Newcastle University Value for Money Report 2012-13September 2013_______________________________________________________________________________

1 Introduction

This is the ninth 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 the 2012-13 and the following objectives were re-stated:

to integrate VFM 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 VFM 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 VFM for the institution as

part of their routine activities; to benchmark our activities against other similar activities and organisations where this is

considered useful.

The full Value for Money Strategy which was endorsed by Audit Committee at its meeting on 25 April 2013 is attached as Appendix 1.

2 Measurement of Value for Money

2.1 National Student Survey

The National Student Survey (NSS) is an important indicator of UK undergraduate students’ perceptions of the value for money offered by the University. We maintained our strong institutional performance in the 2013 survey, with 90% of students who took part agreeing or strongly agreeing that they were satisfied with the overall quality of their course. This is a 1% improvement on 2012, and shows a sustained improvement from 81% in 2006.

Percentage of students who agree or strongly agree to satisfaction in:

Newcastle AllHEIs

2012 2013 2013The teaching on my course 89% 89% 87%Assessment and feedback 67% 70% 71%Academic support 83% 84% 80%Organisation and management 84% 85% 78%Learning resources 86% 91% 85%Personal development 83% 84% 82%Overall satisfaction 89% 90% 86%Satisfaction with the Students' Union 76% 78% 68%

Results at subject level continue to improve with 30 out of 48 of our published subject scores meeting or exceeding the 90% target for overall student satisfaction (compared with 25 out of 47 in 2012).

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2.2 Other student surveys

In the 2012 International Student Barometer (ISB), 90% of Newcastle respondents were satisfied overall, giving strong overall scores in all four ISB categories: learning, living, support and arrival. Newcastle was ranked first in the Russell Group in nine specific areas. Particular strengths include the Students’ Union (96%), IT support (96%), campus environment (96%), the Library (95%), expert lecturers (95%) and virtual learning (95%). During 2012-13, we took part in the Postgraduate Research Experience Survey. 83% of respondents were satisfied with their experience at Newcastle, comparing favourably to the national average of 81%.

2.3 Research indirect costs

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 report1. The University’s full economic cost indirect charge-out rates continue to reduce 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.

2008/09 2009/10 2010/11 2011-12 Improvement over 3 years

Newcastle University £34,518 £32,885 £31,465 £31,460 9%TRAC peer group average £39,825 £38,347 £37,812 £37,666 5%Sector average £39,570 £39,176 £38,130 £37,593 5%

2.4 Procurement2

During 2012-13 Procurement Services invited tenders for 87 contracts and framework agreements on behalf of the University with a total contract value of £81.2m. Reported financial savings negotiated during the process for purchases were £1.85m, up from £1.5m in 2011-12. These tenders were carried out using the University’s e-tender system resulting in efficiency savings of £52k. £31.5m was ordered using collaborative procurement arrangements (£25m in 2011-12). This equates to 28.8% of qualifying procurement spend as calculated using the Universities UK Procurement Advisory Group guidance. The target for the University is to achieve 30%.

Purchasing card usage increased by 27% from 17,069 transactions (value £2.5m) to 21,599 transactions (value £3.3m). This equates to an efficiency saving of £127k in the year. E-marketplace transactions increased from 25,923 transactions (value £4.8m) to 30,081 transactions (value £5.3m). This equates to an efficiency saving of £154k on 2011-12. The marketplace is the source of 37% of all orders placed by the University. The proportion of purchases compliant with University purchasing procedures has increased from 83.2% (fourth quarter 2011-12) to 94.3% (fourth quarter 2012-13).

2.5 Administrative costs

The graph below shows our total administrative expenditure as a percentage of income set against an extended peer group for the most recent comparative years3. We see this as an important measure of the value for money of our support activities. In 2011-12 27 institutions occupied the range from 14%-19% and Newcastle, at 14.9%, was eleventh lowest in the group of 35. The mean for the comparator group was 15.7% and the median 16.0%.

1 Financial Sustainability and Efficiency in Full Economic Costing of Research in UK Higher Education Institutions, June 20102 All Procurement savings quoted, other than those achieved on contract negotiation, are based on HEFCE Efficiency Measurement Model benchmarks.3 Of the comparator group York, in its HESA returns, has the lowest percentage of non academic salaries but a review of the published audited accounts suggests that Newcastle and York are actually much closer in their structure and commitment of resources than HESA data infers.

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2.6 Employee opinion survey

Last year’s report looked in detail at staff time allocation. This year the report focusses on the value for money evidence derived from the employee opinion survey which was conducted in May 2013. The last survey was completed in 2010 which provides most of the internal comparisons. The survey was conducted by Capita and they were able to draw comparisons with 30 other HEIs. 3,325 staff completed the survey, a response rate of 61%. The headline result was 92% regarding the University as a good place to work compared to 89% in the HE norm.

