Public procurement methods slammed at MMC probe

The cashflow model used in government procurement is not fit for promoting modern methods of construction (MMC), senior figures from contractors told a Parliamentary committee this week.

The industry experts were giving evidence to the House of Lords’ Built Environment Committee, which has launched a probe into problems with the sector, following a number of high-profile business failures.

Laing O’Rourke’s group technical director Andrew Wolstenholme told the committee that the “low-cost, competitive-tender system” currently used by the public sector was not fit for promoting MMC.

He said: “I do think that government departments have to understand that if you want to procure for value… you can't continue to put risk burdens onto the supply chain, such that the innovations are not going to create the opportunity,” he told the committee.

Wolstenholme stressed the importance of clients adopting different ways of designing and paying for MMC projects.

“If you’re going to run a manufacturing process, then public sector clients should not be surprised about having a different cashflow to it,” 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 advance funding that you need to manufacture before you actually get the payment from the client is what can make and break an organisation.”

Oral evidence started on 24 October, when Carl Leaver, chair of modular housebuilder TopHat, criticised a government-appointed consortium’s plans to create a standardised kit of parts for MMC.

Similar themes were raised in Monday’s hearing, with Jones attributing recent modular housebuilder failures to their focus on standardised manufacturing assembly lines above creating bespoke solutions for clients.

He said: “My personal view is that it’s always difficult to try to do a volume product in a traditional industry,” he said.

Christy Hayes, chief executive of offsite specialist Tide Construction, called for more support to be aimed at the demand side of modular housing construction, rather than the supply side.

Tide recently built Europe’s tallest volumetric modular building, a 50-storey tower in Croydon, London.