16th June 2021
Steve McCombe in Thrings’ Construction and Engineering team looks at the emergence of off-site modular construction – buildings which are constructed within a factory setting before being transported to site for installation – and discusses some of the associated contractual issues that may arise.
The terms modern methods of construction (MMC), smart or modular construction all refer to off-site construction processes using a broad range of parts that benefit from controlled factory conditions and mass production techniques for on-site assembly of ‘complete’ modules.
There is perhaps nothing ‘modern’ about MMC in that it simply offers an alternative to elements of traditional construction processes. The Crystal Palace, an enormous iron, timber and glass structure originally erected in Hyde Park, London to house the 1851 Great Exhibition, used prefabricated modules in a grid formation.
Supporters claim that off-site modular construction has an increasingly important role in the construction industry, including the housing sector, and that it offers a more efficient, quicker and more sustainable method of project delivery.
A National Audit Office report published in 2005 suggested that if off-site modular construction was adopted in place of more traditional construction methods, amongst other things up to four times as many homes could be built with the same on-site labour and on-site construction time could be reduced by more than half. However, the subsequent level of use of off-site modular construction in the housing sector was perhaps disappointing.
In September 2018, the NEC issued a practice note explaining how the NEC4 suite of contracts could be used to support the use of off-site modular construction.
Off-site modular construction was, nevertheless, becoming increasingly popular before 2020 and the Covid-19 pandemic has made those processes an even more attractive option for projects involving housing, hospitals and laboratories (where high levels of cleanliness can be achieved), schools, hotels, student accommodation and prisons.
There is a never-ending demand for more housing. The following are examples of recent initiatives involving off-site modular construction:
Homes England, the government’s housing agency, announced in March 2021 that it had commissioned a major research programme on the impact of the use of off-site modular
construction within the housing sector across eight pilot sites, totalling approximately 1,800 homes.
Homes England hopes that the evidence of the benefits of off-site modular construction will provide greater confidence to the industry, investors, insurers and customers to support its use across the housing sector.
As to current and future projects involving off-site modular construction, numerous often interrelated contractual issues will need to be considered, including: