Newcastle University Value for Money Report 2014-15

Newcastle University Value for Money Report 2014-15

September 2015

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1INTRODUCTION

This is the eleventh annual report on the University’s value for money activities. The report has been prepared for the benefit of Audit Committee to assist it in formulating its conclusions in respect of the University’s arrangements for securing value for money.

The University’s value for money strategy was reviewed during academic year 2012-13 and the following objectives were re-stated:

to integrate value for money principles within existing planning and review processes and embed the pursuit of economy, efficiency and effectiveness within operational management;
to respond to opportunities to enhance the economy, efficiency and effectiveness of activities and adopt recognised good practice where this makes sense;
to undertake value for money studies on areas of activity identified as worthy of review and apply the lessons learned to other areas of the University;
to promote a culture of continuous improvement;
to ensure that all staff recognise their continuing obligation to seek value for money for the institution as part of their routine activities;
to benchmark our activities against other similar activities and organisations where this is considered useful.

2NATIONAL DEVELOPMENTS: DIAMOND REPORT

February 2015 saw the publication of the second Diamond Report on efficiency, effectiveness and value for money in the Higher Education. The Value for Money Working Group has been considering one of the eight themes from the report at each meeting. To date Estates and Human Resources have been considered and the remaining themes will be considered during the 2015-16 academic year. The recommendations from the Diamond Report will be used to develop our approach to Value for Money.

Since the publication there have been various discussions involving both the HEFCE and UUK on the introduction of a more standardised approach for value for money reporting. A range of data that could be requested as part of a standardised report is provided as Appendix 1.

3MEASUREMENT OF VALUE FOR MONEY

3.1National Student Survey

Student fees are now the single largest source of income to the University. In 2014-15 income from student fees was £205.7m. The National Student Survey (NSS) is an important indicator of undergraduate students’ perceptions of the value for money offered by the University. In the 2015 survey 91% of students who took part agreed or strongly agreed that they were satisfied with the overall quality of their course. Thismaintains our performance from 2014, and continues the sustained improvement from 81% in 2006. It places us joint top of the Russell Group, with Oxford. We scored particularly well for the quality of our teaching staff and our library services, IT facilities and support.

Percentage of students who agree or strongly agree to satisfaction in: / Newcastle / Sector
2015 / 2014 / 2015
The teaching on my course / 89% / 90% / 87%
Assessment and feedback / 71% / 71% / 73%
Academic support / 86% / 86% / 82%
Organisation and management / 86% / 86% / 79%
Learning resources / 91% / 90% / 86%
Personal development / 86% / 84% / 83%
Overall satisfaction / 91% / 91% / 86%
I am satisfied with the Students' Union at my institution / 81% / 82% / 68%

30 out of 45 of our published subject scores met or exceeded the 90% target for overall student satisfaction. It should be noted that the NSS only applies to final year undergraduate students and this year is the first time that most students participating will have paid the £9,000 fee.

3.2Other Student Surveys

In the 2014 International Student Barometer (ISB), 90.1% of Newcastle respondents were satisfied overall, giving strong overall scores in all four ISB categories: learning, living, support and arrival. Newcastle was ranked in the top quartile globally in 36 specific areas. Particular strengths include IT support (95%), the Library (96%), virtual learning (95%), registration (95%), personal tutors (93%), careers service (95%) and the estate buildings (94%). In the 2015Postgraduate Taught Experience Survey 85% of respondents were satisfied with their experience at Newcastle, and in the Postgraduate Research Experience Survey 83% said the same.

3.3TRAC

The need for universities to reduce their indirect costs (both in comparison to their peers and over time) was seen as a key conclusion of the Wakeham report (Financial Sustainability and Efficiency in Full Economic Costing of Research in UK Higher Education Institutions, June 2010). The University’s full economic cost indirect charge-out rates have significantly reduced since the report, reflecting improved efficiency in our research support activities. We compare extremely well both against our TRAC (Transparent Approach to Costing) peer group and against the sector average. The costs below are per academic researcher FTE. Our costs are significantly lower and have improved at a faster rate than the sector.

