Opinion

Editorial: What history can – and can’t – reveal on offsite

Elaine Knutt, editor, CM

CM’s Cover Feature on offsite construction and pre-fabrication could unfortunately give readers a strong sense of déjà vu. It’s easy to recall several previous waves of enthusiasm for offsite breaking on the industry’s shores, from the Egan-era excitement over all things Toyota, to John Prescott’s campaign to build 60k homes.

Sadly, the demonstration projects that resulted were often left high and dry, with the Joseph Rowntree Foundation forced to demolish its CASPAR housing project and the Peabody Trust backing away from volumetric, modular methods. Hardly any 60k houses were ever built, and just last month Taylor Wimpey announced it was abandoning the most successful examples, by Richard Rogers.

So while offsite clearly has its place in the industry, many observers would argue that that place is at the margins. Modular is fine if you’re building anything with en suite rooms off a double-banked corridor, and the client isn’t too worried about its business-park looks. For the rest of the industry’s output, offsite might mean M&E modules and toilet pods, perhaps some engineered timber panels, but everything else will be built the old-fashioned way.

But offsite is currently being revisited, in the recognition that asking the industry to produce ‘more for less’ using traditional methods could simply be wishful thinking. Cost plans are still based on inefficient supply chains, each link susceptible to inflation hikes, suicide bidding, cash-flow problems, pricing in unseen contingencies. Hardly the way to achieve ‘more for less’.

So, instead of tinkering at the edges, why not go for a construction revolution? Throw away traditional methods and designs, re-think your project from first principles. Identify elements that can be standardised and rationalised, build it in BIM then watch it take shape, component by component, in the real world.

Except we know it doesn’t work that way. Will contractors take on the design risk if it all goes pear-shaped? What size of programme do you need for 10%, 20% or 30% savings? And if we’re talking about public sector procurement, where are the agencies that can take a concerted approach and provide the investment to pay for it? Under the coalition, it’s all about death to the quangos and localism.

So, for the moment, Health Properties is a lonely vanguard. But it does have a large programme, high-profile architects and a willingness to tell the world what it’s doing. And revolutions, as history tells us, can be highly contagious. Any contractor that resists the onward march of history could find itself outflanked – by providers and consultants taking their market share.

Training was the topic of last month’s editorial, so it was interesting to hear from ConstructionSkills about evolving plans for Green Deal training and accreditation (see our online story) and Higher Level Apprenticeships (see news p5). We also touch on declining provision for CIOB Level 3 and 4 courses (page 24). Clearly, there’s a shake-up going on, where the CIOB needs to play an active part in shaping provision for future students.

Elaine Knutt, editor

Feedback

Offsite manufacture holds key to better procurement

John Nixon MCIOB, formerly development manager, Octavia Housing

It was interesting to read in the January issue of CM (news, page 8) that although 224 out of 525 respondents to a CIOB survey on procurement said that standardisation would assist in reducing problems during procurement, only 95 said that offsite manufacture would help. Also, lean construction and Building Information Modelling got relatively scant support.

But standardisation is integral with effective manufacturing processes, as are a lean construction culture and BIM.

Until my recent retirement I was a housing client for many years and my view is that construction and housing procurement will only improve significantly and achieve better value for money if more building is procured through appropriate off-site manufacture.

As expectations and standards rise, especially with the need and requirement for more sustainable building and tougher regulations which make buildings more complex, my experience is that with traditional procurement, costs rise and often there are more defects on completion.

Whether consultant-, constructor- or client-led, traditional procurement activities produce far too much waste in design and construction. Early integration with the supply side is still mostly inadequate, real standardisation is rarely achieved and learning from one project to another is still poor. I am not suggesting that people do not try to work hard to give good value for money, but we are using design and production processes that are ineffective.

Paul Morrell, the government’s chief construction adviser ,is asking for costs to be reduced by 30%. Given that construction costs increased dramatically between 1996-2006, it seems unlikely that better building standards and reduced costs will be achieved without some radical changes. A 2006 report to the European Commission showed that countries that were more efficient used prefabrication to a greater degree than those that did not.

