Value on Social Value

Placing Value on Social Value

For those of you that have read Rob Charlton’s blog on the Value of Value, you will appreciate that any discussion about value inevitably generates far more questions than answers. Many of the positive, but it should also be noted, negative effects of the built environment are the soft, intangible social influences. This has led to much discussion on how to agree a consistent approach to measuring these subjective outcomes in a consistent manner.

Social value formally gained a place on the pre-procurement agenda for public sector organisations with the introduction of The Public Services (Social Value) Act 2012. Since its introduction, The Act has been slowly gaining traction, however a review in 2015 found that only 15% of English councils had applied it to their procurement processes. Furthermore, a 2019 consultation on Social Value in Government Procurement was met with criticism as only a 10% weighting was typically applied to social value in public sector procurement; and greater emphasis placed on construction phase impacts, despite the considerable long term effects if properly considered at the outset.

Many private sector organisations have realised the commercial edge that social value reporting can offer, with the likes of Google, GE and IBM all adopting a ‘shared value’ concept. Many contractors also now include a monetary figure for social value creation in their annual reports. In 2019 Mace cited £491m created through an independent review of over 60 performance measures, from renewable energy use to apprentice training and volunteering hours by its employees.

The real challenge for our industry is not only agreeing a consistent methodology for measuring social value, but also placing much higher emphasis on the subject when defining project aspirations. Poor decisions at the outset of a project can have many decades of legacy impacts on wider society.

The RIBA is imminently due to release its Social Value Toolkit and we are eagerly awaiting its publication, keen to engage in dialogue with our clients and colleagues on how, as an industry, we define, deliver and review the value our built environment creates.

We recently completed a new graduate start-up pre-accelerator facility with Northumbria University. The University has supported the creation of 367 start-ups over the past 10 years, with currently trading businesses supporting 1,089 jobs and a combined turnover of £81m per annum. We had the pleasure of attending three launch events, at which we heard from inspirational business leaders who had themselves been supported as graduates of Northumbria University in this way. It served to highlight the significance of ‘getting it right’ at a strategic business case level. Some of these former graduates are now supporting the next generation of business leaders through both generous donations to the Enterprise Fund and pro bono mentoring via the Enterprise Club. But beyond these tangible numbers such jobs, turnover and growth; we also heard about ethical business, empowerment and social responsibility. How do you place a figure on that?

The current Coronavirus pandemic and UK social distancing has instigated a seismic shift in perspective for many. The change has allowed time for reflection on our values and priorities. As a nation we have become closer through isolation, with weekly community displays of support for our NHS, neighbours supporting the more vulnerable in society and children displaying rainbows and messages of hope in windows; to name but a few.

At the same time, in an unprecedented time of government borrowing we are facing the sharpest economic downturn on record, with an estimated 14% contraction in the size of the UK economy. It is clear that whilst having to proceed with extreme caution to avoid a second spike in infection rates, for the government an easing of restrictions is critical to arresting the economic freefall we find ourselves in.

In the midst of this, we cannot afford to side-line environmental and social issues. I listened to an interesting Ted Talk by Kate Raworth on ‘Rethinking Economics’; seeing beyond an endless obsession with ‘growth’ to creating an economically, environmentally and socially thriving ecosystem.

Following the 2008 financial crash we saw the Code for Sustainable Homes 2016 ‘Road to Zero Carbon’ gradually slip prior to it being scrapped in 2015. We seem no further forward in 2020. Former Governor of the Bank of England Mark Carney recently described the aftermath of the Covid-19 pandemic as a, ‘big opportunity’ towards greener growth and warned against falling back into the status-quo. It will be businesses which are agile and able to adapt and innovate which will benefit most in the long term.

But we also need to work closely with clients and project teams to ensure that their aspirations are rigorously defined and measurable at the outset. Procurement must continue the shift from lowest cost to long term value and our industry must become more accountable for outcomes through review and feedback, which will inform future decision making. We must look for the opportunities in the chaos.