For many years FM providers have felt increasing pressure from both public and private sector clients to “give something back” as part of the contracts they undertake, whether in the form of employing local people, helping out in communities or supporting charitable projects.
In 2013, though, the Public Services (Social Value) Act came into force, placing a duty on government, councils, the NHS and other public bodies in England and Wales to consider the economic, social and environmental impact — known collectively as the “social value” — when commissioning services.
This is now starting to have an effect on the way in which facilities management services are procured, particularly in the public sector.
“It’s been reflected in more in-depth conversations about our training programmes, specifically apprenticeships; the employment of local people and procuring of local products; and community engagement such as supporting events, donations of time, materials and expertise; together with sustainability initiatives,” says Richard Sanders, director of vacant property firm Orbis. “In the past, these types of questions were perhaps more of a box-ticking exercise. Now they are fundamental to the procurement process.”
According to a report by Social Enterprise UK — a membership organisation for social enterprises that was one of the driving forces behind the legislation — some 81 per cent of commissioners now seek to identify the social value of potential contracts, and 75 per cent of public sector bodies say their tenders now include social value criteria.
Finding out local needs
But as things stand, the definition of what constitutes social value is deliberately vague. “It’s up to the commissioning body, either nationally or locally, to set priorities around what it wants to see,” says Nick Temple, director of business and enterprise at Social Enterprise UK. “There are pros and cons to that; it means that hopefully you get social value being delivered that’s very relevant to that local context. On the other hand you get lots of different practices and you don’t get much consistency. Some local authorities will say that what’s critical at the moment is youth unemployment, while others are leaving it very vague.”
One of the challenges for FM providers is how to assess the impact of any social value they deliver, either financially or through the longer-term benefits a contract delivers to a community. There are some obvious metrics; Mitie, for example, can point to its own charity — The Mitie Foundation — which was set up a year ago and has found work for 38 unemployed people and supported careers events at more than 100 schools over the past year.
“It is possible to measure social value,” says Anthony Bennett, co-founder of bespoke hospitality provider Bennett Hay. “The key is choosing the right measures and then setting improvement targets using leading and lagging indicators.”
This could include behavioural training completed, numbers of hours volunteered for charity, total donations to charity in the year or the number of successfully completed apprenticeships where people are now in full-time positions, he says.
Different strokes
Yet it doesn’t take long before some difficult questions emerge. Rohan Martyres is head of impact and investment strategy at CAN, a body set up to help social enterprises and charities measure the benefits they deliver. Some aspects are relatively easy to measure, he says, such as energy consumption or economic value of a contract, but the more “social” aspects are much harder.
“Different people value things in different ways, so what a company thinks is valuable might be quite different to the commissioner, and that may be quite different to what end-users, beneficiaries or communities think,” he says. “One of the challenges of impact measurement is to take all of that into account, particularly if there are contradictions.”
Often issues can arise when clients start to become more prescriptive, and want to see hard numbers around which to make a decision — potentially ignoring other aspects which may make up a bigger picture. Greg Daniel, operations director at Serco Infrastructure Services, gives the example of a recent contract where the business lost out after the client focused solely on the number of jobs it would create.
Assessing the benefits: Number-crunching and difficult questions
Landmarc Support Services manages facilities across the Ministry of Defence’s National Training Estate, providing FM services at locations across the country. It has held the contract since 2003, and was recently awarded another five-year deal worth £322 million.
The company first starting thinking about formally reporting around the social value it delivers about four years ago, after realising that its business model — under which any profits beyond a certain point are reinvested into the estate — was unusual, and potentially a differentiating factor.
Working with social value measurement business CAN, the company produced the Landmarc Difference Report, which came up with a figure of £90 million as the total gross economic value added to the UK as a result of the contract — much of which stemmed from direct and indirect employment — plus £2 million reinvested into the estate.
Since the report the business has sought to assess the benefits it has brought the local communities in which it works — something which Mat Roberts, head of sustainability, admits doesn’t fall nicely into “rows and columns”.
“We’re all facing the same problem, which is what do we measure and what comparative value does it have?” he says. “Is taking on an apprentice and seeing them through into permanent employment of greater comparative value than taking someone who is mid-career and reskilling them into a new job role, which means they can stay in a locality and continue to use the local shops and transport system which holds the local community together? That’s one of the challenges that we have yet to get an answer for.”
“The winning company delivered more or less the same type of solution but were proposing to get more people back to work,” he says. “But we had a really interesting programme which would get ex-offenders back to work, on the back of our experience in the prison sector.”
Andrew Bish is business development director for local government at Interserve. He says there are a number of metrics that can be used, citing apprenticeships, sustainable employment of six months or more, the use of smaller businesses in the supply chain and volunteer days undertaken by staff. “But you can pick holes in all of these,” he points out. “If you take SMEs, for example, you can easily get bogged down in arguing the toss about what’s an SME and what’s the definition of local.”
Bish would like to see a looser system of reporting, based around annual or half-yearly updates that incorporate some form of independent verification.
“If it’s a housing association, it could be a tenant representative,” he says. “That allows you to get down into the detail and for people to challenge it. Volunteering days is a good example. We might say we’ve given 200 days of staff time from a particular contract to help good causes locally. But that doesn’t tell the whole story, because you don’t know if those 200 days have been productive or if they were particularly deserving causes.”
His big concern is that any moves towards a more prescriptive, key performance indicator-type arrangement could turn such reporting into a box-ticking exercise, which discourages organisations from undertaking other initiatives.
Ian Murray, business operations director at Sercon, also cautions against trying to solely measure the impact of social value in monetary terms. “What monetary value can be put on giving a third-generation unemployed person an opportunity to build a career?” he asks. “Until there is a comparable methodology to measure and analyse social value which is used throughout the industry, social value will continue to be applied on an ad-hoc basis.”
There are signs that such a set-up may eventually come. The Inspiring Impact scheme, which brings together a number of charitable bodies to attempt to measure the impact of third-sector organisations, for instance, aims to share best practice and ensure greater consistency across the board. If such a set-up eventually flourishes, it would not require a huge leap to deploy similar metrics for private sector businesses.
But Martyres is keen to resist any mass move towards standardisation or formalisation of reporting metrics.
“The process of organisations putting up whatever they measure is a good thing, because in the long term this means that commissioners will start to see the different sorts of elements that potential contractors are measuring, and that they can start to see what’s possible and what’s appropriate from those contractors’ point of view,” he says.
There is, however, the potential for significant benefits for organisations that seek to embrace this kind of reporting while it’s still a largely un-coordinated affair.
Serco, for example, has made it a matter of course to report on the social value of any contract it wins, whether in the public or private sector. “We can directly draw a line between the values of the customer organisation and the outcome as that we’re delivering, even though they may not have asked us to,” says Daniel. “It’s not just altruistic; it allows us to create a better customer experience, enhances our profile and allows us to demonstrate that we do this, so when we bid for a central government contract we can point to real-life examples, and have that backed up by customers.”
The direction of travel is only moving in one way, too. Temple highlights growing interest in such metrics from the European Union, particularly through the recent EU procurement directive. “That just lends even more strength to this,” he says. “If you want to get ahead of the game, you really need to start thinking about this now.” – See more at:http://www.fm-world.co.uk/features/feature-articles/acting-up/#sthash.zsMgV9aC.dpuf
