Debate | Determining the social value of projects

It is clear for the whole of the infrastructure sector that the debate about investment priorities has to shift from cold, hard-nosed calculations alone,” says HS2 Ltd chief executive Mark Thurston in his foreword to The social benefits of infrastructure investment, a report published by the Civil Engineering Contractors Association.

“I therefore encourage the industry to support the efforts underway to address the measurement of social benefit from infrastructure investment,” he adds.

The nature of our infrastructure, as Thurston says, has long been dictated by “cold calculations” without considering the wider social impacts.

But the mood of the industry, government and wider community is changing.

In 2013, the government’s Public Services (Social Value) Act came into force. It says that those providing new infrastructure must articulate the “wider social, economic and environmental benefits” of a project or service.  

Arup’s report entitled Societal value of infrastructure published in 2014 says that, using flood alleviation infrastructure as an example, “Social value is not well understood by either local communities or those working to design, deliver, and construct.”

The report also says that consulting local people about projects is sometimes seen as an “exercise of informing” rather than  genuine consultation, and that projects that failed to consult those affected by them have often failed to capitalise on local knowledge and suffer as a result.

Social value and  total value

Arup associate director for sustainability and social value, Alison Ball says that Arup has begun to consider aspects beyond social value in its projects, something the company terms “total value”.

“Many things come together to form the social value of the project, such as health and wellbeing, crime and safety, identity, pride and belonging, community cohesion and diversity, geography, and stakeholders,” she says.

A total value approach involves putting a financial figure on social value, as well as considering the environmental impacts.

“We also think that added into this we need to take a total value approach, asking: ‘what are the natural and environmental benefits?’, and the negatives, the financial values, as well as the economic values?”

“Let’s think wider and make the hidden value of infrastructure visible,” Ball adds.

This reflects Arup’s Making the Total Value Case for Investment research paper into total value. In this report, the concept of total value is represented as the equation: Total value equals a combination of financial, economic, social and natural value.

Ball says all these elements must be taken into account to give a picture of the true “net” value capture possible when comparing costs to benefits.

However, Offshore Wind Consultants lead advanced engineer, Khalid Kamhawi, says that projects cannot always be assigned a fixed economic value.

“Not everything should be reduced to an economic rationality. There are things that are above this,” he says.

“Social value has a dimension above and beyond economic dimensions.”

Further issues arise when trying to define just what social value means. London Climate Change Panel member Anusha Shah argues, that social value is highly subjective, and there is not one size fits all formula for calculating it.

“We need to define the social values for developed countries as different to what the social values for other countries are,” she says.

It is not a new concept to consider all the stakeholders of a project independently, but does each group of stakeholders needs to have its own social value, to be compared and considered with the others?

“When we measure social value, where do we set the system boundaries?” asks Morgan Sindall’s equality, diversity and inclusion manager Sam Hewlings.

“Does local social value count more than national social value? How do we weight that?”

This is a problem in defining social value of infrastructure. Who counts more: the consumer or the community? They are not always the same group.

“How do we decide which of these is the most important? asks Shah. “The people most directly affected by the works surrounding a project, or those who stand to benefit the most?”

Ethical debate

This in turn spawns another ethical debate about who is best placed to decide these values: the engineers, developers and builders; the people who will be impacted by the work; or the people who will use the assets created.

“Why don’t we ask the communities first: what is it they want? asks Shah.

“We need to start things the other way round; we are defining social value but we are not asking the communities: is this what will make them happy? How do we decide that?”

A prime example of this consumer versus community issue can be seen in the expansion of Heathrow airport, says Transport Focus board member Isabell Weh Liu.

“We are trying to represent the interests of the consumer, and that is different from the community interest,” she says. “If you poll the 50,000 people living in a 3km radius of Heathrow, you are going to get a very different answer than if you poll the tens of millions that will derive benefit from the airport expansion.”

However, it is the focus on communities over consumers that causes the progress of new infrastructure projects to be so slow in the United Kingdom, Liu adds.

“Why doesn’t the UK have that much infrastructure and why does it take so long [to deliver]? It is because the process is to first ask the communities, who say no. It fails to take into account the benefit the tens of millions of consumers that could be accessing the infrastructure. Communities are treated as the primary stakeholders and they are ones that can kill you with a yay or nay.”

Role of the government and planning

Of course any new project must engage with the government planning processes, but these do not currently have a framework for considering these social values on large scale projects, argues contractor SLC Rail Northern Powerhouse area liaison manager Chris Longley.

Longley says that a greater understanding of how this concept of social value is going to fit with government planning policy is needed.

“There needs to be a better understanding before the expectations of social value measurement become too high; of what needs to be done to help the key drivers for the public sector

and the private sector and the hybrids in order that they could actually accept them in the first place,” he says.

We need to understand this, Longley says, because social development goals have not been considered on a large scale project before, “otherwise all we will do is, at a very high level, affect the delivery mechanism as opposed to the decision-making mechanism”.

“We need to know more about the public sector drivers, and the private sector drivers, before we can use social development goals to choose not just how projects will be built, but whether they will be built at all.”

Anti-Corruption Centre co-founder Neill Stansbury argues there is a “massive failure” of leadership in politics and the industry for not properly challenging the government’s lack of vision in developing more sustainable and socially valuable projects.

“There is a massive failure of leadership and a massive failure of vision,” he says.

“I can’t comprehend that we are even discussing a third runway at Heathrow airport, with planes already going overhead every 45 seconds in London, blighting the lives of millions of people.

“There has got to be a much deeper vision with sustainability; we are a hugely powerful industry with dynamic leaders. Why aren’t we challenging the government’s lack of vision?

“We are blighted by weak and inept government leaders, it is time for the industry to stand up and say ‘we can do more and can do better’.”

 

 

 

 

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