Quality is key in accurate social value calculations

Loop’s Ken Chalk asks if inaccuracies in calculations have diluted the true value and power of social value in construction

A decade is a short time in the construction and built environment industry, meaning that there are people and organisations at every stage of the maturity curve in terms of social value calculations, understanding and implementation.

This also means a huge scope of varying approaches, focuses and processes, which is leading to a warped understanding of what a ‘good’ level of social value generated truly looks like.

In the race to achieve the ‘best’ figures, an element of accuracy has given way to over-claiming to the point where in some cases, the numbers quoted can be scarcely comparable with the actual value delivered to the people and communities the project serves.

Just as the industry talks about best value versus lowest cost in terms of project costs, we must apply the same mindset to social value.

If we don’t, it could undermine the very powerful communication tool that social value monetisation can provide, with an increased risk of stakeholders seeing it as green or impact-washing, rather than something of true value.

Accepting the reality of monetising social value

Alongside the optics of how this culture of inaccuracy looks both inside and outside the industry, the inherent issue of being inaccurate is that it undermines the very purpose of putting a monetary amount on social value in the first place.

The monetisation approach was designed to take something that can be incredibly difficult to properly quantify and communicate and put it in a measurable like-for-like unit that we can all understand no matter our areas of specialism.

While the inherent complexities of calculating social value are always going to lead to that figure being subject to some level of estimation, the idea behind monetisation was for it to be as accurate and as representative as possible.

Although new methodologies and data have led to improvements over recent years, there are still significant accuracy issues and the need to face the reality that there is no having your cake and eating it. Robust social value calculations need investment in terms of tools and time, and the ability to adapt to evolving methodologies and data.

If you choose to monetise social value – and there are many great benefits of doing so – this must come with an acceptance of the complexities and process that accompanies it.

We must demand proper economist-driven approaches like Cost Benefit Analysis (CBA), and if the measurement framework you utilise isn’t constantly updating, that should set red flags flying.

An inaccurate approach also has serious consequences on decision-making. A key benefit of applying a monetary figure to social value is that it can be used for everything from informal side-by-side evaluations to more complex business cases and investment decisions.

If figures aren’t robust enough, poor decisions will be made. While the numbers may look good on paper, the reality is that the actual impact on people and communities – the reason social value requirements exist – will end up being less than it would be if more accurate numbers were being used.

An industry-wide effort on calculating social value is needed

Recognising the need for more accurate social value calculations is going to take a significant level of introspection and self-awareness from the industry.

The reality is that a more robust, quality-driven approach to calculation is going to result in changes in the monetary figures – and we must recognise that neither highest nor lowest values can be called inherently ‘best’ due to the nature of social value and metric-to-metric variation.

The industry time-lag that comes with everyone catching up with the pace of change will be an issue, with those choosing to do the right thing and use accurately calculated numbers in tenders risking the challenge of being matched up against others who are still using less robust numbers.

To avoid this, there needs to be a concerted, industry-wide effort to communicate and educate on how social value can be accurately calculated.

Social value needs to be integrated into the procurement process

As already highlighted, social value is not a straightforward thing to calculate and quantify – after all, how do you put a monetary figure on someone’s mental health?

What is needed is the guidance of experts that understand the field and its fluid nature. Frameworks also need to get on board with this fluidity as well, making sure they are operating in a way that truly integrates social value into the procurement process from day one, and that they are using regularly updated and accurate numbers in those processes.

It’s not quite the wild west out there on the social value plains, but the inherent complexities of calculations mean that there will always be evolution, and we may never get to the point where there is a fully standardised, codified method that everyone follows.

The reality is that scrutiny and understanding of social value from stakeholders is only going to increase.

There’s enough evidence out there about overclaiming for everyone to know that it simply isn’t OK to do it anymore, so organisations should be bold in making the change, getting on the right path with the right tools and methods, and making that their point of difference.

You can learn more about measuring and driving social value in your developments here.