Laing O’Rourke – Written evidence (OMC0055)

Laing O’Rourke would like to thank the committee for taking the time to focus on offsite manufacturing and look at what more can be done to support this step-change in the construction industry. As one of the UK’s leading construction and engineering enterprises, we have both the ambition and, through our offsite component manufacturing facilities in Nottinghamshire and our mechanical and electrical (M&E) manufacturing facilities in Oldbury, have the capacity and capability to deliver high-quality, engineered offsite solutions at volume, across all sectors within the built environment.

Defining off-site: At Laing O’Rourke, offsite is best articulated through our proven Design for Manufacture and Assembly (DfMA 70:60:30) approach which enables 70% of a project’s construction to be conducted off site, leading to a 60% improvement in productivity, and a 30% improvement in delivery schedule.

1.1 Perceived advantages of off-site manufacturing for construction

Offsite manufacturing offers the opportunity to ‘turbo-charge’ capacity and wider economic productivity in the UK and responds to many demands of the Industrial Strategy.

Improved sustainability through accurate, cost and time efficient build delivers high quality projects that are energy efficient and offer whole life benefits to the end user. The sophistication of digital planning allows for a highly flexible build process well suited to built-up urban environments. Productivity is improved through a more efficient, high-tech design and delivery process less reliant on traditional on site construction works, utilising techniques that necessitate diverse, highly-skilled, well paid engineers and technicians throughout the UK; and the accuracy and comparative ease of assembly offers a safer and healthier, more attractive working environment. The accuracy and quality of the build minimises the risk of additional costs, providing value for money; and investors are attracted by the clearer return on investment offered by predictable timescales and greater opportunity for risk and reward sharing.

1.2 What are the likely drawbacks?

While the opportunities for offsite are considerable, industry and Government should be cognisant of the barriers or perceived drawbacks.

Out-dated perceptions of offsite manufactured products remain within our culture and the term ‘pre-fabrication’ continues to conjure memories of ‘post-war’ high-volume, standardised and low-quality homebuilding. Offsite manufacturing today is driven by precision engineered, quality products delivered more efficiently. A consistent and evidence-based narrative is needed to instil confidence, and the Government can continue to lend support by positioning offsite as a core component of its long-term strategic approach to a more productive nation.

For offsite methods to become the norm and transform the way in which the built environment is delivered, industry needs confidence and visibility of pipeline, at a regional and national level. With higher demand and volume visibility, industry will be more encouraged to invest in advanced technology, research and development, skills and training. Government can support surety of pipeline by adapting its procurement methods; adopting an off-site-first approach. Public procurement processes that incentivise smart digitised construction and offsite manufacturing will signal confidence to the market and help to unlock investment. An offsite manufacturing approach will best deliver cost efficiencies and whole-life value through repeatability and volume, and this is discussed in more detail within our response to question eight.

2. Evidence of benefits

Offsite manufacture brings benefits across all sectors. While there is a growing bank of available evidence, industry and Government should work together to agree consistent data collection parameters, thus continuing to build confidence in the approach. The following three short case studies provide evidence of various, and inter-linked benefits.

5. Can the benefits of standardisation and factory manufacture be realised without hampering architectural ambition? If so, how?

Architectural ambition need not be hampered through standardisation. A good design approach will look to minimise as much as possible the non value-adding variation through appropriate standardisation; for example structural grid sizes or column dimensions in a range. In car manufacture, customer choice is offered through a wide range of configurable options and price-points but the use of common fixings, standardises the assembly process. Similar techniques can be applied to construction. A façade system can have a common set of fixings and dimensions, but offer different options in terms of facing materials or even facing geometry and relief. Laing O’Rourke already deploys some of these approaches, for example, in the Glass Reinforced Concrete tunnel lining panels for Crossrail Tunnels, where the design was re-engineered to support common fixing arrangements to support better installation processes. Laing O’Rourke’s DfMA 70:60:30 approach was also used successfully at British Land’s Clarges development in Mayfair, a collection of some of the city’s most sought-after ‘super-prime’ apartments – without compromising architectural individuality or the quality of finish.

