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Social Value 10th February 2016
Social Value – it’s increasing importance and benefits to clients in Construction
Peter Schofield AGMA Procurement Hub Programme Manager
February 2016
Agenda
AGMA Procurement Hub Objectives Operation Benefits
Social Value in Greater Manchester Social Value Act 2012 GM Social Value Policy Indicators Next Steps
AGMA Procurement Hub
Members Bolton Bury Manchester City Oldham Rochdale Salford City Stockport Tameside Trafford Wigan
Associate Members Blackburn and
Darwen Blackpool Cheshire East Warrington GMFRS GMP TfGM GMWDA
Hub Objectives
Review and re-let existing AGMA Contracts Consolidate existing best deals Aggregate fragmented spend Maximise opportunities for local suppliers Aligning collaboration/promoting best practice Supporting new ways of working (eg
Devolution)
Operation – “Hub and Spoke”
AGMA Procurement Hub “Facilitator”
• Develop Business case • High Level Project Management • Timescales, Risks, Communications etc • Provide support • Monitoring & Reporting • Capturing impact Lead Authority
• Lead the procurement exercise • Decide “procurement strategy” (route to goal) • Use own processes and procedures • Lead management of contract
Benefits
Only do things once – internal efficiency Manage pipeline of projects Promote collaborative approach with
partners/stakeholders Consistency:
Performance management of contracts Business cases Benefits reporting
Reacting/embracing new legislation/agendas etc Support for working groups Link to other sub-regional, regional and “other regional”
bodies
Public Services (Social Value) Act 2012 “public authorities to have regard to economic, social and environmental well-being in connection with public services contracts; and for connected purposes”
GMCA requested a GM wide approach to embed Social Value into all procurement
Benefits from a common approach Ability to benchmark Simplified for suppliers Able to understand link between policy and achievements
Social Value Policy approved by GMCA in November 2014
Review carried out in Autumn 2015 to establish baseline External verification – CLES (Centre for Local Economic
Strategies)
Social Value in Greater Manchester
GM model for delivering Social Value
‘Golden Thread’ of: Corporate Objective Enablers Process
GMCA “Stronger Together” Strategy used to set Corporate Objectives for GMCA Social Value Policy
Each procurement exercise identifies appropriate outcomes e.g. “Workforce that is fairly paid and positively supported by
employers”
Suppliers respond on how they would deliver the Outcome(s) and how they will be measured and verified
Contract Management includes delivery against outcomes
Social Value “Menu”
Promote employment and economic sustainability tackle unemployment and facilitate the development of skills
Raise the living standards of local residents working towards living wage, employee access to entitlements
(childcare) and encourage suppliers to source labour from within Greater Manchester
Promote participation and citizen engagement encourage resident participation and promote active citizenship
Build the capacity and sustainability of the voluntary and community sector practical support for local voluntary and community groups
Promote equality and fairness target effort towards those in the greatest need and tackle deprivation
Promote environmental sustainability reduce wastage, limit energy consumption procure materials from sustainable sources
So What?
More thought and action “pre-procurement” Must follow through into Contract management
Measurement against specific KPIs Baselining Exercise by CLES (Centre for Local
Environmental Strategies) Independent look at top 300 suppliers Consider spend in local economy (desktop study) Survey against generic KPIs
Lord Young Review of the Act Overall positive but recommendations re measurement, awareness
and consistent practice Case Studies Awareness raising E-Learning Module GM Social Value Network
Promote Employment and Economic Sustainability 84.8% of the direct spend (£1bn) with GM based suppliers £487 million (48.5%) of total spend with SMEs 57% of suppliers’ employees are resident in GM 93% of suppliers created 1060 jobs 69% of suppliers created 195 apprenticeships
Raise living standards of GM Residents 50% of suppliers paid all staff the Living Wage Foundation
wage of £7.85 per hour (this is now £8.25) Lowest paid member of staff average £7.66 per hour 93% of employees are employed on a permanent basis
Baseline Study Findings 1
Participation and Citizen Engagement 64% of suppliers encouraged staff to participate in
volunteering and community activities 14,051 hours of staff time were offered in GM
Capacity and Sustainability of the VCS 64% of suppliers actively provide support to the VCS 10,159 hours in GM Examples:
Logistical support such as the provision of office space Provision and improvement of community facilities Employment support, such as work experience and CV and
interview workshops
Baseline Study Findings 2
Baseline Study Findings 3
Equality and Fairness 71% of suppliers created employment opportunities for
individuals described as ‘hard to reach’ 185 employment opportunities in Greater Manchester
Environmental Sustainability 32% of suppliers actively measure carbon emissions 82% have an environmental management strategy
96% increasing recycling 89% include energy use 60% include carbon emission reduction 56% have transport type included 80% have waste minimisation included 40% having a cycle or walk to work scheme
Social Value in GM – Next Steps
1. Ensure Social Value is considered as a matter of course i. Raise awareness in Pre-procurement ii. Embed into contract monitoring iii. E-Learning course for all Commissioners
2. Develop a process for continuous monitoring of SV i. Repeat baselining exercise to benchmark performance ii. Report on contract management KPIs
3. Explore leakage out of the Greater Manchester economy i. Chasing the missing 15%
4. Influence the behaviour of the supply chain i. Open dialogue with suppliers about economic, social and
environmental benefits ii. Pre-market engagement and ongoing conversations re innovation
5. Provide signposting for suppliers i. Advice and support – eg accreditation, living Wage, Carbon Footprint ii. Engagement with VCS etc
Questions?
