After Balfour Beatty were praised by the CBI in a report calling for infrastructure investment to have 'wider social contributions', Amanda Fisher, managing director of Balfour Beatty Living Places outlines the company's approach.
Balfour Beatty believes that by focusing on outcomes such as more job opportunities, better and faster access, improved health, reduced crime, local communities will prosper and grow sustainably while saving money. We call this 'place shaping'.
Local government faces significant challenges. Currently, for every 100 people in the UK , 57 are dependent on the other 43. By 2030 the number of dependents (children and adults over 65) will have risen to 67 in every 100. Over the same period, the number of people over 85 will have doubled. All this adds up to an increasing demand on public services and less people to deliver them.
Balfour Beatty setting a new agenda on outcome delivery
At the same time, the advances in communication technology and the rise of social media have made it far easier for the public to voice opinions and compare services. This means they expect more. However, between 2010 and 2017, budgets for delivering public services will have been drastically cut. Councils are going to be faced with either getting more from existing budgets or providing fewer services.
To overcome the challenge, the infrastructure that underpins services must work harder and the people providing them must work smarter.Infrastructure is going to have to meet a much more complex array of individual and collective needs. This can only be achieved if the public and private sector work together and change the focus from inputs - delivery of each individual service - to focusing on the outcomes that communities need from a range of services.
If we take as example highways maintenance; in the past our contracts focused on agreed targets, such as the number of pot holes that were filled in per day, how long the grass verge was or how many trips the gritting truck needed to make. This was easy to measure and agree between ourselves and the council and resulted in the targets being met. However, neither the council nor we could claim that this was reducing the journey time of travellers, increasing the use of public space or ensuring that businesses could keep working. Inevitably, it also meant that when funding for the service had to be reduced, the conversations focused on cutting cost and what we could stop doing.
More recently, where we have trusting relationships built on strong performance and good communication, we have shifted away from a focus on delivery targets and towards outcomes for people. These contracts with local government have measures like the number of jobs we help create, the reduction in the number of people killed and seriously injured on the roads, the improved access for the community and the reduction in the environmental footprint. Where budgets are being tightened, instead of simply focusing on cost, we are considering how integrating services can deliver more outcomes for fewer inputs.
As an example, across three of our PFI Street Lighting contracts in the Midlands we have overseen a programme of investment that has improved community satisfaction, while reducing carbon emissions by 50% and saving £2.8m p.a. from councils’ energy bills. The arrangement focused on, and incentivised, the delivery of these outcomes as opposed to measuring how many bulbs were changed a day, a typical measure of a traditional street lighting contract.
In Southampton, a road improvement scheme on Oxford Street with a budget of £800,000 would normally have focused on improving the road and pavement surface and providing clear signage. However, early in the process the council said they wanted to achieve socio-economic benefits. The project team chose as their performance criteria the number of jobs created locally, business profits,and the increase in trade.
With this focus, the design of the scheme provided increased space for pedestrians, allowing restaurants and cafes to use frontages for spill out space to increase business. It created a calmed street, restricting parking, but improving access for servicing and deliveries. The use of high quality materials, for street furniture and planting of new trees delivered a refined and contemporary streetscape.
The project has revitalised a key heritage area of the city, creating 54 new jobs, raising average profits in the area by 5% and increasing trade by 10%. In addition, for the £800,000 that the council invested, £1.8m has been invested commercially by businesses. By moving the focus beyond the ‘road’ we have delivered the potential of the ‘street’: a dynamic public place that connects and combines local community and business needs, encourages social interaction and helps pedestrians and motorists to co-exist safely.
What has emerged from this and other examples where the focus is on outcomes, is that many different services interact to deliver them. In the example above, patronage of Oxford Street is impacted not only by the quality of the place, but also by the provision of local car parking spaces and the ease of access to the area by public transport.
For the council to achieve their desired outcomes they have had to understand how services interact, procuring these services with this interaction in mind. To achieve success in Oxford Street we have had to integrate highways maintenance, network management and transport services and it requires better control of the interfaces between each service to deliver economic growth. This has taught us the importance of encouraging a broad scope of works at the procurement stage, so that these opportunities exist for integration.
Other factors play a part in the public and private sectors’ ability to successfully deliver outcomes. Most significant is the quality of the relationship and communication between the partners. Where a traditional command and control relationship exists, innovation is stifled. Adversarial conversations around contract clauses undermine trust between the two parties, as does poor performance by suppliers.
From the public sector perspective, it is essential to have clarity around the outcomes to be delivered, as well as how these will be measured. This must come from consultation with the community, as ultimately it is they that will decide if the service is a success. For the private sector, long term certainty of work load facilitates upfront capital investment as the return can be calculated over the longer term. This can unlock significant improvement in the delivery of the service.
As has been recently highlighted in the CBI’s paper ‘Competitive, Accountable, Transparent – A Value Driven Public Services Sector’, meeting the social and fiscal challenges facing the UK requires a collaborative approach between government and business.To be successful, this must focus on the outcomes that Local Government wishes to achieve as opposed to the costs that need to be cut.
The evolving nature of our society means we all need to shape our environment to meet a complex array of individual and collective needs. Balfour Beatty is proud to be right at the heart of a