6. What R&D is needed, and by whom, to realise fully the potential benefits of off-site manufacture?

The three areas of focus for R&D as set out in the construction sector deal of Digital, Manufacturing and Performance, is aligned and constant with Laing O’Rourke’s priority areas. The i3P roadmap provides an initial industry level view on the main elements within these areas, as well as enabling aspects such as business models, culture and procurement processes that should also be addressed.

For innovation to be adopted and for R&D investment to deliver the desired returns in productivity, profitability and sustainability, it is critical to address the route to market. The industry must become more systematic in progressively identifying requirements, demonstrating, and gathering evidence to support wider uptake and deployment. Procurement processes need to incentivise and reward the development and adoption of new methods.

Laing O’Rourke has found Innovate UK funding an important mechanism to support the innovation process, enabling collaboration more widely than possible without external support, and this should be further supported through the Industrial Strategy Challenge Fund. The roles of Catapults and Universities is welcome in supporting this, but particularly in this sector the real challenge is adoption and deployment of new technology and practices within the challenging construction environment. This innovation needs to be industry-led, and continued support to industrial companies large and small is needed to help encourage uptake and learning of the R&D and deployment processes. Links between future workload, innovation and skills capacity building needs to be further improved.

7. Government actions. Does the construction sector deal correctly identify the issues faced by the construction industry and the actions that the Government and other stakeholders need to take to address them? What should it contain/what is missing?

We welcome the sector deal and have been active in supporting it during its formation, and are hopeful that it will support the change we would like to see in the industry. Critical will be to support industry in enabling it to engage with uptake, and deploy new technologies and methods, particularly though public procurement policies as outlined below in response to question eight.

8. What changes could be made to public procurement processes to encourage more economically and environmentally sustainable practises in the construction industry and facilitate off-site manufacture?

Continuity of workload is a significant factor for the construction supply chain. Where future workload can be made more visible and also more contractually secure, but still tied to performance, this enables the supply chain to anticipate a return on investment in capacity, skills and innovation, including facilities for offsite manufacturing. The November 2017 budget (4.52) stated that Government will use its purchasing power to drive adoption of modern methods of construction including offsite manufacturing. This is an encouraging move that we strongly welcome and support, but better procurement approaches need to be more consistently adopted, across all departments and this will require a change in current practice, culture and behaviours starting with client organisations.

To support this approach we recommend more collaborative forms of procurement based on longer term strategic relationships. Having contracts structured to enable multiple sequential delivery over a period of time enables visibility of continuity of resource and the ability to invest in and benefit from progressive learning and innovation. Although current procurement has used frameworks, in practice this has not consistently resulted in the intended outcomes due to the nature of the base contracts and fragmentation of workload; with each successful partner incurring excessive costs of bidding, oftentimes with little or no commitment and resulting in insufficient workload to be viable. Our preference is to adopt procurement more aligned to collaborative Alliance methods, whereby project participants are properly enabled and incentivised to deliver better project outcomes. One example is the Stafford Area Improvement Programme, as evidenced in question 2 above.

The Construction Leadership Council Innovation in Buildings “Demand Surety” working group has published a position paper recommending longer term strategic relationships and has commissioned King’s College London Centre for Construction Law to develop a model contract for such relationships, based on the Framework Alliance Contract. In related work, Ann Bentley, is leading a Construction Leadership Council workstream on “Procuring for Value”; the ICE’s Project13: From Transactions to Enterprises; and the IPA’s “Procure for Growth “ strategy set out in “Transforming Infrastructure Performance” are all seeking to support this objective. Laing O’Rourke is working with private sector partners to develop longer term strategic relationships and agreements to support enhanced delivery and project outcomes.

26 April 2018