Re-thinking Value in the built Environment - A G4C event

1
Re-thinking value
in the built
environment

Re-thinking value in the built
environment
July 31st 2015

Founded in 1986; UK’s largest independent think
and do tank
Inspired by 3 principles:
 Sustainable development
 Social justice
 People’s well-being
…and a belief that metrics can create positive
change
• Social enterprise founded and owned by NEF to
help organisations put NEF’s ideas into practice.
• We aim to prove and improve social, economic
and environmental impact and put people and the
planet at the heart of our work.
“Economics as if
people and the
planet mattered”

Why are we interested in
measuring social value?
Big Picture

The problem
with
traditional
measures of
success
Robert Kennedy (1968) talks about Gross National
Product

Problems with
measurement
1. Financial measurement:
limited measure of value
2. We allocate resources only
to the things we can measure
3: Stakeholders are left out of
decision making

SROI is a way of understanding how
effectively money is spent
SROI = [Value of outcomes]
[Investment]
It considers triple-bottom-line benefits and
investments (economic, social,
environmental)
It is an outcomes based evaluation
It measures change that matters to
stakeholders
It can be evaluative or forecast
What is
SROI and
how can it
help us?

Principles
1. Involve Stakeholders
2. Understand what changes
3. Value the outcomes that matter
4. Only include what is material
5. Do not over claim
6. Be transparent
7. Verify the result

Some
relevant
organisations
we have
worked with

CASE STUDY
Newlon Fusion
(Housing &
Regeneration) -
Social valuation

THANK YOU
Charlotte Crack
NEF Consulting
For further information contact:
charlotte.crack@nefconsulting.com

+44 (0) 7811160822 adam@adamwilkinson.com www.lm3online.com
Social Value is there a benefit
and to whom?
Adam Wilkinson
12

Today
• Brief overview of ways to assess social value,
based on purpose
• How sustainability/Social value are changing
public procurement
• An example of a methodology and tool - LM3
• Case study with TfL
13

What is your purpose?
14
• Communities – CSR, Reputation
• Shareholders – Demonstrating value
• Customers/Clients – Winning business, CSR
• Government – Winning business

15

Forces on Public Procurement
1. Eu Regulation and new directive
strengthening and including social benefit
specifically for the first time
2. UK National Procurement policy equal
weight to social, economic, environmental
3. Localism act and Public Services (Social
Value ) Act – Specific legislation
16

Social value criteria
17
Anecdotal
E.g Case
Study
Monetisa
tion
E.g SROI
Impact
Measure
E.g
Outcome
Star
Financial
E.g LM3
Objectivity
Auditability
1 5 8 10
Commissioning/
Tender usability
1 2 7 9
Resource cost
Human and £
4 8 4 2*
Breadth of
description
5 7 5 5

NNDC compared two
contracts. The LM3s are on
the right. Note that the
smaller contract in fact
generated more money for
the local economy!
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How LM3 works in practice
Two construction contracts

19
Large scale Case
Study
 ALL North East
Local Authorities’s
 140.000 suppliers
 £3.5bn annual
procurement spend

Corporate Lm3 Area distribution

Business Case?
21
• Government Procurement highly regulated local, national,
and European scales
• Tenders really have very limited area for distinctiveness
• Price/Quality balance and Sustainability
• To be distinctive meet procurement criteria:
• Objectivity
• Transparency
• Auditability

TfL STIP
22
TfL's Structures and Tunnels Investment
Portfolio (STIP) is currently made up of
eight key structures, all of which require
refurbishing or replacing to ensure they
remain fit for purpose for the 21st
Century

Structures and lead suppliers
• Hammersmith Flyover Costain
• Chiswick Bridge BAM Nuttall
• A406 Woodlands retaining wall BAM Nuttall
• A406 Fore Street Tunnell BAM Nuttall
• A127 Ardleigh Green rail bridge Hochtief
• A1 Upper Holloway rail bridge Hochtief
• A1 Highbury Corner rail bridge Hochtief
• A406 Power Road rail bridge Hochtief
23

