24 March 2019
Construction lags behind other industries in terms of investment in research and development, and consequently the rate of innovation is slow. However, the emergence and acceptance of Off-Site Manufacturing (OSM) at scale in the UK and USA in recent years signifies a shift that has the potential to significantly change the way buildings are designed and constructed. This shift comes at a time when the design process is undergoing significant change, with increased digitisation in the industry and manufacturing processes, and the increasing use of BIM modelling. Speed of delivery is a key element in addressing the housing shortage, and off-site manufacturing (OSM) plays a fundamental role in achieving this.
The funding and cash flow model for OSM differs from traditional on-site construction. Traditionally, payments are made for works completed to an acceptable standard on-site, with occasional payments for materials vested securely off-site.
The cost of entry associated with the OSM model is high, with significant up-front investment in manufacturing facilities, materials and labour required by the supplier. Current funding and cash flow models will have to change to address the risk that goes with this level of up-front financing. There needs to be better alignment between developers and suppliers, with early investment in research to develop and certify systems before they can go into manufacture. Inevitably, this will result in risk transfer towards the funder, with early financial commitment required well in advance of modules being delivered to and installed on-site. Pre-planning design costs are also likely to be higher.
A critical issue with OSM is that very significant responsibility lies in the hands of a single entity – the module supplier. The timely delivery of modules is fundamental to schedule and project success - therefore, the traditional risk profile of a construction project needs to be examined to ensure there is fair apportionment of risk. Ultimately, this will mean the client taking a greater level of risk than in the past, when this was passed to the Tier 1 contractor and down the supply chain.
Successful adoption of OSM requires a high degree of collaboration, and early engagement between all parties, down to the supply chain, from the beginning of the design stage.
Traditionally, a very proactive and iterative approach has been taken to Cost Management, including the tendering of selected subcontract packages while the main construction works are on-site, engaging in value engineering exercises to optimize cost/value, and addressing overruns at various stages throughout the design and construction life cycles.
With OSM, a significant number of these opportunities occur early in the design process and cannot be re-evaluated once the modular system goes into production. This requires a change in approach to design management, and recognition that a significant aspect of the traditional change management process will not exist once design is released to manufacture.
Engaging experienced planners, design and manufacturing partners who understand the early-stage value management process, and have the expertise to evaluate options and value in a structured and timely way, is key to the success of the process.
There is no doubt that OSM is a more efficient form of construction than traditional build, benefitting from the digitization of construction, and leveraging available technologies to streamline the design and construction process.
An emphasis on the decision-making process during the early design stages pays dividends once the development is approved and goes to manufacture.
The most significant benefits of OSM on-site include: