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BETTESWORTHConstruction
capital investment

UK University Cost Models After Covid: The Priority Questions Estates Teams Must Answer

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The 25 April 2023 Building feature by Aecom’s Rory Armstrong and Steven Jenkins is best read as a decision framework, not as a price list. It describes how UK universities moved from a decade of rising funding and capital investment to a period in which Covid-19 made future income, student demand and estate requirements less certain. Its central challenge is practical: before committing scarce capital, an institution must decide what its post-pandemic estate is meant to provide and which projects deserve priority.

The publication says it includes a cost model for a typical building, but the detailed model is not available in the accessible article material. That means its building type, floor area, rates, specification, inclusions, exclusions, location, base date, procurement assumptions and adjustment factors cannot be quoted responsibly. The useful takeaway is therefore how to interrogate a university cost model and connect it to institutional priorities without treating an unavailable figure as a current construction estimate.

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What the 2023 feature is actually about

The feature sits within the UK tertiary-education sector rather than general university budgeting. Armstrong and Jenkins describe an upward trajectory in funding and capital investment during the decade before Covid-19. In their account, two forces supported that growth: increasing student numbers and a larger proportion of international students, who paid higher fees than domestic students.

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The pandemic disrupted both the assumptions and the timing behind that investment. Students studied from home during 2020 and 2021, while prospective international students could not travel to the UK. Universities were consequently left uncertain about capital funding. The article says some projects were put on hold while institutions recalibrated their needs and priorities and reconsidered what their estates should look like and provide after the pandemic.

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That context matters because a cost model is never just a collection of rates. It is a financial expression of a brief, a timetable, a specification and a set of assumptions about how a building will be used. If those assumptions change, a precise-looking total can still be the wrong number for the decision being made.

What is known—and what is not—about the model

The publisher’s standfirst says the authors “explain what’s happening in the tertiary education sector and offer a cost model of a typical building”. The accessible material confirms that purpose but does not expose the model itself. No safe figure from the 2023 feature is available for construction cost, area, elemental breakdown, inflation, location, procurement route or contingency.

Those omissions are not minor editorial details. Each one can materially change an estimate:

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  • Building definition: a teaching building, laboratory, library, residence or mixed-use facility has a different cost profile.
  • Size and measurement: a rate per square metre is meaningless without the area measurement convention and the amount of accommodation included.
  • Specification: specialist services, laboratory systems, information technology, furniture and equipment can move the total substantially.
  • Location: labour, logistics, abnormal ground conditions and local market conditions vary across the UK.
  • Base date: a historic rate needs a stated date and an appropriate index before it can be updated.
  • Procurement and risk: contract strategy, design maturity, inflation exposure and client contingencies determine how much of the risk is inside or outside the headline figure.

Until those assumptions are published, the feature should not be used as a current tender benchmark or as evidence for a particular university project.

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Why post-pandemic priorities change the cost question

The introduction frames a change from expansion to reassessment. Before Covid-19, growth in student numbers and international enrolment helped support capital investment. During 2020 and 2021, remote study and restricted international travel challenged the demand and funding assumptions on which some schemes had been based.

For an estates team, this creates a sequence of questions rather than a single “what does a building cost?” question:

  1. What educational, research, residential or civic outcome is the project intended to deliver?
  2. Which parts of that outcome require new construction, and which can be achieved by adapting existing space?
  3. How durable is the demand case if enrolment patterns, teaching methods or international recruitment change?
  4. What capital is genuinely available, and when can it be released?
  5. What level of operational performance, flexibility and carbon reduction is required over the building’s life?
  6. What happens to the institution if the project is delayed, reduced or cancelled?

A cost model becomes useful when it answers those questions transparently. It becomes dangerous when its total is treated as an objective fact detached from the choices that created it.

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Build a decision-ready cost model

1. Write the brief before entering rates

Start with a one-page brief that names the users, activities, capacity, operating hours, key adjacencies, accessibility requirements and performance objectives. Record what is explicitly out of scope. A brief that says only “new teaching building” cannot support a defensible estimate because it leaves the accommodation and performance standard undefined.

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2. Separate accommodation from project cost

Present the model in layers so decision-makers can see what each total means:

  • Works cost: the defined construction and installation work.
  • Project cost: works cost plus design, surveys, statutory charges, project management and other client costs included by the institution.
  • Funding requirement: project cost plus financing, tax treatment, risk allowances and any other items required by the funding decision.

Do not combine these layers into one unexplained number. A low works rate can coexist with a high funding requirement if substantial professional, enabling or risk costs sit outside the headline figure.

