Public sustainable-energy requirements and innovation in UK PFI school projects

Abstract

In a bid to understand the relationship between public sector clients’ sustainable energy requirements and innovation, this paper describes a study examining the requirement development process in four private finance initiative (PFI) school projects. A case study approach was adopted to enable a greater understanding of the public sector clients’ activities at the front end of the design process, particularly focusing on requirement identification and the effect of the requirement on private sector actors’ pursuit of an innovative sustainable design. The findings have shown that incentive effects of the requirements are often weak in PFI projects, particularly in relation to the requirement’s specificity and achievability, the inability of requirements such as BREEAM to promote energy efficiency and the low weighting of environmental sustainability on PFI bid evaluation criteria. Taken together, these results offer insight into public authorities in relation to the necessary conditions for the use of requirements as an effective contractual mechanism to encourage innovation for sustainable energy.

Keywords:

• Public-sector client
• sustainable-energy requirements
• design process
• sustainable-energy innovation
• private finance initiative (PFI)
• schools

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. It should be noted that the PFI consortium was responsible for facility-related provision, not for the employment of front-line staff such as teachers, doctors and nurses except for some specialized health care facilities or prisons.

2. There are about 24,000 state schools in England, 3500 of which are secondary schools with most of the rest being primary schools. These are owned and managed by England’s 150 Local Authorities. In 2002, around 14% of existing school buildings had been built in the previous 25 years, but about 30% were more than 50 years old (Wilkinson 2002). Combined with low levels of investment in previous decades, the age of many school buildings signalled a significant need for investment.

3. The BSF programme started in 2003/04 with a series of pathfinder projects. In 2005/06, BSF accounted for roughly 40% of the DCSF capital investment, £2.2 billion out of a total of £5.1 billion. Of the £2.2 billion for BSF, £1.2 billion (55.5%) was allocated to PFI schemes (Department for Education and Skills 2005). The BSF programme, nonetheless, was withdrawn in 2010 soon after the Coalition government assumed power. The programme was scrutinized for its excessive bureaucracy and inefficiency. And yet, since its introduction in 2004, BSF had been responsible for the complete rebuilding or significant refurbishment of a total of 255 schools, of which 132 were PFI (Department for Education 2010). Interestingly, the subsequent introduction of BSF’s successor, the ‘Priority Schools Building Programme’ by the Coalition government in 2012 (Livesey 2012) and its use of Private Finance 2 (PF2) contracts, a reformed model of PFI, to rebuild 46 schools (Education Funding Agency 2015) clearly indicates that PFI contracts will continue to be a dominant strategy in the delivery of UK school buildings.

4. In the Department for Children, Schools, and Families (2010) Report ‘Road to Zero-Carbon, Final Report of the Zero-Carbon Task Force’, a ‘zero carbon’ building was defined as that with ‘net zero carbon emissions over the course of a year … after taking into account (a) energy consumption and related CO₂ emissions of the fixed building services (i.e. heating, ventilation, hot water, lighting, and appliances) and (b) energy exports and imports from the development (and directly connected energy installations) to and from centralized energy networks’. However, this definition is yet to be finalized, according to the UK Green Building Council Task Group report (2014) titled: ‘Building Zero Carbon – The Case for Action’.

5. A comparison of the average electricity cost in dollars per kilowatt hour of different sustainable energy technologies by the International Energy Agency (2015) has shown that geothermal technologies are the most economic energy sources ($0.05/kW-hr). Photovoltaic systems are more expensive ($0.125/kW-hr) and solar thermals are the most expensive ($0.24/kW-hr).

6. For example, an input-based specification for classroom lighting could be stated as ‘supply and installation of XX light bulbs of XX Watts, and XX light fixtures’. On the other hand, an output-based approach to the same requirement could be specified by saying ‘classrooms need to be lit to XX quality for XX hours per day. Corridors need to be lit to YY quality for YY hours per day. Electricity consumption of the lighting system installed must be XX% lower than the current system’ (Clement et al. 2009).

7. Local authorities were introduced to BSF in 15 waves, i.e. groups of authorities, based on need. In 2006, 14 Local Authorities were invited to take part in the first wave of BSF. By 2009, around 96 Local Authorities had joined the programme.

8. The link between the physical environment and educational attainment remains elusive. While studies such as that of Woolner et al. (2007) have found an association between the physical elements of the school environment (e.g. temperature, lighting and air quality) and pupils’ attainment, this was only evident up to the level in which the environment was brought up to a standard that is meeting current regulations. Beyond this, a complex set of factors come into play, e.g. pedagogical, motivational and socio-demographic, which complicate the link between the learning environment and attainment. In fact, a Government review (James 2011) has argued that leadership and the quality of teaching have a much more profound effect on pupils’ attainment than the environment.

