Modern methods of construction require change to contract and risk models

Out-Law News | 06 Aug 2021 | 10:24 am | 2 min. read

Traditional contract models and ways of allocating risk are ill-suited for delivering new housing through new modern methods of construction, according to views expressed by industry insiders at a recent roundtable forum called Accelerating Modern Methods of Construction hosted by international law firm Pinsent Masons.

Modern methods of construction (MMC) are widely seen as having the potential to transform the delivery of modern, affordable, high quality UK housing, but some industry experts said they believe that to harness the potential of MMC for delivering new housing, procurement processes, contracting models and the sharing of risk that the building sector is currently familiar with need to change.

MMC is a general term used to describe a range of alternative off-site and on-site manufacturing techniques. There is a significant emerging market in MMC globally. As the housing and infrastructure construction sectors look to improve productivity and deliver on government infrastructure pledges while dealing with a lack of new entrants and an aging workforce, MMC is expected to grow exponentially as a means of delivery.

Currently, it is common for the design and build elements of major housing projects, particularly mixed use or apartment schemes, to be addressed under a single contract and for the main contractor to sub-contract elements of the work to others. Some experts believe this approach can cause problems when using offsite manufacturing because both the majority of the turnover and risk is with one sub-contractor, yet the overall risk remains with the main contractor. This may lead to a reluctance for main contractors to be involved in significant modular schemes leaving procurers exposed to significant risks in coordinating the works.

Graham Robinson and Nigel Blundell of Pinsent Masons, the law firm behind Out-Law, said that collaborative contracting models that are outcome-focused have potential to ensure a fairer share of project risk and reward and accelerate the use of MMC. They said the public sector is a leader in this regard, as there have been examples of contracting authorities tailoring standard forms of contract for construction produced by the Joint Contracts Tribunal (JCT) to make housing project contracts appropriate to MMC.

“Instead of a main contractor-designer relationship, a team-based approach, working to an output specification could work,” Robinson said. “There also needs to be a shift to ‘design for manufacture and assembly’ and ‘now design for deconstruction’ with designers working with manufacturers to drive efficiency.”

Blundell said that another popular view that emerged from the roundtable discussions was that appropriately structured procurements can build flexibility into the way that housing projects are designed and better facilitate the use of MMC as a result.“Having well informed design is crucial,” said Blundell. “Having a good understanding of what type of MMC process will deliver the most benefit is essential and then the design should be undertaken with the MMC solution in mind. Using an ‘open protocol design’ allows for flexibility in the supply chain route.”

Both Robinson and Blundell also highlighted the vital role data has to play in ensuring new housing is designed and built in accordance with stiff new building safety standards that are being mandated through the introduction of the Building Safety Bill. They said the use of MMC can improve the volume and quality of data available about buildings.

“For traditional design and build, it is difficult to know exactly what products and materials have gone into the build,” said Robinson. “This is a major risk for contractors. However, off-site construction largely solves this issue as there is much more information available on the products and therefore far more certainty as to the materials used.”

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