Categories: Industry News, Thought Leadership
Social value is likely to play an ever-increasing part in the procurement process, but there is still a lot of work to be done across the board to ensure it is delivered.
Simon Toplass, chief executive at Pagabo, believes that despite this, social value will play a bigger part than ever as the sector faces increased scrutiny in the wake of COVID-19, especially with the latest measures for delivering value to society through public procurement, announced by government last week.
New year, new measures
From 1 January 2021, government departments will use the social value model to assess and score suppliers on the wider positive benefits they bring by delivering the contract. The intent for this is to ensure that value for money for the taxpayer can be maximised while also building a more resilient and diverse supplier base. This model includes supporting the COVID-19 recovery both nationally and on a community level, tackling economic inequality, fighting climate change, and driving equal opportunity, including reducing the disability employment gap.
It’s brilliant to see that the government is introducing these measures, showing a determination to truly unite and level up the country while keeping local businesses and communities firmly at the heart of the recovery.
Every pound spent matters
Construction in this country is not just central to placemaking, but also - more crucially - to economic development and employment. With literally tens of billions of pounds being invested in major projects, there are huge opportunities for the public sector, industry and government to step up to the plate and make sure that every one of those construction pounds delivers tangible additional social impact.
One of the knock-on effects of the coronavirus crisis is that the social value on projects will almost certainly be monitored more tightly. With this, the requirement to demonstrate it in a simple “amount per pound spent” metric will increase, putting added importance on both the initial procurement and the tools used for calculating social value as the project progresses.
The new Richmond Upon Thames College building, delivered by ISG through Pagabo
The importance of calculating social value
The pandemic has had a huge impact on our industry, but it has also allowed for a time of introspection and given those in construction the chance to really look closely at how their social value models work.
Accountability and transparency are key watchwords here. Something we have seen from our clients is a real desire to get under the skin of the way that pounds-and-pence figures are applied to the social value of a project.
Demonstrable value – things like how projects are contributing to economic recovery, local spend, job creation and skill development - is incredibly important, and will become even more so as scrutiny on the sector is increased. Now more than ever, people need to be seeing the real-life impact of every pound they invest, and the new measures mean that central government will now need to go further than the Public Services (Social Value) Act 2012 to ensure that all major procurements explicitly evaluate social value, rather than just consider it.
A standardised set of measurements in construction
This is not without its challenges, and calculating social value is something that the construction industry as a whole has often found challenging. However, the importance of doing it well going forward cannot be overstated. Being transparent and relying on standardised metrics and measurements to ensure that the data produced is robust is absolutely essential, and something that will need to be a focus in the coming months and years.
Crucial to this is a rethink on how social value is viewed in some areas. It can sometimes be seen to be a “fluffy” subject, but in reality, it relies on detailed research, drawing on government standards and global best practices. In order for a business to be able to provide credible social value information, they need to be engaging with that themselves or with a partner that can provide it.
Because of this and the increasing importance of social value calculations, there is likely to be a significant push regarding industry standards of data collection. This will allow for more comparable data between projects and - as the country increases debt to cover the investment in the construction industry – it is vital that the wider socio-economic and employment benefits of the government’s spend is demonstrated through social value tracking.
Having clear social value agendas in the short, medium and long term - as well as a meaningful feedback loop between clients and the supply chain - means that businesses can start to see the full impact of emerging programmes of work.
The role of framework providers
By engaging with stakeholders on a continual basis, businesses can understand where they are succeeding and where they are falling short. It isn’t just about being able to report to clients – it’s about understanding where your business excels at creating impact so that you can focus your energies in those areas. This is something that framework providers need to put more emphasis on during their procurements and encourage their clients to include or develop their project deliverables to take this into account.
Construction has a key part to play in recovery
There’s no getting away from the impact the pandemic will have on employment. With the furlough scheme coming to an end, the next couple of months are unfortunately likely to be marked with a deluge of redundancies – and we have already seen this beginning throughout the construction industry. It was only a few months ago that people were happily going about their work, only to be blindsided by this crisis.
Especially in the early weeks, the corporate response to coronavirus was fantastic. We saw so many great examples of companies donating PPE and supporting foodbanks and local charities, and this is where the supply chain is so crucial.
If you are a bigger business, you are often so far removed from the front line that it is hard to understand how your resources can benefit local communities, or even what the community’s needs really are. However, by really engaging with your supply chain, there is great scope to create end-to-end social value by engaging with and enabling SMEs you are working with to make their own decisions about how to best support the local area.
When it comes down to it, it’s all about partnership and working in collaboration to understand the local need for each project and what requirements drive the client.
This crisis has hopefully brought businesses closer together, and the collaboration of responsible and clear procurement and genuine client support on how to make the best impact locally is what is going to deliver true social value.
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