9. The Output Specification on BSF projects was required to follow the standard documentation format provided by Partnership for Schools (PfS), the government body responsible for the delivery of the programme. The Output Specification was fundamentally a large set of documents outlining the client’s strategic objectives, facilities’ requirements, services’ specification, performance requirements and availability criteria. It also had to include annexes outlining statutory requirements in terms of statutory codes, standards, regulations, policy requirements and design and construction information, such as site-specific restrictions among others. The Output Specification also included a document outlining school-specific requirements in terms of strategy, vision, design considerations and accommodation requirements. Often, concept design drawings (RIBA Stage B) are also prepared by the Technical Advisors to demonstrate the feasibility of the schemes within the budget’s and the site’s constraints.

10. CHP is ‘the simultaneous generation of usable heat and power (usually electricity) in a single process’ (Department of Energy and Climate Change 2012, p. 191). According to the Digest of United Kingdom Energy Statistics 2012, the electricity generated by CHP schemes in 2011 was just over 27 TWh which corresponds to about 7.4% of all electricity produced in the UK. In 2011, about 89% of CHP electrical capacity were in the industrial sector and 11% of capacity were in the agricultural, commercial, public administration, residential and transport sectors.

11. The main regulatory frameworks that BSF schools were required to adhere to are as follows: (1) BREEAM schools: The Building Research Establishment’s Environmental Assessment Method for school buildings. A point-based system that enables schools to assess the design of new or refurbished buildings in terms of several sustainability considerations such as management, health and well-being, energy use, transport, water, materials, land use and ecology and pollution. Under BSF, every newly built and refurbished school was required to achieve at least a ‘very good’ rating; (2) Part L of the Building Regulations on Energy Conservation: Mandatory minimum standards for new buildings and large refurbishment projects in terms of CO₂ emissions from heating and power. Schools procured under BSF were required to be at least 23% more energy efficient than equivalent buildings built before 2006; (3) Building Bulletin 87 (BB87): Guidelines for Environmental Design in Schools: A Department for Education and Skills (DfES) technical manual that deals with issues such as energy use, ventilation, lighting and water services in schools. The document outlines standards for energy use in schools, for example, 5kgC per m² per year for secondary schools; (4) Building Bulletin 90 (BB90): Lighting Design of Schools: A DfES technical manual that provides guidance for architects and engineers in relation to lighting design in the various types of spaces and activities found in schools; (5) Building Bulletin 93 (BB93): Acoustic Design of Schools: A DfES technical manual that sets the standards for noise entering the school, and for how easy it is to hear someone talking in a class. The standards are known to be set high and may restrict natural ventilation for urban schools due to noise caused by open windows; (6) Building Bulletin 98 (BB98): Briefing Framework for Secondary School Projects (Revision of BB82): Recommended area guidelines for new school buildings. It outlines the space requirement for basic teaching, halls, learning resources, staff and administration, storage, dining and social space.

12. It should be noted that confidentiality was important and one bidder’s solutions or other confidential information was not to be revealed to other bidders without their permission (Partnership for Schools 2006). Across the four case studies, the BSF engagement process was seen to be ‘intense’, ‘restricted’, ‘massively bureaucratic’, ‘cumbersome’, ‘time-consuming’ and ‘frustrating’ to both Local Authorities’ and ProjectCo actors. Communication was difficult because it needed to be equal and uniform across all bidders. It was also complicated by confidentiality issues and a great deal of sensitivity regarding commercial knowledge. Indeed, the Local Authorities’ actors were required to sign several documentations about confidentiality prior to their engagement with bidders.

13. The risk management standard – ISO 31,000:2009 – defines risk as ‘the effect of uncertainty on objectives’ with uncertainty arising whenever the ‘understanding or knowledge of an event, its consequence, or likelihood’ is inadequate or incomplete. Risk exposure is defined as the ‘extent to which an organization and/or stakeholder is subject to an event’ (ISO 2009).

14. In the UK, the VfM assessment for PFI projects is undertaken using a PSC, which establishes costs over the operation of the service both through traditional procurement methods and through PFI. Those that show better value using PFI are endorsed. VfM is defined as ‘the optimum combination of whole life costs and quality (or fitness for purpose) to meet user requirements’ (Treasury 2003, p. 30).