The Value Toolkit uses the capitals approach as a way of defining value. Whilst the capitals approach may be new to a construction audience, it is familiar to a corporate audience – where many construction-related decisions are made. It also aligns with HM Treasury’s Green Book, against which public sector investment decisions are made.
There is an international movement towards a capitals approach for managing impacts and dependencies. The definitions of the Four Capitals Model have been agreed upon following extensive consultation and engagement with UK and International governments, investors, businesses, academia and society.
The Four Capitals Model used in the Value Toolkit has been developed by the Capitals Coalition and defines a capital as any resource or asset that stores or provides value to people.
The capitals approach reflects how a project or programme may have an impact on a capital, and how it may depend on a capital. For example, a project may have an impact on biodiversity and may depend on the availability of local labour. This contextualises how projects and programmes relate to the capitals and illustrates the business case for protecting and investing in them.
All capitals are interrelated, forming part of a wider system. Their effective consideration requires an integrated approach to their assessment and embedment into decision making – the approach provided by the Value Toolkit.
Natural Capital
Natural Capital is defined as the stock of renewable and non-renewable resources (e.g. plants, animals, air, water, soils, minerals) that combine to yield a flow of benefits to people.
In the context of the built environment, Natural Capital values the natural environment, addresses solutions to climate impacts and provides benefits to society throughout the full life cycle of the built assets.
Human Capital
Human Capital is defined as the knowledge, skills, competencies and attributes embodied in individuals that contribute to improved performance and wellbeing.
In the context of the built environment, Human Capital encompasses employment opportunities, skills development, individual health and wellbeing as well as an asset’s capacity to influence these factors.
Social Capital
Social Capital is defined as the networks together with the shared norms, values and understanding that facilitate cooperation within and among groups.
In the context of the built environment, Social Capital refers to influence and consultation, equality and diversity, networks and connections as well as the changes people experience in these areas as a result of built assets.
Produced Capital
Produced Capital is defined as the man-made goods as well as all financial assets that are used to produce goods and services consumed by society.
In the context of the built environment, Produced Capital encompasses a combination of capital cost, operational cost and revenue, thereby covering the whole of the direct monetary spend on the project over its whole life. The man-made elements include indicators of the efficiency and quality of design, construction and operational processes.
