P21 value for moneyPrimary Schools for the 21st Century (P21)
Value for money and budget management
The P21 program was very large and complex. It was delivered within very tight timeframes to maximise the amount of economic stimulus.
Our commitment was to:
- Ensure that value for money was achieved on every school project;
- Make sure that no P21 funding was lost to the NSW Public School System and returned to the Australian Government;
- Ensure that all eligible NSW Public Schools benefited fairly from P21; and
- Maximise the number of schools that received their full Australian Government approved project.
Each school’s funding allocation was based on the school’s enrolments, not the particular features of the school site or the relative complexity of the project. In a program as large as P21 with over $2.9 billion being invested across 1,785 NSW public schools there were going to be some projects that cost less and some that cost more than the school’s allocated funding.
Our value for money and budget management strategies minimised the risk of overspends and enabled under-spends or left-over funds to be transferred to other public school projects that needed it.
Click on the below links to find out more about:
P21 value for money strategies
P21 budget management strategies
P21 school project costs
P21 budget transfers procedure and participating schools
P21 value for money strategies
Cost control and value for money checks are embedded into every stage of the P21 program; ensuring that the price paid for each project is fair, reasonable and above all, good value for money in the current market.
Value for money doesn’t mean the cheapest price – it means the best price for completing the work to the required quality standard and within the set timeframe.
P21 value for money strategies include:
- Managing Contractors were appointed through a competitive tender process
- Every school project is competitively tendered
- The Benchmark Value (BMV) process
- The Audit procedures
The P21 Project Budget fact sheet explains the costs of developing and delivering P21 projects and the processes which are in place to ensure value for money is achieved.
The P21 Value for Money Checks and Balances fact sheet provides more detail on the value for money checks which are in place.
1. Managing Contractors were appointed through a competitive tender process
Managing Contractors were selected through a competitive tender process. This process ensured that the appointed Managing Contractors had the necessary skill and experience to deliver this challenging program. It also ensured that good value for money was achieved, as each bidder had to put their most competitive price forward to be successful.
To view publicly available information on BER Primary Schools for the 21st Century Managing Contractor tenders visit: NSW eTendering
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2. Every school project was competitively tendered
Each school project was competitively tendered. This competitive process required builders not only to provide their best price to win the work, but to also show that they had the skills and experience to deliver the school’s project and satisfy quality and safety standards. This process tested that the best value for money was achieved on each school project in the current market.
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3. The Benchmark Value (BMV) process
The contract between the Department of Education and Training and the Managing Contractors was designed to enable very fast delivery and effective cost testing at key stages to ensure value for money was achieved on each school project.
School projects were approved to start construction based on an Estimated Construction Sum (ECS) provided by the Managing Contractor. The ECS was based on detailed pre-construction investigations and was the Managing Contractor’s best estimate of the full cost of developing and delivering the project using their expertise, market experience and knowledge. Projects were approved to start construction, in line with our budget management strategy, when the ECS scope aligned with the school budget.
The ECS was not the amount that was actually paid to the Managing Contractor for the works undertaken. The amount actually paid is determined through the Benchmark Value (BMV) process where the BER Program Office compares the tendered cost of the project to the tendered cost of similar BER projects and sets the project’s Benchmark Value. The Managing Contractor is only entitled to be paid the lesser of either the actual costs incurred in delivering the project or a maximum of 105% of the Benchmark Value. This is a real incentive to keep costs down for the life of the program.
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4. The Audit procedures
Every aspect of the BER program was audited to make sure that our processes and those adopted by our delivery partners represented best practice and deliver value for money. The audits were undertaken by independent internal and external audit teams including: the BER audit squad, the Nation Building and Jobs Plan Taskforce’s probity auditor, Deloitte, and the New South Wales Audit Office.
The audit procedures were an important check and balance in the system; making sure that public money was spent efficiently to deliver real improvements to schools and benefit the community as a whole.
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P21 budget management strategies
- Align approved project scope to budget
- Budget transfers procedure to transfer left-over funding
- Setting aside 5% of each school’s allocation as contingency
1. Align approved project scope to budget
Each school’s funding allocation was based on the school’s enrolments, not the particular features of the school site or the relative complexity of the project.
The majority of school projects are affordable within the school’s budget. However, the cost of delivering the same sized hall at different school locations can differ markedly because of site issues such as a steeply sloping site, heritage considerations or the school location in an area prone to flood or bushfire.
If a school project was estimated to cost more than the budget, we worked with the school Principal to explore ways of reducing costs by, for instance, re-siting the building or re-focusing the project’s scope to meet the school’s priorities. This process ensured that all reasonable cost saving actions were taken early to reduce the risk of overspends once construction started.
