Social Value in Construction

Ani Raiden, Martin Loosemore, Andrew King, Chris Gorse

• Publisher: Routledge
• Year: 2018
• ISBN:
  9781351587198
• Edition: 1
• Topic: Business
• Subtopic: Public Relations
• Index: Business

While the concept of social value is not new, recent interest in social value in construction has grown because of new social procurement legislation around the world and an increasing acceptance of the need to ensure construction projects provide social value, rather than simply economic value. Despite this growing recognition, literature and professional guidance on the subject is hard to find. This is the first book looking at social value in construction and it sets the agenda by asking and answering important questions like:

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• How is the construction industry developing and supporting social enterprise and social value and for who?

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• How and when is the industry recording and measuring social value and its effect?

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• Which organisations are doing things well and what can we learn from their experiences?

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• What can industry players do together to consolidate efforts and drive improvements?

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• What are the key challenges in the field and what does the future look like?

Drawing on a variety of professional and academic experiences and disciplines, the authors present global perspectives and lay the foundations for creating social value in the construction industry. This timely book makes use of real-life case studies and examples of best practice to demonstrate how innovative companies can utilise contemporary research to create social value through their projects. It is time the construction industry viewed community involvement and corporate social responsibility as an opportunity rather than a risk, and this is the book that shows the industry how. This is essential reading for all professionals in the construction, engineering, architecture and built environment sector. In particular, project managers, clients, contract managers, quantity surveyors, CSR and HR personnel will gain a lot from reading this book.

Part 1

Principles and conceptual foundations

Part 1 of our book lays out the principles and conceptual foundations to social value. In the introduction we define social value and discuss the language of social value. We then consider the many drivers for thinking about and creating social value, together with the political context of social value. We begin to map out some practical examples of what social value may mean in the built environment, and highlight specific projects that have evidenced social value in practice throughout the construction project’s life-cycle from planning and design, to tendering, construction and facilities management. Allaway and Brown then present a review of the legal framework and associated practical implications in the UK in Chapter 2. This is followed by a theoretical justification for social value by Knight in Chapter 3. In Chapter 4 we discuss different ways of creating social value within and between organisations, through strategic initiatives, such as partnering with social enterprises, and some specific ways of achieving impact through employment and training. Embedding social value to strategy and practice arises as a key theme in our discussion. Finally, Chapter 5 outlines current debates and different models and tools regarding the assessment and measurement of social value.

1Introduction

Ani Raiden, Martin Loosemore, Andrew King and Chris Gorse

In this chapter we aim to define social value and demystify the somewhat confusing language that is used in this area. Through reference to contemporary and numerous practical examples, we also discuss emerging trends and drivers of social value in the built environment and the ways in which social value can be created throughout a construction project’s life-cycle from planning and design, through tendering, construction and facilities management. The chapter concludes with a discussion about the ethics of social value in the built environment and raises important questions for practitioners, students and researchers about the many perspectives that must be considered when developing, measuring and reporting the social impact initiatives that are designed to give back to the communities in which the industry builds.

Social value in context

The built environment has a major impact on the communities in which it builds, although the social dimensions of this impact have been relatively neglected in comparison to the economic and ecological (environmental) issues. In academic circles, the recent interest in the concept of ‘social value’ in the built environment has been largely a response to the need to fill this gap in our knowledge. In practice, social value has been driven by legislation, procurement, and growing community demands for greater corporate social responsibility (CSR) in built environment business practices. The World Business Council for Sustainable Development defines CSR as ‘the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large’ (Watts and Holme 2003: 3).

In the context of construction, CSR is about the relationship between organisations and society and as Watts, Dainty and Fernie (2015) point out, a good CSR record is becoming an increasingly important selection criteria for both public and private construction industry clients employing firms within the built environment. Social procurement is just one increasingly popular mechanism by which construction clients are enforcing their CSR expectations on the built environment, which in simple terms involves leveraging their purchasing power with the deliberate aim of creating social value in the communities in which they build (Barraket, Keast and Furneaux 2016, Barraket and Loosemore 2018. While there remains a ‘lack of construct clarity’around the emerging concept of social procurement (Furneaux and Barraket 2014: 265) social procurement is broadly defined as ‘the acquisition of a range of assets and services, with the aim of intentionally creating social outcomes (both directly and indirectly)’ (ibid: 269). In simple terms, ‘direct’ social procurement involves purchasing construction products and services directly from socially responsible businesses and social benefit organisations which trade for a social purpose. These would include, for example, social enterprises, indigenous businesses, enterprises owned by people with disabilities, minority owned enterprises, enterprising not-for-profits/ charities, social businesses, cooperatives, enterprising charities and local businesses. In contrast, ‘indirect’ social procurement involves requiring business partners in existing construction supply chains to do the same, through numerous mechanisms such as social clauses in employment contracts; supplier codes of practice; responsible sourcing policies. Through social procurement initiatives, businesses diversify their project supply chains with the dual goal of maximising both economic and social value for their shareholders, stakeholders and clients. This social value can take many forms. For example, some social procurement initiatives may be targeted at employing local businesses while others may be aimed at providing employment and training opportunities to disadvantaged groups such as the long-term unemployed, disengaged youth, ex-offenders, people with disabilities or indigenous groups. These outcomes can in-turn translate to numerous impacts for wider society such as improved income, health and well-being and reduced crime, substance abuse and incarceration, which social impact practitioners controversially attempt to measure, quantify and monetise using a variety of techniques such as social return on investment (SROI) (Maier et al. 2015).

