Delivering social value (2): Social value doesn’t come for free

Last week we brought you our first in a series of three articles focusing on social value (SV), where we discussed the concept of social value and how personalising your activities to suit the team carrying them out can play a key role in how successful a social value programme is.

This week we look at the true cost of delivering social value, and why some SV programmes don’t have the opportunity to be successful.

Who decides on social value?

Generally speaking, in construction it’s the client or framework body who set out their social value expectations at tender stage, with the contractor agreeing to the terms as part of their submission. In our experience this is the right approach, but it can be a mixed bag when it comes to what those expectations look like and how invested a client can be to their desired outcomes.

Some clients really buy into it, understand it’s value and the far-reaching impact social value can have. Others may not require it – which may be the most realistic approach – particularly if the scheme does not lend itself well to a social value programme (a remote project or small value scheme as an example). Or perhaps the client may not understand social value fully and, in some instances, has tried to go down a ‘one-size-fits-all’ approach – this is where things can get a bit diluted.

Setting expectations

If due diligence is not given to what is achievable on a project, and as importantly – what the cost to the project is – this is where social value falls flat.

As a start, consideration of the procurement route is key – when working on a six week, single-stage tender, the contractor often does not have the time or resources to deliver an extensive SV programme, and this must be considered. Or they may have been given a ‘one-size-fits-all’ checklist at tender stage, which is often over and above what a project team can realistically achieve.

An example may be that expectations for delivery of a £1 million scheme by a regional contractor are the same as that of a £20 million scheme delivered by a tier one contractor, purely because they are grouped together in a regional framework lot. This approach can be too structured and disproportional, and from the get-go there is a scrambling of bodies trying to figure out how to logistically achieve the same outcomes, when the reality is it’s probably not achievable from the start, even when a contractor’s intentions are to deliver a positive social value return.

Where social value doesn’t add up

Sadly, at the risk of being controversial, there is also a lack of understanding of the true cost of delivering social value. At Speller Metcalfe, we know first-hand how important and impactful a meaningful social value programme can be, but it comes with a cost, and many clients simply do not make allowances for it.

On paper, asking a contractor to spare a labourer or two to build a garden shed for a local charity is simple enough, or asking a site manager to facilitate a number of school visits when they’re on site is a no brainer… or is it? Have they factored in that the time out of site for those key trades is now at a cost to the project? Are replacement staff required or will it affect programme? There is a cost to somebody organising an activity and managing it, so who pays for that time? If a client wants their site delivered in a safe manager, to the highest quality and while keeping it to programme, then that cost needs to be managed.

All social activities come at a cost, even if it is not an obvious one, and to expect a contractor to absorb every penny is simply unsustainable when margins are tighter than most other industry’s across the UK. In a single stage tender this is even more pronounced, where contractors fear that if they add SV activities to their prelim costs, they will be more expensive than the competitor who hasn’t allowed for the relevant quantum of spend.

Measuring social value

Another area of inconsistency can be how social value is actually measured. It has been great to see a number social value calculator programmes available in construction, which enable us to put a figure on the social value activities we undertake, referred to as ‘social value spend’.

But as a relatively new initiative, contractors are often using a variety of calculators – and parameters can differ – so where supporting a local charity may provide you a social value return of £1000 on one SV calculator, another platform may suggest it’s only worth £500. Some may use ‘hours spent’ to cost a social value activity, where as another may choose a ‘number of people’ approach to create their social value spend. This inconsistency can spell difficulties as it means you may not be able to offer ‘true’ social value spend when comparing with another contractor, and may even put you at a disadvantage when being scored by a framework.

KPIs are another area which can be difficult if they are set too early on (often at tender stage), rather than as part of a collaborative approach that takes into account the project size, scope and location.

So how do you make it work?

At tender stage, clients and frameworks needs to consider actual costs of social value activities and allow for these to be challenged by the contractor. Qualitative responses are often weighted with scores on delivery and achieving ‘social value return’, but we rarely – if ever – see tenders that identify the associated cost of social value activities, and it is simply not sustainable to see these as a ‘freebie’ from the contractor.

Once a monetary value has been identified and agreed, in our experience, the best social value outcomes come from those clients who are willing to engage directly with their contractor about what their social value activities should be, how achievable the outcomes are and how ‘proportional’ these are to a project.

In a tender, this may look something along the lines of identifying social value as a necessary outcome, but specific outcomes are left until the project goes live. In this way, activities are identified and become part of an on-going conversation between the project team and the client throughout the programme, where opportunities are considered collaboratively, and activities almost become natural in their progression and increasingly valuable as a result.

For example, if we’re building a school in a city, and the social value is weighted towards local employment of the supply chain, will this truly make a difference to the project when the majority of the supply chain would be local as a given? Perhaps if we worked more closely with the school as the end-user, we can identify activities that they would find most useful, and would create a greater legacy on the project itself. An example may be using surplus materials to create a Forest School garden, or working with sixth form students to support interview workshops to help prepare them for life after school.

When properly understood and supported, social value can add huge value. But it needs to be individual, proportional to a project, well-considered and costed properly to make it have a chance of achieving the desired outcomes and leaving a lasting legacy.

Our final article on social value comes to you next week, where we will be looking at how to implement a successful social value programme.