Socio-Economic Advancement is our proprietary process for creating economic development structures for use in government civil procurements.
Several of us on the Constructive Edge team began our careers developing economic development structures using countertrade involving civil infrastructure projects, especially in the former European Eastern Bloc. In those examples the selling company was often asked to structure transactions - countertrades - that were at their heart essentially designed to stimulate the economies of the jurisdictions to which they sold. Value had to be created through the sale of goods that could ultimately be converted into hard currencies. If there was no viable economic activity within a jurisdiction (economic activity that created marketable goods or services in global demand) then there would never be hard currency. The selling company became the facilitator of economic development. Offsets (a form of countertrade that does not involve the conversion of economic activity into hard currency, but does contribute to economic activity) related to major defence sales are common in over 100 countries, and have been linked to defence sales since after the second world war.
There has always been recognition by some companies that civil offsets offer a significant opportunity for bid differentiation, which is especially important today as global infrastructure needs are vast, yet truly bankable or fully funded projects relative to the overall needs remain few.
Today’s global infrastructure demand is estimated at approximately US$ 4 trillion in annual expenditure, with a gap (or missed opportunity) of at least US$ 1 trillion every year. The demand for infrastructure exceeds the ability to supply it.
Compared to demand there will only be a relatively limited number of high quality financially viable projects. Competition for these projects will be fierce and the Constructive Edge process provides a mechanism for clever bidders to discriminate their offerings; in other words they can give themselves a Socio Economic Advantage over their competitors.
Public dollars are always at stake in procurements whether through direct investments, expenditures, guarantees or otherwise. As in the case of defence procurement, governments will have an interest in leveraging the expenditure of public dollars or granting of public concessions to achieve socio-economic development. Due to competition, smart developers will be willing to meet these needs. As governments in all countries, and especially developed ones, begin to look at the way they can maximize socio-economic activity as a result of public expenditures, an ability by corporations to put together compelling socio-economic proposal will become more and more relevant.
There is already a movement to civil offsets in many countries. We prefer to call this form of leveraged economic development Socio-Economic Advancement, a term we coined to use when speaking with governments and civil developers.
Constructive Edge seeks to show its clients how they can develop their Socio Economic Advantage over their nearest competitors, eliminating the need for them to compete solely on the basis of being the low-cost bidder who is compliant with specifications. That is no way to win a project. Invariably, winning a project based on being the low-cost-compliant bidder will result in their being no room for mistake and margins that are often unsustainable.
We therefore see significant opportunity to build on our years of specialist defence sector experience and our beginnings in the civil sector to now provide services that assist with the development of local economies.