Within the results there are some useful value for money indicators. Staff salaries represent the single most important item of expenditure at 54% of income in 2012-13. Therefore how staff believe they are performing is a useful test.

Our staff believe that the University delivers good quality service to students/other customers (93% compared with an HE norm of 86%). This is important and reinforces the evidence from the National Student Survey.

Most staff believe that they are well managed (“I am satisfied with the support I get from my immediate manager” 81%, HE norm 79%) and our Performance Development Review (PDR) process is being applied more consistently (PDR completion in the last survey reported at 88% up from 77% in 2010 and compared with the HE norm of 83%). Staff have a clear understanding of their role in the University (92%), what they are expected to achieve in their job (90%) and the expected standard of performance (93%). 74% report that they are satisfied with their current role and level of responsibility. 79% believe they have enough freedom to do what is necessary to put students/other customers first every time.

There is good support for our IT systems - University computer systems are reliable (90%), easy to use (82%) and staff can find help easily with the computer systems when needed (82%).

72% feel personally encouraged to look for ways to improve the way we do things but only 66% are confident that their ideas will be listened to.

On the negative side there are concerns about workloads – a third of staff report that they find their workload too much and are struggling to cope. There is evidence that the University is rule-bound; 52% feel that there are too many approvals needed for routine decisions (a modest improvement on the 57% in 2010). 44% believe they are required to do unimportant tasks which prevent them completing more important ones.

Internal communication is a weakness with 70% of staff regarding it as effective (although the HE norm is 62%). Similarly most staff (64%) feel more could be done to help prepare for and cope with change (although this is significantly better than the HE norm of 78%).

Overall the survey is evidence of an organisation whose staff regard it as functioning well. Each unit has received a set of results for its own staff and has been asked to prepare an action plan to address particular issues.

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3 Governance

Executive Board and Council receive management information on a quarterly basis which helps to identify value for money issues at a strategic level. The VFM Working Group has continued to take action on various initiatives. Membership during 2012-13 was as follows:

John Hogan, Registrar (Chair) Neil Addison, Head of Procurement Services Peter Andras, Reader in Complex Systems, Computing Science Alan Boddy, Professor of Cancer Pharmacology, Northern Institute for Cancer Research Zoë Bright, School Manager, Education, Communication and Language Sciences Richard Dale, Executive Director of Finance Susan Lawson, School Administrator, Mechanical and Systems Engineering Gary Montague, Professor of Bioprocess Control, School of Chemical Engineering and

Advanced Materials David Ramsey, Faculty Management Accountant, SAgE Clare Rogers, Director of Estate Support Service Juliet Simpson, Head of Internal Audit Chris Stafford, Head of Administration, HaSS Steve Williams, Director of Information Systems and Services

4 Impact of the Diamond Report 4

4.1 Developing procurement within the University

The Diamond Report made four key recommendations relating to procurement:

to reconfigure The Strategic Procurement Group (SPG) to provide high-level leadership and strategic coordination for the development of procurement across the English, Northern Irish, Scottish and Welsh higher education sectors.

to set a minimum target for the English higher education sector of 30 per cent of non-pay spend to be addressed through effective collaborative arrangements, to be achieved within five years

that relevant sector bodies should work together to establish a model for England based on the Advanced Procurement for Universities and Colleges (APUC) in Scotland.

to establish an Academy for Procurement in Higher Education to enhance expertise and capacity within the sector.

The University has supported initiatives by the sector to increase the professionalism of its procurement functions and to increase the volume and effectiveness of collaborative procurement. Progress during the past 12 months includes:

North East Universities Purchasing Consortium: the appointment of a new Director in 2011 following the decision not to merge with the North West consortium has seen a significant improvement in its effectiveness with the University taking a leading role in the consortium, particularly in estates related activity and cash collection. The Executive Director of Finance has been appointed as a director of the Consortium.

Procurement Maturity Assessment: the University commissioned an independent review of the effectiveness of procurement across the University which was conducted by the Southern Universities Purchasing Consortium in February 2013 with the results presented to by the Value for Money Working Group in July 2013. Overall the report demonstrated that the University’s procurement arrangements compared favourably with other institutions. The blue lines in the table below show Newcastle’s scores in the various areas assessed and the red lines show the sector average.

4 Efficiency and effectiveness in higher education: A report by the Universities UK Efficiency and Modernisation Task Group 2011

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Collaboration with other institutions was highlighted as the main area where the University could improve. This is an area where the University had a good track record but this may not have been emphasised sufficiently during the assessment interviews. There is also more work to do on supplier relationship management and category management. A detailed action plan has been agreed and a follow up review will be commissioned in 2015.

