Maximising Social Value in Northern Ireland Construction

Shauna Young, Head of Responsible Business at McLaughlin & Harvey, shares her expertise on social value, making this blog your go-to resource for maximising social value in your projects.

You'll gain valuable insights and guidance to:

• Understand the true meaning and significance of social value
• Learn effective methods for measuring social value
• Navigate and manage costs associated with social value initiatives
• Ensure compliance with social value regulations and standards
• Understand key social value frameworks, particularly in the UK and Northern Ireland
• Discover available support to enhance your social value delivery and achieve long-term impact

This blog is an essential guide for embedding social value into your procurement processes, driving meaningful change, and delivering real benefits to communities.

Social Value has varying interpretations. Some view it as a community benefit or a Corporate Social Responsibility (CSR) activity. However, from my perspective coming from finance and quantity surveying, Social Value is a procurement term. It leverages procurement processes to generate positive economic, environmental, and social outcomes for society, which can be measured in metrics and ‘value’ terms.

Essentially, social value seeks to maximise the benefits of public spending by considering the broader implications of procurement decisions on the economy, community, and environment. While the term 'social value' is less commonly recognised outside the UK, Environmental Social Governance (ESG) and Sustainable Procurement practices are common. These practices aim to improve social returns on capital investment, align with sustainable procurement and social responsibility standards, and support the United Nations Sustainable Development Goals (UNSDGs). Despite differing terminologies, the core principles remain the same: driving sustainability through strategic ESG practices and ‘social value’ creates this through procurement.

For me, success in social value is achieving a net positive economic, environmental, or social impact that addresses local, regional, or national needs while contributing positively to global well-being. The value of the outcomes must exceed the inputs required to achieve them. This is why early engagment, strategy development and measuring are so important.

Measuring social value has often been described as a "dark art." There was a time when transparency and accountability in social value measurement was non-existent. However, as practitioners and reporting frameworks have matured, and with the rapid pace of digitisation, measuring social value has become more precise and regulated.

There is no one size fits all and it is best measured quantitatively and qualitatively in terms of impact on the economy (e.g. job creation, apprenticeships, local economic growth), the environment (e.g. carbon footprint reduction, sustainable practices), and society (e.g. community engagement, improved well-being).

The measuring, reporting and accountability is also bolstered by legislation, more recently most of which focus on ethical governance and transparency. Economic Crime and Corporate Transparency Act 2023 which underpins ethical governance and responsible supply chain management reducing the risk of economic crimes. The Employment Bill in consultation ensures Fair work for all, The Procurement Act 2023 supports fair and ethical procurement practices to drive responsible economic growth, Building Safety Act 2022 which ensures improved safety standards which is done through competent and skilled work force with investment and training.

While the core themes and indicators of social value are consistent across regions, differences exist in regional priorities, weighted values, measurement indexes, and reporting frameworks. For instance, PPN06/20 has been interpreted into PPN01/21, both of which provide guidance on how tenders are required to allocate at least 10% of the total award criteria to social value. This ensures social value is a significant consideration in procurement decisions. However, there is no guidance to support the integration of social value into the project's lifecycle from inception to reuse.

In Northern Ireland, the 10X Economy strategy highlights regional priorities and sets specific goals for social value in alignment with local needs. Which was redefined within the Economy Minister, Connor Murphy’s four key objectives as part of a new Economic Mission for Northern Ireland.

These have all been underpinned by a fresh and forward-thinking perspective in the recent publication of the Stormont Executive’s first draft programme for government in over a decade, which focuses on 'prosperity and lifting everybody up'. Titled Our Plan: Doing What Matters Most, it also highlights nine policy areas that the coalition will prioritise in the remainder of the mandate.

All of which can be driven through strategic ‘social value’ through leveraging public spending to achieve Good Job, promote Regional Balance, raise Productivity and reduce Carbon Emissions to support Northern Ireland as prosperous, fairer and greener region.

However, a prevalent issue is the "tick-box mentality," where there is a focus on short-term, visible outcomes rather than genuinely integrating social value into the project's lifecycle. This approach can undermine the overall policy outcomes or economic objectives of social value.

