Construction spend must deliver more “tangible social impact” and outcomes for disadvantaged and left-behind communities post Covid-19
Launch of ‘From the Ground Up – Improving the Delivery of Social Value in Construction’
“There is not a common, comprehensive definition of what counts as social value, to frame understanding, benchmarking or reporting, and aid comparison of tenders and to determine best practice. This has given rise to significant disparities in what counts as social value activities, and no requirement to focus on improving the wellbeing of those who are most disadvantaged”.
This is the headline finding of a major construction industry research report, From the Ground Up – Improving the Delivery of Social Value in Construction, published by the Institute of Economic Development (IED) today. The report finds that there is a “high risk of social value becoming too diffuse and lacking focus” and calls for an immediate step change in procurement, delivery and monitoring impact.
Respondents from construction multi-nationals and SMEs to local authority, public sector and specialist third sector organisations reported that projects spanning geographies have “multiple project stakeholders often competing for social value outputs, different frameworks with differing social value requirements, and a real lack of alignment around desired benefits and outcomes”. There was clear consensus on one of the biggest barriers – “the lack of understanding of what social value is” – and that “substantial improvements need to be made in the monitoring and evaluation of social value”.
Today’s report launch marks the culmination of 12 months’ work which has seen the IED and co-authors Arup and Atkins, together with partners Commonplace and the Joseph Rowntree Foundation, explore all aspects of social value in the construction sector: procurement, definitions, activities, monitoring and evaluation. The aim of the research was to support understanding of what ‘good practice’ social value looks like, and to find and share examples where innovative, replicable and impactful social value has been delivered at all levels of place-based interventions as a result.
IED Chair Bev Hurley said: “Construction is central to placemaking, economic development and UK employment, and the sector spend is estimated to be £500 billion by the end of this decade. Social value is playing an increasing part in the procurement process, but we found that there are significant challenges across all aspects. There are huge opportunities and requirements for the public sector, industry and government to step up to the plate, to make sure that every one of those construction pounds delivers additional tangible social impact, and makes a major contribution to our most disadvantaged citizens and left-behind communities as we plan our post Covid-19 strategy.”
The study itself involved a combination of surveys, interviews, roundtables and case studies, involving over 80 contributors, and a literature review – leading to five key recommendations (see ‘Notes to Editors’ section to view these in full):
1. Establish a Construction Social Value Centre of Excellence – to work collaboratively with industry and public sector bodies to help define social value and provide thought leadership, support and guidance, including delivering a repository of good practice and performance benchmarking.
2. Agree a definition of social value, and what activities are within scope, for the construction sector – to allow robust comparisons of value, and help ensure that social value requirements are proportionate and appropriate, and provide measurable additionality.
3. Update the Treasury Green Book, the Social Value Act and initiate mandatory reporting – to improve Treasury guidance on the monetisation of social value metrics and enable the assignment of different financial values to social value activities according to different areas.
4. Upskill the public and private sector – to work collaboratively to offer continuing professional development on all aspects of social value. A greater understanding of what social value is, how to procure it more effectively, and how to achieve better outcomes, will improve capacity, capability and impact.
5. Upskill those not in the Supply Chain: SMEs and Voluntary and Community Sector (VCS) organisations – to improve local SMEs and VCS organisations’ ability to compete, to deliver and to grow, and by doing so, leaving a more enduring local legacy.
Alison Ball, Associate Director, Sustainability at Arup, said: “The recommendations in this report provide clear steps for the construction sector to help fulfil its key role in generating social value. The global pandemic the world faces has triggered an increased awareness of the importance of social value and resilience in our communities and highlighted existing inequalities. It is vital that the industry and policymakers take this into account as they develop recovery plans at the national and local level, and use this moment to drive change in how social value is delivered through construction, providing real, substantial benefit for citizens.”
Vicky Hutchinson, Environment Practice Director at Atkins, explained: “Atkins is delighted to have co-authored this report. It is an excellent opportunity for the built environment sector to reflect on its progress with social value and to work together to formalise the sharing of best practice. Atkins is committed to embedding social value in all project delivery, ensuring that our projects maximise their positive impact on communities and the environment.”
Mike Saunders, CEO of Commonplace, said: “We are delighted to have supported this report, which highlights the huge importance of social value in construction. In particular we welcome the recommendation to upskill the public and private sectors in community engagement in order to enhance their understanding of social value to the community. This chimes strongly with our belief at Commonplace that digital tools help organisations in the construction sector to understand community needs through open, honest and trusted engagement.”