Peter Schofield – AGMA Procurement Hub Programme Manager [email protected] Tel: 0161 912 4597 Mob: 07814 459668
Social Value through Construction and Infrastructure Procurement
Professor Peter McDermott [email protected] School of the Built Environment University of Salford Also: Fady Farag and Carrie-Ann Huelin, University of Salford
Radisson Blu Edwardian Hotel, Free Trade Hall,
Agenda
What: The Social Value Agenda Why: Why Social Value is important How: How Social Value can be achieved But: No Buts….Social Value can be achieved The north-west imperative?
What?
All public bodies in England and Wales, including local authorities, will be required to consider how the services they commission and procure might improve the economic, social and environmental well-being of the area.
Social value asks the question: "If £1 is spent on the delivery of services, can that same £1 be used to also produce a wider benefit to the community?"
1999 2000 2002 2004 2006 2008
Modernising Construction
Rethinking Construction
Accelerating Change
Improving Public Services
Social & Economic Value of Construction
Common Minimum Standards
Achieving Excellence
Better Public Buildings
Strategy for Sustainable Construction
2009
Operational Efficiency Programme: Collaborative Procurement
Where is the Social Value in Procurement Policy?
Government Policy…
2000 2002 2004 2005 2006 2007 2008
National Procurement Strategy
Rethinking Construction
Kelly Capacity Report
Stern Review
Gershon Efficiency Report
Sustainable Communities Plan
Securing the Future
Where is the Social Value in Procurement Policy?
What?: Examples of other similar Policy Goals
Innovation & Industry Development
Equality and diversity
Skills Local economic development Climate change
adaptation
SME & Third Sector participation Renewable energy Social
Value
Consider just one issue -SMEs in Procurement...
Many policy/advisory documents…
What?: Sustainable Procurement
• “a process whereby organisations meet their needs for goods, services, works and utilities in a way that achieves value for money on a whole life basis in terms of generating benefits not only to the organisation, but also to society and the economy, whilst minimising damage to the environment” (SPTF 2006, p 10).
• Sustainable procurement – in short using procurement to support wider social, economic and environmental objectives, in ways that offer real long-term benefits, is how the public sector should be spending taxpayers money (Simms, 2006).
New Government Construction Strategy November 2015? (And CSR 25th November) February 2016???
Post 2015 Election Construction Policy Context?
Why?
Why? Joined-up government
• UK SPTF 2006: Too often the business side of government – the service provision, the purchasing, the employment, fails to reflect the policy goals of government…
• Bringing together the business and the policy arms of government is what sustainable procurement is about.
• Local councils spends around £ 45 billion on procuring goods and services from third parties (House of Commons, 2014);
• The North West Construction Hub (NWCH) was given as prime example for delivering value for money through their ability to choose competent contractors (P 22);
Social and Economic Value through framework procurement?
New Government Construction Strategy November 2015? (And CSR 25th November)
Post 2015 Election Construction Policy Context?
How?
How: How can Social Value be delivered through procurement/contracts?
Attention to the overall procurement process • The subject matter of the contract; • The technical specifications for the
product/work/service; • The selection criteria for candidates; • The contract award criteria; • The contract management and performance clauses.
How can Social Value be delivered?
Through the most appropriate procurement route…The Infrastructure Procurement Routemap offers a strategic approach to procurement…
In other domains other Procurement Strategies Examples: •Reservation of certain contracts •Preferencing of certain suppliers •Supply side intervention (e.g. training and development for potential supply chain partners to develop)
Delivering sustainable efficiency savings Delivery of projects to target cost and time Reduction of Claims High Client satisfaction rates Good health and safety Good “diversion from landfill”
High proportion of spend undertaken by SME’s High take up of government initiatives (fair
payment, apprenticeships)
How can Social Value be delivered? Through Frameworks?