Collaborative procurement: The University increased collaborative procurement as a share of relevant non pay expenditure to 28.8% in 2012-13 and we are well set to exceed the 30% minimum target in 2013-14. We are working with Newcastle City Council and Northumbria University on city wide common estates procurement and with the Newcastle upon Tyne Hospitals Trust on common procurement of clinical items.

4.2 Shared services

The Diamond Report made two key recommendations relating to shared services:

building on the work HEFCE has already done to support shared services in the sector, further guidance should be developed which identifies a series of ‘non-competitive’ areas where more extensive sharing of operational services can be developed and promoted.

that institutions preparing to collaborate with others to deliver services should also consider options for partnership outside of the sector – such as with other public sector bodies – where this is appropriate.

We are working with Reading and Southampton Universities to create a shared services organisation for the EduCity complex in Malaysia. An early success has been the agreement of JANET to install a common wide area network to link the Malaysian campuses to their UK parent sites. The proposed solution will be cheaper, several times more powerful and more resilient than the current network. We are exploring options to share security, facilities management, finance, HR and IT functions.

The University has started an initiative with Newcastle City Council, Northumbria University and potentially Northumbria Police and Durham University to explore opportunities for shared services between the various organisations. A steering group and governance mechanism have been established with a matching steering group within the University to coordinate our involvement.

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The two areas currently being explored in more depth are establishing shared data centres to reduce cost, increase resilience and deliver environmental improvement and implementing a more systematic approach to estates procurement between the parties to ensure that collaborative activity becomes the default option unless there are compelling reasons not to. We are also working with the City Council to identify opportunities to use or share use of redundant assets including storage facilities and grounds maintenance equipment.

4.3 Benchmarking

There is increasing interest in UK higher education institutions about various forms of benchmarking of administrative expenditure and activities. The Higher Education Statistics Agency has provided some information on numbers of staff and expenditure. We have referred to this in section 2.5 of this report. However this information is limited. Some particular areas of work have good benchmarking information, fundraising via the Ross Group survey, estates via the estates management statistics and the library via the work of the Society of College, National and University Libraries. We make use of all these information sources to measure our comparative performance. Following the Diamond review of efficiency and effectiveness in higher education (2011) UUK commissioned some work from KPMG on benchmarking options. We are involved in discussions with other similar universities about possible approaches. We are looking at possible purchases of benchmarking services or a club approach based on the exchange of information in selected areas.

5 VFM activities during 2012-13 to reduce costs or improve efficiency

5.1 Travel booking arrangements

A review of the University’s travel booking arrangements was conducted during 2012-13. The purpose of the review was to identify a more streamlined path to effectively manage travel spend in accordance with the Travel and Expenses Policy which would ultimately provide savings to the University.

Five travel management companies available through a centrally negotiated travel contract set up by the Southern Universities Purchasing Consortium (SUPC) were considered, together with the University’s current provider. The review considered a number of like-for-like journeys, booking fees charged, ease of use of the on-line service, reporting facilities as well as other criteria, to establish an overall assessment of each company.

The review identified that moving the University’s travel bookings online could generate savings in excess of £50,000 p.a. in terms of charges paid. A comparison of popular journeys in terms of price and flight time was conducted and it was determined that this was an area where savings could be achieved by moving provider. Furthermore, it was identified that it would be possible to achieve savings in terms of hotel bookings and car hire.

As a result of the review, it has been decided that the University will change its travel management provider during 2013-14 and will encourage staff to book travel online far as possible. Savings achieved as a result of these changes will be reported in the 2013-14 VFM Annual Report.

5.2 Jobs On Campus scheme

Savings generated from the Jobs On Campus scheme (JobsOC), the student temporary work agency, during the 2012-13 financial year are estimated at over £60k. This is based on a comparison of the costs of running the JobsOC scheme, including the operational staff costs, with the equivalent costs for employing temporary staff through external recruitment agencies.

Over the past year the Accommodation and Hospitality Service has reduced the number of staff employed on casual contracts from 35 to 3 and now relies on JobsOC staff to undertake temporary

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or casual work. In real terms this represents a saving of £0.89 per hour per worker employed which could have potential savings of £14k per year.

5.3 Central store for laboratory supplies in the Faculty of Medical Sciences

The Scientific Store at the Medical School was opened in December 2012 and acts as a central resource providing research laboratory supplies on-demand via vending-type machines. The store has allowed the Faculty to reduce delivery costs considerably, improve on existing discounts with suppliers and reduce its carbon impact by limiting deliveries to the Medical School. The suppliers Promega, Roche and Bioline currently stock equipment in the store with a view to Life Technologies joining the store in the future.

