The cash flow model used in public procurement is not fit to promote modern construction methods (MMC), senior contractor figures told a parliamentary committee this week.
Industry experts were giving evidence to the House of Lords Built Environment Committee, which has launched an inquiry into problems with the sector, following a series of high-profile business failures.
Laing O’Rourke’s group technical director Andrew Wolstenholme told the committee that the “competitive and low-cost tendering system” currently used by the public sector was not suitable for promoting MMC.
He said: “I think government departments need to understand that if you want to buy for value … you can’t continue to impose risk burdens on the supply chain so that innovation doesn’t create the opportunity,” he said. he told the committee.
Wolstenholme emphasized the importance of clients adopting different ways of designing and paying for MMC projects.
“If you’re going to run a manufacturing process, public sector customers shouldn’t be surprised to have a different cash flow,” he added.
David Jones, interim chief executive of offsite specialist Elements Europe, agreed that clients needed to update the way they commission work using MMC.
He said: “The amount of upfront funding you need to manufacture before you get payment from the client is what can make and break an organisation.”
Oral evidence began on October 24, when Carl Leaver, chairman of modular home builder TopHat, criticized plans by a government-appointed consortium to create a standardized kit of parts for MMC.
Similar themes were raised at Monday’s hearing, with Jones attributing recent failures of modular home builders to their focus on standardized manufacturing assembly lines over creating custom solutions for customers.
He said: “My personal opinion is that it’s always difficult to try to make a volume product in a traditional industry,” he said.
Christy Hayes, chief executive of off-site specialist Tide Construction, called for more support to target the demand side of modular home building, rather than the supply side.
Tide recently built Europe’s tallest volumetric modular building, a 50-storey tower in Croydon, London.
