This is the first in a series of articles regarding “Modern methods of construction” (MMC).
MMC is an umbrella term, encompassing almost anything that differs from the traditional, bricks and mortar construction method. It’s most commonly used to mean off-site construction, where parts of a project can be manufactured and assembled in a factory, before being transported to their eventual destination. However, MMC can also encompass a wider range of ideas, including using AI or robotics and drones to reduce the amount of labour needed to automate and speed up construction and manufacturing processes.
MMC aims to accelerate project times and reduce costs. The Royal Institute of British Architects produced a report in 2019 which suggested that construction programme times could be reduced by 20-60% with the efficient use of MMC, along with a 20-40% reduction in construction costs. If correct, this is a clear, tangible benefit for all parties involved – and could be the strongest motivating factor in increasing the use of MMC.
Proponents of MMC point to sustainability statistics and claim that off-site construction has a smaller carbon footprint than traditional construction methods. This is partly down to more efficient movement of materials and components to factories as well as to construction sites. Factory settings also mean that less waste is produced – and any waste produced can be disposed of in a more sustainable way (or reused rather than discarded). MMC even has the potential to make innovative or otherwise difficult builds easier, as greater accuracy can be achieved in a factory than in the variable and sometimes challenging site conditions that large construction projects often experience.
MMC could also allow for better prospects of innovation. Not only can innovative ideas be tested out in factory settings, without the need to compete with site-specific challenges, but the ability to create accurate builds with the assistance of technology greatly expands the scope of what is seen as ‘possible’. A recent high profile example is the 1000 bed hospital erected in an emergency response to the coronavirus in China, which was completed in a matter of days. In the UK, the Department for Education recently revealed the winners of its £3 billion offsite schools framework “to cultivate innovation and modernise the industry by increasing the adoption of MMC”.
However, although it has incredible potential, MMC is a relatively new concept for the construction industry. It remains to be seen how MMC projects will age and wear – or how disputes will play out if a fault is caused by a part of the build that was constructed elsewhere but installed and finished on-site. Indeed, some insurers have already highlighted that traditional construction methods will be seen as “lower risk” due to the relative unknowns of MMC, and have been wary about the policies they are willing to provide. We have already encountered issues in relation to the same or similar defects incorporated numerous times off-site causing numerous events of damage on site. From an insurance point of view, this leads to detailed interpretation of the design exclusion clause in play as well as the aggregation wording.
MMC also requires forward thinking in contracts. Risk allocation has the potential to be very different in a project using MMC. Building contracts and appointments would need to take into account the type of construction used, and accurately predict any additional risks that might arise. One likely development could be the increased use of vesting certificates, and contracts more specifically setting out the terms of ownership and insurance of materials and components.
This series will look at MMC further from a number of perspectives, including global, insurance and contractual. We will shortly publish two further articles focussing firstly on the insurance issues arising when MMC goes wrong, and secondly on a more detailed analysis of MMC contracts.
Helen Johnson, Commercial Construction Partner