24

25

26
First Indications

Messages
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• Make sure you understand your purpose and any
regulatory or other criteria.
• This applies both to Commissioner and Supplier
• LM3 meets public sector criteria – Common Language
• TfL, Company, and Community all benefit
• Allows TfL to quantify socio economic impact – not only in
London but also nationally
• Be systematic, consistent, and do it properly

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References
• www.lm3online.com
• www.adamwilkinson.com
• www.proveandimprove.org
• Measuring sustainable procurement

Transport for London’s Responsible
Procurement and Supplier Skills
Programmes
Tim Rudin
Supplier Skills Project Manager
31st July 2015

London
• 1,579km2
• 7.5m residents
• 30 million visitors per annum
• 28.7 million journeys per day
…and growing - London is growing at a rate equivalent to
Tube train full of people added every week

London’s Social Challenges
Poverty
• 1 in 7 of London’s employees are paid at a rate below poverty levels
• 590,000 children (37%) live in poverty in London
Employment
• Just under 1 in 5 households in London are workless
• Around 15% of 16 – 24 year olds in London are unemployed
• Low level of skills – under 50% have literacy & numeracy levels of primary school-
aged standards
• Employment projections show an increase in the number of jobs requiring degree
level or higher qualifications of 800,000 between 2011 and 2036 – Londoners
need to be skilled up to successfully compete for jobs.
Diversity
• A third of London’s population are from a BAME background
• 55% of young BAME males are unemployed
• 20% of the working age population of London has a disability, yet only 11% are
working

TfL Commercial - Scope
Around £6bn
per year
30,000
suppliers
Diverse
range of
goods and
services
Over 500
Commercial
agents
£73bn spend to 2020/21 in TfL’s Business Plan

Realising Social Value through Responsible
Procurement
Supply chain diversity &
equality and inclusion
Community initiatives
& tackling crime and
disorder
Ensuring training
and employment
opportunities &
meeting skills
shortages
Union representation
and workers rightsLondon Living Wage
and working conditions
Ensuring standards
of labour
conditions and
human rights in
the supply chain
Climate change,
pollution, natural
resource
management
Fair
Employment
Community
Benefits
Workforce
Welfare
Environmental
Sustainability
Ethical
Sourcing
Skills and
Employment
Equality and
Supplier
Diversity

The benefits of Responsible Procurement
• Helps manage reputation risk
• Builds scarce resources & skills in supply
chain
• Brings improvement and innovation through
supply chains
• Helps deliver value
• Meets policy and organisational objectives
• It’s the right thing to do!

TfL’s Supplier Skills Programme
Tessa Staniforth

Skills Shortages in the transport and infrastructure
sectors
Up to
20%
skills gap
in some technical
areas

Skills & Employment Programme
 Strategic Labour Needs and Training
(SLNT) – one of the seven themes of the
Mayor’s Responsible Procurement Policy
 Supply chain programme initiated in 2009 –
leverage wider links with suppliers and
Mayoral initiatives
 Programme uses a model developed in
conjunction with suppliers to incorporate
employment and training requirements in
contracts
 Ensures TfL spend is generating economic
and social benefits locally

Skills and Employment Programme -
Approach
 Strategic Labour Needs & Training requirements
attached to new contracts – ‘Contractual Approach’
• Skills & employment outputs linked to contract
spend
• Range of activity areas suppliers can deliver
against
 Structured approach to engaging suppliers holding
existing contracts – ‘Supplier Relationship Management
Approach’
• Deliver skills and employment outcomes on a
voluntary basis

SLNT Contractual Approach
• Trigger Points:
• Equivalence and
Priority:
Consultancy /
Service
Contracts
(£1m Value)
OR
Construction
/
Manufacturin
g Contracts
(£3m Value)
1 SLNT
Output
Apprenticeship
Worklessness
Job Start
Graduate
Placement
Positions
(20 Days)
Tasters
Positions
(100 Days)
Apprenticeship
Start
Job Start (non
–workless)
School
Engagement
(20 days)
50% of SLNT
outputs must be
in a priority area