2008/09 / 2009/10 / 2010/11 / 2011/12 / 2012/13 / 2013/14 / Improvement over 5 years
Newcastle University / £34,518 / £32,885 / £31,465 / £31,460 / £31,205 / £32,185 / 7%
TRAC peer group average / £39,825 / £38,347 / £37,812 / £37,666 / £38,254 / £39,790 / 0%
Sector average / £39,570 / £39,176 / £38,130 / £37,593 / £38,161 / £39,481 / 0%
Newcastle variance to TRAC peer group average / -13% / -14% / -17% / -16% / -18% / -19%

3.4Administrative Costs

The graph below shows our total administrative expenditure as a percentage of income set against the Russell group for the most recent comparative years[1]. We see this as a useful measure of the value for money of our support activities. It measures expenditure across the entire institution not just in the Professional Support Services. In 2013-14,20 institutions occupied the range from 13%-19% and Newcastle, at 13.1%, was the fourth lowest in the group of 24. Our expenditure has dropped from 14.0% in 2012-13. The mean for the comparator group was 15.1% and the median 15.2%.

3.5Benchmarking

The most important collaborative initiative we have undertaken in 2014-15 is to form a benchmarking club with eight other Russell Group universities to improve the value for money achieved by support activities across the University. A benchmarking exercise across all support activities has been undertaken in the summer 2015. This exercise is being led by Cubane who have extensive experience of running the benchmarking clubs successfully with 20 Australian and New Zealand universities. In October we will also run a Service Effectiveness Survey which will give an insight into how well academic staff view the services support staff provide. The high level results will be available at the end of November and then the individual University briefings to Executive Board will take place in February 2016. These results and the analysis Cubane provide will enable the University to review the efficiency and effectiveness of the support services and provide a more informed understanding of where we can make improvements. The survey will be repeated in 2017. A further four Russell Group universities will join the club fully in 2016.

3.6Procurement Maturity Assessment 2015

The effectiveness of our procurement activity is measured through a Procurement Maturity Assessment (PMA) process managed by the Southern Universities Procurement Consortium on behalf of the English sector. This primarily measures us against best practice in all sectors of the UK economy and also provides a comparison against the English HE sector. Newcastle has just completed its second PMA review with a score of 65%, an improvement of 7.5% since the first PMA in 2013 (100% would equal best practice in every aspect of activity). This has placed us towards the upper end of the second quartile and third best of the eleven UK universities with income greater than £400m taking part. A more detailed analysis shows that compared to all sectors of the UK economy:

We are top quartile for use of IT and resources and skills
We are second quartile for governance, reporting and KPIs, organisation, collaboration and supplier strategy and policy
We are third quartile for use of category management and corporate and social responsibility (CSR)

An action plan has been agreed which will particularly focus on category management and corporate and social responsibility.

4GOVERNANCE

Executive Board and Councilreceive management information on a quarterly basis which helps to identify value for money issues at a strategic level.The Value for Money Working Group has continued to take action on various initiatives. The membership for 2014-15 was revised to ensure that there is academic and administrative representation from each of the three faculties and also to include representation from Human Resources and Research Enterprise Services. Membership during 2014-15 was as follows:

John Hogan, Registrar (Chair)
Neil Addison, Head of Procurement Services
Ursula Armstrong, Management Information Specialist, NUIT
Zoë Bright, School Manager, Education, Communication and Language Sciences
Dan Brooking-Coker, School Manager, Civil Engineering and Geosciences
Garry Coupland, Assistant Director of Human Resources
Richard Dale, Executive Director of Finance
Peter Elliott, Head of Business Process Improvement
Steve Frater, Director of Planning
Neil Gardner, Faculty Management Accountant, Humanities and Social Sciences
David Hill, Head of University Research Office, Research & Enterprise Services
Michelle Latham, Institute Manager, Institute of Genetic Medicine
Katarina Novakovic, Lecturer, School of Chemical Engineering and Advanced Materials
Clare Rogers, Director of Estate Support Service
Juliet Simpson, Head of Internal Audit
Chris Stafford, Head of Administration, Humanities and Social Sciences
Laura Ternent, Senior Lecturer, Institute of Health & Society
Tim Townshend, Senior Lecturer, Architecture, Planning and Landscape

