Measuring and maximising the social value of major infrastructure programmes
The lives of individuals and their communities can be transformed not only by the creation of well-designed infrastructure but also by the project team doing social value brilliantly during the delivery phase. Proactively seeking out positive social and economic outcomes that create social value is one of the most rewarding parts of managing the delivery of a major infrastructure programme: you become part of the community and you can realise the opportunities to do more than deliver the project on time and on budget. The potential of the infrastructure industry at large to contribute more to the economic and social prosperity of the UK is an additional driver to do social value better on each and every scheme.
Yet research that Costain is leading and years of delivering targeted social value on complex programmes highlights some issues with defining and measuring social value effectively. According to Carolina Toczycka, Costain’s PhD researcher at the University of Edinburgh, “Defining social value on a project or across the industry is still far from straightforward. The value we’re trying to create changes over time, varies between sectors and is perceived differently depending on who you ask.”
What does that mean for infrastructure owners and operators and the delivery supply chain? How can we demonstrate what good looks like and evidence improvement if it’s difficult to benchmark and measure? And what impact will it have on alternative financing options, such as social impact investing? The increased level of green financing is likely to increase the need for even more robust reporting on social value and it may be that improving visibility and trust in social outcomes could reduce the cost of finance for infrastructure projects.
Defining social value when no two areas of the UK are the same
At Costain, we define social value as the action we take to improve people’s wellbeing, whether that’s through the services we provide or the way we operate. The social outcomes and the value we create help address critical national needs and contribute to the objectives of the UN Sustainable Development Goals. The principles that underpin our approach - minimising our impact on the environment and supporting the communities we work in - are also driving change across the industry.
They’re at the heart of the Public Services (Social Value) Act2, which was introduced in 2013 and has led to a more robust stance on sustainability during the procurement of major projects. And they’re important to our stakeholders, who are more informed and empowered than ever before and expect us to change people’s lives for the better. Our experience in working with clients to maximise the social value on schemes, both as consultant and programme manager, means we understand the realities of improving people’s lives through the life of a project, as well as beyond. It also makes us acutely aware of the pitfalls of looking at social value through too narrow a lens.
“Anyone involved in major projects understands what their local communities deem to be valuable,” explains James York, Costain’s Group Corporate Responsibility Director. “For example, we ask ourselves if the initiatives we’re proposing meet local requirements and match the needs of our business, then ask if they support wider government policy or national targets. It shouldn’t be the other way around.”
But no two areas of the UK are the same, so the way people in each community define value will differ. Supporting people into jobs may be a national priority and a worthwhile endeavour in a town struggling to address worklessness. But it’s less so if that’s not a challenge that members of that community face.
Measuring social value
The first time we calculated the social and economic impact of our work was during the construction of a road that was being built through the Rhondda Valley in South Wales more than a decade ago. The relief road was primarily being built to ease traffic congestion and reduce journey times3 for residents and commuters. Our role, as the contractor, was to bring the project to fruition and ensure people from former mining communities along the route benefitted from the investment.
We worked with local recruiters to get people into training and then jobs, and we designed our new employees’ roles and tasks to build their confidence and abilities. We also engaged local firms – 80% of our spending on sub-contractors went to companies in the region. At the time, our analysis showed the initiatives had generated at least £20 million for the local economy.
Since then, our thinking about social value has evolved - it’s now more strategic and it’s measured via a new tool that will soon be able to quantify the social value of every major project we deliver. Likewise, the wider industry has taken significant steps to ensure the value of major projects is defined, captured and recorded. The National Themes Outcomes and Measures (TOMs) Framework4 set out and curated by the Social Value Portal is a well-established resource, which we are using for our evaluation tool as well as HM Treasury’s Green Book5. And yet there are traps to navigate.
Over-simplifying for the sake of creating stats
It’s important to understand the impact of our social, economic and environmental initiatives but there’s also a risk we’ll dive too deep into the detail and overlook other, less straightforward but potentially transformational, opportunities.
Equally, if we’re putting too much emphasis on the data, we also risk simplifying complex human interactions so we can put a pound sign next to them.
Jeremy Galpin, Costain’s Lead Consultant for social value explains further: “A concern that’s emerging within the industry is that we’ll end up in a race towards the highest valuation rather than addressing actual need. There could be an appeal in, or pressure to, report monetised or quantitative data, which is too simplistic. And it won’t deliver the outcomes government and society are hoping for.”
Continue to monitor social value, even after project delivery
The other complexity that a race for data needs to consider is that the benefits we provide to individuals and communities don’t end with completion of the construction project. “One of the most important aspects of the relief road project in Wales was the skills people developed and the experience they gained when they joined the team,” says Sarah Bowles, Performance Development Manager on the project at the time for Costain. “And in many cases, the difference that made to their lives was felt long after our work on the project came to a close. In fact, we know that some people continue to benefit to this day because they’re still working alongside us.”
Costain is also looking at ways to incorporate and measure the long-term view. One way of capturing and sharing the continued value of an infrastructure project is by opening up the data to the public via a data trust with a specific purpose of evaluating the ongoing social value of the asset. Jeremy outlines: “Distributed ledger technology, commonly termed blockchain, is something we are exploring as a way to enable individuals and organisations to share data, remove intermediaries and create a trust worthy mechanism to verify the long-term benefits of the project and potentially share the value generated by the data itself.”
Creating maximum social value from the outset
We also consider social value in totality, rather than within our contract or in isolation. The three main phases of a project or asset life cycle - design, delivery, and operation and maintenance - are interdependent.
The optioneering stage is where we can have the most impact by ‘designing it in’ throughout all three phases. “If you think about the life span of an asset, it could be anywhere between 10 and 120 years,” says James. “That means we can create an extraordinary amount of social value. But only if we embed our initiatives upfront when we also have a huge amount of influence.”
Keep evolving how we define and measure social value
Strategically planning social value into a project at optioneering stages based on what will deliver the greatest benefit to the local community will help ensure that the full potential is realised and meaningful. Investing in tools with common quantitative measures that address local as well as national aspirations is an important step that we and many others are taking towards better measuring social value and the contribution the infrastructure industry really makes to the UK’s social and economic prosperity. Creating a trust worthy mechanism, such as data trusts, to verify the long-term benefits, will add to the richness of this data and enhance the industry’s ability to attract green finance. But it’s also capturing the qualitative, human stories and reporting these in context that helps to keep social value efforts focused on improving people’s lives, not statistics.
If you’d like to speak to one of our experts to understand how you can maximise the social value on your project, please contact [email protected]
To read some of the personal stories on those whose lives are being transformed through their involvement on some of our projects click here.