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Capital costs and lack of expertise are main barriers to off-site investment, report reveals

Despite mounting evidence identifying the benefits for increased implementation of off-site manufacturing (OSM) a survey of executives from the UK's top 50 construction firms has found over half (55%) invested below 2% of revenue in OSM in the last five years.

A report from global law firm Clyde & Co entitled 'Innovation in Construction Report' has gathered the views of 31 C-suite executives from major construction firms. 59% of respondents highlighted investment costs as the primary factor in the stalled use of OSM with a lack of relevant expertise within their organisation following shortly behind. 

Alarmingly, the vast majority (80%) of construction bosses say organisations only use OSM for between 1-20% of the work they carry out despite the government recently committed to adopting a “presumption in favour of off-site construction” across several key departments, including transport, defence, health and education.

Robert Meakin, projects & construction partner at Clyde & Co, said: "OSM has been at the bottom of the UK construction industry's tool box for decades but it is now being heralded by many as the key to tackling chronic low productivity problems. Over the last couple of years momentum has been building and with the government now actively encouraging the use of OSM in some of its projects, the tipping point appears to be within reach."

Despite the low levels of use reported now, Clyde & Co did find that OSM is expected to increase within the next five years. 61% said they expect to double the amount of construction work that they carry out using OSM. 

In the report, Toby Uppington of AECOM said it was time to act now. “The huge disruptive change at the moment, because of the focus on technology, means that the OSM market is in a “sweet spot” which companies can capitalise on,” he added. “AECOM is a major proponent of OSM and has a presumption in favour of off-site. It’s not what can be prefabricated off-site but what can’t” that should be the key question in each case.”

According to the report, the top three reasons cited for investing in OSM are: 

  • To improve efficiency and reduce costs (97%)
  • To overcome new challenges in construction (84%)
  • To help overcome the skills shortage (61%)

Key legal and regulatory hurdles that might hinder the adoption and roll out of OSM were also discussed in the law firm’s report. Executives believed the allocation of risk and liabilities could be different through the supply chain compared with traditional methods.

Meakin added: "To keep all this innovation on track, a robust legal framework will be essential, from contract terms for supply and installation to professional indemnity and product liability, and effective regulation of environmental, health and safety, and employment issues. As the risk landscape changes, organisations need to ensure they understand the new threats they could face as a result of embracing new technologies and working practices."

A recent House of Lords inquiry focused on troubling levels of productivity within the sector. A subsequent report highlighted OSM as a key element which can help increase productivity while reducing labour demands, improving the quality and efficiency of buildings, and reducing the environmental impacts associated with traditional construction.

The infrastructure giant Balfour Beatty last month pledged to modernise its construction process by embracing a new generation of industrialised methods which help the firm reach its target of reducing work undertaken onsite by 25% by 2025.