Most prestigious universities in the each country plans for starting of high quality student accommodation centre. It is in the planning stage and is being planned for with quite of lot of amenities included such as 300 bay car park, laundry, games room, IT and study areas, and a number of common rooms. The University management is committed to provide secure accommodation for students at reasonable cost which would also be close to campus
Commercial outcomes of various options available
University has five models/options that can be chosen from and those are -
Option -1 Design and construct a student accommodation facility using own funds and operated by the university.
Option -2 Design and construct a student accommodation facility using own funds and operated by a facilities management company.
Option -3 Design and construct a student accommodation facility using external investor funds and operated by the university
Option -4 Design and construct a student accommodation facility using external investor funds and operated by a facilities management company
Option -5 Design, finance, construct and manage a student accommodation facility by an external company.
This would require the deployment and utilization of own funds of the university and also increases the manpower outlay of the university. The number of employees that will have to be employed by the university for non academic purposes will be very high. The planned facility and its amenities is a very large asset base that would be created and can cause change of focus from towards non core activities. The administration department would have to be spruced up to handle non academic administrational activities. (Bent, 1989)
This would require the deployment and utilization of own funds of the university only. The onus of administration of the facility can be outsourced to experience facilities management companies and the university can focus on its core activity of academics. However the pangs of large investments still remain in this option too.
This option would not require the deployment of own funds from the university, external institutional investors could be roped in and a special purpose vehicle company could be formed under the control of the university which will be used for the investment to come in. This would take away the financial burden of the project but the operations aspect would still remain with the university. As mentioned above, the administration and operation of such a large facility would certainly be a huge task and would take a large manpower outlay to do the administration and operational activities.
Option - 4
In this option the deployment of funds from the university would not be required, external investors could be roped in and a special purpose vehicle company could be formed under the control of the university which will be used for the investment to come in. This would take away the financial burden of the project. In this option the administration and operation could be outsourced to a facilities management company.
Option - 5
In this option a third party company/organization could be roped in who would have to be provided with a land close by to the university campus on a 30 year lease period. This company would design, finance and construct and manage a student accommodation centre in the land for a period of thirty years. In this option there is no requirement for deployment of university funds for this project. The university could create a structure and format on how the building would have to be designed keeping in mind the needs of the student community. All amenities too could be done in the same manner where in the third party company operate these in the proposed campus. All payments for using these facilities would be collected by the university and then paid to the third party company. A royalty amount of not more than 5-10% of the charges for use of each amenity would be payable to the university by the third party company (Fleming and Koppelman, 2000). These would be deducted from the payments that have to be made the third part company. In this scenario the university stands to benefit in all around manner and also makes business sense for the third party company who wishes to invest in such a facility with a concession period of 30 years. Once this concession period is over they must handover all the assets and amenities to the university.