3. State the measurement and base date

Every rate should carry its measurement basis, currency, geography and date. If a historic rate is updated, show the index or adjustment method and the date to which it has been brought. If the source does not state a base date, mark the rate as undated rather than silently treating it as current.

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4. Make inclusions and exclusions visible

Use an inclusions schedule and an exclusions schedule. Typical lines that need an explicit decision include demolition, enabling works, abnormal ground conditions, utility diversions, external works, loose furniture, specialist equipment, information technology, decanting, temporary accommodation, land, finance and taxes. The correct treatment depends on the project; the important control is that every line is assigned to someone and not lost between estimates.

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5. Add risk as a managed allowance

Risk should be linked to known uncertainties, not inserted as an unexplained percentage. Maintain a risk register with an owner, probability, impact, mitigation and residual allowance. Keep design development, market movement and client change distinguishable where the governance process requires it. This lets a committee see which part of the allowance may reduce as information improves.

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Decision questions for a university capital board

Is the project solving a confirmed problem?

Describe the service failure or strategic need in measurable terms: insufficient capacity, unsuitable research environments, poor accessibility, compliance obligations or an estate condition issue. A project justified only by an attractive concept is vulnerable when funding tightens.

Can the outcome be delivered another way?

Compare new build with refurbishment, phased delivery, shared facilities, changes to space allocation and operational measures. The 2023 feature does not provide quantified alternatives, so no claim can be made that one route is cheaper in a particular case. The institution must produce its own like-for-like options with the same functional brief and risk treatment.

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How reversible is the investment?

Flexible floorplates, adaptable services and phased infrastructure may protect an institution against demand changes, but they can also add upfront cost. Record the premium and the future decision it buys. Flexibility is valuable only when the institution can identify a plausible change it will support.

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What is the consequence of pausing?

Pausing can avoid immediate expenditure, but it may also extend temporary accommodation, delay income or research capability, expose the institution to further inflation, and leave critical maintenance unresolved. Those consequences belong in the options appraisal rather than being treated as zero.

Does the operating case support the capital case?

Evaluate staffing, energy, maintenance, cleaning, security, replacement cycles and technology support alongside construction cost. A scheme that fits the capital envelope but creates an unaffordable operating commitment is not a successful priority decision.

How to present options without false precision

Use a common template for each option. Show scope, capacity, programme, cost layers, exclusions, risk, funding timing, operational effect and the decision required. Label every figure as an estimate and identify its confidence level. Where evidence is not yet available, use “not stated” or “to be confirmed” with an owner and deadline; do not fill the gap with a borrowed rate from an unrelated building.

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Decision field What the board should see
Outcome The educational, research or estate result the option delivers
Scope Accommodation, systems, external works and explicit exclusions
Cost basis Measurement convention, geography, base date and source
Risk Named risks, allowances, mitigations and residual exposure
Programme Design, approvals, procurement, construction and occupation milestones
Affordability Capital availability, operating effect and funding timing
Decision Proceed, investigate, phase, pause or stop, with the trigger for review

Do not mix the 2023 feature with the 2009 model

A separate Building article dated 19 June 2009 describes an example standalone teaching and research facility and bases its rates on the second quarter of 2009. That is a distinct historical model. Its building description and Q2 2009 rates must not be merged with the 2023 feature or presented as current UK university pricing.

If an institution consults the older article for historical context, it should preserve the original date and scope, then commission a current estimate using the project’s own brief, market evidence and risk assumptions. Applying an unexplained uplift to a 2009 figure would not correct differences in specification, regulation, procurement, location or scope.

A practical review checklist

  • Confirm the project brief, users, capacity and performance requirements.
  • Identify the building type and measurement convention.
  • Record the rate source, geography, base date and currency.
  • List inclusions and exclusions in a controlled schedule.
  • Separate works cost, project cost and total funding requirement.
  • Show design maturity and the assumptions that could change.
  • Maintain a quantified risk register with owners and mitigations.
  • Test new build, adaptation, phasing and operational alternatives on the same basis.
  • Include consequences of delay or cancellation.
  • Model operating, maintenance and renewal implications.
  • Set approval gates and define what evidence is required at each gate.
  • Refresh the estimate when the brief, programme, market or funding position changes.

What readers can responsibly take from the feature

The article’s enduring message is about governance under uncertainty. UK universities had experienced investment growth before Covid-19, but the pandemic disturbed the student, funding and travel conditions that had supported some of that trajectory. The authors say institutions paused projects and reconsidered what their estates should provide. A cost model helps with that reconsideration only when it exposes the choices and uncertainties behind the total.

The accessible publication material does not establish a current rate, a typical building specification or a universal answer to which projects should proceed. Each university therefore needs a project-specific model, a transparent options appraisal and a decision process that can change as evidence improves.

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