The equipment in the room is owned by the suppliers and stocked (at no cost) for the users to access on a Just-In-Time basis with risk associated with these machines sitting entirely with the suppliers themselves (in the event of loss of power or equipment failure etc.). The actual financial benefit to date is in the process of being calculated.

5.4 Procurement of autoclaves

The Faculty of Medical Sciences has recently reduced service costs by making changes to its autoclave suppliers. Moving to DML Services and Durham Autoclaves has reduced previous service costs by as much as 50%. Both companies offer quicker response times, due to being based locally, and no call out charges. The University is able to source and buy spares at reduced rates through existing purchasing agreements, which both companies are prepared to fit once delivered. Durham Autoclaves also include work they do in association with the University’s insurance inspectors within the contract, work which was chargeable with previous providers. This deal was set up through the technical managers’ group and is used by a number of institutes within the Faculty.

5.5 Closure of the School of Computing Science Server Rooms

During 2012-13 the School of Computing Science and Information Systems and Services (ISS) completed a joint project to decommission two data centres used by the School and consolidate the servers into the primary University datacentre located in Claremont Tower.

Decommissioning of old kit and consolidation onto virtualised platforms and more efficient kit saw the server footprint fall from 124 servers to 27. Removal of an old, inefficient uninterruptable power supply (UPS) and of 4 air-conditioning units further contributed to energy savings.  

Savings to the University are estimated to be £352,000 over 5 years, comprising £255,000 in energy savings and £97,000 in infrastructure savings. Additionally, 130 m² of high quality space is now available for reuse by the School. This has been converted into an attractive cluster for MSc students, directly improving the student experience.

As well as a financial saving, this initiative delivers green benefits by reducing the institutional carbon footprint.  Decommissioning the largest most complex set of machine rooms on campus also acts as an exemplar for future machine room decommissioning projects. 

5.6 Proactive procurement in the Estate Support Service (ESS)

The Estate Support Service (ESS), working with Procurement Services, negotiated a substantial discount when renewing Building Works Measured Term Contract (MTC) rates with potential savings of up to £300k. This is based on an anticipated spend of £10m over four years and an average project split of 60%/40% between building and engineering work. 5.7 Project management and use of in-house staff in ESS

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Within ESS over £100k of savings have been achieved through the vigilant management of a number of projects:

£60k on asbestos removal for the Armstrong Building project (by challenging the contractor’s quotation and suggesting a sub-contractor);

£20k on the Park Terrace development (by suggesting an alternative design for windows) and £20k on the Kensington/Park project (by agreeing an open book process for asbestos management with the contractor accepting all risk for future funds and programme);

£500 by tendering Fine Art Project signage outside the main contract saving a charge by consultants.

Significant savings were made through the use of in-house design and project management including:

£200k on fees through in-house design and management of the Grand Hotel refurbishment; £32k through in-house design of landscaping for Merz Courtyard and Herschel environs; In-house trades works for a capital project saved between £1,800 and £2,600 on extra

contractor’s costs.

5.8 Resource management in ESS

During 2012-13 ESS have continued to manage resources carefully to reduce running costs at an operational level. Example projects where savings have been achieved include:

£36k saved by re-using unwanted furniture from Kensington/Park Terrace on campus or to other organisations, saving purchase and disposal costs through effort by clerical and ancillary staff;

re-using concrete setts from Claremont Walk for the new ramp to Building Science; retaining and reusing 70 lengths of melamine shelving from the Armstrong Project; selling an obsolete piece of equipment for £600, avoiding disposal costs; re-investing money raised from selling scrap materials following a workshop and plant room

clear out back into staff facilities at the Medical School Workshop; replacing the inverters on the Devonshire Photovoltaic Array with more efficient units which

will provide a 5 year payback, saving £1600 on utility costs, 320kg of CO₂ and generating 18,000 kWh of electricity so far;

replacing valves in the Richardson Road Boiler-house with re-fabricated steel bobbin pieces supplied by Direct Works for £860 against a contractor quoted cost of £4000;

Direct Works recycle unused paint and timber off-cuts to the Schools of Fine Art and Architecture, saving disposal costs and enhancing the student experience;

Direct Works constructed a Gardeners’ mess room in the Drummond Building using a high percentage of recycled materials;

Direct Works’ joiners designed and constructed a plinth for a sculpture (the Corbridge Lion displayed in King’s Gate) within three days following a long delay by a partner organisation to provide it.

5.9 Smartworking in ESS

It is estimated that the Estate Support Service will achieve savings of £760k over 10 years following the introduction of Smartworking arrangements – the shared use of resources, effective use of IT and flexible working.

