8 The Department and PfS were overly optimistic in their assumptions of how quickly the first schools could be delivered, leading to unrealistic expectations. In February 2004, the Department said that it wanted to build 200 schools by December 2008, but Local Authorities only managed to build, remodel and refurbish 42 schools through BSF. The Department underestimated the time needed to establish the programme, carry out strategic planning and procure private sector partners to build the schools. It took over a year for the Department, PFS and Local Authorities to establish the details of the programme, including the scope, overall level of funding available and the funding mix. It took Local Authorities nearly six months longer on average than initial estimates to procure a LEP, although this was a little less time than it took them on average to procure a contractor in previous school PFI projects. It also took Local Authorities about 18 months on average to develop strategic plans, compared to initial expectations of just over six months. After seeing the first few plans, the Department asked Local Authorities to spend more time to improve their proposals, because it believed it was more important to improve the quality than to accelerate the programme. PfS has streamlined the strategic planning and procurement processes so that it should be quicker in future.
9 The programme now includes the majority of Local Authorities, but scaling it up to deliver all 3,500 new or refurbished schools will be challenging. As at December 2008, PfS is working with the majority of Local Authorities to develop their schools. Fifty-four schools are due to open in 2009 and 121 in the following year. To start all secondary schools by 2020, the number of schools in procurement and construction at any one time will need to double over the next three years. Consequently, there will need to be an increase in the availability of procurement and project management skills, which are in short supply at present.
10 There has been an increase in estimated total costs. The Department and PfS estimate the total capital cost of the programme will be between £52 and £55 billion, a 16 to 23 per cent real increase from previous estimates. The majority of the increase is because the Department has increased the scope of the programme and has agreed to provide additional funding for the inclusion of Academies, Special Education Needs facilities, Voluntary Aided schools and carbon reduction measures. About a third of the increase in the estimate is because the original estimate assumed building costs would rise with general inflation, but building cost inflation is now estimated to have been twice general inflation up to 2008. To meet these costs and accelerate the programme to start all schools by 2020, annual expenditure on the programme would need to increase from £2.5 billion a year to between £3.4 and £3.7 billion a year at current prices from 2010-11 onwards.
11 The total capital cost of each BSF school averages £1,850 per square metre, which is similar to most other schools. It is less than Academies built before their integration into BSF, which averaged £2,240 per square metre at 2007 prices. The prices of BSF buildings have been kept under control by the funding arrangements put in place by the Department and implemented by PfS. These place the cost of increasing the scope of school projects with the Local Authorities and require them to keep projects affordable.