2 Managing programme costs
12. The first academies have cost an average of £27
million to build where there is an entirely new building. The
average for all academies including those with a remodelling or
only a partial rebuilding is £24 million. Academies have
therefore cost more than other new secondary schools. Limited
data indicate that other schools typically cost between £20
million and £22 million, though the costs are not directly
comparable with the costs of academies because of differences
in the number of pupils, site constraints and local construction
prices. Some academies were granted budgets that exceeded the
benchmarks used for other schools, for example to overcome site
problems.[29] Cost overruns
on 17 of the first 26 academies, averaging £3.2 million,
have further raised the overall cost.[30]
The Department considers that the cost differences are not likely
to have given academies a significant advantage over other schools.[31]
13. The Department's Academies Group oversees around
200 major academy projects, with its 'project leads' each responsible
for leading between five and eight projects. The detailed project
management of academy set up and building is contracted out to
external project managers.[32]
While some project management has been good, elements of the formal
feedback given by the Department to project managers indicated
instances of poor cost control and failures to notify the Department
early about cost overruns. In 2005 the Department introduced a
system to monitor the performance of the project managers.[33]
Previously there were insufficient controls to make sure that
project managers were managing costs and projects effectively.[34]
14. The Department calculates the annual funding
of open academies so that it is equivalent to that received by
other local schools. In addition, the Department provides start-up
funding for up to four years after opening, which so far has averaged
£1.6 million in total for each of the first 12 academies.
This start-up funding is an additional benefit that academies
receive compared with other schools.[35]
By comparison, Fresh Start secondary schools received an average
of £750,000 of additional revenue funding to meet their start-up
costs.[36]
15. The Department has expected most sponsors of
academies to donate 10% of the building costs, up to a total of
£2 million. Under new arrangements, sponsors' financial contributions
will instead be available for academies to use once they have
opened. By September 2006, the sponsors of four of the first 27
academies were behind schedule on the contributions, by an average
of around £200,000.[37]
The Department believes that all sponsor payments are fully up
to date, but does not yet have documentary evidence because it
is still with the individual academies.[38]
16. If an academy were to favour suppliers associated
with its sponsor by letting contracts to them outside an appropriate
procurement process, it would be breaking public procurement law.
The Department would normally expect academies to use a tendering
process. It monitors and reviews academies' accounts, which should
declare any such related party transactions, but does not sign
off contracts let by academies. In the early days, sponsors were
involved in developing the programme because of their expertise.
Progressively, the Department has developed guidance to academies
on compliance with the contracting rules.[39]
29 C&AG's Report, paras 4, 3.23-3.24; Q 91 Back
30
C&AG's Report, para 4 Back
31
Q 61 Back
32
C&AG's Report, paras 3.2-3.4 Back
33
C&AG's Report, paras 3.6-3.7; Q 81 Back
34
Q 45-46 Back
35
Qq 3-4, 34 Back
36
C&AG's Report, paras 6, 3.43 Back
37
C&AG's Report, paras 3.31, 3.33 Back
38
Q 64 Back
39
Qq 27-33, 124; Ev 19 Back
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