Jane Tabiner, managing director of Solutions Asset Finance (SAF), explores how the next 12 months will be a pivotal time for modular building providers as the demand for MMC projects increases across the public sector
The pandemic has had an unprecedented impact on the UK's public services, which face new and ongoing challenges as they try to combat the ramifications of the last year.
The public sector is faced with rising demands for services, such as routine operations, mental health support and increased classroom space. However, it's been widely suggested that the chancellor will spend £16bn less on public services this year, meaning limited budgets are extremely likely.
One industry that is plagued with capacity issues is healthcare, where it's anticipated that public needs will increase dramatically in 2021 and beyond. NHS waiting times hit a record high in January, with almost five million people waiting to start treatment, so it's essential to increase facilities to meet this demand. Moreover, doing so in a quick and cost-effective way is vital, which is where financial solutions for offsite construction projects can play an essential role.
Why choose offsite construction?
The limitations associated with traditional construction, such as length of projects due to adverse weather or supplier delays, have meant this approach hasn't always been able to deliver the increased outputs required to keep up with demand. In response, we have seen a rise in modern methods of construction (MMC), such as offsite, in the public sector.
Offsite construction unlocks many benefits for both public and private sector companies, offering a quick and cost-effective way to build sought-after new facilities that will go towards serving communities. It requires limited time on site for installation, which means minimal disruption. The offsite building method is also more sustainable and environmentally friendly, which is why it continues to grow in popularity.
With a significant backlog of work in many public services, such as routine theatre procedures in hospitals, the time for investing in new facilities is now. Moving forward, public sector bodies must consider engaging with offsite or modular building providers to source progressive solutions to their ongoing capacity issues.
Accessing the capital to finance projects
For the above to be attainable, both modular building providers and public sector bodies need to be able to access the funds required to finance the creation of these new facilities. It's no secret that budgets are tight, and the chancellor made it clear that decreasing the country's deficit will be an ongoing priority. Therefore, other financial solutions must be made available to ensure we can continue to deliver the support people need.
Flexible finance providers can work collaboratively with offsite or modular building providers and public sector bodies to establish a finance solution that will provide the funds needed to finance essential offsite projects. Moreover, they can ensure funds are made available within a matter of days, allowing the modular provider to begin work as soon as possible.
This is where private companies, such as SAF, can add real value. Appropriately structured funding solutions along with all necessary legal documentation, allowing public sector organisations to make the upgrades, additions and extensions needed to their infrastructure and equipment straight away, without the need for upfront capital outlay.
Collaboration will accelerate innovation
Private finance companies understand that finding capital has been a perennial problem for the public sector, particularly within the construction landscape, as there are often more urgent and pressing ways to spend restricted budgets. This is what makes flexible and creative funding solutions from private companies so valuable and an attractive option to have on the table.
For example, on occasions where decisions regarding new projects are delayed due to cash flow or budget concerns, the option of a creative financial solution could prevent this and promote the efficient delivery of new, innovative projects without delays or concerns. Budgets are agreed at the outset when using a private finance company and a structured repayment method is developed, so new facilities can be funded, built and ready for use in just a few weeks.
Privately funded solutions are supplied by experienced, fully compliant experts, with a strong understanding of tailored procurement procedures. More education and awareness is needed around the opportunities for collaboration between the public and private sectors, particularly with regards to construction work. The financial assistance offered by private companies will help to combat the capacity crisis, allowing our public services to continue delivering fundamental work.
Planning for the future
It's more important than ever for public sector bodies to have access to funds and resources – it's the only way to ensure the UK's key public services can get back to serving our population as and when needed, and in high-quality environments.
Funding for the public sector is imperative, yet it's increasingly unlikely that there will be sufficient finance available to provide organisations up and down the country with the funding required to meet demand.
As an industry, we have an important role to play in joining up the dots and making sure public sector bodies and modular building providers can turn to financial experts to procure funds. With this collaboration, we are facilitating much-needed investment into our public services at a crucial time for our country.