Many clients would like to use offsite construction more as they can see improved benefits in product quality, but they have always been concerned that costs are generally higher than with more traditional methods of procurement. This this is because of insufficient use and development of off-site manufacture.

There is still only a small percentage of general construction procured through the use of off-site manufacture and even less in housing. If the numbers can be significantly increased, together with the proper use and development of manufacturing organisation and processes, there is a very good chance that procurement will improve, costs will reduce and better standards will be achieved.

Is it time for an offsite revolution?

Clarifying FMB competent persons scheme proposal

Brian Berry, director of external affairs, Federation of Master Builders

I read with interest the article in the January edition of Construction Manager headlined “Green Deal’s skills shake up”.

In the article Richard Diment, director-general of the Federation of Master Builders (FMB), is quoted about the scope of the FMB’s proposed competent person scheme for general builders.

Unfortunately, this information is slightly inaccurate and I hope this does not lead to any misunderstanding in the construction industry.

The FMB’s proposal for a competent persons scheme will cover solid wall insulation for both internal and external walls; loft insulation; suspended floor insulation; replacement glazing; and replacement of roof coverings. But it will not cover the replacement of walls and roofs.

The costs of inequality

Niki Luscombe, chief executive, Women and Manual Trades

In response to Gerald Brown’s letter in the November/December issue, I would like to point out that the intention of the Equality Act 2010 was to streamline the law and harmonise definitions for the benefit of businesses, services providers and the public. The Act does not confer on employers the responsibility to ensure that one employee does not “upset” another. It protects employees from discrimination and harassment on the grounds of a “protected characteristic”, including race, disability, gender, sexual orientation, faith and pregnancy.

Nearly 40 years since the Equal Pay Act of 1970, women working full time across the UK still earn on average 16.4% less an hour than men working full time. A large proportion of this pay gap is caused by the concentration of women in low paid industries and due to the gap in wage progression caused by taking breaks to have children. Couples usually make decisions about having children together, yet it is the woman’s pay, career progression and pension contributions that tend to suffer as a result.

There are only around 1% of women working in craft roles in construction, despite women making up 51% of the population. Yet those that do work in the sector find it a rewarding career.

Women and Manual Trades supports women working in the construction industry because we believe it is their right to do so, and because there are strong business and economic benefits to having good tradeswomen. Contractors involved with repairs and maintenance in the housing sector say they benefit from having female workers such as plumbers, carpenters and electricians. These women can gain smoother entry into homes where other women may not be keen to allow a man access, such as for religious reasons, or because they are frail and elderly. Customers also find tradeswomen personable, approachable and considerate of their needs.

The National Audit Office recently estimated that the cost to the economy from the failure to fully utilise the talents of ethnic minorities could be nearly £7bn. Meanwhile, better use of women’s skills could release £15bn-£23bn each year. Can Mr Brown really justify losing out on these economic contributions?

Vox pop

Do you support the NSCC campaign to abolish retentions?

We act as both main contractor and sub-contractor for different clients. Retention schemes work well on the main contracting side, as we manage it well. But as a subcontractor it’s sometimes difficult to get retention released. In some cases, certain contractors are using the money to maintain cash flow, holding on to it as long as possible until sub-contractors give up chasing it. There should be a more fluid way of releasing the money.

But clients do need some form of protection and as a system it’s better than nothing. A standard bond scheme will add unnecessary administration. Perhaps legislation could put a time limit on resolving retention release to avoid delays.

As a main contractor and Chartered Building Company we release on time to preserve good working relationships. We’re looking for strong supply partners these days, so releasing retentions when they are due promotes good relations and goodwill ahead of the next project.

Adrian Crowe MCIOB, HA Marks CBC, London

We support the abolition of retentions. They can soak up anywhere between five and 10% of your working capital. Once the job’s completed the money is held from six months to a year, you write to the client, who often highlights spurious defects, saying they must be rectified before the money is paid. Some of our retention claims go back five or six years.

I’m for a more sensible retention period of, say, three months, rather than a year. The whole process is so messy — even if clients have no ill intentions it still takes too long due to the paperwork. If you’ve delivered a quality piece of building why should you be penalised for another year, while someone else spends your money?