Delivery to date
 Supported suppliers in creating over 4,000 new apprenticeship positions
within the supply chain
 Over 4,500 unemployed Londoners have been access jobs with TfL
suppliers
 Provided work, training and placement opportunities for a range of
under represented groups including NEET’s, ex-offenders and people
with disabilities.
• 83 ex-offenders into employment
 Recognition:
• Business in the Community Collaboration and Partnership
Award 2013
• Government Opportunities CSR Initiative of the Year Award
2013

Outcomes
Engineering Consultancy
Apprenticeship
Work Experience Programme
with Ringway Jacobs
Routes Into Work at London
Transport Museum
Highways (Construction)
apprenticeship programme
Highways Maintenance
apprentices
Worklessness job starts on TPS contract

Keys to success
 Internal buy-in
• Senior level support and sponsorship
 Supplier Skills Team provides support and guidance
• Avoid ‘let and forget’
 Partnership working between TfL and its suppliers
• Cleary articulate the ‘why’
• Addressing common priorities - mutually beneficial activities
 Working with the right partners
• NAS, DWP, SFA, network of referral partners
 Celebrate success

Re-thinking Value inRe-thinking Value in
Re-thinking Value
in Construction
Ben Pritchard
Consultant
@Benpritchard53

Thank you for
listening
For further information
contact:
Ben.Pritchard@invennt.com

Introduction to Social Return on
Investment in Practice

The Context: The Social Value Act
• The commencement of the Public Services
(Social Value) Act, requires “public authorities
to have regard for economic, social and
environmental well-being in connection with
public service contracts” (HMG, 2012)
• The Cabinet Office (2015) recent ‘Social Value
Act Review’ explains the lack of clarity in social
value measurement makes it harder for
procurement officers to evaluate the additional
value for money claimed by a social value offer.
• The impact of the financial crisis in the
construction industry, was “particularly felt on
the recruitment of young people, where
apprenticeships have plummeted”
(Chevin,2014).
• In 2013 there were 7,280 construction
apprentices in England half the number for
2008/2009 (Chevin, 2014) .
“The Budding Brunels
Rail course was beneficial
it improved my interview
skills and gave me more
information on
engineering.”
Karthigan, London

• There is not currently a standard approach to SROI
it is important that it is underpinned by a strong
evidence base.
• SROI is a framework for measuring a broader
concept of value taking into account social,
economic & environmental aspects.
• SROI is not a panacea and that the data
requirements are “fairly onerous usually academic
evidence has to be drawn from other studies an
assumptions and expert judgement used (Oxford
Economics, 2009: 4).
• One of the problems is there are not standard
proxies in use. The Global Value Exchange is an
interactive website that enables users to upload
outcomes, indicators and financial proxies so
progress is being made.
The Social Return on Investment Methodology
“The course was beneficial
because I gained
confidence, experienced
new things and got
knowledge about Network
Rail”.
Ali, London

Budding Builders Birmingham
• Eight young people completed a practical
construction skills course at the
Summerfield Community Centre.
• Young people completed an OCN Entry
Level 3 Course in Multi-Craft.
• Young people also completed CSCS &
employability skills training.
• Young people then progressed on to a
Project where they updated the
Community Centre alongside Willmott
staff.
“The most valuable
lesson that any child can
learn is that he or she
can achieve a great deal
more by becoming part
of a team than they ever
could on their own.”
HRH The Duke of
Gloucester

What Changed?
• Two young people that were working part
time were inspired to consider a career in
the construction professions.
• One of the female students family were
supportive of her choice of a career in
construction in light of the support she
received from the Trust & Willmott Dixon.
• Young people increased their confidence as a
result or working in a real construction
environment.
• Young people were proud of the contribution
they had made to improving the
Summerfield Community Centre.
“As a result of the project
there were positive
changes to the
community who use the
centre. The
improvements will bring
people together”.
AH, Birmingham