As Loosemore and Higgon (2015) and Petersen and Kadefors (2016) point out, due to its large size and its potential multiplier effect into the wider economy, the built environment is increasingly seen by governments (and major socially responsible private clients) as a powerful tool to tackle complex social problems which seem resistant to traditional government welfare interventions and policies. In line with emerging and contemporary principles of ‘New Public Governance’, one of the defining features of social procurement is that rather than governments working alone to tackle social problems like entrenched unemployment, social problems are resolved through new cross-sector collaborations and partnerships between the government, private and third sectors (Furneaux and Barraket 2014; Barraket, Keast and Furneaux 2016). As we will reveal, these new expectations to create social value by collaborating across previously disconnected sectors, raise many new challenges, but also many opportunities, for professionals and businesses operating in the built environment.

One of the immediate challenges, both within and outside the construction sector, is that the emergence of social value as a new currency in business transactions has been accompanied by considerable confusion as to what the term means. The debate around social value has become characterised by a multitude of different commentators attaching different definitions to the term from numerous perspectives including: government; the third sector; business; investors; and from many different fields in academia such as business, sociology, politics and accounting.

Some of the most widely cited definitions of social value are provided below to illustrate the potential confusion that can confront someone who is trying to come to terms with this emerging area. For example,

Emerson et al. (2000) defined social value as being created when resources, inputs, processes or policies are combined to generate improvements in the lives of individuals or society as a whole.

Cook and Monk (2012:11) define social value as ‘the additional benefit to the community from a commissioning/procurement process over and above the direct purchasing of goods, services and outcomes’.

Social Enterprise UK (2012: 11) define social value in the context of social procurement as ‘the additional benefit to the community from a commissioning/procurement process over and above the direct purchasing of goods, services and outcomes’. According to Social Enterprise UK, social value involves looking beyond the price of goods and services procured to consider the collective benefit to a community when a public body chooses to award a contract.

The Social Value (Public Services) Act 2012 in the UK defines social value as a concept which seeks to maximise the additional benefit that can be created by procuring or commissioning goods and services, above and beyond the benefit of merely the goods and services themselves.

The UK Cabinet Office (2012) defines social value as the positive social, environmental and economic impact of an activity on stakeholders over and above what would have happened anyway, taking into account the negative impact of an activity.

Social Value International, a global network focused on social impact and social value, defines social value as the relative importance that people place on the changes they experience in their lives, from the perspective of those affected by an organisation’s work, not all of which can be captured in market prices.

In the UK, Croydon Council’s acclaimed Social Value Toolkit defines social value as arising from ‘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’ (Croydon 2012: 5).

Another prominent UK local council in the social value debate includes Knowsley Metropolitan Borough Council, which defines social value as ‘Outcomes, measures and activity that will create strong and well-connected public, private and social sectors that enable communities to be more resilient’.

The Social Value Portal in the UK, an on-line tool that allows organisations to measure and manage the contribution that their organisation and supply chain makes to society, defines social value as the wider financial and non-financial impacts of programmes, organisations and interventions, including the wellbeing of individuals and communities, social capital and the environment.

The language of social value

The confusion around the concept of social value has been exacerbated by commentators using the term ‘social value’ interchangeability with other related terms such as ‘social benefit’, ‘community benefit’, ‘social impact’, ‘social output’, ‘social outcomes’ and the broader concept of CSR. The language of social value has become vague and imprecise with different terms meaning different things to different people depending on the context in which it is used. Indeed, in the UK, a review of the implementation of the Public Services (Social Value) Act 2012 by the UK Cabinet Office found that difficulties in defining social value are a major barrier to its implementation (Cabinet Office 2015). More recently, in the specific context of construction, Burke and King (2016) and Farag, McDermott and Huelin (2016) found that there was considerable confusion around what social value means in the industry due to a lack of guidance on how to deliver and define social value and a lack of prominence given to social value in public sector construction tenders.

While some argue that the lack of any formal, agreed or indeed legal definition of social value is not a problem because it allows for innovation in the delivery of social value to the community, others fear that if left too vague there is a danger that the concept will lack any practical meaning. So, to address the definitional problems which plague the field as noted above, and without being too prescriptive as to what forms of value can be included in a definition, we begin this chapter by defining some key concepts and terminology used in the social value literature. This will allow us to move forward in this book with a common understanding of the correct terminology and of what we mean by social value, whilst also recognising that all organisations create unique forms of social value, both good and bad, in their own unique ways.

These key terms which have emerged in the developing field of social value, can be found in the growing body of academic literature and the many international practical guidelines published on the subject of social value measurement such as Brouwers, Prins and Salverda(2010) Cabinet Office (2012), CSI (2014), G8 (2014), ICAEW (2015), NCVO (2013), NPC (2014), GECES (2014), NSW (2015). Although there remains no agreed international standard for social value measurement and some variability in the use of these terms across different disciplines, the following definitions are widely recognised in the emerging debate around social value and for this reason are adopted in this book.

Social ‘Inputs’ = resources invested in activity/programme/intervention (financial, natural, intellectual, human, p...