Will offsite finally take off?

06 September 2017

Offsite manufacturing could have interesting implications for the traditional contractor business model.

Last October’s Farmer Review urged construction to embrace offsite manufacturing; in this article we examine the likelihood of that happening and the implications for contractors.

The Egan and Latham reports of the 1990s encouraged the industry to adopt the factory processes of car manufacturing, citing benefits such as greater innovation, less waste, fewer defects, faster delivery, reduced dependency on site labour and improved safety.

After a brief surge, offsite take-up slowed during the recession. But now there’s momentum again. Last October’s government commissioned a review into the construction industry’s efficiency, led by Cast Consultancy CEO, Mark Farmer. They identified offsite manufacturing as central to modernising the construction industry.

“If you buy a new car, you expect it to have been built in a factory to exacting standards, delivered on time, to an agreed price and to a predetermined quality,” says Farmer. “This needs to happen more in construction.”

But can offsite manufacturing modernise construction? 

Construction’s chief offsite evangelist is the CEO of Laing O’Rourke, the UK’s largest privately owned contractor. Ray O’Rourke told Construction News recently:

“Everyone sees this is the way of the future. It is a case of who is going to take a step forward. Otherwise, what happens is our industry reverts to lowest cost and everybody beats each other up in a race to the bottom.”

O’Rourke, who has a long-standing self-delivery philosophy, sees synergy between building information modelling (BIM) and offsite manufacturing, which he calls design for manufacture and assembly (DfMA), and reckons that pre-assembling 70 per cent of a project in one of his firm’s factories reduces the workforce by 60 per cent and the programme by 30 per cent.

But the approach isn’t quite working out yet. Demand has not kept up with supply, and Laing O’Rourke has delayed a £100 million plan to extend its offsite plant at Streetley in Derbyshire. 

The contractor said that three DfMA projects caused exceptional costs of £26.6 million last year for its UK business, contributing to a £141.1 million loss on £1.11 billion turnover.

For further information, please contact Dave Cahill, Business Development Leader on +44 (0)20 394 0389 or email dave_cahill@jltgroup.com