5ESTATES

The way we use the estate itself is one of our greatest value for money initiatives with potential saving into the future. In 2014-15, estate investment and running costs were:

Recurrent£33.5m

Capital projects£17.5m

Revenue projects£6.6m

Total£57.6m

Key findings for the higher education estate UK wide presented in Diamond II were that substantial investment has delivered significant improvement in quality, condition and suitability of infrastructure which is dramatically the case at Newcastle where since 2001 the floor space in condition A & B improved from 74% to 89% (sector wide 59% to 78%) and our percentage of space with ‘excellent’ and ‘good’ functional suitability improved from 34% to 91% (sector wide 63% to 85%). Newcastle was an exemplar of outstanding progress (UK Funding Councils, 2011):

Measure / 2000-01 / 2012-13 / Peer Group
2013-14 / 2013-14 / Predicted
2014-15
Floor space in condition category A & B / 74% / 88% / 87%
(upper quartile) / 88% / 89%
Floor space in functional suitability
grade 1 & 2 / 34% / 87% / 92%
(upper quartile) / 91% / 91%

An indicator of the value for money of the estate is space utilisation. As our most expensive asset after people, we cannot afford for it to be underused. Our total net non-residential space per student FTE is down by 34% (sector wide 8%).

Since 2000, Newcastle has been acknowledged as a leader in the sector for space management (since carrying out a HEFCE funded study to identify best practice and establish a toolkit for space management). We implemented our guidelines and achieved major efficiencies through an estate strategy to achieve a functionally suitable estate while controlling size and improving condition and quality, which in turn controlled cost.

The utilisation of our non-residential estate has improved by 34%. Only 2 of 23 peer estates have reported improvements at this level. The current space per student is on par with that reported by our peers:

Measure / 2000-01 / 2012-13 / Peer Median 2013-14 / 2013-14 / Target
2014-15
Net internal area per student FTE (m2) / 17.0 / 11.1 / 11.1 / 11.4 / 11.4

At 10.9m², our academic office area per academic staff FTE is less than averages reported by peer estates (13.8m²), but high sector wide or in comparison with the private sector. A more strategic approach is required to explore how academic workspace can best support academic needs, including more innovative and flexible ways of using space. We have embarked on a project to establish a process and templates for dialogue for change. Office space per support staff FTE at 8.6m2 is below median averages reported across all peer estates (12.4m2). Peers suffered increases during the same period.

Total income relative to estate sizeincreased by 22% over 5 years, indicating more efficient and effective use of space as well as better income generation:

Income/m2 GIA / 09-10 / 10-11 / 11-12 / 12-13 / 13-14 / 14-15
Estate m2 GIA / 324,548 / 337,697 / 321,281 / 322,774 / 316,444 / 329,200*
Income pa £’000 / 357,530 / 367,504 / 364,590 / 393,496 / 425,896 / 466,789*
Actual income/m2 / £1,102 / £1,088 / £1,135 / £1,219 / £1,346 / £1,418*

*estimated

6SHARED SERVICES AND CONSULTANT AND CONTRACTOR FRAMEWORKS

The Diamond Review promoted the benefits of group purchasing consortia, frameworks and arrangements. Assumptions that shared services and outsourcing may be more cost effective need to be examined carefully to ensure all proposals are of mutual benefit.

The University has a Shared Services Steering Group and has implemented various local initiatives as well as with the North East Universities Procurement Consortium (NEUPC). The Estates Support Service(ESS) led for the NEUPC on setting up an asbestos management framework. Disappointingly, because it covers a very large region with the majority of framework suppliers located in areas outside of the North East, this has not proved to be better value for money. ESS is represented on an NEUPC group and has suggested that progress to date be reviewed to ensure that what is put in place is appropriate. More sub-regional frameworks are required.

We have progressed a range of initiatives locally with universities, Newcastle City Council and the NHS, and are exploring more. Further information is provided inAppendix 2.

