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.

Sarah Coughlan, Chief Operating Officer of Social Profit Calculator

More information available here

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. 

Construction Playbook

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. 

This week, Social Profit Calculator, along with our partners Pagabo, Kier Construction, RLB and Akerlof, were delighted to take home the 2020 Offsite Award for Product Innovation for our Smart Construction Calculator, and although owing to “these unprecedented circumstances” we weren’t able to attend in person, we managed to celebrate nonetheless.

With our fresh success in mind, it seems like an ideal opportunity to introduce our Smart Construction Calculator in a bit more detail and explain why for SPC as a social value company, we are excited about the smart construction revolution.

Modern Methods of Construction (MMC, or ‘smart construction’) is a wide term, embracing a range of offsite manufacturing and onsite techniques that provide alternatives to traditional house building. MMC includes whole homes being constructed from factory-built volumetric modules, through to the use of innovative techniques for laying concrete blockwork onsite. It has been promoted as a way of working more effectively to achieve more without using more.

The Industrial Strategy Council recently repeated the long-known fact that differences in productivity growth and wellbeing across the UK are still shamefully large and regional imbalances continue to grow. It is a crucial time for the building industry and the dynamics are complex, but the government aims to “level up” the UK economy as it shifts from crisis management to recovery with the prime minister promising to “build back better”.

There are a number of problems within the construction sector that underpin the political drive to modernise the sector. Poor levels of productivity and delivery timescales, rising costs, declining workforce and greater carbon emissions and other environmental impacts.

In an attempt to accelerate momentum within the construction industry, we have developed a social value calculator tailored  to constructors and clients exploring smart construction approaches. It enables quantitative assessment and visualisation of social value, capturing the social impact beyond the site domain, including manufacturing within the supply chain. Our data is based on an extensive benchmarking exercise using historic data from previously completed projects in order to produce accurate estimates of the social value returns from a smart construction project. We have adopted a holistic approach that advocates design should be focussed upon wider considerations beyond manufacture and assembly to extend to broader outcomes, such as sustainability, social-economic impact, quality of life, operational performance and whole-life value.

Users of our tool will have access to functionality to, from a client’s point of view, assess the quality of submissions against the forthcoming procuring for value agenda, and from a constructor’s point of view, align with client needs and target areas in line with their expectations. It is our ambition for our Smart Construction Calculator to be a one-stop-shop for everyone in the sector looking to target their smart construction project’s social value offerings, as well as an understanding of cost, timeframes and whole life value.

The opportunity for social value then is about how a move away from traditional building methods opens the door to deliver social value in a broader way. Traditional building methods tend to create value that is limited to the project’s surrounding area. Smart construction has the potential to generate value in deprived areas in greater need with the strategic placement of project delivery sites by creating new employment opportunities and sustaining existing employment in the area. Offsite construction will result in longer comprehensive training for apprenticeships, creating stronger education and skills programmes, and in turn more social value. MMC has the potential to reduce the environmental impact of projects by reducing waste, reducing carbon emissions and allowing the delivery of low-impact buildings. Using smart construction techniques, we can come to expect that projects will begin to generate more social return on investment, and more economic impact while simultaneously lowering the level of environmental impact.

This is the smart construction revolution. We are delighted to be a part of it.

Delivering social value is the cornerstone of what we do as we continue to support our clients to enhance their contribution to society. Through our approach and methodologies, we enable our clients to capture the societal and environmental impact of their activities and operations.

Prior to the pandemic, social value was becoming an increasing part of corporate social responsibility, economic and procurement narratives. The post-COVID era, however, paints a very different picture. For many businesses what’s left of 2020 will be a question of survival, and few will be in a position to deliver the aspirations that they might have had at the end of last year.

The UK economy has experienced a significant shock since the start of the COVID-19 pandemic, driving the UK into recession. GDP has fallen dramatically, -24.5% below the level of February 2020 in May this year. Production, services and construction still remain well below their February 2020 levels. As of August, approximately 9.6 million jobs were furloughed in the UK as part of the government’s job retention scheme and the number of people applying for universal credit has soared.

