Social value needs to consider whole life value

The concept of social value has been around a long time but since the Social Value Act first came into effect eight years ago, we’ve seen little change – until this January. With the arrival of PPN 06/20, social value is now mandated in all central government procurement.

With covid recovery, the levelling up agenda and the desire to ‘Build Back Better’, it is the perfect time to be looking at how we can improve the impact of our infrastructure projects on people, the environment and the local economy. But how do we ensure this is a long-term impact that doesn’t simply stop when construction ends?

In many ways, during the operational phase is actually where you’re creating the more sustainable jobs and the greater social value

From experience, I believe the only way we can truly measure and achieve social value is to focus on whole life value and not just construction and procurement. Too often as contractors and consultants we have a blinkered view of social value as something that is created during construction. But in reality, social value is often best realised at the operational phase.

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Focusing on social value at solely the procurement and construction stages can lead to us missing the bigger picture and longer-term impacts on communities and economies. For example, if we build a scheme in Manchester but use a modern methods of construction (MMC) provider in Scotland, it could be argued we are not creating jobs locally. However, when that building opens, it can provide numerous benefits to the local community in the creation of jobs, work experience opportunities and space for outreach activities.

In many ways, during the operational phase is actually where you’re creating the more sustainable jobs and the greater social value. If we are building schemes in areas of deprivation, the creation of more long-term job opportunities will have more impact on tackling inequality than a relatively short-term construction project will. And if the government wants to push the industry to use MMC on projects, the creation of MMC factories in deprived areas will provide more sustainable manufacturing jobs that can improve social inequality and contribute to the levelling up agenda.

The recently published Construction Playbook focuses on value-based procurement, however, to achieve this, we need to consider whole life value – measured across a project’s entire lifecycle rather than construction costs alone. We need to look at what opportunities we can create at the back end of a project and have this in our sights when we create the business case and procure services. Too often the construction supply chain builds, hands over and moves on to the next project; instead, we need to identify and integrate social value opportunities across the project’s whole lifecycle.

For example, if we’re not creating enough social value during construction, let’s look at what the opportunities are in operations. This could have a positive impact on SMEs (small to medium size enterprises) and VCSEs (voluntary, community and social enterprise) who work more in the operations side of projects. This is especially relevant in the wake of covid and the retraining and upskilling of sectors most hard hit by the pandemic.

The concept of whole life value is new in the social value market and something the supply chain is currently trying to understand, particularly around calculating and demonstrating that value. I believe professional service firms can play a big part in leading this, embedding whole life value at the business case phase where we can start to visualise operational benefits alongside construction, before we even get to procurement. This will help us make decisions based on social value gains throughout a project lifecycle and the impact the infrastructure will have on communities once it is handed over.

The bottom line is, if we look at whole life value, our social value benefits increase, and we understand the real return on investment. To achieve this, we need to marry up our data on operational costs with our data on social impact to create whole life value assessments and change our assumptions that social value is delivered at both construction and operation phases. This meets the objectives of value-based procurement in the Construction Playbook as well as PPN 06/20 and our industry’s desire to leave a lasting legacy on our communities and prosperity.

Mark Bolger, social value director, Atkins