Social Value through frameworks? Supply Chain Engagement:
• Agree SME and supply chain engagement strategy: • Ensure engagement in national, regional and local
frameworks • Emphasise the involvement and integration of tier
2/3 suppliers within the framework and design team • Ensure transparent approach and client
engagement with supply chain • Local sourcing, fair payment provision down the
supply chain, measure and monitor engagement Example Measures in Local Government: • % of Sub-Contractors SMEs • % of Sub-Contractors local to the area • % of Construction Contract Spent with SMEs
Data from NWCH- Key Performance Indicators (KPI’s)
KPI data is monitored using the Centre for Construction Innovation (CCI) KPI Engine and include:
• Fair Payment • Waste Reduction • Carbon • Local Labour • Apprentice Weeks • Predictability • Satisfaction • Health & Safety
Data from the NWCH “Delivering True Value”
1618 employability and learning activities 141 project initiated apprentices created 288 sustainable apprenticeship placements 567 community engagement events 60.6% of site staff were defined as ‘local’ For full details, visit www.nwconstrucionhub.org to view the ‘More for your Money’ Report Please note the above figures are the most recent and supersede those within the More for your Money Report
But? No buts…..
All public bodies in England and Wales, including local authorities, will be required to consider how the services they commission and procure might improve the economic, social and environmental well-being of the area.
Social value asks the question: "If £1 is spent on the delivery of services, can that same £1 be used to also produce a wider benefit to the community?"
“…socially responsible procurement… is not only …fully in harmony with the latest requirements of EU procurement legislation, but can also deliver greater social value.. More jobs, better pay, improved skills, vibrant small businesses, technical innovation….
Cabinet Office -Social Value
This procurement policy note gives guidance supporting the Public Services (Social Value) Act 2012.
Social and Economic Value through Procurement?
February 2016
Each contract above £10 million must have a skills section in its procurement strategy which will consider the workforce element of the contract and its ability to support apprenticeships . An appropriate but proportionate, weighting for tender evaluation will be set – taking into account the importance of skills in the value for money case and to the sector.
New Government Construction Strategy November 2015? (And CSR 25th November) February 2016???
Post 2015 Election Construction Policy Context?
The north-west Imperative?
“Towards a north-west construction and
infrastructure powerhouse”?!
New Government Construction Strategy November 2015? (And CSR 25th November) February 2016???
Fixing the foundations: Creating a more prosperous nation
“The government’s framework for raising productivity is built around two pillars….”
Resurgent cities, a rebalanced economy and a thriving Northern Powerhouse
The National Infrastructure Plan for Skills
The National Infrastructure Plan (NIP) pipeline, updated in July 2015, contains details of £411 billion of investment in 564 projects and programmes to 2020 and beyond.
Construction productivity growth has lagged behind the other sectors of the economy
Chart 2.A by 2020 there would be a reduction in workforce numbers meaning demand would outstrip supply by around 100,000 people
Construction management and supervisory roles increasing levels of demand for these skills across all English regions over the next five years….
Technical and engineering skills are required throughout the project lifecycle with many critical to delivery as construction works progress.
Ensuring the right project leadership skills exist – in both clients and the supply chain – is essential to delivery
Case study: North west construction pipeline
Northern Powerhouse Infrastructure pipeline investment 2015-2020 (£29 billion)
• The IPPR report argued that despite changes occurring in the North West region decisions are still centralized where the precise nature of devolution and the suitable nature of power which should be passed is still debated;
• Goals are economic, accessibility & accountability and sustainability.
The Northern Powerhouse!?
The northern powerhouse • must generate a better type
of economic growth • must liberate the potential of
its greatest asset – its people • needs investment ……in its
creaking infrastructure
• must rejuvenate local democracy by giving people a genuine involvement in the way the north of England is run.
Increasing investment in infrastructure is critical to improving connectivity and productivity
The northern powerhouse • must generate a better type of economic
growth • must liberate the potential of its greatest
asset – its people • needs investment ……in its creaking
infrastructure • must rejuvenate local democracy by
giving people a genuine involvement in the way the north of England is run.
