As the construction industry continues to wrestle with its "productivity challenge" at a macro scale, the government has sought to improve national economic growth through improving wellbeing in poorer areas and narrowing productivity gaps regionally. The new catchphrase in prime minister Boris Johnson’s government is "levelling up", in response to data that shows regional disparities in employment, investment and quality of life.
By using modern methods of construction (MMC) – moving elements of the construction process offsite, beyond the confines of the site hoarding – construction companies can bring investment to deprived areas and sustainable jobs to their communities.
The government recognises this, and has reinforced its ‘presumption in favour’ of offsite through the appointment of Mark Farmer, chief executive of Cast Consultancy, as an official champion of MMC in housebuilding. Among other tasks, the government has asked Farmer to develop the “construction corridor” in the North of England, starting with the £30m Homes England investment to the area, announced in December 2019.
Growth where it's needed
MMC comes with significant benefits, but research has shown that just 7 per cent of UK construction is currently undertaken in this way. A 2018 report prepared for Heathrow by consultancy WPI Economics suggested that increasing this proportion to 25 per cent would increase productivity across the sector 3.6 per cent, with much of this growth coming in areas of the country that would welcome it the most.
“It remains challenging to bring holistic economic considerations into the agenda when procuring for value at a project level”
The report also concludes that significant expertise and experience of offsite manufacture currently sits outside of the capital and, coupled with lower land and labour costs, this means that increased offsite manufacture will provide significant economic benefits to regions outside of the major cities and especially outside London.
Modelling in the report shows that by boosting employment and utilising skills and expertise outside of the capital the spur to growth outside of London could be worth some £15bn.
Our map below illustrates the location of offsite manufacturing facilities mapped against areas of deprivation. It demonstrates how an increase in MMC provides the opportunity to address construction skills shortages in London and the South East, by moving activities from these regions and creating sustainable employment in other parts of the UK.
Calculating social value
Kier is partnering with social value software resource the Social Profit Calculator (SPC), cost consultant Rider Levett Bucknall, framework expert Pagabo and MMC consultant Akerlof to develop a social value calculator dedicated to MMC.
Our calculator enables the assessment and visualisation of social value to identify the holistic impact of construction, not just on site but at manufacturing locations through the supply chain.
While the promise of ‘levelling up’ sounds attractive, it remains challenging to bring holistic economic considerations into the agenda when procuring for value at a project level. Our calculator aims to addresses this hurdle. Underpinned by data from the industry and the Office for National Statistics, it will enable the evaluation of MMC options on a broader basis than direct capital cost, quantifying the benefit of the social value investment and productivity-enhancing potential.
In simple terms, offsite manufacture is often rooted in the former industrial heartlands of the Midlands and North. Embracing MMC offers the opportunity to help rebalance the UK economy, improve national productivity and support a regionally-balanced, safer, and more sustainable construction industry.
John Handscomb is procurement lead at Kier and oversees the company’s MMC strategy
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