UK & Europe
The cost of investment and lack of relevant knowledge within organisations are the two primary barriers stopping the development of off-site manufacturing (OSM) in the construction sector, according to a report from global law firm Clyde & Co – 'Innovation in Construction Report'.
A survey of 31 C-suite executives from the UK's top 50 construction firms found that 59% of them believe investment costs are the primary factor hindering the implementation of OSM, followed by a lack of relevant expertise within their organisation (48%) [see chart 1 below].
The construction industry is yet to reach critical mass as far as the use of OSM techniques is concerned. The vast majority (80%) of survey respondents' organisations only use OSM for between 1-20% of the construction work they carry out.
However, its use is expected to increase within the next five years. 61% say they expect to double the amount of construction work that they carry out using OSM. Using it for between 20-40% of the construction work they carry out [see chart 2 below].
It's a similar picture with plans for investment. Just over half (55%) of survey respondents invested only 0-2% of revenue on OSM in the last five years, while in five years' time just 6% expect to invest at this low level. The majority plan to invest much more – 39% plan to invest between 3-5% and 42% between 6-20% of revenue in OSM [see chart 3 below].
Robert Meakin, projects & construction partner at Clyde & Co, comments: "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."
Clyde & Co explains that the Government has recently committed to adopting a “presumption in favour of off-site construction” across several key departments, including transport, defence, health and education. In addition, the 'Construction Sector Deal' launched this summer identified OSM as one of its key areas of focus.
Meakin continues: "Of course, one persistent problem that needs to be addressed is the lack of a secure pipeline of projects. Since the decline of PFI / PPP at the beginning of the decade, the industry has been dismayed by a severely limited flow of new schemes. As industry experts told us in our report, it would be a very difficult commercial decision to invest seriously in OSM technology without a clear plan of how and when it will deliver a return."
Investment and skills shortage
Clyde & Co's 'Innovation in Construction Report' contains insight from interviews with 15 C-suite executives from across the construction industry, including Mark Farmer of Cast, Toby Uppington of AECOM, Susan-Hone Brooks of the Manufacturing Technology Cenrtre, Jamie Johnston of Bryden Wood and Matt Gough of Mace and among others.
According to the report, the top three reasons cited for investing in OSM are:
Meakin comments: "The primary driver for investing in OSM is clearly about improving productivity and using new techniques to overcome fresh challenges. Down the line it should also help to reduce the skills shortage, using modern production line techniques where traditional manual labour might previously have been required."
"However, it is ironic that so many would invest in OSM to overcome the skills shortage, when one of the key barriers to implementation is a lack of relevant expertise. This will not be missed by UK construction's boardrooms."
"It is something of a chicken and egg situation. Those who find a solution are likely to gain a clear advantage over their competition. We may soon find the construction industry starting to look to the manufacturing sector for new recruits."
The 'Innovation in Construction Report' also considers some of the key legal and regulatory hurdles that might hinder the adoption and roll out of OSM.
Meakin says: "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."
Download the report here.