Off-site construction, 2018

A WPI Economics update using recent ONS data  

There has been increased attention given to off-site construction by Government recently

Following the publication of WPI Economics' 2017 report on off-site construction, the Autumn Budget 2017 committed to supporting the modernisation of the construction sector and prioritising off-site construction (OSC)

As recommended in our 2017 report, Government has committed to increasingly favouring projects that involve OSC.

The Presumption in Favour of off-site construction

The Government has committed that five key government departments would favour off-site construction in suitable capital projects from 2019, these departments are:

1. The Department for Transport;

2. The Department of Health;

3. The Department for Education;

4. The Ministry of Justice; and

5. The Ministry of Defence.

Construction Sector Deal

Through the Construction Leadership Council, the Government has agreed to work towards improving the productivity of the sector. This would occur through greater investment in innovation and skills, improving efficiency and reducing costs.

The Construction Sector Deal committed to achieving four key objectives by 2025:

Off-site construction has been shown to have a wide range of  benefits for project delivery

This means it will be central to the Government's ambitions for change in the construction sector

Off-site case study: Lynch Hill Enterprise Academy is one of the largest schools in the UK to have been built using modular design.

It was built almost 25% faster than expected - off-site construction was a key driver of this speed and efficiency.

65% of Lynch Hill Enterprise Academy was manufactured off-site at The McAvoy Group's production centre in Northern Ireland.

Off-site case study: Heathrow logistics hubs

Heathrow have committed to #DeliveringforBritain by utilising OSC at specific locations.

To build on the success of off-site construction during the Heathrow’s Terminal 2 and Terminal 5, Heathrow will also use four logistics hubs for its future expansion. These will source products from local supply chains, and either combine them into efficient shipments, or to pre-fabricate whole modules of the buildings or component that will be used for the expansion project. 

The result of approaching the whole project like this is that some 60% of the procurement spend will be outside of London, spreading the benefits of local investment regionally and nationally. This is reflected in the wider job creation figures for the Heathrow expansion project, which are forecast as around 108,000 in total outside of London and the South East.

Off-site case study: Heathrow will be selecting four logistics hubs to host OSC activities

Since inviting communities to apply to host one of its four logistics hubs, Heathrow has long-listed 65 potential sites from regions across the UK. Each site will now be visited individually, and four locations will eventually be selected to pre-assemble components of the expanded airport before transporting them in consolidated loads to Heathrow

WPI Economics' analysis reveals the extent of benefits that  OSC can provide to UK regions.

It suggests that if off-site construction represented 25% of all  construction works, GVA per job (a measure of productivity) could increase by 3.6%.

Future employment growth in construction would also be concentrated outside of London, this would lead to a productivity boost worth £5.5bn a year by 2025 and a total spur to growth worth £30bn between 2018-2025 in non-London regions.

To read the full report, please click here.