Peter Smurthwaite, managing director, PBS Construction CBC, Hull

I don’t support the campaign, retention is still the best way to ensure a project is completed efficiently. The money is an incentive both ways: it puts the client at ease because they know they have a bit of a hold over you, and it encourages the contractor to do the job well. The system works if everyone plays it fairly. The problem is that a large part of the industry is run by accountants, not contractors, so it becomes all about the bottom line. They dictate the releasing of retention money, so maximising the bottom line takes precedence over fair payment – how can the industry function if no one gives a damn about anyone else? It means builders fall out with clients and there’s no pride in the work at the end of it.

Barry Morgan FCIOB, managing director, Morgan Restoration CBC, Kent

I’d be prepared to support the NSCC’s campaign.

We have between £30,000 to £80,000 a year held as retentions on a £3m turnover. All of our contracts are 5% retention, half of which gets returned at practical completion. But generally we don’t hold retentions for the subcontractors we employ.

Clients have a financial stronghold over you to sort out defects, but if you are a decent contractor you’d go back.

The current system should be replaced with some sort of insurance policy such as a performance bond.

Mike Smith MCIOB, managing director, Corniche Builders CBC, Sutton

I can understand why the NSCC wants to have retentions abolished, but until clients get things, I don’t see it happening. If we are going into contract with various employers and they insist on retention being part of that contract it’s very difficult for us not to pass that contractual term on. Policing retentions for a business like ours is very time-consuming, however, particularly dealing with contractors who chase us up. A retention bond might work as an alternative.

Business development director at south-east Chartered Building Company, name withheld

Online opinion: Your reaction to the stories in last month’s CM

Fair payment campaign eyes retentions after 30-day success

Retention funds are very outdated and an unreasonable way of beating the contractor.

It is not just the fact that the money is withheld in the first place, but on a lengthy contract and with, say, a six-month defects period, the retentions can be held for long periods of time. That’s on top of trying to request the release of retention once the defects period has expired.

Clients tend to hold on to retentions well after the expiration of the defects period. They also use this as a lever to get additional work/defects work done well after the defects period has expired. However, they hold the handbag, and you have to do what is necessary to secure outstanding funds.

Stephen Foster

RICS turns judge and jury on members’ misdemeanours

Quite clearly a nice little earner for the discipinary panel.

1. Trawl the papers for offences that have already been punished and concluded by the courts.

2. Phone up your fellow panel members and solicitor buddies.

3. Kerching! A minimum £3,000 in expenses and you haven’t even had to pay for your travel.

Keith

Case notes: Dhamija v Sunningdale

One cannot overemphasize the tendency by most clients to put the quantity surveyors in a defensive position when it comes to work which they believe to be unsatisfactory.

In most instances, design documents/drawings contain the words “to the engineer’s specification or to the architect’s approval”, which
can be used as a defence, should quantity surveyors be sued for failing to highlight the defects that should have been highlighted by the architect.

Lawrence Mutale

Government aims to support self-build sector

Before you encourage self-build too much, there needs to regulation around the enforcement of contractual obligations. Even as an experienced PM, undergoing self-build was a difficult and confrontational process and the normal means of dispute resolution is useless in the face of burgeoning costs and the time commitments most clients have made in terms of their project, ie selling a house or renting a house in anticipation of a completion date that often seems little more than a notion to the builder.

Joe Colgan

This should be good news all round, for budding self-builders, the construction supply chain, construction workers and professionals, and mortgage lenders.

BuildStore

Presumably the removal of planning consent will also remove the need to comply with CDM 2007, or perhaps this photo [illustrating the web article] was not taken in Britain?

Andrew P T Smith

CPD: Fire prevention on construction sites

It is disappointing that the 7th edition of the Joint Code of Practice for Fire Prevention on Construction Sites isn’t free to download via the web. Costs £20 to buy hard copy!

Eric Bray

Online poll

Last month

Is the coalition living up to its “greenest government ever” claim?

88% NO

12% YES

This month

Will we see a step-change in offsite construction in the next 18 months?

Vote on our reader poll now. Go to the homepage.

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