National Infrastructure Pipeline by region
Government Northern Powerhouse investments: March 2015
“Towards the north-west construction and infrastructure powerhouse”?! As the taps on the investment pipelines are turned on, it is the
procurement decisions that will determine the social and economic impact that the “powerhouse” will generate. Amongst all industry sectors construction has the quickest and deepest economic multiplier effects. If the powerhouse is to be more than a free labour market, if it is to help re-balance the economy, if it incorporates some anti-austerity measures, if the new governance structures for devolution are to have an impact, then better procurement decisions, and new procurement vehicles are needed, especially in the construction and infrastructure sectors.
THE WIDER POTENTIAL USE OF THE INVESTMENT PIPELINE DATA We can anticipate many other powerful uses of this pipeline, including • to help identify hot-spots of activity and pinch points in supply to allow the promotion of smoothed investment planning across sectors by major clients in the region; • to potentially forecast the impacts of demand scenarios derived from the pipeline on future outturn costs, and help to mitigate the impacts of cost inflation; • To encourage major clients in the region to invest more in the commissioning phase of programmes and projects, as outlined in IUK Project Initiation Routemap; • To encourage the major clients in the region to adopt the set of Common Procurement Principles being developed by government;
All of the above would potentially encourage changed behaviours and new business models from suppliers? For example, suppliers may • invest more in their own workforce,(or their sub-suppliers), • improve payment times, and • may help reduce false self-employment. Further in consideration of the recent Review of the Public Services (Social Value Act) (2012, and especially the amendments to the EC Procurement Regulations the use of social and environmental criteria in procurement has been encouraged. If this public sector purchasing power was harnessed in the north-west (pure public sector = £2.9Bn) and was spent with a view to securing beneficial social and environmental outcomes, it would, inter alia, • mitigate against any overall falls in this spend during the next
parliament • help prepare the suppliers for more inward, private sector
investment • stimulate local growth by increasing the spend that passes, directly
and indirectly, to SME’s in supply chains
Post-Script University of Salford is currently working on a project – “The definition, development and measurement of social value through construction and infrastructure expenditure - Helping the Construction and Infrastructure Client’s Business Model to incorporate Social Value”
The Project
Results so far
Most local public clients have long term visions about any Social Value to satisfy their local population’s needs; they struggle to define and hence deliver this vision especially where the goals exceed the initial duration of constructing any project.
Clients perceived contractors to have a shorter term vision of Social Value where they are only interested to deliver during construction duration which creates a conflict in defining and implementing SV
A Contractor Perspective
Jocelyne Underwood Senior Community and Regeneration
Advisor
THE IMPORTANCE OF SOCIAL VALUE
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DELIVERING SOCIAL VALUE OUR APPROACH MANCHESTER CASE STUDY
The below projects have been pivotal in shaping the delivery of regeneration •Ethiad Stadium – A catalyst for regenerating New East Manchester (NEM) •Building Schools for the Future & The East Manchester Academy (TEMA) •Manchester Town Hall Transformation Programme •NWCH & the Construction GTA
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ETIHAD STADIUM regenerating New East Manchester
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BUILDING SCHOOLS FOR THE FUTURE
BUILDING SCHOOLS FOR THE FUTURE Manchester people
City made a commitment to recruit and employ apprentices with contractors and sub-contractors providing placements. • £500m programme - Manchester People into Construction •150 apprentices supported on this and the wider council framework •Savings to the public purse - CLES Report - £25k saving to the public purse for each apprentice employed
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MANCHESTER TOWN HALL COMPLEX 66 Apprentices
•12 months spent developing a regeneration, employment and skills plan. •Ambitious targets agreed working collaboratively with the client •High profile project during recession required lots of positive opportunities for the local community •66 new or ‘project initiated’ apprentices with a further 22 sustained through the programme
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ETHIAD STADIUM Regenerating New East Manchester
500+ APPRENTICESHIPS industry collaboration
GTA launched 2012 •Led by LOR from its launch in 2012 for 12 months Callum said: “We see this collaborative effort as a vital step not only to secure the long-ter future of our industry, but to drive sustainable economic benefits in our region” Between the NWCH and the Construction GTA, industry has collectively delivered over 50 apprentices.
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THE IMPORTANCE OF SOCIAL VALUE
2006 -
Delivery of social value is scalable – from small community engagement to major projects such as the town hall. Using schemes like the GTA to employ apprentices, industry, working collaboratively can achieve more. •Community engagement – creating long lasting legacies •All LOR projects are now required to have a social sustainability plan and we are working to get some consistency with the terminology: Social value; CSR; Social Sustainability •We are aware of the importance of the footprint we make, not just with the building but those that will be there long after we’ve gone.
