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Social value takes the front seat in construction

Social value takes the front seat in construction

9 May 2014

CONSTRUCTION giant Carillon’s Philip Green, in his role as government CSR adviser, is leading an industry-wide push to promote social value through supply chains.

He has asked 50 of Government’s main suppliers to report back on not only their own social value efforts, but also on the efforts of their suppliers.

For any buyer who might have viewed social value initiatives as a ‘nice to have’ this is a wake-up call that it’s now a strategic part of the procurement process, making its way steadily down the supply chain.

Public sector entities and a number or larger companies have realised ‘value’ is no longer just about price, quality and time but also about giving something back to local communities.

Major train operating company First Great Western was among those quick to respond.

The company worked with Achilles – a global supply chain risk management company, to contact 1,439 active suppliers, asking them to reveal details about their own internal apprenticeships schemes, and fulfil the needs of the train operator’s customers.

That was only possible because First Great Western had outsourced the management of its supplier assurance to Achilles, and had a bank of up-to-date supplier records.

The process has also allowed the company access to the data and information to understand their supply chain, including that of their 1,500 suppliers, 65% are SMEs.

However, many companies would struggle to replicate First Great Western’s approach.

Research shows that 40 per cent of large UK businesses, including those in the construction sector, do not know who their suppliers even are,* let alone whether they provide social value.

Compounding the issue, information is stored on multiple databases or pieces of paper, which becomes out of date almost as soon as it’s filed.

Understanding the supply chain is becoming absolutely essential for businesses who are seeking to improve their social value and companies need to take steps to gain an overview of their suppliers..

To ensure they meet social value requirements, construction companies should act now by putting in place a proper system for managing supplier information and gathering the required information from suppliers.

This works best when construction companies work together to agree common standards required of all suppliers in business critical areas; traditionally HSEQ and environmental – but also social value. In the three highest levels of our BuildingConfidence audit programme, there is a standardised ‘Social and Ethical’ questionnaire, with information required on the use of apprenticeships and local labourers.

Social value has been on the mind of a number of our buyers for quite some time, but we have seen efforts ramp up recently; particularly with regards to the use of SMEs and buying locally.

Construction companies can only survey their supply chains about social value criteria, and ensure suppliers share their values, once they have accurate, up-to-date information about who their suppliers are.

What is the Social Value Act?

The Act, for the first time, places a duty on public bodies to consider social value ahead of a procurement. The Act applies to the provision of services, or the provision of services together with the purchase or hire of goods or the carrying out of works. The wording of the Act states that…

The authority must consider –  

(a)how what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area, and

(b)how, in conducting the process of procurement, it might act with a view to securing that improvement.

It also opens the door for consultation with stakeholders to better understand social value and improve service specifications, the Act states…

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