Hub Industry insights How important is social value during public procurement How important is social value during public procurement There is a growing recognition that procurement decisions should not only focus on cost and efficiency but also consider the broader impact on society. 19 July 2024 19 min read Social value has become a critical component in the public procurement process in the UK. There is a growing recognition that procurement decisions should not only focus on cost and efficiency but also consider the broader impact on society. This article will explore the concept of social value in public procurement, examining its significance, the current trends, and the implications for businesses involved in public service provision. The numbers don’t lie. For instance, 77% of consumers prefer companies that have embraced a social value culture, indicating a significant shift in consumer expectations. Additionally, 73% of investors are more inclined to invest in companies that have established social value programs, highlighting the financial viability and attractiveness of socially responsible businesses. Environmental benefits are particularly valued, with 66% of global consumers willing to pay more for products, services, or works with strong sustainability credentials. In short, businesses looking to gain a competitive edge cannot ignore the powerful repercussions of considering social value in procurement. Their competitors probably are. What is social value? Social value refers to the additional benefits that procurement can deliver beyond the primary purpose of a contract. These benefits might include improving community well-being, enhancing environmental sustainability, and supporting economic development. In the context of the UK, the Public Services (Social Value) Act 2012 mandates that public sector organisations consider how the services they commission and procure can improve the economic, social, and environmental well-being of their local area. Here are some examples of how procurement could deliver further value and demonstrate social value beyond the main focus of the contract. Social Initiatives like local hiring, apprenticeships, and community engagement programs. These initiatives could include projects that address homelessness, depravity, educational equality or supporting the vulnerable members of the community. You could also consider whether an initiative you’re backing or launching could reduce crime rates or develop new social opportunities in the community. For example, sponsoring a local youth club or investing in kits and resources to support a neighbourhood watch scheme. Economic Supporting local businesses, particularly SMEs, and fostering economic resilience in local communities. This could be achieved by employing and working alongside local, home-grown businesses and suppliers to support the local economy. Environmental Projects focused on reducing carbon footprints, utilising sustainable materials, and promoting green energy. For example, you could offset your carbon footprint by planting trees locally or sponsoring and supplying recycling schemes to help raise awareness of the importance of taking care of the local environment. The growth of social value Over the past decade, social value has gained significant traction, especially within public procurement processes in the UK. This growth is driven by an increasing awareness and commitment to improving social, economic, and environmental outcomes through business activities. For example, our work at Brandon Forest Academy not only had a resounding and lasting impact on the efficiency and sustainability of the premises, significantly reducing its carbon footprint, but it also made a lasting impression on the next generation. The client has reported that the practical exposure to the project has sparked a notable interest in environmental issues, along with cornerstone subjects in the curriculum, including science, technology, engineering and mathematics. Key drivers of social value include: Legislation and policy changes surrounding social value The introduction of the Public Services (Social Value) Act in 2012 marked a significant shift, mandating public sector bodies to consider social value in procurement decisions. This act has encouraged public buyers to seek more than cost efficiency, focusing on broader community benefits. The policy was further reinforced in 2018 when the government required all major central government procurements to explicitly evaluate social value. Shifting consumer and investor expectations of social value Consumers and investors are increasingly working with companies that demonstrate social responsibility. Statistics show that consumers and investors prefer companies with a strong social value culture and, even better, invested in social value initiatives and policies. Additionally, global consumers are willing to pay more for products and services with strong sustainability credentials, driving an increased market demand for businesses with strong and demonstrable social values. Environmental and social responsibility concerning social value The push for sustainability and community improvement has never been stronger. Businesses are now expected to contribute positively to the environment and society. This includes reducing carbon footprints, improving biodiversity, supporting local economies, and providing opportunities for disadvantaged groups. In the construction sector, the focus on social value has become crucial. Contractors are now expected to deliver more than just physical infrastructure; they must also contribute to the social and economic well-being of the communities they serve. How do public procurement projects support communities? Explain the effect of public procurement projects on communities and how these improve local areas, and government buildings such as schools and youth centres, as well as providing environmental solutions to properties. Public procurement projects support communities in many ways. The project itself needs to be implemented with the community in mind. Beyond the final output. For example, when we undertook work at West Suffolk College, we didn’t just arrive, construct and leave. We ran and implemented a tee-level student training course to support development and learning in the community. This can further extend to supporting and employing apprentices in the area, providing opportunities for local talent. Social value can also have a wider impact by promoting local employment, engaging with charities and providing communities with a revised and revamped identity and energy. Social value in construction can also include additional initiatives including volunteering, sponsoring local initiatives, and charity fundraising, to give back and demonstrate a construction firm’s Corporate Social Responsibility (CSR). The process of social value in construction Social value must be integrated into both the design and construction phases to ensure it delivers benefits during and after the project’s completion. This integration should align with the client’s visions, enabling them to achieve their desired social outcomes, which their local community and business vision should also guide. For instance, tech companies, which can be energy-intensive, might aim not only to create job opportunities but also to minimise carbon