Out-Law News 3 min. read

Contract differently for modern methods of construction, says UK government

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The traditional approach taken to construction contracting is unsuitable for the successful adoption of modern methods of construction (MMC), according to the UK government.

MMC is a general term used to describe a range of alternative off-site and on-site manufacturing techniques. The concept is at the heart of the September 2022 updates to ‘Construction Playbook’ – a document that sets out the UK government's approach to, and expectations of, future public works projects including roads, railway lines, schools, hospitals, and prisons.

The government has said MMC has “the potential to deliver significant improvements in productivity, efficiency and quality for both the construction industry and public sector”, and also support greater sustainability in construction. While it is seeking to “maximise the use of MMC” for those reasons and has said that there will be a “presumption in favour of offsite construction” in public sector projects, it has urged contracting authorities to review, on a case-by-case basis, whether the adoption of MMC is appropriate for achieving their desired outcome.

Nigel Blundell of Pinsent Masons said: “With the current inflationary pressures, major clients and contractors will be looking to find the most efficient ways of working and use of MMC is a potential solution.”

To supplement the Construction Playbook, the government recently published a raft of additional papers – including a new guidance note on MMC (22-page / 823KB PDF). The government said that document is designed to “provide more detailed guidance for [government] departments on the contractual and delivery elements required to deliver infrastructure and construction projects using platform approaches and MMC”, with a view to encouraging their wider adoption when appropriate.

According to the new guide, “facilitating this change will require us to change the way in which we work”. This includes moving away from traditional construction contracting.

“There is consensus that some current contracting models will not be as effective in facilitating platform or MMC approaches to delivery, and that different models of contracting and delivery are required,” the government said.

“Different MMC solutions and platform approaches will require different contracting models and ways of thinking. Traditional contracts have developed in a manner that suits traditional methods of construction, where every element of that project is developed incrementally. Design continues to evolve at relatively late stages of the project, including after construction has commenced. MMC and platform approaches require product-led thinking, an increased fixity of design and earlier decision-making associated with manufactured elements,” it said.

The government has described a platform approach as “an approach leveraging a kit of parts that are standardised and rationalised, alongside complementary components via defined interfaces, delivered via defined processes”, which “ultimately provides greater assurance around quality, value for money and a supply chain’s ability to invest in innovation and improvement as a result of greater predictability and volumes”.

The Construction Innovation Hub has developed a platform rulebook, which the government has cited in its guide, which is designed to help construction companies across the supply chain adopt more standardised parts by using product platforms for delivering infrastructure.

Blundell said: “MMC creates a raft of new legal issues and relationships because of the significant manufacturing and supply elements of the products. This starts from design where rather than a designer having free reign, there needs to be a ‘design to manufacture’ approach.”

“MMC requires long lead times and pipelines of work to maximise factory efficiencies. Clients and contractors need to consider both long term relationships with MMC suppliers and more collaborative ways of contracting,” he said.

“Traditional contracting models will find the success of the project is potentially bound up in the performance of one key supplier which will have a significant percentage of the turnover. This does not sit comfortably in a traditional main contract context – differing structures such as construction management should be considered. For larger projects, enterprise models with incentivised key team members will become increasingly attractive,” Blundell said.

Anne-Marie Friel, also of Pinsent Masons, said: “Projects should be set up for success in MMC from the outset, including the adoption of longer design periods where the parties can work collaboratively to develop the best design to facilitate MMC for best for project outcomes. Adoption of digital technologies such as BIM during design will greatly aid successful implementation.”

The new MMC guide explores when the adoption of MMC and/or a platform approach would be most appropriate for contracting authorities and contractors. It also includes a table that offers users a comparison between typical contracting norms for a hypothetical project and the alternative approaches to contracting that could be taken when adopting MMC or a platform approach.

Included in the raft of other papers published to accompany the Construction Playbook is other new guidance on longer term contracting programmes, projects and portfolios; promoting net zero carbon and sustainability; and market, supplier and supply chain engagement.

A summary of the recommendations made by professor David Mosey in his independent review of public sector construction frameworks has also been published, in addition to new government model clauses on conflict avoidance and subsurface data sharing.

Friel said: “The increase in the use MMC is another good example of industrialised construction in practice. The Playbook is welcome, as is pragmatic guidance helping stakeholders to understand how best to standardise the way components are made and improve design and construction processes on projects.”

Industrialised Construction
Transforming infrastructure performance needs a new approach. Industrialised construction can improve productivity and deliver efficient and low carbon infrastructure through digital and modern methods of construction. We investigate the opportunities and challenges.
Industrialised Construction
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