The Office for Students (OfS) recently issued their financial sustainability update, highlighting that the financial situation for universities is worsening faster than expected. Universities must act swiftly and decisively whilst remaining fit for today and the future.
“increasingly likely to involve bold and transformative action to reshape institutions for the future – while continuing to deliver for the students of today and tomorrow.”
The messages within this review are reinforced with recent posts by Susan Lapworth, the CEO of the Office for Students, noting:
“Unless they act boldly, our modelling suggests that nearly three quarters (72 per cent) of higher education institutions will be in deficit by 2025-26, and 40 per cent would face low liquidity.”
The necessary steps that universities must consider cannot be delayed any longer. Given the severity of the financial challenges, commercial lenders are likely to revise their lending policies for some universities, a scenario that was previously unimaginable.
University task forces responsible for finding cost savings need to employ rapid and dynamic decision-making techniques. These techniques should be scenario-tested, sensitivity-analysed, and serve as a clear record of robust decision-making. Prioritised change projects must be identified, cash flowed and controlled to ensure the success of rationalisation plans. The understanding of the business data is critical to do this swiftly.
The estate, being the second largest cost after salaries, plays a crucial role in achieving a financially sustainable future. Bold changes may include:
- Mergers;
- Acquisitions;
- Rethinking space allocation;
- Course planning and delivery;
- Shared services;
- Outsourcing;
- and campus withdrawals.
These will all occur alongside traditional estate cost reduction methods.
The estates data when integrated with business data will provide a means of reducing costs whilst protecting the key capability of the university – the academic knowledge. Estates and buildings may take time to change but this is far quicker than the time to rebuild lost academic capability.
