The Future is Modular

1. Better quality buildings and infrastructure;

2. Fast delivery;

3. Enhanced productivity; and

4. Improved sustainability.

This is a direction in which the construction industry itself has been travelling for some years. Those involved in the construction and development of hotels and student accommodation will be more than familiar with offsite manufacturing for key component elements of buildings such as bathroom pods.

However, it is only more recently that some key players in the industry – Berkeley Homes, Legal & General, Swan Housing, Stanhope (to name but a few) - have all publically committed to and heavily invested in off-site manufacturing.

The benefits are obvious – as the House of Lords Committee has identified – but there are some drawbacks.

First, there may be financial risks. Traditionally, developers pay their contractors for the materials delivered to site where they are then stored on the project within the developer's control. The developer does not usually pay for what he does not have. Offsite manufacture obviously changes that model considerably. This can be addressed by use of vesting deeds and on demand bonds (for performance security) but there is a need to be specifically addressed. Ring-fencing materials in manufacturing facilities will need to be commonplace.

Secondly, some in the industry have expressed concerns about monitoring quality and lack of visibility over being able to review production. This can obviously be remedied by regular visits to the plant and rigorous inspections and will probably become less of an issue as more and more off-site manufacture takes place in the UK.

Thirdly, off-site manufacture is clearly the purchase of a "bespoke" product. Therefore if the manufacturer does become insolvent or it is necessary to terminate those arrangements for whatever reason then securing alternatives or a compatible replacement could be difficult. Once again, that may impact upon availability of funding for developers unless lenders can become comfortable with this altered risk profile.

Fourthly, and presenting a direct challenge to the Government, Parliament's Environment Audit Committee also reported on 18^th July 2018 and highlighted general concerns over lack of regulation in buildings overheating leading to increased deaths and stating "Modular homes are not resilient to heatwaves, and the Committee is calling for the Government to end public funding for them."

The House of Lords Committee itself recognises that there are a number of barriers to the take up of off-site manufacture including a lack of trust within the construction industry that may hinder the collaboration and cooperation between clients, designers and contractors that would be required in order for the concept to thrive. The industry's willingness to allocate blame for problems quickly and unforgivingly naturally inhibits innovation.

All of that said, the Government has expressed its commitment and it remains to be seen what actions it will implement in order to deliver.