If there is one message that we have received and understood from Transforming Public Procurement, the Construction Playbook, and the new Social Value Model, it is that the UK Government wants to change the way that it looks at procurement to ensure that they are getting wider value for money than simply financial. There’s no doubt that construction tenders are going to change, putting a greater emphasis on social value.
To support this, the Construction Innovation Hub has just launched its Value Toolkit, a set of tools and processes that will support the public sector to consider value more widely as it procures services and designs projects. The toolkit has just started live testing, with clients and practitioners across the sector involved in the testing process; it’s expected to go live towards the end of 2021.
The Value Toolkit mirrors the principles of the Construction Playbook, and the IPA’s Transforming Infrastructure Performance. It will also form part of the Construction Leadership Council’s Roadmap to Recovery.
Overview of the Value Toolkit
The toolkit breaks down the considerations for any project into five integrated streams:
- Value Definition
- Client Approach
- Measurement & Evaluation
These streams interact and overlap, but together form a way of looking at the project that ensures all aspects of value have been considered.
This stream helps procurers develop a value profile for their organisation and/or the project that reflects their core values and drivers. It sets a baseline across the asset lifecycle and allows them to align with national, organisational, and regional policies to give measurable outcomes that can be achieved through the project.
This stream helps identify risk and create a risk profile. Moving from conventional risk transfer methods towards active, evidence-based approaches to ensure risk is mitigated and assigned in the most appropriate way.
The client approach stream supports clients to pick a delivery model and commercial strategy that best fits the value profile. This supports clients to engage with the market in a way that ensures their values will be delivered, and will run through the project lifecycle. This would be reflected in market engagement part of the construction tenders process.
Measurement & Evaluation
This stream enables the client to link the Value Profile to a value index, a tool that lets them compare different approaches and compare values across all measures and not just financial. It helps clients to develop a robust approach to measurement and evaluation. This should help to demonstrate value for alternative method construction tenders.
This stream ensures that clients build a team, both internally and externally, that can deliver all phases. Naturally, this phase will have the most impact on construction tenders, as it will be at this stage that project partners will have the opportunity to show how they can support the organisation to meet its value goals.
The Four Capitals
The Value Toolkit Uses Four Capitals model as a way of defining value (this aligns with HM Treasury’s Green Book):
- Nature Capital – renewable and non-renewable resources. Valuing the natural environment, addresses climate change and considers the whole life cycle.
- Human Capital – Knowledge, skills, and competencies embedded in individuals. Employment, skills, opportunities, health and wellbeing.
- Social Capital – Networks and shared culture/understanding. Influence, consultation, ED&I etc.
- Produced Capital – Man-made goods and financial assets.
The Five Phases
The Value Toolkit breaks down the project lifecycle into five phases. The first of these, the Need Phase, is an internal process that will support procurers to clearly understand the project and what types of value will be delivered through it. The following processes will intersect with the construction tenders process:
- Phase Two: Optioneering. Considering alternative approaches to the project.
- Phase Three: Design. Procurement.
- Phase Four: Delivery. Appointment.
- Phase Five Operation. The solution is in use, handover/soft landings etc.
Construction companies will need to prepare themselves for involvement in these stages, and to think about their works in a way that reflects the Value Toolkit. Companies who understand the playbook, and write their tenders in a way that demonstrates they align with it, will put themselves in a great position moving forward.
A New Understanding of Value for Construction Tenders
The Value Toolkit is just the latest in a line of documents that are showing a shift in the way the construction industry considers value, with a distinct move away from purely financial measures and towards a more holistic and whole-life approach that considers the way buildings are designed and created, and the legacy they leave for those who use them and the environments they are built-in.
If your company hasn’t really got to grips with social value, then now is the time to change that. At Bid for Success, we have supported a number of companies in reviewing the processes to make sure that they can meet social value requirements and that their systems are future proof. If we can help you with that as well, please get in touch today.