development stage”, there is “growing evidence of a significant increase in demand for construction capacity leading to cost pressure to deliver the programme in the agreed timeframe and capital budget.”

However a DfE spokesperson said the report’s figures are a snapshot from September last year, adding that this year’s outlook is “better”. They also claimed the phase one project is not delayed.

Issues with the PSBP have already been aired in parliament, with one headteacher claiming last year his school’s rebuild had been “really painful”.

The report will also pose questions for the government, which came under fire for scrapping the previous Building Schools for the Future project in 2010 because the scheme was too expensive and “massively flawed”, according to then education secretary Michael Gove.

It left hundreds of schools, that had been promised a new building, without investment, and having to wait years before they could apply for funding again under PSBP.

The report said the £180 million overspend “remains in line with the latest forecast expenditure”, prepared in August last year, and reflects “a number of chnages in scope to the programme”.

The report states that the project’s problems stem from “external factors”. The most significant, it says, is the “recovery of the construction market”.

“Over the last 22 to 24 months we have experienced a lack of interest from the contractors in the new batches being released into procurement and delays on a number of schemes as contractors seek additional funding to cover increasing costs of labour and materials.

“This has resulted in delays against our internal delivery programmes, expenditure slipping backwards and an increase in the overall cost to deliver the programme.”

However, the DfE, in the report, said it is “reviewing its market strategy”, which includes ensuring every school rebuild has “back up option” in case the first procurement for the project fails.

Meanwhile, a third section of the report covers the school build under private finance initiative (PFI) contracts as part of phase two.

It shows the scheme, to rebuild 46 schools, is well on track, with forecast costs “significantly below budget” due to “favourable interest rates and economies of scale savings”.

However Schools Week has previously reported on problems encountered by schools build under private finance deals later down the line.

A spokesperson for the department told Schools Week the PSBP is transforming some of the most run-down schools in the country, adding the first school under the project actually opened five months early.

“We expect to hand over the majority of the new or refurbished buildings in the first phase of the programme by the end of 2017, two years ahead of schedule.”

She added: “We recognise that the recovery of the construction market is having an impact on a range of building projects, which is why we have a range of procurement routes to ensure we continue to open new and refurbished school buildings as quickly as possible.”

They said the average costs of rebuilding under the PSBP are one third less than under previous school building programmes.

The spokesperson added that on top of this investment, they are also investing £1.2 billion next year in condition funding for councils and academy trusts, plus there is an extra £440 million available for single academies and small trust under the Condition Improvement Fund (CIF).