Offsite Manfacturing Technology Centre Risk

The construction industry needs to grasp the opportunities of the sector deal or see Government investment potentially dry up, a leading figure in the industry has said.

Speaking at our Offsite Manufacturing Development Conference Trudi Sully, Associate Director for Construction and the Manufacturing Technology Centre, said: “It’s a fantastic time to take advantage of the opportunity which has been given, if we don’t then the Government won’t continue to invest. We have to take advantage now and start to drive change to drive future investment from Government. The aerospace went through similar experience to the construction’s sector deal and has subsequently had around £10bn of investment from the Government.” [emaillocker id=”71749″]

 Ms Sully noted that the construction sector has often operated as individual firms working in isolation, which has hampered innovation across the sector, however barriers are beginning to break down. She added: “They [construction firms] are starting to collaborate, it is the only way that this works, it is exactly the replica of what happened in automotive and aerospace [sectors].

 “Only when they [firms] got over their competitive element of ‘we can’t possible talk to each other’ when they worked together, they made the step change and became the successes that they have. And that is what is starting to happen now. We need to keep the momentum and what was revealed by the Farmer Report.”

 Ms Sully’s comments were echoed by Rory Bergin, Partner for Sustainable Futures at architecture practice HTA Design: “We need to move forward from a ‘who’s fault is it?’ to ‘how do we move forward’. I’ve seen on a transformation on a daily basis where we have traditional contracting on one hand and offsite on the other, the behaviours are completely different. If only I could put these people all in the same room, they would learn a lot from each other.”

 Offsite construction has long been tipped to have a transformative impact on the sector, however Project Director at developer First Base Steve Eccles believes that the investment in offsite manufacturing by large US banks such as Goldman Sachs may herald big changes in the sector. In April Goldman announced plans to invest £75m in offsite manufacturer TopHat’s to aid the delivery of its homes at the Kitchener Barracks in Chatham, Kent.

Mr Eccles said: ““The most interesting one [offsite deal] is between Goldman Sachs and Top Hat – they can see there is an investment and return that they can get through the market. It is delivery, and certainty of delivery and they [investors] have seen what is happening in the contracting market in the past four or five years and they see greater risk. In terms of a comparison of the risk profile of a new factory, even if it is a relatively new entry, compared risk profile of the traditional market at the moment, it’s a known risk.”

“We are working on very big markets funded by the investment market with several hundred modular homes per project build to rent (BTR) homes per project and they are going very well. I see that as being the catalyst for the market – we get throughput through factories using the BTR and local authority market, then the private market will follow on.”

Neil Pennell, Head of Design Innovation & Product Solutions at LandSec noted that security of delivery and the ability to speed up construction times means a lot for developers when they choose how to invest their funds.

He said: “In our commercial developments as soon as we can get a new build to market gives us greater opportunities for pre letting, your financial exposure is over a shorter period, over the last build cycle we invested about £3.5bn in new development projects across the UK. If we could save 10% or 20% on that it would have meant that we could have bought us a lot more property developments and assets for our portfolio, if we could have bought them to market quicker than the normal build cycle.” [/emaillocker]