Procurement update: Offsite
With government pushing the offsite agenda and a growing housing sector needing to access new capacity, how can clients position themselves to take advantage of the benefits of offsite construction?
01 / Introduction
This year could mark the breakthrough for innovative construction in the UK. Following the announcement of the construction sector deal, a “Core Innovation Hub” will shortly be established to develop and commercialise digital and manufacturing technologies for construction. Meanwhile five government departments, including those for health and education, have signed up to a presumption in favour of offsite manufacture (OSM) – creating the prospect that government will shape a portion of its £20bn construction spend to pump-prime investment, based on design for manufacture and assembly (DfMA). This initiative should provide pipeline visibility and certainty of workload, which are the investment enablers for which OSM specialists have been calling for years. This in turn should lead to more investment in manufacturing capacity, a wider choice of solutions, and, in time, better value from better-performing buildings.
The potential for growth is huge: forecasts put annual growth in the sector at more than 100% – reaching £2.8bn a year for buildings alone by 2020. However, the barriers to adoption of innovative methods remain high, which has meant that even after many years of market interventions such as John Prescott’s Design for Manufacture competition in 2005, there are only seven modular manufacturers operating at scale in the UK.
Modular is not the only OSM technology available to clients in the UK. Indeed, government is actively sponsoring a platform-based approach based on standard sets of components so that programmes for schools, hospitals and other buildings can all be brought together into a single investable pipeline of work. However, modular solutions are being favoured by new entrants such as L&G as well as by established players in the housing market, including Crest Nicholson. Accordingly, getting the procurement of modular construction right, particularly in the residential sector, will go a long way towards building the skill sets that the industry needs as well as delivering better outcomes to clients.