Following the decision to convert Kensington Terrace into student residences, £590k was allocated to convert existing cellular offices in the Agriculture Building into open plan office space for ESS staff. The new accommodation provides 65 workstations for the 80 members of staff within the service, reducing the space occupied from 1044m² to 610m². Savings of £57,500 p.a. and 210,000KW/h p.a. will be generated as a result of the reduction in floor area. It is estimated that to

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provide individual workstations for all 80 staff, would have cost £775k, therefore a saving of £185k has been achieved on the overall project cost. Further details about this development, together with the views of ESS staff, as displayed in responses to the recent Employee Opinion Survey, can be found in Appendix 2.

5.10 Rollout of WARPit

The University has recently signed up to WARPit, a resource redistribution facility which enables staff to give away or loan resources internally as well as externally with partner organisations. Unwanted items are posted to an Amazon-style marketplace for other members of staff to view and claim. If items are not required internally within a certain period, they are passed on automatically to partner organisations such as charities, councils, hospitals and schools. Using this system, diverts waste from landfill, saves money that would be spent on purchasing new products, and benefits the environment by reducing CO₂ emissions associated with the manufacture and transport of new products. Since the facility was launched across the University on 1 July 2013, it is estimated that the volume of items traded on the site has resulted in 7057kg of CO₂ being saved, 1599kg of waste being diverted, 3 cars being taken off the road, 9 trees being planted and £9,723 saved in total.5

5.11 Replacement of digital printing equipment

In early 2013 the Library carried out a major procurement exercise to replace the black & white and colour digital printing equipment which comprises the main technical infrastructure of its print room. Working closely with colleagues in Procurement Services, a successful outcome for the tender was achieved, and the equipment was replaced ahead of schedule with a smooth transition from old to new production arrangements. The new leasing contracts are expected to produce a cost saving to the service of £50K-£70K per year over the next three years, based on current and projected production volumes. This is partly due to reductions in equipment costs since the time of the previous contract, but more specifically to effective research and planning, and the detail and accuracy of the technical specification for the tender.

5.12 On-line booking system for student placements

The School of Medical Sciences Education Development within the Faculty of Medical Sciences has recently introduced an online booking system for the purpose of administering early clinical experience placements, the booking of study days, module choices and Faculty development conference bookings. This paperless system has generated efficiencies in terms of staff time since the majority of the data required is now entered by the students themselves. It also has the additional benefit of improving the student experience.

5.13 Student accommodation

As part of the refurbishment at Windsor Terrace student accommodation, individual gas combination boilers have been installed in each flat. This has resulted in reduced operating costs and significantly lower carbon emissions.

5.14 Catering

A catering review has delivered salary savings of £200k this year and a review of vending and subsequent tendering of the service has improved customer service and trebled income to £60k.A comprehensive review of all catering suppliers, to ensure best price and quality, has resulted in 40% collaborative procurement (compared to 31% in 2011-12). This has involved working with Durham and Northumbria Universities on collective tendering. The redevelopment of Eat@Newcastle Event Catering and implementing a minimum order charge has eliminated inefficient journeys and deliveries.

5 Figures taken from the WARPit website on on 2 September 2013.

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During the summer 22 large shopping trolleys of unopened packets and tins of food were collected as students were leaving halls. This was diverted to help feed local people in crisis and save money on landfill costs.

6 VFM activities during 2012-13 which have provided added value

6.1 Careers Service

The Careers Service has replaced a full-time careers adviser role with two advisers employed to work on a part-time basis predominantly during term time, thereby focussing additional advisory capacity where most needed by students. At the end of August the Careers Service telephoned all new graduates from the Faculty of Humanities and Social Sciences to offer assistance to those seeking careers support post graduation, the aim being to further improve the University’s Destinations of Leavers from Higher Education (DLHE) return by helping our graduates from targeted subject areas into graduate level employment or further study. In consultation with postgraduate students, the Careers Service is developing a new on-line resource targeted at postgraduate research students aimed at raising the profile of careers support for these students.

6.2 ‘Live Chat’ support in the University Library

As part of the continuing development of the Library’s enquiry services, a ‘live chat’ service was introduced in 2013, taking advantage of new communications technology to enable library users to ask questions and have virtual conversations with members of the Library staff online in real time. In order to extend this service out of normal service hours to the full 24/7 period, the Library worked with other university libraries in the Northern Collaboration to set up an overnight service which is delivered from a consortium of libraries in the USA. When Newcastle Library staff sign off for the day, colleagues in the States take over, but the transition is effectively seamless for users. This shared services approach is extremely cost-efficient, as the Library currently pays £2,500 per annum as a contribution to a service which would cost at least £25,000 if it were to provide it itself.

