Chartered Institute of Building (CIOB) – Written evidence (OMC0040)

1. Introduction and general comments

1.1     The Chartered Institute of Building (CIOB) is at the heart of a management career in construction. We are the world's largest and most influential professional body for construction management and leadership. We have a Royal Charter to promote the science and practice of building and construction for the benefit of society, which we have been doing since 1834. Our members work worldwide in the development, conservation and improvement of the built environment. We accredit university degrees, educational courses and training. Our professional and vocational qualifications are a mark of the highest levels of competence and professionalism, providing assurance to clients and authorities who procure built assets. We welcome the opportunity to respond to this inquiry and are happy to be involved in the debate as it develops.

1.2     Even with increased or maintained levels of manpower, there is a general consensus that substantially increasing the number of homes, other buildings and wider infrastructure built a year will not be possible without embracing new technology.[1] If a wholesale switch to off-site construction is to be successful, customers and investors will need to be reassured about the new products. New competencies and managerial skills will have to be nurtured. A number of guaranteed projects will be needed to create market certainty for off-site manufacturers to scale up production capacity. We welcome the construction sector deal commitment for a presumption in favour of off-site manufacturing from 2019.

2. Defining off-site construction

2.1              Some in the construction sector use the term ‘modern methods of construction’ (or ‘MMC’) in place of off-site construction for brevity and understanding rather than accuracy – for example, several ‘modern’ methods of construction have been used in practice for many years, but are not widely adopted by the sector.

3. Off-site construction

3.1  Off-site construction, and MMC more widely, offer alternative solutions that could:

• Reduce the amount of labour needed on site;
• Reduce health and safety risks during the build process;
• Raise the overall quality and energy efficiency of the finished building;
• Help control overall costs;
• Reduce production waste;
• Encourage the wider take up of digital construction tools and techniques such as Building Information Modelling (BIM) within the sector, which is part of the Government’s Digital Built Britain strategy.

3.2  Even relatively small changes to design such as use of timber frame or precast panels could reduce requirements for labour. “Analysis of data suggests that a well-established timber frame product could reduce labour needs by 25% compared to a conventional housing construction.”[2] This is also important in the context of the recent 25 Year Environmental Plan, which commits government to increasing the amount of home-grown timber for us in construction, and in stimulating innovation with products such as cross-laminated timber. There is evidence that off-site wall panels are replacing the need for bricklayers on some projects.[3] Contractor Laing O’Rourke also estimates that using MMC could bring a 30% reduction in programme time, compared to traditional methods.[4]

3.3  Houses are among the most homogeneous products produced by the industry, particularly mid- to high-rise developments. There is scope to develop new products and processes that increase productivity. This can also apply to other relatively homogenous builds such as hotels, some retail etc.

3.4  The off-site construction sector in the UK was valued in 2013 as around £1.5bn, but has the potential to achieve value of £6bn if the market conditions are right.[5] Evidence from UKCES also suggests that modern methods of construction could potentially contribute an extra 60,000 homes per annum.

3.5  A vibrant home-grown off-site sector would have the opportunity to compete on the global market. The sector is currently dominated by companies from Austria and Germany. Japan, China and the USA are ramping up activity. High quality examples of prefabricated products being imported into the UK include SvenskaHomes and Huf Haus from Sweden and Germany respectively. Polish company BUMA also exports a steel framed modular product into the UK. If the UK lags behind international market leaders, this could be a missed opportunity to develop home grown skills and intellectual property rights, protecting direct and indirect employment in the sector and stimulating economic growth.

3.6  Evidence has shown that there are no national regulatory barriers to increased use of off-site manufacturing in house building. Constraints are often based on commercial or supply-side challenges, as well as an aversion to risk. We need to bear in mind that the cost of materials used in the construction of new homes represents only a small proportion of the overall cost; savings from the implementation of new solutions or processes are likely to be modest in most cases, meaning there is no real financial incentive to introduce them.

3.7  Against this backdrop, though, is evidence from house builders themselves that they would not be able to build more than 150,000 units a year via conventional means, assuming they have the resources available immediately.[6] Volume house builders tend to phase production with sales, making demand erratic. Scaling up production can be seen as risky, and high profile market failures can make investors nervous to invest. In addition, the general public could be reluctant to buy properties that use off-site methods, possibly due to perceptions of prefabricated houses supplied in the post-war era.