Consultant and Contractor Frameworks provide the benefit of being able to move relatively quickly to let contracts by mini competition between framework firms who are pre-vetted for quality and VFM and meet EU competition regulations. We share Durham University’s design services consultancy framework. We are exploring sharing frameworks with Durham, Northumbria and Sunderland Universities: potentially minor construction works (circa £0.5m- £2m value range) with Durham and minor mechanical and electrical works with Sunderland. These aim to supplement our own current frameworks. We are exploring the feasibility of a main contractor framework for construction values from circa £2m and above. Newcastle will lead on procuring this framework, as Durham previously led on the design consultancy framework process, to share equably the considerable effort needed to put frameworks in place.

7VFM ACTIVITIES DURING 2014-15 TO REDUCE COSTS OR IMPROVE EFFICIENCY

7.1Business Process Improvement

In January 2015 the University recruited externally to fill the newly created ‘Head of Business Process Improvement’ role. The purpose of this role is to facilitate a culture of continuous business process improvement and change, by ensuring that processes meet existing and emerging needs, whilst supporting the continued success of the value for money agenda.

Peter Elliott joined the University with 16 years’ experience gained in Business Improvement and Project Management from the financial services sector. He has developed a framework to facilitate the formal scoping, design, delivery and benefit capture from Business Improvement initiatives that are guided by the Registrar and the Value for Money working group. Peter also supports a number of process improvement coaching initiatives, allowing smaller initiatives to be undertaken at a local level and transferring skills and ideas.

Over the past 8 months the Business Process Improvement portfolio has seen process review and improvement activity in the Staff Development Unit (CPD), International Office / Student Mobility Teams and Medical Science Research Administration areas. Working with various senior stakeholders, several further potential improvement projects have been scoped and will be progressed alongside key strategic reviews in coming months.

Over the next 12 months Peter will be supporting two key strategic reviews:

University Wide Research Administration – Working with the Director of Research and Enterprise Services and the Faculty based teams to review the administration process that supports the University’s “Raising the Bar” Initiative.
HR E-enablement – Working with the Directors of HR and Finance to reduce paper based interactions across a number of internal HR processes

7.2IT Infrastructure

Throughout the year the University has obtained additional discounts from Huawei on the purchase of networking equipment through requirement aggregation: aggregating an order for networking and Wi-fi equipment for student accommodation and refurbishment projects achieved a saving of £71k against contracted prices; an aggregated order for data centre networking equipment to support the Digital Campus infrastructure consolidation and pervasive Wi-fi projects achieved a saving of £560k against contracted prices; an order for 149 replacement edge switches realised a saving of £11k against contracted prices.

The maintenance contract on Huawei network equipment has been renegotiated realising a saving of £27k compared to contracted prices.

The tender for Phase 2 of Digital Campus infrastructure consolidation data storage resulted in the University obtaining an additional 50% data storage capacity than had been anticipated within the available budget.

Capacity on the data circuits to Bowsden Court, St. Mary's College and Dove Marine Laboratory have been upgraded from 100Mbps to 10Gbps (100 fold increase in speed) at an increased rental cost of 43%. Such capacity upgrades enable NUIT to deliver the benefits of Digital Campus projects such as pervasive wi-fi to these remote sites.

7.3Microsoft software

As noted in the report from 2013-14, the University has access to Microsoft’s ‘Dreamspark’ offer which gives high value development software to University members at no charge. University members who are studying or teaching on STEM (Science, Technology, Engineering and Maths) have access to the enhanced premium version which gives access to the majority of Microsoft’s software.

The University has facilitated the uptake of this service as a benefit to its members and as a digital literacy enhancing initiative.

During 2014-15, 1,398 Dreamspark downloads of 203 different software titles totaled a £1.18m saving to 1,078 users.

7.4NUIT Faculty

Working collaboratively with Central NUIT, a number of Schools in SAgE avoided the need to purchase their own storage systems, by making use of NUIT central storage instead. This produced a more functional, robust storage solution at lower cost and energy saving to the University.

Existing school High-Performance Computing (HPC) systems were combined, along with requests for new capacity to produce a single, larger HPC system. This has facilitated better use of spare capacity and gives a system that is capable of solving larger problems.

PC procurements have been combined across some Schools and Institutes resulting in savings of £70/machine in the Faculty of Medical Sciences which enabled the team to refresh 10% more PCs than planned. A £10,000 saving on specialist PCs in School of Electrical Engineering was also realised.