These current figures are only the tip of the iceberg, with the British Chamber of Commerce (July 2020) reporting that 29% of UK businesses plan to cut jobs in the next three months as the Coronavirus Job Retention Scheme is wound down. This would be the highest percentage of companies making redundancies since it began tracking employment intentions in 1989. The government’s OBR has forecast this could lead to at least 10% or as much as 20% of jobs furloughed on the scheme to be lost, with the unemployment rate reaching 12% before the end of the year. It is, therefore, not surprising that job insecurity is on the rise, with more workers saying it’s likely they’ll lose their job. Almost 6 in 10 say their financial security has become worse since the pandemic, with many furloughed workers having little indication of when they can return to work.

COVID-19 has exposed the weaknesses and inequalities in every society

Although we are seeing a gradual easing of lockdown, the virus has ruthlessly exposed gaps between the haves and the have-nots across the country and we are witnessing only the beginning of the economic and social implications. 

The people who have been worst affected by the virus are those who had worse health outcomes before the pandemic, including people working in lower-paid professions, those from ethnic minority backgrounds, and people living in poorer areas residing in overcrowded accommodation with limited access to personal outdoor space. Whilst it’s been known for years that these groups typically have worse health outcomes, shamefully, it has taken a global pandemic to draw attention to these deeply entrenched health inequalities, and it will continue to discriminate against the most vulnerable as the socio-economic effects will be with us for some time.

Time to get serious about social purpose

While the economic landscape is testing, we have witnessed the strength of collaborative action between business, the public sector and charities working together. It is crucial that we do not lose this venturing into “new normality”. 

The government has a number of key infrastructure and construction projects to come over the next ten years, with a total construction spend of £500 billion by 2030. Buildings have a direct impact on quality of life and long-term emission reduction goals. The construction sector is, therefore, at the core of a post-COVID recovery that can catalyse a transition to fairer more sustainable economies and must strive to make more sustainable local economies and healthier and more enjoyable places to live.

Fundamentally, buildings need to meet the needs of those who use them. Contractors bidding for work, or developers looking to become a development partner, will need to deliver more social outcomes. They will need to do more to capture and measure the social value of their initiatives to secure commercial success. This calls for the big corporations to be transparent when setting out their corporate purpose and to translate this into a strategy and real action.

A recent report from Social Enterprise UK summarising in-depth research across local government found 82% of councils believe spending public money focusing on social value, rather than cost alone generates higher levels of growth. So, it is now more important than ever to get serious about delivering real social value in partnership with communities, successfully incorporating local employment and ‘building back better’. 

Building back better means doing more than getting economies and livelihoods quickly back on their feet, but instead triggering investment and behavioural changes that will reduce the likelihood of future shocks and increase society’s resilience to them when they do occur. Doing this well requires a meaningful commitment to equality and inclusion, alignment with long-term emission goals, factoring in resilience to climate impacts, slowing biodiversity loss and increasing circularity of supply chains across the project lifetime from inception to long-term legacy impact. If adopted faithfully and based on local need rather than simply a checkbox exercise, this will create a very strong social purpose with the potential to enhance community resilience. Along these lines, social value will become a vital priority on the back of which we will hopefully see the creation of a whole new social contract.

We have an opportunity to evolve. As the need for social value-driven projects is made more and more apparent, it is time that we all, practitioners, contractors and clients, stop thinking of social value as simply something that must be demonstrated. In the past, social value has often been seen as a “tick box” exercise: you must create five new apprenticeships, for example, to win a project, regardless of the specific needs of the community. We can start to move away from this standardised approach to social value and think instead about delivering the social value that is right for each project, and each community in which the project sits. This is part of the Construction Leadership Council’s Procuring for Value Toolkit and promises to become an influential part of our industry in the coming months and years. This means that social value can meet the community’s real, as opposed to perceived, needs and ensure that the work that is being delivered offers real impact.