On the eve of Offsite Expo 2019, Hadley Group hosted a Roundtable Event to discuss issues surrounding the ways offsite technology can be better promoted to the wider construction sector and what obstacles are still proving barriers to greater uptake.
Arguments about how to deliver an improved built environment in the UK over the next decade are complex. The housing numbers required are much repeated and albeit successfully pushed to the background by recent Governments – the pressure to develop a more sustainable, low carbon and environmentally aware brand of construction is huge.
As a part of this, the role offsite construction has to play has never been more important. Over the last two years in particular, offsite has seen its status grow to an all-time high. But problems still surround lack of knowledge about what offsite can truly deliver, and why the necessity of early supply-chain engagement and collaboration during the project cycle is critical.
How can the offsite manufacturing sector engage more with institutional funders/lenders and businesses that are providing finance to projects that are using offsite technology to remove a potential 'barrier to finance' and facilitate greater confidence in the sector?
Over recent months, the levels of investment flowing through the offsite industry has been sometimes eye-watering with vast amounts of money being injected into factory developments, product research and system design – unseen since the last hey-day of offsite in the mid-2000s.
This new money will provide some
answers to the giant problems faced by construction UK – especially those
surrounding housing provision. Funding and cash promised by Homes England via
the Accelerated Construction programme and governments policy for 'presumption
in favour of offsite' has smoothed progress. This public sector support has encouraged
a wider interest of private equity and institutional backing entering the
system, giving industry lenders greater confidence in manufacturers with much
more robust balance sheets.
However, both central government and cash-strapped local authorities can only provide so much money, time and expertise to bolster construction and housing market development. The long-term answers rest with industry pioneers and dynamic thinkers to use the flow of investment wisely, to deliver a successful, sustainable expansion of offsite manufacturing in a controlled manner.
Potential funding opportunities, 'catapult programmes' and wider fiscal incentives exist but there seems to be a knowledge gap – or more to the point a 'lack of time' gap – in tracking them down. All sorts of SME-focused offsite investment opportunities are not being understood and exploited well enough. Many clients and investors need to widen their expectations and understand that offsite adoption is about absorbing the culture of offsite manufacture into the business model – recognising the need for substantially different cash-flow models and 'vesting' issues that are quite different to 'traditional' contract funding models.
Confidence levels are growing about the use of offsite – but with confidence being everything in long-term investment decisions – this is putting the pressure on disparate parts of the supply-chain to demonstrate performance standards, consider new models of technology interoperability and even the potential for exploiting shared intellectual property.
Funders have a profound influence on design decisions and greater control of the supply-chain. They are being very strategic about what they control and what brings less cost and ultimately what saves them money on the operational side.
Beyond the funding options available from public sector, the deep pockets of large private capital investment is seen as essential to sustained development and growth. Large backing is required to get to scale. It requires significant investment to grow at speed in a profitable way. That is a real challenge for the smaller players, however it is not about subsidies and funding, it is about creating a pipeline and certainty of demand. To build an offsite manufacturing facility at scale takes tens of millions of investment and some time. That is something that not every entrant into the market has.
While the direction of travel is hugely positive, issues persist surrounding land banking and a fit for purpose planning system that can grasp what offsite manufacture does. Developers and clients who commission projects must start to think differently. Across Europe they have been developing offsite for decades, the technology is used more successfully and is better integrated. This has pushed the construction industry to raise the bar and create fabulous products and build them to significantly lower costs, with lower embodied carbon and with less environmental impact.
The pace of change in London is quicker than at national level and the political urgency seems to be larger, driven by high-density living, the rapid growth and deployment of build-to-rent accommodation and the urban creep to the outer limits of the Greater London area.
For a wider uptake and interest at all levels, there needs to be a roll-out of high value demonstration/pilot schemes to engage people better and also provide the opportunity to benchmark and measure offsite's benefits. There needs to be a big education drive around the role of offsite – whatever shape and material it takes, so that we can get the potential solutions showcased. It is not so much the general public we need to educate but the funding markets, politicians and those that are in the position of specifying within the supply chain. Now is the time to move beyond the nascent stage of the offsite manufacturing industry into the mainstream.
What changes are needed to the Planning system to remove the barriers to deployment of offsite technology and for the pent-up pipeline demand for offsite technology to be unblocked? Is it really just about good design rather than the method of delivery or technology involved?
Planning and procurement behaviour needs to change. There is still a struggle with people trying to procure 'new things in an old way'. There is a maturing awareness of what products and systems are available on the market but not all Boroughs or planning authorities want to be at the leading edge of technology deployment, and many still have a 'fear of the unknown'.
To underpin greater confidence, better collaboration and more partnerships between contractors and the offsite supply-chain are required, that make the best of both worlds with greater vertical integration. What needs to be better understood, communicated and sold as a positive, is the concept of 'moving the value of a project away from the construction site to inside a factory' where the levels of quality and reliability can be controlled and streamlined.