6.3 Dreamspark Software

During 2013 the management and promotion of Microsoft Dreamspark offers was migrated to ISS.  A service re-launch focussed on granting access to the “Premium” offer available to all STEM students and educators.  The administration of the system was automated and the user experience simplified via use of single sign on. These improvements granted access to the “Premium” offer to 14,000 users, up from the 700 previously provisioned. These technical improvements were then matched by a sustained multi-channel campaign of promotion and awareness raising. As a result, in the 2012-13 academic year, software with a retail value of £1,733,339 was downloaded for free by Newcastle University users. 2,420 software packages were downloaded by 1,512 unique users with an average value of £1,146 per user. The offers will continue into next year and further promotion should see continued growth in uptake.

7 Internal Audit

Internal audits review compliance with the University’s policies, processes and procedures, and determine whether they are ‘fit for purpose’, protect against fraud and error and promote value for money.  Hence consideration of value for money is integral to all audits.  Where a business process is reviewed, its ‘fitness for purpose’ is considered – e.g. the audits of staff recruitment and selection and compliance with UKBA requirements (both staff and students).  Any resulting recommendations are made following consideration of the cost of their implementation and the value of the expected control improvement.

Two audits undertaken in 2012-13 had a more explicit VFM focus:

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Insurances: the University needs the services of an insurance broker to provide specialist advice on insurance cover / policies and to access policies that might otherwise be unavailable.  Internal Audit reviewed the most recent tender for insurance brokers (January/ February 2011) and confirmed that the contract was awarded to the firm that offered the most economically advantageous offer to the University.  We also reviewed the most recent tender exercise for the individual insurance policies.

Agents: as a follow-on to an audit (part of which included the review of whether the alternatives to the use of Agents for international student recruitment had been considered) 200 students (for whom the University had paid an educational agent a recruitment fee) were asked to complete a short questionnaire about their experience and the performance of the agent.

8 Conclusion

The University’s approach to value for money during 2012-13 can be summarised as paying careful attention to the major strands of the University’s activities and making progress on more detailed processes or projects. Our indicators on learning and teaching, research and staff suggest an organisation that is effective. Particularly commendable has been the continuing success of the Estates Support Service in identifying ways of improving value for money.

John HoganRegistrar27 September 2013

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Appendix 1

VALUE FOR MONEY STRATEGYUpdated October 2012

Introduction

The University has had an explicit Value for Money (VFM) strategy since 2004, most recently updated by Executive Board in 2009. It follows the HEFCE’s published guidance available at:

http://www.hefce.ac.uk/whatwedo/reg/assurance/guidance/strategicmanagement/

Our VFM web site is available at:http://www.ncl.ac.uk/executive/office/responsibilities/vfm/strategy.htm

The University is an educational charity that receives a substantial proportion of its funds from public sources. We seek to achieve value for money (VFM) from all our activities, however they may be funded. The University’s strategy is to embed value for money as part of our ongoing business processes and decisions.

Definition

Value for Money has three components, economy, efficiency and effectiveness. In the short term it can often be simplified as lowest price or cost but this is a mistake and it is important to try to achieve an outcome that also recognises the efficiency of any process or function and its effectiveness.

Objectives

To achieve good VFM, we seek:

to integrate VFM 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 VFM 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 VFM for the institution as

part of their routine activities; to benchmark our activities against other similar activities and organisations where this is

considered useful.

Since 2009, much of our work in this area has been under the heading of the ‘One University’ concept. Our commitments are to:

Simplify wherever possible; Avoid duplication of effort; Cut out ineffective processes where safe to do so; Redefine processes and roles and, critically, commission supporting technology; Aim for consistency of processes and ‘single source of truth’ for data; Implement appropriate changes to processes without regard to the current organisational

boundaries.

The single largest initiative under this heading has been procure to pay (P2P).

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Governance, Management and Value for Money

The University’s governance structures are similar to those found in a majority of pre-1992 universities with Council as the governing body and Senate the supreme authority on academic matters. The University has adopted the CUC guidance on the operation of the governing body.

Responsibility for pursuing value for money lies with all members of staff; in a formal sense, the following roles have been agreed:

Council ensures that there are sound arrangements for risk management, control and governance, and for economy, efficiency and effectiveness. It keeps under review the arrangements for managing the resources under its control;

The Vice-Chancellor is the officer designated by Council as responsible for satisfying the governing body that the conditions of the HEFCE Financial Memorandum are being satisfied;

Audit Committee receives assurance during the year that satisfactory arrangements are in place to promote economy, efficiency and effectiveness. It maintains an overview and independent judgment on the effectiveness of the University's value for money arrangements. Its annual report includes its opinion of the arrangements for promoting economy, efficiency and effectiveness.

