The increased emphasis on boosting social, economic and ecological value in recent years is not just about good PR – it’s now part of the tender process. David Price has had a look
Nearing his 60th birthday, Steve found himself in a terrifying position last summer – he had lost his job and things were unravelling.
“I was put in a situation where I was forced to sell my house and technically found myself homeless,” he says. Living on the streets was a very real prospect. Fortunately, Steve managed to avoid that fate.
As an ex-soldier, having spent almost a decade with the Royal Engineers, he got in touch with the Royal British Legion who found temporary accommodation for him at its village in Aylesford, Kent. They saved him from the streets, but he still needed a job, and he was finding a persistent barrier to that.
“People just look at your age,” he says. “It comes up every time.”
While living in the village it was recommended he visit a social enterprise located on the estate, operated by a sister charity to the legion, Royal British Legion Industries (RBLI). The signage and pallet making factory, run by Britain’s Bravest Manufacturing Company (BBMC), gave him a job almost immediately. BBMC saw the value of the experience of surveying and cartography he picked up in the army.
Steve now works with around 100 other veterans and others who have struggled to find employment at Aylesford, producing signage for the likes of Amey, Barratt and Network Rail. These contracts were not given as an act of charity, they were won through competitive tender against other businesses.
Rise of social value
The social benefits that organisations such as BBMC generate are set to have a greater influence on the way work is won by contractors. The concept, known as social value, is fast becoming an asset for contractors in public procurement with the government passing legislation to encourage it and tenders now explicitly accounting for it. For contractors, improving the community in the places they work is no longer a public image boosting exercise, it is of serious commercial importance.
Businesses delivering value beyond the basics of paying workers, rewarding shareholders and delivering goods and services is nothing new. Every novelty oversized cheque or local volunteering effort is an example of it. But this new focus on social value takes this to another level with its focus on social, economic and environmental benefits.
Social benefits could include getting firms to offer mentoring and work experience placements, while economic value could be created through training the supply chain. Environmental social value could be derived through carbon reduction and increasing biodiversity.
BBMC gives employment to armed forces veterans who might otherwise struggle to find work
The notion of businesses being a force to help transform communities and people’s lives was elevated to another level on 1 January 2013, when the Social Value Act came into force. When it was launched, in the midst of the coalition government’s austerity programme, the emphasis was on public sector buyers getting more bang for their buck. It called on all public sector bodies to consider how they could secure more economic, social and environmental benefits when procuring goods and services.
As minister for civil society Nick Hurd said at the time: “This Act is an important step in encouraging public sector commissioners to think harder about maximising value to communities.”
Contractors tell Construction News that around five years ago a social value element started popping up on tenders. Typically, it was only a small portion of the overall assessment, maybe 5-10 per cent of the quality criteria in the bid. However, in July 2018 this began to change.
With the failure of Carillion still fresh in the memory, minister for the cabinet office David Lidington made a speech at the Reform think tank that emphasised the importance of social value when making tenders. “We will extend the requirement of the Social Value Act in central government to ensure that all major procurements explicitly evaluate social value, where appropriate, rather than just consider it,” Lidington said. “By doing so, we will ensure that contracts are awarded on the basis of more than only value for money – important though that is – but a company’s values too, so that their actions in society are rightly recognised and rewarded.”
Social value is increasingly set out as a standalone set of criteria on bids, giving it serious commercial implications.
Client-led approach
Sarah Fraser is head of the Willmott Dixon Foundation, which co-ordinates, promotes and records social value work across the company. This ranges from the firm’s Building Lives academies, which offer people training and a way into the industry, to the volunteering efforts of the contractor’s staff. She says the change in emphasis on social value has been profound.
“Five years ago, you were still looking at it being a little bit of the qualitative [criteria].” she says, “Now you’re looking at 20-25 per cent [of the overall score] being social value.”
No longer are extra social benefits something to make people feel good or generate positive PR – now it can be the difference between winning a job or losing one. As its importance has increased, the consideration of how to extract the most social value has changed.
“It’s key that you don’t make [the implementation] of social value overly burdensome for your supply chain”
Sarah Fraser, Willmott Dixon
Morgan Sindall’s head of social value and sustainability Louise Townsend says that, at first, it was often crudely implemented, with tick-box requirements, such as taking on one apprentice for every X-million pounds of spend on a project.
“Contractors could recruit an apprentice for a period, and then as soon as the project’s finished, get rid of them,” she says. “I’m not saying the industry did that, but that was basically all that was being asked of them.”
However, this client-led approach has changed and contractors are now getting more involved in setting out the ways social value is generated on a job.
Amey’s highways business director David Ogden says: “I think what we’re starting to see now in the market is [social value] being pushed and also government is being pulled to be more imaginative and innovative around how we deliver it to a community through public contracts.”
Contractors are now more likely to discuss with the client what the problems and needs of a local area are and come up with ways in which they might be able to help. In one area it could be youth unemployment, in another it could be working with schools. Some may see working with ex-offenders as an area where the most good can be done.
Do the right thing
This drive for social value is a formalisation and expansion of what some contractors have been doing for decades.
“In days gone by it was called community work and just about doing the right thing for the community,” Fraser says. This included making sure the site was tidy and not a blight on the local area and working with local groups, perhaps doing some charity or pro-bono work, such as painting the local scout hut. Fraser sums it up as “being a good neighbour”.
