Social value metric means contractors have to change

Chidi Nnebe became YBUK Young Builder of the Year 2016 after joining Durkan as a local apprentice

With a measurement metric now able to calculate a development’s social value, contractors must be sure they are contributing positively to a community. One way is to work with local SMEs, argues Kevin O’Connor.

Social value is becoming an increasingly important consideration for contractors, especially those seeking to work with the public sector. Since the introduction of the Social Value Act of 2013, more and more local authorities are asking potential partners and suppliers to demonstrate how they’ll deliver social value.

In fact, a recent review of the act by Chris White MP praised the growing numbers of local authorities with social value policies in place. This has filtered through to procurement, where a typical tender places as much as a 10% to 20% weighting on social value.

But when operating in this new landscape, how does the forward-thinking developer prove its worth? Put simply, developments need to work harder to show how they address not only a housing need but a social need too.

Some in development and construction have set the ball rolling on making their projects go further. There are great examples of large contractors, like Willmott Dixon and Morgan Sindall, setting up foundations and socially conscious programmes to boost social value, but unfortunately they can be something of a rarity.

While positive steps are being taken, there is more companies could be doing. My suggestion? Look to SMEs for inspiration. Armed with expert local knowledge, SMEs are ideally situated to respond to the changing demands of local authorities and housing associations.

This is in part due to a smaller sphere of operation and less cumbersome size; SMEs are well placed to forge strong relationships with communities and voluntary and community social organisations (VCSOs). Project teams may also be in a better position to identify specific need and have enough clout to do something about it.

But monitoring is key. Being able to offer tangible results from social value initiatives can be instrumental in securing new business, particularly partnering with local authorities or housing associations. Switched-on contractors have recognised this and are looking to provide evidence of how their developments give back, not just now but in the future too.

Many have turned to the social value measurement metric formulated by the Housing Associations’ Charitable Trust (HACT). It allows developers to calculate a monetary value to social value delivery – something that procurement processes increasingly require.

For example, on a project Durkan delivered before HACT’s metric, we took on 13 apprentices who stayed with us through to full-time employment. While we could identify how much it cost us to do this, we had no way of monetising the long-term value it offered to our recruits and their community. Today we’d be able to demonstrate that our efforts would generate around £150,000 in additional value.

Benchmarking developers’ work

It’s perhaps clear then why many SMEs have signed up to use the metric. It not only gives developers a way to benchmark the work, but it allows the public sector to measure just how much value is being put back into communities.

For companies large and small, social value can no longer be a footnote, especially if they want to work with the public sector of 2018 and beyond. Money is tight, and looks set to get even tighter. Local authorities will need more to show for the developments within their boundaries.

They will require partners with a proven track record of successful social value delivery. For those yet to take steps to embrace the changing sector, there’s no time like the present.

Kevin O’Connor is head of social responsibility and inclusion at Durkan