As part of the UK’s digital strategy, there is a growing expectation that transport and infrastructure projects will, as standard, include modern methods of construction as part of their processes. This, coupled with the renewed focus on social value following the release of the government’s Social Value Model has meant that constructors are increasingly faced with a challenge when reporting to clients.
How can they include modern methods of construction and accurately report the value that they are generating?
As part of a transformative collaboration of 25 partners together with Government, i3P and theConstruction Innovation Hub, the TIES Living Lab is determined to increase the productivity and added value of transport infrastructure projects. Our new calculator is one of them.
Download our PDF to find out more about TIES, social value, modern methods of construction and Project 10.
Social value has long been considered a ‘nice to have’ when it comes to construction projects, but thanks to the introduction of the government’s Construction Playbook in December 2020, that is starting to change according to our industry expert. Chief operating officer here at Social Profit Calculator, Sarah Coughlan, says that the playbook has given public organisations across the board confidence to demand social value is embedded into their schemes – and that the private sector is also starting to take note.
There is no doubt that the construction industry has slowly been embracing social value and working hard to include it within the scope of a project, but it hasn’t necessarily been put at the heart of delivery. Instead, it was seen as something that ‘should’ be included but wasn’t essential – unless delivery was taking place via a framework where social value forms a key part of reporting.
Embracing a change in ethos
Since the introduction of the playbook, however, this is starting to change. The difference when it comes to publicly procured works really is like night and day. Social value is already of huge importance when it comes to framework appointments with providers such as Pagabo requiring it, but this approach hasn’t necessarily been replicated elsewhere.
However, we are now very much starting to see that shift from social value being something that must be ‘considered’ to that which must be ‘explicitly evaluated’ and built into a project from the outset – across the whole of the public sector, not just those schemes being procured by central government.
We are starting to see that the playbook has had a really positive impact on local authorities too. While it relates specifically to centrally procured public works, it has given many local authorities added confidence to demand that their suppliers deliver against the policies outlined by central government and put social value at the heart of delivery. This isn’t something we have seen before and it is an important shift.
It isn’t just the public sector that is making change either. The private sector is also becoming increasingly keen to ‘do good’ through development – there is a recognition that social value isn’t just something that those working in the public sector do, but also something the wider industry must take responsibility for, and provides an opportunity for the private sector too.
Understanding social value
In the past, social value has been somewhat of a mystery that often wasn’t fully understood, but again this is really starting to change now. Previously, a monetary figure would have been put against it for a project, but that simply didn’t cover the full breadth of what social value means and the impact it has on local communities in terms of things like job creation, environmental issues and the long-lasting legacy left behind. This is probably the biggest change that is taking place at the moment; there is a real move away from the need to monetise everything as we look towards a much more holistic view of what social value entails.
“Organisations procuring works can now much more easily consider what it is that is important to them and the communities in which they are active.”
Annex A of the playbook outlines five key themes for considering social value: COVID-19 recovery, tackling economic inequality, fighting climate change, equal opportunity and wellbeing, and make it very clear what ‘good’ looks like within those different areas which is a much-needed change that will undoubtedly help shape what social value looks like for a particular scheme.
In giving structure to social value calculation, much of the mystery that has previously enshrouded it has been removed. Organisations procuring works can now much more easily consider what it is that is important to them and the communities in which they are active and consider their priorities more effectively within the matrix outlined by the playbook – something which aligns well with the early engagement of local supply chain and its knowledge of local priorities.
We know that social value looks different to everyone and what benefits one community wouldn’t suit another, but there is now clarity that was lacking previously and that has already started to have a positive impact. In legislating at central government level, we are seeing a ‘trickle down’ effect to local authorities and into the private sector as the discussion about social value has been brought to the fore.
Legislation to require ‘doing good’
This drive towards really understanding what social value means for our communities and the requirement for ‘explicit evaluation’ of social value is a hugely important one – and it is very encouraging that we are seeing local authorities and other organisations taking on board the new guidance.
However, if this progress is something we want to see continued and replicated across the industry, it is vital that the legislation extends to cover all public sector procurement. While we have certainly seen many local authorities embracing it, only by legislating will we see changes adopted wholesale.
Measuring social impact
The progress that has been made since the release of the playbook has been significant and is paving the way towards a more responsible built environment sector which puts social value at the heart of delivery, but it is important that we continue to move forwards and see the industry embrace real social value and demonstrating its real impact.
This is what we’re always striving to do with our software, ensuring that we work to make improvements in line with the latest updates and trends so that we can provide the true measurement on social value. We’re also looking at this more closely with a future-forward vision through the development of our ‘Smart Construction Calculator’. This sees us working with companies from throughout the supply chain to gain historical data on Modern Methods of Construction (MMC) projects in order to create a benchmark moving forwards for new and upcoming projects.
The key is collaboration. If businesses are more forthcoming with existing information, and work as a collaborative collective to develop these benchmarks, we can get a true picture of what good and true social value means to every area of the country.
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.
PPN 06/20 – Roadmap to Recovery
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.
Construction Innovation Hub – Procuring for Value
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.
The Year That Was
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.