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FBE Manchester - Social Value - 10th February 2016

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FBE Manchester - The importance of social value
Peter Schofield
Professor Peter McDermott
Jocelyn Underwood

Published in: Business
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FBE Manchester - Social Value - 10th February 2016

  1. 1. Social Value 10th February 2016
  2. 2. Social Value – it’s increasing importance and benefits to clients in Construction Peter Schofield AGMA Procurement Hub Programme Manager February 2016
  3. 3. Agenda  AGMA Procurement Hub  Objectives  Operation  Benefits  Social Value in Greater Manchester  Social Value Act 2012  GM Social Value Policy  Indicators  Next Steps
  4. 4. 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
  5. 5. 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)
  6. 6. 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
  7. 7. 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
  8. 8.  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
  9. 9. 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
  10. 10. 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
  11. 11. 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
  12. 12. 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
  13. 13. 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
  14. 14. 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
  15. 15. 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
  16. 16. Questions? Peter Schofield – AGMA Procurement Hub Programme Manager peter.schofield@trafford.gov.uk Tel: 0161 912 4597 Mob: 07814 459668
  17. 17. Social Value through Construction and Infrastructure Procurement Professor Peter McDermott p.mcdermott@salford.ac.uk 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,
  18. 18. 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?
  19. 19. What?
  20. 20. 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.
  21. 21. 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?"
  22. 22. 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?
  23. 23. 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?
  24. 24. 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
  25. 25. Consider just one issue - SMEs in Procurement...
  26. 26. Many policy/advisory documents…
  27. 27. 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).
  28. 28. New Government Construction Strategy November 2015? (And CSR 25th November) February 2016??? Post 2015 Election Construction Policy Context?
  29. 29. Why?
  30. 30. 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.
  31. 31. • 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?
  32. 32. New Government Construction Strategy November 2015? (And CSR 25th November) Post 2015 Election Construction Policy Context?
  33. 33. How?
  34. 34. 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.
  35. 35. 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)
  36. 36. 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?
  37. 37. 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
  38. 38. 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
  39. 39. 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
  40. 40. But? No buts…..
  41. 41. 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.
  42. 42. 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?"
  43. 43. “…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….
  44. 44. Cabinet Office -Social Value This procurement policy note gives guidance supporting the Public Services (Social Value) Act 2012.
  45. 45. Social and Economic Value through Procurement?
  46. 46. 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.
  47. 47. New Government Construction Strategy November 2015? (And CSR 25th November) February 2016??? Post 2015 Election Construction Policy Context?
  48. 48. The north-west Imperative?
  49. 49. “Towards a north-west construction and infrastructure powerhouse”?! New Government Construction Strategy November 2015? (And CSR 25th November) February 2016???
  50. 50. Fixing the foundations: Creating a more prosperous nation
  51. 51. “The government’s framework for raising productivity is built around two pillars….”
  52. 52. Resurgent cities, a rebalanced economy and a thriving Northern Powerhouse
  53. 53. The National Infrastructure Plan for Skills
  54. 54. 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.
  55. 55. Construction productivity growth has lagged behind the other sectors of the economy
  56. 56. Chart 2.A by 2020 there would be a reduction in workforce numbers meaning demand would outstrip supply by around 100,000 people
  57. 57. Construction management and supervisory roles increasing levels of demand for these skills across all English regions over the next five years….
  58. 58. Technical and engineering skills are required throughout the project lifecycle with many critical to delivery as construction works progress.
  59. 59. Ensuring the right project leadership skills exist – in both clients and the supply chain – is essential to delivery
  60. 60. Case study: North west construction pipeline
  61. 61. Northern Powerhouse Infrastructure pipeline investment 2015- 2020 (£29 billion)
  62. 62. • 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.
  63. 63. 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.
  64. 64. National Infrastructure Pipeline by region
  65. 65. Government Northern Powerhouse investments: March 2015
  66. 66. “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.
  67. 67. 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;
  68. 68. 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
  69. 69. 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”
  70. 70. The Project
  71. 71. 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
  72. 72. A Contractor Perspective Jocelyne Underwood Senior Community and Regeneration Advisor THE IMPORTANCE OF SOCIAL VALUE
  73. 73. © Laing O’Rourke 2014, all rights reserved.74 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
  74. 74. © Laing O’Rourke 2014, all rights reserved.75 © Laing O’Rourke 2014, all rights reserved.75 ETIHAD STADIUM regenerating New East Manchester
  75. 75. © Laing O’Rourke 2014, all rights reserved.76 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
  76. 76. © Laing O’Rourke 2014, all rights reserved.77 © Laing O’Rourke 2014, all rights reserved.77 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
  77. 77. © Laing O’Rourke 2014, all rights reserved.78 © Laing O’Rourke 2014, all rights reserved.78 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.
  78. 78. © Laing O’Rourke 2014, all rights reserved.79 © Laing O’Rourke 2014, all rights reserved.79 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.

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