Levelling Up & Procuring for Value

20th July, 2021

Does the increased use of offsite methods contradict social value? Mark Bolger, Social Value Director at Atkins, outlines why we must think differently about what makes construction tick.

From the Construction Playbook to the Homes England MMC study, the industry is being called to embrace modern methods of construction (MMC). For the most part, the response has been a resoundingly positive as MMC is seen to provide huge benefits in terms of efficiency and environmental impact.

Where the positive element of MMC is less clear however is in terms of social value. With traditional construction, a project can be designed, procured and built all in close proximity to the site. So, if you’re looking to demonstrate to local stakeholders the impact of an infrastructure scheme to the community, you can quite clearly show the number of new jobs created locally and investment in the local supply chain. However, if you’re using MMC, while the scheme may be designed locally, a varying proportion of the works will take place in other locations. What may have been hundreds of jobs created in the local community now becomes hundreds of jobs distributed across the UK.

As a challenge to localism, can MMC and social value work hand in hand? I firmly believe that yes, they can, but only if we look at whole life value. Whole life value looks beyond the delivery phase and considering the social, economic and environmental outcomes when assets are operational. Since the introduction of the Social Value Act in 2012, we have focused on procurement as the vehicle for delivering social value however our focus in evaluating social value has all too often concluded at the end of the construction phase, when the asset is handed over to the client. MMC provides an opportunity for delivering social value with a whole life perspective, moving beyond localism and recognising the legacy of an asset in use. MMC has the potential to address social, economic and environmental inequalities at a UK PLC level by encouraging suppliers to invest in manufacturing and production factories in areas of deprivation.

Research by Akerlof has revealed the extent to which offsite manufacturers are based in the industrial heartlands of England and areas of economic need. Creation of sustainable manufacturing jobs and digital skills opportunities through investment in offsite can support growth in areas that are in greatest need. The scale of this impact is not to be underestimated. MMC can create an intrinsic social and economic uplift of up to 36% higher than traditional construction methods, with larger social and economic multipliers for manufacturing than construction compounded by investment in areas of economic deprivation.

With many MMC solutions applying low carbon technologies, sustainable materials and low wastage, there is a strong value proposition for delivering better environmental, economic and social outcomes. So, if the government wants to push industry to use MMC on projects, it is essential that they look at social value in terms of whole life value creation.

MMC providers by their nature will be based in fixed, specific locations across the country. There is no guarantee that you will be able to use a local supply chain if MMC expertise and capacity doesn’t already exist locally. Particularly for projects in rural areas and those pursuing higher levels of pre-manufactured value (PMV), KPI’s that demand 40% local spend may be challenging.

Instead we recommend focusing upon the broader picture – beyond the myopia of localism in procurement and instead towards whole life asset performance at a national level. One that seeks to ‘strengthen the Union’ and deliver against the ambitions of the National Infrastructure Strategy. To advocate these principles for select stakeholders may be challenging. One approach might be creating a ‘Local Credit for National Spend’, the idea that a local authority will be credited back – perhaps into their social fund or apprenticeship fund – for project value that is picked up by a MMC supplier elsewhere in the country where the industrial infrastructure may be better or may be needed.

Mechanisms that measure the wider impact and encourage those in procurement to adopt a broader perspective will be critical in making this a reality. The MMC Social Value Calculator – developed by a consortium led by Akerlof – is an excellent example of innovation that seeks to address this complex challenge. If our aim is to create longterm sustainable jobs, arguably these are better created in fixed locations – manufacturing facilities offering stability rather than transient, shortterm construction sites.

If we want to see an increase in both MMC and social value, then the traditional approach of focusing upon social value exclusively in the construction phase needs to change. Despite the move to encourage MMC and other innovations, the way we view social value remains heavily rooted in the traditional mentality. Instead we need to broaden our focus – to consider whole life value and consider how we may apply MMC to enhance our social value but also address wider challenges such COVID-19 recovery, Build Back Better and through the levelling up agenda, social inequality.

To read full article and for more news, check out the latest Offsite Magazine

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