Colleges are to be given further strong encouragement to work together with other colleges in their area - in the form of additional cash.
The "area-mapping" initiative, promoted by the Scottish Further Education Funding Council, is now about to enter its second stage. Scotland has been divided into 11 areas, each of which will be able to bid for up to pound;1 million over the next two years to undertake projects designed to make a "significant difference".
The funding council, sparked by the 2002 report by the Pieda consultancy, has been busy touring colleges to encourage them to talk to each other with the aim of meeting the needs of their areas more effectively, taking account of what employers and students want.
The issues of supply and demand vary considerably across Scotland, Anne Grindley, the council's depute director for strategy, points out. "FE is not like a conglomerate and is very different in Tayside compared with Lanarkshire, say, and in urban areas compared with rural communities."
Given that FE colleges were "set free" from local authority control and encouraged to be highly competitive against each other in the initial stages of incorporation, their readiness to engage in area-mapping has varied.
So, it seems, has their willingness - or, as the funding council delicately puts it, "the extent to which they have welcomed the area-mapping initiative as an opportunity for strategic change, and their capacity to formulate strategic ideas".
A great deal has also depended on how colleges worked in the days of local authority control, Alison Cook, the funding council's senior policy officer, says.
So the first stage of the council's attempt to turn this round was a pound;50,000 sum per area allowing colleges "time to talk", as Ms Grindley puts it.
She stresses, however, that the council has no blueprint. "We are not being prescriptive but we would expect one project to come from each area. What we have simply stipulated is that the projects must lead to significant change, that they would make a difference for students and employers and that they would help colleges raise their game in meeting the needs of their areas."
The first such project to come before the funding council for a decision next month is from Tayside where a collaboration between the three colleges, the local enterprise company and two tourist boards has proposed a pound;1million initiative to look in detail at tourism potential and employability issues which will then inform the fare the colleges should be providing. The group is looking for pound;750,000 from the council.
While the project is focusing initially on the hospitality and tourism sectors, it is intended to be a model for other curricular developments.
The national Scottish Enterprise agency believes the approach has potential in the rest of the country.
Other ventures in the pipeline include combining services among four colleges in the Lothians, a new partnership between Falkirk and Clackmannan colleges, described as "radical" by the funding council, and a review of the curricula supported by the 10 colleges in Glasgow.
The council is also interested in how colleges collaborate not simply in their areas but also in their sectors. It is therefore taking a keen interest in efforts to that end by Elmwood, Oatridge and Barony, which specialise in land-based studies. They are aiming to bring more coherence to their curricular offerings while retaining their own specialisms.
While all this is going on, the funding council has asked Pieda to embark on a second report mapping the supply and demand of FE. Work on this began this month. It will look at the impact of area-based working by the colleges since the first study two years ago.
But, as Ms Cook points out, it is difficult to get a handle on what FE colleges can and should be doing without a more complete picture of the whole of post-16 learning. So Pieda will investigate provision by the enterprise companies, private organisations and others.
Ms Grindley comments: "Some information is still very patchy, for example on community learning, adult literacy and numeracy teaching, provision by the private sector. Yet the extent of these activities can have a major impact on the ability of colleges to recruit students."
The funding council is being helped in all these endeavours by a remarkable "geographical information system" (GIS). Student information supplied by colleges to the council in their annual returns is superimposed on to Ordnance Survey digital maps so colleges can see at a glance where their students are coming from and where the gaps are.
Postcode details from the student statistics allow even the streets where they live to be pinpointed, although the records are kept anonymous to comply with data protection legislation.
This level of detail, missing in the past, will have a major influence on the way the council allocates funds to the colleges, Ms Grindley says, but she is careful to insist it is not a simplistic exercise. "You have got to look at levels of participation in FE, of course, but you have also to look behind that at factors such as unemployment, underemployment, deprivation, population shifts, the state of local economies within which colleges have to operate.
"Growth is not really an issue. We know there is high demand for FE and most colleges are having to turn students away. What the council therefore has to do is to make judgments, to get them right and to have the fullest information possible to ensure that we get it right."