Survival of the SME and the importance of addressing economic factors through Social Value

Times are tough across the construction sector and most noticeably for our local supply chain businesses, which make up a fifth of all SMEs in the UK. As small businesses, they are more vulnerable to economic volatility and the implications of them going bust are significant for local economies. It leads to local unemployment, a loss of skills and contractors looking to national suppliers, taking away vital local income streams.

Quantifying economic factors as part of delivering social value has become increasingly important to make sure that procurement is focussed and tailored to provide maximum benefit to the local economies. This is particularly true for public sector projects, where there is greater scrutiny to illustrate ethical spend with further economic benefits.

Quantifying economic value in spend and employment

There are varying measurements around quantifying or adding an economic value to local spend as part of a build project – for example a common measure is that for every £1 spent locally, this equates to ≈£2 worth of value.  In addition, there are a variety of ways of calculating employment through projects – either through the cost for those that may otherwise be unemployed or apprenticeship values through those that go on to become qualified operatives.

However, measuring social value at source starts by listening to what the supply chain needs, understanding from the coal face of delivery the pressures, trends and ambitions of suppliers.  Engaging in two-way dialogue is key to understanding and ultimately delivering higher local economic impact through the procurement process.

At NACF, we share key performance requirements across multiple public sector frameworks to ensure consistent information across similar public sector procurement projects- and beyond – it saves resources and focuses efforts on those with the greatest impact.  Our latest baseline carbon tool is a prime example of that and this will be adopted by other NACF members.

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