A new guide to the legal issues surrounding offsite manufacturing was recently launched by Constructing Excellence South West to smooth contractual issues and help the sector realise its full potential. Alan Tate, partner at participating law firm Michelmores, discusses its development
Constructing Excellence South West (CESW) has nine forums which look at specific aspects of the construction sector with a special regard to collaborative working and best practice. One of the purposes of these forums is to provide guidance and information which is then made available to its members.
The Digital & Offsite forum identified the need to consider how the construction industry will need to adapt its contractual arrangements and processes to take full advantage of the benefits offsite manufacturing can provide.
With this in mind, CESW asked law firms in the South West if they would provide a guide on this subject. This would be the third guide in the series; the first being a guide on development finance and the second on mediation. All of these guides are on CESW’s website.
Five firms volunteered and have contributed to the cost of this guide: BPE – Cheltenham office; BPL Solicitors – Dorchester office; Michelmores – Bristol and Exeter offices; Osborne Clarke – Bristol Office; and Trowers & Hamlins – Exeter office. We are grateful to Walker Jansseune, who provided the design and production of the guide. The guide is available on CESW’s website: www.constructingexcellencesw.org.uk.
Each firm has addressed two legal topics that are relevant to offsite manufacturing. Of course, not every topic will be applicable in every instance as the guide is not sector-specific. As such, it seeks to cover both housing projects and client-commissioned projects. Each article gives general guidance and provides suggested solutions on how to address the legal points. At the beginning of the guide there is an executive summary that has four key points for each of the 10 topics. There are a number of themes that run through the topics.
Firstly, the use of offsite manufacturing invariably means that the design process has to be completed in advance of the manufacturing starting. This raises a number of points. RIBA recommends that the design process needs to start with an offsite solution in mind and the RIBA overlay addresses this by adapting the usual Plan of Work.
Also, there is a strong argument that early contractor involvement and the use of two-stage procurement is the natural consequence of offsite manufacturing. In addition, clarity is needed over the ownership and risk of damage of materials while they are being manufactured and transported to site. The related subject of security over any advanced payment is also addressed.
Secondly, the guide highlights some of the advantages of offsite manufacturing. These include the likelihood that the industry’s health and safety record will improve as the factory environment will provide a more controlled workplace.
Also, the adoption of supply chain engagement not only complies with the government’s best practice, it also has the potential to save overall costs.
Thirdly, the guide considers the various contract structures that could be used and are readily available. It highlights the recently published NEC4 contracts and suggests a number of procurement structures that are suitable for offsite manufacturing.
Looking forward, the recent introduction of an insurance-backed quality assurance scheme is a sign of further changes that will make offsite projects the system of choice and suitable for long-term investment.
Of course, the guide is not intended to be definitive but is intended to highlight some of the legal points which are particular to offsite manufacturing if being compared to the traditional construction methods and how the legal documentation can be adapted to reflect this construction process.
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