OFF-SITE ARTICLE by Alan Tate
Legal Guide to off-site manufacturing
Constructing Excellence South West (CESW) has 9 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 'off-site' 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 of off-site 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 is 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 LLP - Bristol and Exeter offices; Osborne Clarke - Bristol Office; and Trowers & Hamlins LLP - Exeter office. We are grateful to Walker Jansseune Limited who provided the design and production of the guide.
Each firm has addressed two legal topics which are relevant to off-site 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 which has 4 key points in for each of the 10 topics. There are a number of themes which run through the topics.
Firstly, the use of off-site manufacturing invariably means that the design process has to be completed in advance of the manufacturing being starting. This raises a number of points. The RIBA recommends that the design process needs to start with an off-site 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 off-site manufacturing. In addition, clarity is needed over the ownership and risk of damage of materials whilst 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 off-site manufacturing. These include the likelihood that the industry's health and safety record will improve as the factory environment will provide a more controlled work place. 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 which could be used and are readily available. It highlights the recently published NEC4 contracts and suggests a number of procurement structures which are suitable for off-site manufacturing. Looking forward, the recent introduction of an insurance backed quality assurance scheme is a sign of further changes which will make off-site 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 off-site manufacturing if being compared to the traditional construction methods and how the legal documentation can be adapted to reflect this construction process.
Alan Tate - Partner. Michelmores LLP