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Modular Construction – What do you need to think about?

Modern Methods of Construction (MMC) embraces a range of innovative building methods including modular construction, which essentially involves a building, or elements of it, being constructed off-site, and then delivered and assembled on-site.

MMC is endorsed by the Government’s Construction Playbook and advantages of modular construction over more traditional building approaches are considered to include:

  • potential to be more sustainable, with controlled factory conditions resulting in more accurate construction and therefore less waste. These conditions also facilitate easier recycling of any extra materials;
  • quicker to deliver as modules can be precision-built in controlled environments, avoiding delays including those caused by bad weather. Furthermore, the construction process can take place alongside groundworks and foundation work, often meaning the works as a whole can be completed more quickly;
  • cheaper, with less time and less waste potentially resulting in lower overall cost; and
  • safer, as a result of less time spent on site, complex work being carried out in a controlled factory setting and fewer heavy vehicle movements lowering both risk and disruption.

However, from a legal perspective, modular construction raises various issues which need careful consideration including:

  • questions around transfer of ownership and risk. Employers may be paying significant sums prior to delivery of modules to site and will need to carefully consider timing of transfer of ownership and risk, possibly requiring vesting certificates or advance payment bonds to provide security;
  • risk of damage to modules during delivery to site and the costs involved in transporting modules to the site;
  • precise timing of delivery to site. There is the further risk of damage to modules once on site (for example due to bad weather) if the site is not ready when modules are delivered. Precise and accurate planning and timing is therefore important;
  • issues surrounding design responsibility and copyright;
  • arrangements for inspecting and assessing the quality of modules off-site. This is important as if modules are discovered to be defective once delivered to site, there can be challenging logistical and cost issues involved in returning modules to the factory for repair.

Many of these issues can be mitigated through planning, procurement structure and contract terms.  However, many standard form construction contracts will require bespoke amendment to address these issues and to ensure that parties’ commercial agreement is properly reflected and that they have adequate protection in place.

For more information, please contact Ruth Gibson.

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