emissions, demonstrating this during the procurement process. Key considerations for developing social value in project proposals Focus on priorities A construction project can benefit society in numerous ways, but it’s crucial to focus efforts where they will have the most significant impact. Collaborate with each client to identify, set, and support their priorities, whether creating new employment opportunities or providing amenities to the local community. Embed social value in every aspect of your bid Simply stating a focus on social value or adding a few key points to your bid is insufficient and lacks authenticity and could, in turn, have a negative impact on how your business is perceived. Social value needs to be deeply embedded in the entire project process. Provide clear guidance for all parties involved and consider using contractual obligations to ensure all the buy-in of value propositions, making them consistent, measurable realities. Include accountability Ensure that all teams understand the goals and their roles in achieving them. Consider using sub-alliance contracts in complex projects to unite all parties under shared goals while sharing risks and responsibilities during the project delivery process. Highlight achievements Integrating social value is a learning process for the construction industry and clients. Evaluating what was effective, why it worked, and what was achieved is essential. Highlighting these successes attracts clients who want to incorporate social value into their projects and inspires future projects by showcasing real examples of success. A clear process for delivering social value At the core of the guidance is the UKGBC’s revised eight-step process for delivering social value. This process provides a comprehensive framework for ensuring social value is effectively incorporated and delivered throughout the project lifecycle. 1. Agreeing a clear social value purpose – Develop a concise statement outlining why the project aims to deliver social value, setting a clear direction for the entire team. 2. Identifying priority stakeholder – Identify key stakeholders involved in the planning, design, construction, and operation of the building. This ensures that time and resources are used effectively when engaging stakeholders. 3. Understanding stakeholder needs – Engage with stakeholders to understand their needs and priorities, allowing you to respond effectively and deliver the desired social value outcomes. 4. Agreeing on social value outcomes – Collaborate with the project team and stakeholders to agree on specific social value outcomes. These will form the foundation of your social value delivery plan. 5. Creating a social value delivery plan – Develop a detailed plan outlining the initiatives and actions you will implement to achieve the agreed social value outcomes. 6. Putting in place a social value measurement framework – Establish a structured and consistent approach for evaluating and reporting on the social value outcomes achieved, noting milestones along the way and communicating them internally and, if appropriate, externally. 7. Executing your social value delivery plan – Implement the steps outlined in your delivery plan, ensuring all team members are aligned and working towards the agreed goals. 8. Ongoing measurement, monitoring, and reporting – Continuously measure, monitor, and report on the progress and outcomes of your social value initiatives. This not only helps to evidence the impact, identify any issues, and support continuous improvement, but it also serves as a strong narrative to underpin any communications and public relations activity surrounding your project. At DPL, we have wholeheartedly followed this rule of thumb since day one. It helps attract local businesses who want to work with you and in turn talent and prospects who are keen to roll up their sleeves and start their own careers in construction. What are the measures of social value in construction projects? Measuring the success of your social value can be challenging, owing to the multiple possible short—and long-term benefits it may provide. However, provided your procurement process is robust and you have agreed to associated KPIs linked directly to social value, there are ways to measure and demonstrate your project’s impact on the wider community. Thankfully, at DPL, measuring and demonstrating social value has been central to our work since our inception, and as such, we found every project that we are involved in on how it drives social value. We’ve learned, over the many years, that striving to make a difference presents quantifiable changes to a community, and there are many layers and different measurements to determine the impact of this. These vary from project to project and what your social value is defined as, some are more tangible than others. For example, suppose you’ve installed solar panels in a facility or electric vehicle points at a warehouse. In that case, the measures around energy saved, costs saved, and CO2 emissions offset should be relatively straightforward to assess and prove. However, if you’re planting trees or providing community employment provisions, the long-term impact of these may not be known for some time. There are tangible benefits that can be quantified, for example, giving back 230 hours of volunteer work during the Glenwood SEN School project, or reducing Brandon Forest Academy’s carbon footprint by 8,277 kg/year. In addition, perhaps the most powerful outcome of your social value project is the way it makes the community feel, which is almost impossible to completely quantify. However, garnering feedback and staying in a regular dialogue with the community affected can provide qualitative information to help demonstrate the impact of the project. We also take pride in the positive feedback we receive from our clients, who are working directly in the community. Dale Windle (Sustainability Manager), Conor Nicholson (Business & Stakeholder Coordinator), working with us on the Galloper Wind Farm project said “The service provided by Nic, Dale and the team was outstanding from start to finish and we would definitely recommend using them for your renewable energy contract.” Our case studies We’re passionate about continually evolving our approach to social value, and our procurement process is very much geared towards understanding and ensuring a positive wider community impact of every project that we undertake. This has help many of our clients not only offset negative press or uncertainty about the impact of construction work, but answer questions about the project before they are even asked. While social value can feel like a minefield, it is increasingly important and unavoidable, particularly in public sector bids. But don’t just take our word for it, here are a few examples of how social value has been integral to the procurement process in recent projects: Brandon Forest Academy Glenwood SEN School FIND Charity Fabio Wardley More Arrange your project with DPL Group If you’d like to find out more about how we could help you execute a project that positions social value at the heart, demonstrating your credentials and CSR to your community, get in touch with a member of our team who will happily discuss your requirements, and the most responsible, mindful, efficient and beneficial way to bring it to life.