The difference between this “community work” and what social value encompasses are that the latter is measured, co-ordinated and is approached with long-term benefits in mind. Measuring the value of this community work is perhaps the most radical aspect of social value.
It is a bit of a headscratcher at first: how do you put a monetary value on something like going to a secondary school and doing sessions on job seeking skills? How do you put a number on renovating a park? Economists have been working on such questions and developing tools to provide answers for decades, but it is still a developing field.
The most widely recognised set of measures are found in Social Return on Investment (SROI) analysis. SROI came to prominence when Westminster and the Scottish government commissioned a research project in 2007 to develop a clear methodology for charities and other non-profit organisation to measure the value of their impact. In 2009, a Guide to SROI was published with the backing of the Cabinet Office, setting a standard for accounting for social value.
This work has been built on by others and revised in the years since. However, a continued lack of standards for measuring social value was a problem identified by Lord David Young in his 2015 government commissioned review of how the Social Value Act was working. “This makes it difficult for bidders to know which technique to use when, and difficult for procurers to compare like with like,” Lord Young said.
Fostering collaboration?
Fraser gives an example of this inconsistency, saying that one methodology might value someone doing two weeks work experience at £200 for the wider community, but another might value it at £300. “The consistency is where we’re lacking at the moment,” she says.
“We need to be open that it’s in its infancy, we’re all finding our way,” Fraser added.
Other contractors echoed this position. There are no illusions in the industry that anyone has it all figured out. One positive of the collective way-finding is that it appears to be generating collaboration. Willmott Dixon has worked with Wates to share methodologies and learning on social value, and Fraser says it is “delightful” to work in partnership on this area with a company that, in all other aspects, is a competitor.
“Together we’re stronger” Morgan Sindall’s Townsend says, adding that she wants to see contractors collaborate when working on frameworks, for example, to help the supply chain deliver social value by standardising what the tier ones want and need from them.
Willmott Dixon employees are encouraged to volunteer to improve community infrastructure
But with social value now being specifically weighted and marked on bids, it has become a point of competitive advantage and that risks stifling collaboration. Amey’s Ogden thinks clients can help strike that balance between collaboration and competition when it comes to evaluating bids though.
Instead of simply stipulating targets around training, for example, clients could ask for examples of how firms have collaborated to bring people into the industry or how they will collaborate on a project. Similar questions relating to health and safety are already asked.
Different kind of supply chain
Increasing social value is not just a question of clients and main contractors hashing things out. More work needs to be done with the wider supply chain, especially to support training.
It is sub-contractors, after all, who will be managing and working with people who struggle for employment. But, the further down the supply chain you go the smaller the operations get and the less money and time people have to take on that responsibility and deal with the extra challenge.
Willmott Dixon has tried to address this problem by taking on some of the burden itself. In 2018 the contractor set up its first ex-offender apprenticeship programme, where Willmott employs the apprentices directly, but they are managed by the supply chain. “It’s key that you don’t make it overly burdensome for your supply chain,” Fraser says.
There needs to be a willingness for greater collaboration with the supply chain if significant social value is going to be delivered. It requires a different way of working.
Social enterprise challenges
This is especially true for social enterprises such as BBMC. The firm’s managing director Kate Bull emphasises that BBMC will compete with anyone on quality and delivery time, and Amey’s Ogden testifies to this, calling their work “market leading”.
However, BBMC, like many social enterprises, has challenges that other profit-driven entities do not. Staff can have physical disabilities and mental health problems, including post-traumatic stress disorder. Some have been on the streets and come with addiction problems. Getting these people ready to work can take a bit longer, which makes it very hard for the company to scale up production quickly if a client dumps a big order on them.
“Give longer lead times then we would be able to put the infrastructure in place,” Bull says. But awarding a job one week and expecting delivery to start the next is simply unfeasible for many social enterprises.
“We will ensure that contracts are awarded on the basis of more than only value for money, but a company’s values too, so that their actions in society are rightly recognised and rewarded”
David Lidington, then-Cabinet Office
Registered charities such as RBLI, which controls BBMC, have an additional problem – their covenants prohibit them from making a loss. BBMC cannot low-ball a bid to get in with a client because it cannot risk making a loss. It also has to be careful when it comes to frameworks where the amount of work that will actually be delivered is uncertain.
“Unless somebody says we’d like to give you a £100,000 printing machine [to do more work], I can’t just go and buy one,” Bull says, as an example of the kind of speculative investment social enterprises cannot risk. The stakes are too high if the work does not materialise and costs cannot be covered.
“When you go into the factory, who are you going to lay off? Where is my triple amputee going to get another job from?” Bull says. BBMC’s main objective is to safeguard its workers.
Social enterprises such as BBMC want to grow, because it allows them to help more people. But they cannot take the same risks pure profit companies can take to achieve that. To get the most of social enterprises and deliver more social value, contractors need to work in different ways.
Learning process
Dialogue to understand limitations is needed before a tender opportunity is put out if firms are serious about working with companies such as BBMC.
This is another part of the learning process that the industry is going through, just as clients are finding their feet when it comes to maximising social value through procurement and everyone is getting to grips with capturing and measuring outputs.
Those contractors that embrace social value and are willing to flex and work in different ways to deliver it stand to be favoured by clients. They will leave not just buildings and infrastructure as testaments to their work, but a legacy of positive, social change.
