“Understanding local needs is the key to good development and it needs to be forefront of mind when thinking about delivering social value. Although ticking as many boxes as possible may seem like the solution, understanding what you are trying to deliver and then building your plan will enable the most suitable benefits for the specific project and people involved.”Dr Victoria Johnson, Principal Consultant, Social Profit Calculator
Last week we attended the Simplifying Social Value Conference organised by Built Environment Networking and were part of a high-quality panel to debate the realities and myths that exist around social value.
The panel was chaired by our executive chairman, Gerard Toplass, who was joined by non-executive chairman Lord Bob Kerslake, and principal consultant Victoria Johnson.
Our contingent was joined by Andrew Craig, partner at Maven Capital Partners, and Martin Summers, associate director at GK Strategy, to bring different perspectives and views to the discussion on social value.
The cause of confusion
Gerard kicked off the debate by asking the panel whether there is a mystique around social value and what the industry should do to demystify. Victoria was first to respond, identifying that the way that we often define social value is part of the confusion and this a result of no standardised approach being adopted yet.
The panel stepped in to agree with Victoria, explaining that calculating both social value and environmental, social and governance (ESG) is a means to an end. Although calculations make things easier to explain afterwards, the true measure of these concepts is what change people are seeing in their lives and when considered from this point of view, social value is a fairly simple concept based on capturing the full benefits of what you’re doing, and not just economic benefits.
Lord Kerslake, with his many years of experience and highly respected opinions, commented that sometimes the desire to create a methodology that works is actually an obstacle to making the public understand the aims. He said: “The public need to see tangibles, but it needs to be measurable too, so there needs to be different approaches for different audiences.”
ESG – an old new idea?
Gerard opened up the next topic by suggesting that younger people’s attitudes towards the world may now be more in line with social value. Lord Kerslake appeared to agree by stating his belief that ESG is now the leading industry issue for organisations. He believes that in the past it may have been one of many issues companies were facing, but over the last two to three years it is now at the forefront of everything we do.
Andrew echoed this notion, stating that ESG was once only a key matter for big companies, but it has now transitioned to a core consideration for SMEs alike. His suggestion for evidencing this commitment is through case studies. He said: “By doing this you can illustrate the tangible impact, it helps extrapolate the information, brings it to life and shows how it benefits all stakeholders.”
Simplifying evidence of social value
People have been benefitting from the construction industry forever, but how we understand those benefits continues to change and develop. Our Social Profit Calculator software offers a more scientific way to understand social value, but Gerard was keen to find out more ways we can intelligently look at the positive impacts.
Martin offered an alternative, saying that there is too much of a focus on KPIs and not on roadmaps. He said: “The industry needs to remain focussed on one key question, ‘what has been able to happen on a social value front that wouldn’t have happened without your intervention?’ By doing this, we avoid the impact of the innovation within social value being lost under a weight of process and calculations.”
Delivering optimum social value
Although an obvious question for a highly skilled panel, Gerard asked what advice his guests should be giving to people assessing portfolios regarding social value and ESG. Victoria highlighted the importance of early stakeholder engagement in order to best understand what they want to achieve. She said: “Understanding local needs is the key to good development and it needs to be forefront of mind when thinking about delivering social value. Although ticking as many boxes as possible may seem like the solution, understanding what you are trying to deliver and then building your plan will enable the most suitable benefits for the specific project and people involved.”
Lord Kerslake believes that following Social Value UK’s seven principles is a staple of excellent social value. Delivering social value is unique in all cases, so in its nature, it is distinctive to what you are assessing. He said: “What we are trying to achieve is some level of consistency, but we need to be flexible at the same time. The best way to find this balance is through doing it – my experience is that people are most successfully delivering social value after learning on the job.”
Is it a level playing field?
SMEs in construction are receiving a lot of focus in relation to social value, stated Gerard. So, he asked, are they at a disadvantage at the procurement stage because they struggle to illustrate how much SV they deliver?
Lord Kerslake, first to intervene, said that because of the nature of the construction industry in the UK – made up of a large number of SMEs – they are naturally at a disadvantage because they don’t have the capacity to work on the new agenda in a way that will help them compete. The ability to help them through that, either via Social Profit Calculator or frameworks, means that there is no need to reinvent the wheel because there is a standardised approach available to them already.
Victoria added to Lord Kerslake’s view, stating that knowing SMEs have lower levels of resources means we need to make sure they are not getting left behind in the conversation. She said: “SMEs already add so much in terms of productivity and local employment, so making social value an onerous task for them would be unfair. The challenge is making sure that the public sector is upskilled in understanding that SMEs can deliver social value, and also focussing on local enterprises and building resilience.”
Is social value transforming procurement?
To conclude the session, a short discussion was had on whether social value has a role to play in changing procurement for the better. Martin highlighted the example of a proposal in the Green Paper: Transforming public procurement to change the basis of contract awards from “most economically advantageous tender” (MEAT) to “most advantageous tender” (MAT) as an example of the wider project benefits moving to a level playing field and the debate being explored elsewhere.
Andrew agrees with this proposal and believes that we can’t always go with price over quality. He said: “Local government needs to catch up by considering all tenders and rewarding quality. Social housing, for example, being driven by a ‘lowest price wins’ system is a recipe for disaster which can be avoided.”
We are confident that as the construction industry continues to build on its social value responsibility and commitment, we will see ourselves entering a transformational era of procurement in which companies that succeed will be those that put the needs of all at the heart of what they do.