Mike Hawking, Policy and Partnerships Manager at the Joseph Rowntree Foundation, added: “Construction is likely to have a crucial role to play in stimulating the recovery of our economy. As we grapple with the scale of the current economic shock, we must do all we can to prioritise support for those hardest hit by the pandemic. It is vital that investment in infrastructure creates new jobs which are accessible to people who have been swept into poverty. If government is serious about their levelling up agenda, they should take note of the practical examples this report offers on how to maximise the social value of any new projects.”
The full report, From the Ground Up – Improving the Delivery of Social Value in Construction, can be downloaded at www.ied.co.uk/insights, where the Executive Summary and case studies are also available.
NOTES TO EDITORS
Recommendations in full:
1. Establish a Construction Social Value Centre of Excellence
The Centre will work collaboratively with industry and public sector bodies to help define social value, provide thought leadership, support and guidance, be a repository for social value reporting data, benchmarking, monitoring and evaluation, develop a kitemark, provide guidance on evaluation tools, and support the collection and dissemination of good practice case studies. We recommend that this be funded by government, in the same way that Be The Business and the What Works Centre are – the return on investment to be gained will far outweigh the cost. Such a Centre will increase communication, knowledge, understanding and collaboration and help defragment a complex, competitive, confusing marketplace. It will provide a longer-term perspective to help all learn what good practice looks like in terms of outcomes, legacy and impact, and who delivers it – a procurement memory.
2. Agree a definition of social value, and what activities are within scope, for the construction sector
This is essential to allow robust comparisons of value, and help ensure that social value requirements are proportionate and appropriate, and provide measurable additionality. We recommend that environmental components are separately weighted in procurement, and that good business practices (e.g. internal diversity/inclusion initiatives, prompt payment codes, training of existing supply chains, modern slavery, managing noise or disruption) should be considered as a given. Activities which may be commercially beneficial to the supplier, such as apprenticeships and educational visits, could be considered as social value if supported by a robust needs analysis in the area.
3. Update the Treasury Green Book, the Social Value Act and initiate mandatory reporting
Improve Treasury guidance on the monetisation of social value metrics and enable the assignment of different financial values to social value activities according to different areas. Social value must be considered in relevant aspects of the Five Case model (such as the economic, commercial and financial cases) so that it is considered in the early stages of the project lifecycle. New rules should allow the social value delivered outside of a project area to be included in business case and procurement calculations and incentivise the procurement of outcomes, not outputs. Authorities should be required to create a social value plan as an integral part of their economic development strategy, based on a needs assessment to provide one context for all bidders, and to monitor and report annually on social value outputs and outcomes, including their cost effectiveness. Local Industrial Strategies and Covid-19 local recovery plans must also give due consideration and action to social value and impact.
4. Upskill the public and private sector
The Centre for Excellence should work collaboratively to offer Continuing Professional Development (CPD) on all aspects of social value, from defining a strategy, embedding it in procurement and at all stages of project lifecycles, and understanding the tools to assess social value components, through community engagement, local spending, pre-tender consultation and education about modern construction, to monitoring, evaluation and legacy. There is a need, especially in cross-boundary infrastructure projects, to increase collaboration, political leadership and to develop a clear framework for social value delivery. Greater understanding and clarity of what social value is, how to procure it more effectively, and how to achieve better outcomes, will improve capacity, capability and impact.
5. Upskill those not in the Supply Chain: SMEs and VCS organisations
Considering the growing impetus towards local spending requirements, we recommend that industry must help improve local SMEs and VCS organisations’ ability to compete, to deliver and to grow, and by doing so, leaving a more enduring local legacy. Improving their capacity and capability will extend beyond just the construction industry. Industry must ensure that prompt payment codes are adhered to at all levels of the supply chain, particularly at the bottom where the pressure of late payments is felt most. Public authorities should provide information and contacts at pre-tender stage of businesses and community organisations who might be utilised for the delivery of social value.
The Institute of Economic Development (IED) is the UK’s leading independent professional body representing economic development and regeneration practitioners. Established over 30 years ago, the IED’s key objective is to represent the interests of economic development practitioners and ensure their views are widely expressed and noted. The IED is committed to demonstrating the value of economic development work for local and regional communities; the pursuit of best practice in economic development and the attainment of the highest standards of professional conduct and competence.
Bev Hurley is available for interview via Phil Smith, Institute of Economic Development PR consultant, on 01778 218180 / 07866 436159 / firstname.lastname@example.org.