Executive Board is the formally constituted senior management team and is responsible to Council and Senate for the operation of the University including the use of key performance indicators, risk management and value for money activities. It submits an annual report on VFM to Audit Committee. VFM is specifically part of its terms of reference and the terms of reference for two of its key sub-committees, Budget Setting Group and Financial Monitoring and Budget Scrutiny Group;

Managers have the responsibility for reviewing and maintaining good practice in their own area of operation;

All staff should endeavour to seek and achieve VFM in all activities and to bring to management’s attention any opportunities for improvement;

A VFM steering group has also been formed to assist with operational matters, with membership from academic units, faculties and services and monthly scheduled meetings;

The Internal Audit Service considers VFM as an integral part of its work and carries out a small number of specific VFM reviews. The annual report from internal audit includes an opinion on the University’s arrangements for securing value for money.

Financial Memorandum

The HEFCE’s Financial Memorandum sets out the terms and conditions for payment of HEFCE grants to higher education institutions and imposes a formal obligation to deliver VFM. The governing body of each HEI must take reasonable steps to ensure that there are sound arrangements for risk management, control and governance, and for economy, efficiency and effectiveness (Value for Money). The Financial Memorandum requires Council to designate an accountable officer, who will normally be the head of the institution, as the person with responsibility for satisfying the governing body the conditions of the Financial Memorandum are being complied with. The Vice-Chancellor is the University's accountable officer.

Implementation

Executive Board agreed the following mechanisms to help achieve our VFM objectives.

Internal Audit ServiceIn line with the HEFCE's code, the annual report from the Internal Audit Team must include an opinion on the adequacy and effectiveness of arrangements for:

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o Risk management, control and governance and o Economy, efficiency and effectiveness

Value for money considerations will form part of the agreed audit annual plan on the areas to be reviewed in the year. Value for money considerations will form an integral part of the routine work of the internal auditors. The Internal Audit Team will give an opinion on each investigation on value for money aspects. We will continue to ask the Internal Auditors to undertake specific value for money studies where appropriate. A member of the Internal Audit Team serves on the VFM Steering Group.

Procurement OfficeThe Procurement Office will continue to operate value for money procedures in the oversight of all the University's procurement. The Head of Procurement serves on the VFM steering group.

Financial Monitoring and Budget Scrutiny GroupFinancial Monitoring and Budget Scrutiny Group specifically consider value for money issues when considering submissions and project proposals from the four budget holders (three PVCs for Faculties and the Registrar) and report on such matters to Executive Board.

RegistrarThe Registrar has particular responsibility for ensuring that the arrangements described above operate effectively.

ManagersManagers have the executive responsibility to maintain an awareness of good practices in their own area of operation and to ensure that these are followed appropriately.

StaffAll staff should endeavour to seek and achieve VFM in all activities and to bring to management's attention any opportunities for improvement.

Tools

We have good systems for generating management information. The way we measure and how we report will never be perfect but they are sufficient to enable good questions to be asked and further work undertaken to produce answers or solutions. For example, the Transparent Approach to Costing (TRAC) mechanism allows us to cost our research teaching activity in a way that was simply unavailable ten years ago.

Within the framework of the University’s strategy Vision 2021 we have developed a comprehensive set of KPIs. We can measure the success of our learning, teaching, research and engagement activity.

Benchmark data is weaker. It normally lags by at least 12 months and there are doubts about the consistency of measurements between HEIs. The results of the National Student Survey and Research Excellence Framework are central to any assessment of our effectiveness and hence to any assessment of VFM.

Financial Sustainability

The key objectives in our financial strategy are to: Create capacity for strategic development by achieving an annual historic cost surplus of at

least 2% of income, with a medium-term target of 4%; Grow income faster than our peer group;

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Identify and exploit opportunities for new areas of profitable income; Maintain a robust balance sheet with sufficient cash reserves to meet our financial

obligations; Provide enterprise resource planning services, which are top quartile in higher education and

meet our legal and ethical obligations.

