18 December 2020
Of course, this has been a year unlike any other: a year where many have lost loved ones, jobs, and social connections: 2020 has been difficult. There are indications that 2021 might be better: the news of a safe and effective COVID vaccine as well as an economy that looks more robust than we had feared means that a return to normalcy looks like an achievable goal.
Despite it all, social value has had something of a bumper year. During the last twelve months, we have gained more and more serious proof that our industry is maturing. No longer is social value simply something to be “considered” – we are now operating in a world that makes assessing the social value of a procurement one of its central pillars. And, it isn’t just the government’s Procurement Policy Note that has the sector excited. The Construction Playbook’s release this month, coupled with the work at the Construction Innovation Hub on Procuring for Value mean that the signs point very firmly to social value taking centre stage.
This year’s Procurement Policy Note 06/20 – taking account of social value in the award of central government contracts is doubtlessly the biggest transformation this year for our sector. The document, which comes into effect on 1st January 2021, will formalise the requirement for central government bodies to award contracts by weighting 10% of a tender to social value. Though the document only makes this a requirement for central bodies, the evidence we are seeing makes it clear that local authorities are set to follow suit, as are private bodies. Aside from formalising the role of social value in the procurement process, PPN 06/20 also sets out a new reporting framework for social value. This framework focuses on delivering targeted social value against all procured contracts. The five pillars that make up the framework are: Covid-19 recovery, tackling economic inequality, fighting climate change, equal opportunity and wellbeing. After the year we have all had, these priorities come as no surprise. Although delivering these will be a challenge for bidders everywhere, the new framework should go a long way towards ensuring that next year’s projects focus on delivering the social value that will make the most impact.
Taking up that question of delivering maximum impact, the work that the Construction Innovation Hub (CIH) have been undertaking for their Procuring for Value strategy echoes many of the themes reflected in PPN 06/20. The work at CIH is all about maximising value in the broadest sense. We at Social Profit Calculator have been proud to be part of the team that is working with Social Value UK to map out a detailed, sophisticated understanding of what social capital will look like in the coming years, and the groups working towards similar definitions and best practices for human, produced and natural capital. This is a move towards a greater understanding of the whole life value of procurements and is another welcome advancement for the industry. We expect the new four capitals model to quickly begin gaining traction in the new year.
The anticipated release of the Construction Playbook has been welcomed this month across the board. The Playbook focusses on many of the themes being driven by the Construction Innovation Hub, and perhaps particularly in their shared ambition to deliver value-driven procurement. Gone are the days where cost, quality and speed would be the only considerations for decision makers. What the Playbook, and Procuring for Value, both emphasise is that as we move into 2021 and beyond, “value” is more than a question of cost. The Playbook is clear:
“When considering ‘outlay’ the key factor is whole life cost, not lowest purchase price.”
Here again we see the emerging theme of whole life cost and whole life value. This means that understanding the basics: cost, quality and time, will need to go hand in hand with an understanding of social value, economic and environmental impacts and whole life operational costs. The Playbook insists that, moving forwards, we will see a consistent approach running through policy intent, project selection, approval, initiation and into procurement, evaluation criteria, contracts, delivery and operations. This, together with the increased focus on social value through PPN 06/20 means that understanding what we mean when we say “value” will be the all-important question in 2021.
For a year that has left a nation grappling with the question of how substantial a scotch egg is and Googling the whereabouts of Barnard Castle, it has been a welcome relief for us at Social Profit Calculator to have been hard at work in a sector that has gone from strength to strength. We are looking forward to a truly valuable new year.