In the long run, everyone involved in specifying offsite manufacture wants certainty of pipeline, volume, timing and costs and then confidence will grow exponentially. There is also pressure mounting to restructure procurement practices generally and make planning a quicker, easier process to navigate – potentially incentivising and offering a fast-track option – where certain obligations can be relaxed or refined.
There are cases where the time taken to process a planning application is actively hindering one of offsite construction's key benefits. The delays surrounding planning and the length of time it can take to get a project started on the ground are frustrating. It's not good for any aspect of the industry. What would be helpful would be creating a way to incentivise or fast-track solutions using offsite.
How can the Government assist in removing barriers or bringing forward enablers for the greater uptake of offsite technology? Is this likely to have best effect at a National level or do we foresee Region/Sub-Regional initiatives for further investment in offsite manufacturing facilities or in creating demand pipelines?
One hurdle and a deep underlying issue is that the manufacturing and traditional construction industries are entrenched in the way they work and neither fully understand what each other does. Each have different thought processes, different histories and modes of operating. Certainly the role of precision factory engineering is at odds with the traditional construction mindset. Offsite needs to be sold as precision manufacture so more of that will give more confidence in specifying across a range of projects – and not just pilot schemes of which there seems to be a plethora. Offsite technology deployment around the regions needs to be adopted at scale and not just contained within the 'London bubble'.
With skills development an industry challenge at many levels, newer entrants have gone more towards precision engineering. The building industry has always been notoriously slow to pick up new technologies. There is a huge amount of technology out there but we are slow to pick it up. It's all about shifting perceptions and the difficulty seems to be that there is often a 'traditional approach to a technological problem'.
As the quest for cutting edge technology and greater digitisation drives factory manufacture, there is an opportunity for regional 'centres of excellence' to be developed around offsite manufacturing, but the opportunity will only be realised if the leaders within the major conurbations or the heads of Local Enterprise Partnerships and Local Authorities can fully appreciate the potential to create regional circular economies e.g. regional offsite manufacturing activity to provide for regional housing demand, and in some areas the potential to 'export' to other regions of the country and create long-term sustainable manufacturing jobs – regaining the sometimes long-forgotten industrial heritage.
Is there enough focus on the training/skills requirements of the offsite sector and what can be done to address the demand for new skills and job roles associated with offsite manufacturing and offsite construction?
Offsite manufacture needs to be positioned as a 'clean engineering product', technologically advanced, exciting, diverse and existing in the 21st century and not – in many ways – still stuck in the 19th century. Facilities such as the Manufacturing Technology Centre and Advanced Manufacturing Research Centre are at the vanguard of where the sector is heading and the offsite manufacturing sector must engage with these organisations to tap into the advanced manufacturing culture and technology embraced by the UK automotive and aerospace sectors over the past two decades. It is time to make the offsite manufacturing sector 'sexy' and for construction-related manufacturing to become a career of choice.
More engagement is required with education providers and students to accurately promote this wider choice of career options. A new class or 'persona' – as outlined by the CITB – is tied to the use of digital technology – in particular BIM modelling and the adoption of new virtual reality (VR) and augmented reality (AR) immersive environments. These digital tools are a huge part of the standardisation and optimisation process that rest at the heart of a successful offsite approach.
VR/AR is revolutionising the way that buildings are perceived and understood. Not only by those designing and constructing a building but also by occupiers. Housing or schools are now something that can be seen and experienced before the building has even started construction (or manufacture).
These digital tools can also help eliminate waste within the factory and everything that can be done to take out waste is critical. Productivity needs to be a new measure of efficiency and value for money. Clients can view buildings and ensure that by the time it is manufactured any issues can be ironed out in advance. Using digital technology is one clear way of helping deliver an 'as built' project 'as designed' and being a mainstay of quality control. This better alignment between technology and the offsite industry taps into achieving greater productivity – something that is historically poor within the construction sector. It also provides for a long-term view on building specification, with whole-life costing, future adaptation, repurposing and relocation of entire buildings becoming a viable proposition as the truth about our climate emergency is faced up to and large corporates begin to view their assets and impacts in a different way.
Generation X, millennials and Gen Z will place greater demands on developers, contractors, architects and manufacturers to take more seriously the opportunities to reduce embodied carbon by exploring alternative materials and building processes that will ultimately lead to offsite manufactured solutions and the shift in terminology away from construction to assembly. The offsite sector will begin to improve its brand credentials, understand how to market itself and in time become the disruptor that it has the potential to be, displacing the existing market leaders and eventually replacing them at the helm of the sector.
Many thanks to Hadley Group for hosting the Roundtable event and to all participants for their time and contributions to the discussion.
For more information on Hadley Group visit – www.hadleygroup.com