3.8  Construction is a risk-averse sector. Its fragmented supply chain acts as a disincentive to investment. It has the lowest spend on research and development than any other sector in the UK, currently estimated to be running at 0.1% of output. Consequently, there are problems in getting products to the market and scaling up production. So we have to ask the question of whether current business and financial models are fit for purpose in being able to deliver the houses, buildings and infrastructure that the UK needs. We need to diversify tenures and supply, bringing in new entrants to the market.

4. Off-site construction and skills

4.1  The move away from traditional build methods to adopting premanufactured elements presents new training challenges which are underestimated by the industry at present. This is likely impact most heavily on professional roles, as trade skills in terms of joinery, plumbing etc. do not differ extensively from their current on site role. As off-site requires integration between design, construction, manufacturing and engineering disciplines, professionals will need to work in a more interdisciplinary way, embracing wider areas of knowledge than previously. The roles most likely to be affected include design and architecture, engineering, BIM modelling and supervisory project management.[7]

4.2  Managers will need to manage a greater number of variables and diverse teams, bringing together on- and off-site activities. Other hybrid roles may develop, such as an overlap between managerial and professional levels, or technical sales roles where commercial and technical skills overlap. Site managers will need to deepen their logistics competencies. This suggests that behavioural development is as important as skills development for education and training providers. There will be a need for leaders and managers to develop softer collaborative skills such as problem solving, team working and communication alongside their technical competencies.

4.3  However, at present, current training for off-site skills is inadequate. There is a disconnect between industry and training providers and industry and academia. Because of the bespoke nature of off-site systems, most of the training is carried out by companies in-house and lacks consistency. With low margins and tight schedules, organisations lack understanding as to where the skills and knowledge gaps lie for offsite production. Although most of the construction industry consists of SME subcontractors, they are predominantly not involved with off-site technology, and lack the resources to become involved.

5. Productivity and measurement

5.1  There is a further, often undocumented, side effect of moving more construction work to an off-site, factory environment. This lies in the way the Office for National Statistics (ONS) measures construction output, which at the moment only includes onsite activity. By moving construction/house building work off-site and into what is technically defined by the ONS as the manufacturing sector, it is likely that what we see as construction output and its productivity will actually decline or remain stagnant, providing policy makers, industry and the public with an obscured image about the sector. So paradoxically, one could be theoretically building more productively to a higher quality, with innovation in design, product manufacture and construction management, while the statistics suggest the industry is actually becoming less productive.

5.2  We therefore recommend support for a built environment ‘satellite account’ dataset from the ONS. A more complete and consistent set of data like this that measures the entire delivery and maintenance of the built environment would provide significantly better understanding of how construction in its entirety delivers value. It would better capture the impact of the industry as a whole and enable more informed and holistic policy making, as well as provide a truer picture to potential employees of the future about the wide array of roles that the industry provides.

5.3  The CIOB itself has held preliminary discussions with the ONS about such a satellite account, but it will require cross-industry and government support to ensure such a move happens – the National Productivity Investment Fund, for example, would provide a solid and relevant platform to support this work.

6. Case studies and best practice

6.1  The Buildoffsite Property Assurance Scheme (BOPAS), launched in 2013, provides long term assurance to mortgage lenders, valuers, funders, landlords and homeowners that properties built using non-traditional forms of construction will be durable for at least 60 years, without the need for disproportionate maintenance. BOPAS was developed by Buildoffsite, Lloyds Register and BLP Insurance with RICS, the Council of Mortgage Lenders and the Building Societies Association. It gives an independent assessment of quality and reassurance from inception through to construction. Some schemes that have received BOPAS accreditation have also benefitted from a BLP Insurance 10-year structural warranty. Twelve manufacturers have already been approved under BOPAS and a further 12 are going through the process.

6.2  Laing O’Rourke has invested heavily in Design for Manufacture and Assembly technology, establishing a factory at the Explore Industrial Park in Nottinghamshire. As well as manufacturing many components for Custom House Crossrail station, the factory has also supported residential projects, including Elephant Road, London and Two Fifty One, Southwark. Laing O’Rourke is planning to build an advanced manufacturing facility alongside the existing factory, using intelligent design, precision engineering and fully automated processes that could revolutionise house building in the UK.[8]

6.3  Legal and General launched a business in 2016 to deliver pre-engineered homes more quickly and cheaply through the largest modular housing construction factory in the world. Using pre-assembled and fitted out cross laminated timber frames, this lean approach dramatically reduces time on site and subsequent need for manpower on site, improving predictability, cost, quality and time. The Farmer Review says that the factory “represents one of the biggest potential disruptions in the UK residential sector with a manufacture approach being used at an unprecedented scale.”

26 April 2018