John Hogan Registrar 12 October 2012

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Appendix 2

ESS VFM Statement 2012-13 – Smartworking Case Study

In relocating from Kensington Terrace, by modernising working practices ESS achieved a 37% space reduction whilst increasing provision of meeting and interaction space. Smartworking was designed in house following extensive research into the private sector based on three intrinsically linked elements: shared use of resources, effective use of IT and flexible working. It is an output focused way of working flexibly from modern, professional offices with multifunctional workspaces, furniture and appropriate IT supporting different work modes and functions in the office and remotely. Intermingling of staff has helped relationships and communication across teams with better joined up working. Flexible working enables a better work life balance. 80 staff have been smartworking since August 2012. The business case for redevelopment of Kensington Terrace for student residences justified £590k investment in converting cellular academic offices to open plan flexible modern space, providing furniture and flexible IT. This included essential building work such as asbestos removal and updating of services. Replacement cellular offices of the same size, together with additional furniture and equipment to provide a dedicated workstation per person, computing telephony and software for each of over 80 staff would have had a project cost of £775k, £185k more. ESS carried out the whole process of designing the workspace and managing change in normal staff roles with no consultancy fees.

Estate Support Service formerly occupied 1044 m2 cellular offices at Kensington Terrace. Our smartworking office of 610m² accommodates 80 staff, equating to 7.6m² per person, but feels spacious as there are only 65 desks. Smartworking reduced the space costs for the service by £57,500pa, energy consumption by over 210,000 kW/h pa and energy emissions by over 46,000Kg of CO₂ as a result of the reduced floor area. In comparison, King’s Gate accommodates 440 staff in 4549m2, equating to 10.34m² per person.

The total saving was £760k based on the £185k project saving plus £575,000 (10 years of £57,500pa saving).

The number of PCs reduced in line with our desk to staff ratio of 0.77, with actual average recorded usage at 81% delivering energy, capital and recurrent savings on IT equipment. Drastically reduced reliance on paper has saved storage space and printing costs. Paper consumption reduced by 40% in 2012-13 due to fewer printers/secure printing with electronic storage providing 24/7 access to documents. The number of stationery orders has decreased by around 21% due to central re-ordering and fewer stationery requirements due to electronic storage.

While the cost driver figure includes an averaged cleaning cost, the actual 2011-12 cost was £12,700 pa while the 2012-13 cost was £8,300pa, saving £4,400pa.

Cultural change related savings include hospitality and travel, hospitality cost £5,000 in 2011-12 compared to £1000 with smartworking in 2012-13, we relinquished 2 reserved visitor/essential staff use parking spaces saving £2640pa, and staff work at home for approximately 2.25% of time saving travel carbon as well as improving work life balance. Waste has reduced, the average recycling rate in 2011 in our Kensington Terrace was 26% while Agriculture Building averages 55%.

Office staff sickness has reduced by around 6% in staff sick days from 2011-12 to 2012-13.

The savings have the potential to be scaled up across all professional staff intensively using best space and shedding poorer space.

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Measurable Savings in comparison to our previous cellular offices

Metric Cellular Smartworking

Difference % Change

Floor area (m2) 1,088 680 408 -37%Area / per person (m2) 13.6 8.55 5.05 -37%Capital Cost (Cellular v. actual Smartworking )

£775,000 £590,000 £185,000 -24%

Space Charge (£) £153,500 £96,000 £57,500 -37%Carbon emissions (kg CO₂e) 125,000 78,000 46,000 -37%

Number of Staff PC’s 80 64 16 -20%Number of Printers 20 2 18 -90%Sickness Absence (days) 257 239 18 -7%Paper consumption 367,500 191,000 176,500 -48%Hospitality £5,000 £1,000 £4,000 -80%Recycling rate 26% 55% 29% +112%Cleaning costs £12,700 £8,300 £4,400 -35%Car Parking spaces 2 0 2 -100%

Many benefits are delivered by our ‘change in agriCulture’; carbon emissions are reduced through improved space efficiency and lower energy consumption (less heated space, lighting, fewer PCs etc.). A combination of improved technology and a change in culture have delivered integrated sustainability, cost, organisational and wellbeing benefits.

Measurable staff feedback: responses to Employee Opinion Survey questions The table below shows estates respondents who agreed or tended to agree with the statements in 2013 compared to 2010 (smartworking commenced in 2012):

Metric 2013 2010Relationships at work are strained 18% 43%I feel I have a good balance between my work and home life 90% 85%There is good co-operation between teams in my service 64% 50%People are willing to help each other even if it means doing something outside their usual activities

80% 66%

I have adequate resources to complete my work 81% 70%I have enough freedom to do what is necessary to put students/other customers first every time

87% 76%

ESS gives a good quality service 95% 87%My satisfaction at work is generally high 79% 72%

The following feedback was received at a recent ESS Managers’ smartworking workshop:‘More effective and productive way of working’, ‘Excellent space utilisation’, ‘Better home work balance’, ‘Better interaction and communication across teams’, ‘Becoming one team’, ‘Enjoy engaging with other teams’, ‘Social interaction within the office’ , ‘Much better environmental facilities, nice physical atmosphere, light and airy’.

Clare Rogers, Director, Estate Support Service23 August 2013

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