By aligning social value performance indicators with client needs and strategic goals, costs and economic uncertainty can be navigated.

A common concern with social value is the perceived higher upfront costs to deliver the value, exacerbated by current economic uncertainty. However, objective of social value is to strengthen the economy by using public funds effectively. If the cost outweighs the value created, it fails to create value to society or ‘value for money’.

To mitigate costs, focus on delivering value tailored to the procuring authority's needs. While apprenticeships are valued for their role in boosting productivity, focus on solutions that align with specific project requirements and long-term goals. For instance, if a business faces a skills gap, incorporating continuous professional development (CPD) training into social value initiatives can be more beneficial than merely focusing on reporting on construction apprenticeships.

Strategic planning and early stakeholder engagement are essential for creating genuine social value. Understanding client priorities and local needs helps design effective initiatives. This balanced approach involves conducting feasibility studies and cost-benefit analyses to ensure that the social value created outweighs the delivery costs.

Unrealistic targets and poorly considered social value initiatives can lead to excessive costs and resource allocation. Social value should not be a mere add-on but an integral part of the procurement process form inception, design, construction right through end use to reuse. With a focus on practical, sustainable solutions that deliver real, long-term benefits to the society.

Correct social value delivery creates a thriving, self-sustaining local economy that benefits all members of the community. It supports responsible economic growth and resilience.

From simply leveraging a local and diverse supply chain, ensuring money circulates and stays within the area, leading to job creation and economic stability. With investments in social programs enhance community skills and education, leading to a skilled workforce. To sustainable practices that reduce costs and enhance resource efficiency, benefiting both businesses and residents. Social value initiatives also drive community cohesion and resilience, attracting further investments and tourism in the area.

Compliance with social value is rooted in the Public Services (Social Value) Act 2012, which mandates public authorities to consider how their commissioned services can improve the social, economic, and environmental well-being of their areas.

The Procurement Policy Note (PPN) 06/20 further emphasised social value's importance in public service contracts, providing the model award criteria (MAC) that was adapted regionally. For instance, Northern Ireland's approach incorporates the Social Value into the 2015 Public Contracts Regulations (NI) and offers guidance through PPN 06/21 and the Central Procurement Board’s (CPD) Model Award Criteria (MAC) of the pass fail of the social value schedule points-based social value plan and a character limited methodology submission.

Despite regional adaptations, core themes, outcomes and the raw metrics for measuring social value are consistent across the UK. The differences lie in the model award criteria and reporting models. Northern Ireland's points system is one method, but various other approaches also exist to benchmark and assess "value for money" through fair and transparent procurement.

Compliance is achieved through accurate, transparent, and accountable reporting, regardless of the award criteria used, when there is fair and ethical procurement and value for money is achieved.

Keep updated with international, national, and regional regulations and legislative changes. Beyond the Procurement Act 2023 and Public Procurement Notices (PPNs) outside of social value (e.g., PPNs on the Common Assessment Standard, Carbon Reduction Plan etc), be aware of all the environmental legislation relating to building design and development, the Building Safety Act 2022, the Economic Crime (Transparency and Enforcement) Act 2023, and the recent Employment Rights Bill. True social value will support compliance with these. Additionally, ensure that requests from the procuring authority within their Model Award Criteria (MAC) and in your delivery of social value there is compliance with legislation and regulations beyond the 2015 Public Contracts Regulations (NI) and PPN06/21.

Establish transparent and accurate data governance of your operations. This will enable the transparency in reporting of social value, ensuring accountability and continuous improvement.

Continuously assess what is social value and share best practices to promote the responsibility of all stakeholders throughout the project lifecycle.

Educate all stakeholders that achieving value for money and social value begins with the procuring authority, not the contractor. Decisions made during the business case development, including brief, cost-benefit analysis, program, location, design, and specification, must support the delivery of social value. If these elements prioritise other objectives, the procuring authority should adapt the award criteria during procurement to reflect what can be achieved during the construction phase and the projects full life cycle.

By staying informed, implementing robust data governance, sharing best practices, and raising awareness among procuring authorities, the construction industry can ensure compliance and achieve genuine social value.