Welcome to the first in our 3-part series on Winning Business through Social Value. This is a guide for construction contractors; We will talk you through the 4 critical steps you need to consider when implementing your Social Value strategy to help you win tenders.
But what is Social Value in terms of the construction industry?
In 2012 the Government introduced the Public Services (Social Value) Act 2012 (‘the Act”). This had a goal to ‘…strengthen the social enterprise business sector and make the concept of ‘social value’ more relevant and important in the placement and provision of public services’.
But how? The point of the Act was to make sure that when local and national bodies were making spending decisions, they gave consideration to outcomes which benefited the community. In an economic, social or environmental way. The intention was to make sure public funds delivered the best value for money. Not only in the ROI on the project, but in terms of wider benefits to the community,
So, authorities must make sure the companies they employ to carry out contracts demonstrate that they make decisions to benefit the community too. This could be through a wide range of different commitments… Examples include a pledge to employ a certain amount of long-term unemployed people; agreeing to replace outdated or dangerous facilities in the community in which they operate etc
While this act was brought in almost 10 years ago, it was recently recognized that it did not go far enough. The need for businesses to act sustainably is coming under greater scrutiny. There was still a tendency for contracts to be awarded based on the lowest price, basically missing the point of the new Act.
In 2015, things went a little further. The United Kingdom, along with the other United Nations, committed to delivering the Sustainable Development Goals (SDGs). This outlines 17 goals to be achieved by 2030. These are aimed at ending poverty, protecting the planet and ensuring prosperity for all.
Things took a more decisive turn this year with recent additions to the Act – referred to as PPN 06/20. These came into place in January 2021, and decree that a minimum 10% of the weighting criteria of tender awards must be based on the social value credentials. It’s no longer enough to sponsor a local event in the name of a public image exercise. There are now serious commercial consequences to improving the community. Carbon reductions, training schemes, locally sourced materials… the list of options on how a company can provide social value is vast. But to make things a little clearer, as part of PPN 06/20, the government have created a Social Value Model. This should be applied to government procurement and runs on 5 themes and 8 outcomes:
So, the % contribution from social value in tender submission is now often 15%-20% or more. And financial penalties have been introduced for not delivering on commitments. Thus capturing and conveying the social value a business delivers has moved from a ‘nice to have’ to a ‘must have’. Not only for winning new business but also maintaining it.
Yet the landscape is still a confused one.
While it is great that the government have laid down a foundation for how they will asses the social value component, how do you actually measure the activities you are doing and effectively relay this back to them in your tender? If you have had an ad hoc or reactive approach to this element of tendering before now, where do you start? And how can you know that what you are putting forward is valuable to the body evaluating the tender?
It is time to change the way Social Value contributions are thought of. Contractors need to take control of their own Social Value approach. To empower themselves to be able to succinctly ‘tell their story’ in bid submissions; to feel proud to report back on achievements to clients during project meetings; and to derive overall business success from properly engaging their staff, supply chain and community partners.
You can read more about how the social value component of a tender is weighted and considered here
So where do you start when making sure you are demonstrating your social value? It goes far beyond writing the provisions into your tender contract. It comes down to how you operate as a business, how your staff feel, and how you tell everyone about your wins… You can read part two on how to look at social value in construction here.