We spoke with National Highways’ Executive Director of Commercial & Procurement about how his organisation uses its position to deliver positive change.
How do you define social value?
For us as an organisation, social value encompasses a huge range of things. Together they quantify the experience we add to people’s lives, from skills and job creation through enhancements to the local environment to boosting community facilities. As a government company, we are spending public money to build and maintain the nation’s strategic road network and we do this in a way that supports business, the economy and has a genuine positive impact on people’s lives. This can take many forms – from creating wildlife habitats to employing veterans to help them get back on their feet. This is what we mean when we talk about social value.
At National Highways we’ve been working for some time to embed social value into our ways of working, but the guidance from the Government (in particular its recent policy note on procurement) has provided us with a real boost. It’s great to see that government is placing itself at the heart of this agenda as this will only help ensure that organisations, both big and small, are making a positive contribution to the levelling up agenda and Covid-19 recovery. I’m proud of the passion with which National Highways is adopting social value thinking and it can only be a good thing to see more commercial and procurement teams embrace social value.
The roads that we build and maintain, connect different communities up and down the country and it is important to us that we are engaging with those communities to understand their needs and concerns. This is front of mind when delivering projects, the longevity of which means we can deliver positive results for current and future generations. A requirement for apprentice schemes within our contracts, aimed at those who live alongside the scheme, is just one of the ways we are leveraging our position as a client to make an impact on the world in which we live. We want to be in a place whereby we finish a project and can take a step back safe in the knowledge that we’ve not only built quality infrastructure but also left a legacy.
How do you work in collaboration with your suppliers?
Delivering social value cannot be achieved in isolation. We bring together the supply base to engage in an open dialogue around things such as net zero and social value and encourage innovation. This creates a space for suppliers to share knowledge, contribute ideas and work towards collective goals. Social value now represents 10% of the overall score for tender assessments and we will be adopting new approaches to assess carbon content in bids. The scale and size of our framework contracts form a significant change enabler for the sector.
We use our significant spending power to support suppliers whether that’s through charity work, volunteering, improving the diversity of the workforce, or helping them to be more sustainable. For example, one of our supplier’s chosen areas of focus is the rehabilitation of ex-offenders and they have a track record in helping them to find work after coming out of the prison system. For us, social value is about doing what we can to support suppliers like these who are committed to improving quality of life and enhancing the environment. My favourite example is Royal British Legion Industries who employee ex-service men and women who need some help. The business makes road, rail, and street signs and we are working with our supply base to support a steady level of demand from the sector to help them provide continuity of employment to ex-service men and women.
Challenge number one is crystallising what social value means within our sector – only through a common understanding can we work with our suppliers to achieve our ambitions around social value. Our suppliers have been more active in this area and we are learning rapidly from them. We are reviewing the different standards and approaches that are used today so that we can adopt the approach that will work best for the sector. 80% of our revenue is spent with our suppliers so a co-ordinated effort is essential.
In our experience, when money flows rapidly through the supply chain to smaller organisations regardless of their role the whole supply chain benefits. That’s why we use Project Bank Accounts (PBA). Suppliers working on projects which use PBAs are assured prompt payment as they do not have to wait for higher-tier contractors to process their payment. This not only helps smaller business with cashflow but also offers a degree of financial protection when high-tier suppliers run into difficulty. This was proven to be successful when Carillion and nmcn went into administration.
We have developed the Roads Academy, a multi-level learning programme to help organisations in the industry develop leadership capabilities and deliver value for their business and the industry as a whole. We have also worked alongside Derby University to develop a degree level course in Concrete Pavements and Construction Maintenance that will upskill a new generation of specialists in this field.
How do you see your work being impacted by the road to net zero?
Two key stages of our recently published carbon net zero plan include achieving net zero for our own organisation by 2030 and supporting our suppliers to do the same in relation to the work they deliver on our behalf by 2040. We act as a catalyst for change, working with suppliers to take on challenges that will make a difference, whether it’s divesting from fossil fuels or investing in green technology. Suppliers aren’t going to suddenly go from diesel to electric or hydrogen overnight – we need to play a role in helping them on that journey.
The scale of the schemes we are working on means we can take a leading role in driving significant change in this area. For example, National Highways is the largest single buyer of asphalt in the UK. Recently we changed one of our key standards and now use a warm mix asphalt, which uses less heat and in turn saves energy in the long term. We hope that by highlighting effective and sustainable options, the wider industry will follow our example.
Regular, open, and honest conversations with our suppliers, in which we work through issues and share experience, mean we get better design and speed of construction while also helping businesses to develop and perform better.
It’s this approach to collaborative working and our commitment to social value and the carbon agenda that will ultimately see National Highways successfully delivering the government’s Road Investment Strategy for 2020-2025; and in turn support the aims of Building Back Better and Greener.
If you would like to find how out Proxima can help you and your company with delivering social value , please get in touch.
For more of Proxima’s interviews with Public Sector Executive’s click here.