Building Budding Builders SROI
“The group came together and
demonstrated good
communication skills, team
working skills, peer learning
skills & following instructions.
They also gained valuable
practical experience,
employability skills & all 8 have
received an OCN ”. Angela,
Construction Youth Trust
Issue Outcome Stakeholder Financial
proxy
Confidence Increased confidence Beneficiary £1195.00
Friendship Increased social networks Beneficiary £806.00
Increased Income Increased wages Beneficiary £6341.80
Tax revenue
forgone
Increased tax take Exchequer £501.20
Improved health Beneficial impact of health
on employment.
NHS £698.60
Career in
professions
Secure a job as Trainee
Project manager for 2
trainees less JSA
Beneficiary £14,592
Tax revenue
forgone
Increased tax as a result of 2
learners moving from p/t to
f/t work
Exchequer £2,000

Forecast SROI Ratio for Budding Builders
“A well thought-through
project with real work
experience: a project that the
whole community could get
involved with. It was a great
opportunity to work alongside
the Willmott Dixon Team
Oscar, Construction
Youth Trust
Forecast Social Return on
Investment (SROI) Ratio
Social value of outcomes £70,328.17
Inputs of the Willmott Dixon
Foundation’s funding & Willmott Dixon’s
staff time supporting young people
£10,800
SROI Ratio £1: £6.51
For every £1
invested
There is forecast wider
social value creation of
£6.51

The Budding Brunels Rail Course
• 18 students completed the Buddings
Brunels Rail course in Acton
• Students attended Imperial College
London & were given interactive career
presentations from Network Rail staff.
• Students went on a site tour of the Acton
dive-under site & were introduced to a
dumpy level and a theodolite.
• Students pitched an advertising
campaign to encourage more people into
the industry.
• Students were interviewed by Network
Rail & those that performed well were
offered a work experience placement.
.
“I want to be an
engineer for Network
Rail or London
Underground”.
Ali, London

What Changed?
• For young people on the course
• Enhanced teamwork & Interview skills
• Increased knowledge of the construction
industry
• Students said Budding Brunels Rail enabled
them to make a more informed decision about
their future careers.
• Increased awareness of opportunities
available to them within construction.
• Increased confidence
• Enhanced employability skills
• For young people on the work experience
• Increase in confidence working in a
professional environment.
• “I would like to visually see my work after I
retire”
• All students reported an increase in knowledge
of different careers within the construction
industry
“The Budding Brunels
Rail course was beneficial
it improved my interview
skills and gave me more
information on
engineering.”
Karthigan, London

Building Budding Brunels Rail Forecast SROI
“The course gave me the
incentive to finish my
qualification and go on to
higher academic studies”.
Madji, London
Issue Outcome Stakeholder Financial proxy
Confidence Increased confidence Student s £1195.00
Friendship Increased social
networks
Student s £806.00
University placement Competitive university
placement
Students £495.00
Skills shortage Reduced skills
shortages
Construction industry £30,614
Confidence teaching Increased confidence
working with young
people
Construction industry
professionals
£200.00
Confident
Communication
Increased confidence
working in a
professional
environment
Students following
work placements
£182.00
Project Management Basic knowledge of
project managements
Students following
work placements
£395
Increased aspiration Improved motivation at
school
Students following
work placements
£243

Forecast SROI Ratio for Budding Brunels Rail
“I thought construction was
only brick laying and
cement, but now I can see
the many other things in
construction especially the
technology that is used!”
Student, London
Forecast Social Return on Investment
(SROI) Ratio
Social value of outcomes £81,163.66
Inputs of Network Rail’s funding &
Network Rail’s staff time supporting
students
£14,943.80
Forecast SROI Ratio £1: £5.43

• The SROI model at the Trust has been
developed as part of a KTP with LSBU
• SROI is a principles based methodology and
the model at the Trust used to calculate the
SROI of projects at the Trust is robust.
• It is the changes that happen for
stakeholders that are important and through
the SROI report we described the value the
project created.
• The forecast SROI ratio for Budding Builders
is 1: £6.51 & for Budding Brunels the
forecast SROI ratio is 1: £5.41 but the report
is about value not about money.
Recap on the SROI of Budding Builders &
Budding Brunels
“The sessions have been a real
eye opener and I can’t get
enough of them - while my
youngest child is being cared for
in the crèche, I'm out learning
new skills!.”
Sarah

John Graham
Head of Business Development
Construction Youth Trust
www.constructionyouth.org.uk

Re-thinking Value in the built Environment - A G4C event

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