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2. Budget transfers procedure to transfer left-over funding
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In a program as large as P21 there were going to be some projects that costed less than the school’s budget and some that costed more, despite all reasonable cost saving measures being taken.
This was where the budget transfers procedure came in – it enabled under spends or left-over money to be transferred to another NSW public school whose P21 project needed top-up funding.
Only those schools that received their full approved project and had money left over were asked to allow the left over money to be transferred to another NSW public school that needed it.
Schools only received top-up funding after all reasonable efforts had already been taken to align the project scope to the budget. These schools needed top-up funding because unavoidable site specific issues had made the project cost more to deliver.
The budget transfers procedure had the full support of the NSW Primary Principals Association (NSW PPA) and the NSW Federation of Parents and Citizens Associations.
Click here for further information on this procedure and a list of those schools that agreed to participate.
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3. Setting aside 5% of each school’s allocation as contingency
It was not possible to know all the potential site risks which may emerge once construction starts, although every effort is taken to identify potential risks through site surveys and ground investigations in the pre-construction stage.
The BER Program Office set aside 5% from every school’s allocation as a contingency. Contingency funding was set aside to cover only the costs of unforseen risks which may have emerged during construction such as buried asbestos-containing materials, soil contamination, archaeological remains, endangered species or unidentified topographical or geological issues.
The contingency was in addition to the schools project budget and was only available to cover the costs of unforseen risks; not additional project scope. Any amount of contingency which was not required to cover the costs of unforseen risks at one school may be used to cover unforseen risks at another P21 public school project, in accordance with the Australian Government’s guidelines.
P21 funding could only be used to deliver P21 projects – the NSW Government made this commitment to the Australian Government when P21 funding was allocated.
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P21 school project costs
Each school’s P21 allocation needed to cover the full costs of developing and delivering the school’s project. This included the actual cost of the building and the costs of all pre-construction works, site investigation, concept design, detailed planning, statutory approvals, services, site works and more.
The cost of delivering, for example, the same size hall at different schools can differ markedly. This is because it is site specific issues that drive construction costs, such as a steeply sloping site, heritage considerations or the school being located in an area prone to flood or bushfire.
The P21 Cost Questions Fact Sheet provides answers to commonly asked P21 project cost questions.
Site specific issues that affect cost:
- It costs more to build on sloping sites - building foundations on sloping sites is more complex and more expensive requiring specialist structural design and often reinforced suspended concrete floors and additional drainage works. Costs can also be higher because of site access issues including the difficulty of getting heavy excavation equipment on site. There can also be high costs associated with removing excavated soil from the site, particularly if the soil contains contaminants like lead, mercury and phosphates.
- It can be more expensive to build in remote or difficult to access sites - A project in a remote location can cost more because of the time and transport costs involved in getting building supplies to the site. Similarly, a project in a tight small urban site can be more expensive because the restricted access may mean building supplies need to be craned into position. On a tight site, if temporary teaching demountables are required, it may be necessary to move the demountables several times during the construction program to gain access to the site for the new building.
- Projects in flood or bushfire prone areas can cost more – It can be costly to comply with strict mandatory statutory planning requirements. School buildings in flood prone areas may need to be raised above ground which increases costs of the building foundations and requires longer access ramps to be constructed. Schools in bushfire prone areas may have to install fire breaks and use specialist fire resistant building materials which are more costly.
P21 school project cost breakdowns
The cost breakdown for each school’s P21 project is made publicly available on the school’s page.
This cost breakdown includes the costs at Estimated Construction Sum stage as well as links to the Australian Government’s website which contains the forecast final costs.
An explanation of the cost terms is available at: Estimated project cost breakdown – Explanation of terms fact sheet.
A commonly asked cost questions fact sheet is also available at P21 Resources page.
P21 Budget Transfers Procedure and participating schools
The budget transfers procedure was developed in partnership with the NSW Primary Principals Association and the NSW Federation of Parents and Citizens Associations.
Click here to view the memo from Michael Coutts-Trotter, Director General of Department of Education and Training, and Geoff Scott representing the NSW PPA, thanking Principals who have agreed to transfer left over money, and urging others to do the same.
The budget transfer procedure is key to our budget management strategy:
- It ensured that all schools benefit fairly. We only asked those schools that received their full project to allow left over money to be transferred to another public school that needed additional funding.
- It ensured that no P21 funding was lost from our public school system. This procedure ensures that all funding is used within the set timeframes.
- It is completely transparent. When funding transfers between schools take place we update this website to show where the funds have come from and the schools that are benefiting.
Further information about the budget transfers procedure can be found in the Managing the P21 Program fact sheet.
