The UNIVERSITY of EDINBURGHPilot Resource Allocation Model

“Relentlessly pursuing success - the University of Edinburgh breaks into the world’s top twenty for the first time.”

- THE headline from the future

The UNIVERSITY of EDINBURGHPilot Resource Allocation Model

……… how will we do it?

What we will do (1)

Establish the Vision We will develop a clear vision for the University, and keep this under review. What will the University of ten years’ hence – in the Top 20 - look like? (students, staff, research, estate etc)

Develop the Strategy We will set a course that sees the University growing sustainably and developing to achieve our specified goals and objectives. Identifying and monitoring KPIs will keep us on track.

Prepare regular updates to our ten-year financial forecast (TYF)

This financial context will ensure that we have the financial parameters, including revenue and capital investment, properly aligned. Forecasts will refresh and roll forward each quarter.

Use the TYF to set our three-year plans and RA decisions

Resource Allocation will be directed towards longer term goals, updated each year in the light of progress.

What we will do (2)

Develop the PRAM We will develop the PRAM as a University project over the next three years.

Focus on Income generation

PRAM will support maximisation of our income generation to reinvest in strategic developments whilst enhancing our academic credentials.

Focus on investment Expending resources – whether capital or revenue – will be aimed at both enhancing our strengths and building up strategically targeted new areas.

Communicate our progress

Through quarterly reports and the annual planning process.

Streamline our planning process

Cut down on duplication and unnecessary work

More time up front to develop plans, consider external environment, support earlier offer-making, recognise and support grant getting and KE

Foster an iterative and integrative approach

This will highlight areas of strategic importance and encourage idea sharing and integration between Colleges and Services plans. We are one university

Encourage reflection and self-appraisal

More time to define and refine key measures to increase the chances of success in planned outcomes.

Increase quality of University plan

Create more time for review and debate and develop highly ambitious but attainable plans.

Will the current RA model not get us there?

The current RA model is not one model

The current approach to RA is actually a series of at least 10 different models, across the University hierarchy. It covers a range of legacy deals that are not consistent or compatible.

Not all activity is covered. Only a subset of total activity is reflected in the current RA processes. All restricted income and expenditure, and a lot of unrestricted income and expenditure, is ignored.

The focus is mainly on income sharing.

The current RA process occupies itself with the short-term (1 year) allocation of income. It does not concern itself sufficiently with establishing coordinated, concrete financial plans for capital and revenue investment.

Timescales need better context.

A three-year rolling RAM set in a clear ten-year context ensures proper integration of staff, student, estate and financial planning. We do not currently have this.

Aligning the TYF and the RAM:rolling our forecasts

Now Yr1 Yr2 Yr3 Yr4 Yr5 Yr6 Yr7 Yr8 Yr9 Yr10

Ten-Year Forecast

Three Year RAM

Each year, the Planning Round will be informed by the 10-year forecast. The PRAM and the TYF will interlink.

Key Principles (1)

One University – several cultures

We must seek to promote and develop the highly University brand, whilst also recognising and respecting the different cultures, interests and aspirations within Colleges and Schools.

Establish a transparent approach

We will establish a planning process with a three-year RAM set within a ten-year context regularly updated and will communicate this, and progress against it, openly and routinely.

We must build up communication and trust

This is very difficult and we don’t always get it right. But we must all take individual responsibility to contribute positively, and so build up the wider team.

The RAM itself only informs – it does not decide

The RAM is neutral in its output, allowing for the range of assumptions that will need to go into it. It is then for the senior management team to decide how to address the output of the model.

Key Principles (2)

The PRAM will be one model, applicable to all

One model will greatly simplify the process, making it much more transparent.

Establish one clean data record

All inputs – financial, space, staff and student records must be correct, up to date, consistent and reliable.

Establish positive incentives to progress

Progress in delivering academic success and University objectives will trigger increased investment and support for new initiatives and developments.

Acknowledge the varying nature of what we do

Accept that Colleges run a portfolio of activities, some of which generate surpluses and some of which do not. Colleges will manage the balance of these activities to ensure that the College portfolio generates a sufficient margin to provide its contribution to achieve University strategy

The PRAM

We will attribute the bulk of all income to Colleges and Schools.

Various assumptions will be needed to make this feasible and fair, but we will do so using an approach consistent with theTRAC/fEC model.

We will set contribution targets for Colleges and net spending limits for Support Services.

Again, this will require certain assumptions to be made, and again, we will do this in accordance with the TRAC/fEC model.

The model will make clear the cost of all support.

Whether support is delivered by a Support Group, a College Office, or from within a School itself, the model will identify all support costs, in an effort to ensure that resources are delivered where they are really needed and kept lean and efficient.

Surpluses and deficits arising across Schools or Colleges will be managed in the context of the overall Strategic Plan.

Surpluses and deficits may be planned or unplanned. The senior management team will be responsible for addressing issues arising, in conjunction with Heads of Schools.

What about my Reserves??

Impact of underuse of reserves£20m

Impact of underuse of reserves£20m

What about my Reserves??

Reserves have not been ‘taken’

Accrued surpluses are available to support capital investment and, within certain criteria, for revenue investment.

While the PRAM is in gestation, we will parallel run the old model(s).

During the transition period, which will last some three years, we will continue to operate the existing system, with an emphasis on using existing reserves for capital purposes.

In a fully-fledged PRAM, reserves will not exist in quite the same way as before.

However, activities will be funded in accordance with robust plans, with priority given to those that advance the University along its strategic path.

We will consult widely as we develop our approach in this area.

Building Expenditure 2003 – 2013Major Projects

Key Projects

MVM SCE HSS

New Roslin Institute Appleton Tower - Informatics Business School

New Vet School Ashworth Building Dugald Stewart Building

SCRM Noreen and Kenneth Murray Library Main Library

QMRI and CRIC Waddington Building Teviot Place

Anne Rowling Regenerative Neurology

Informatics Forum 55 George Square

Chrystal Macmillan Building

Charteris Land

Externa l ly Funded

UoE Funded

MVM 70% 30%

SCE 58% 42%

HSS 55% 45%

Other 34% 66%

Proposed Building Expenditure Programme 2014 - 2022

Key Projects

MVM Development of Bioquarter Plots

Easter Bush Phase 2 & Centre Plot

QMRI Extension

SCE Darwin Building

GeoSciences (Crewe) Building

Animal Facility and Research Labs

Grant Building

HSS Edinburgh College of Art

David Hume Tower

School of Law

Confirmed Programme 2014 - 2016

£M

Spend 119

Funding 39

Externa l ly Funded

UoE Funded

MVM 57% 43%

SCE 51% 49%

Other 37% 63%

HSS 27% 73%

Source: Estates and Buildings Group Estates Development Programme.

Note: unconfirmed projects remain speculative at this stage.

Project Benefits

Better common understanding - better team work.

Develop improved and more widespread understanding and appreciation of the income and costs  of research, teaching, knowledge exchange and commercialisation, and associated support services

Focus resources where its most needed.

Enhance our ability to fund a portfolio of mature, growing and new academic activity, reduce bureaucracy and duplication and invest in leading edge support services.Increase confidence to invest in projects.

Resource allocation will help more fully develop our focus on our long-term strategic objectives.

Within ten years, we will achieve our – more sharply-defined – strategic objectives.We will see resource as not just a budget, but as a resource to fuel ambition.

The UNIVERSITY of EDINBURGHPilot Resource Allocation Model

Questions and Discussion