Reed Smith Client Alerts

Projects continue to face the risk of cost overruns and delays, yet the necessary improvements in predictability and productivity needed to avoid these risks remain elusive. Benjamin Disraeli once remarked there can be economy only where there is efficiency. In the first of two alerts we examine if and how the use of offsite or modular construction techniques can contribute to the efficient completion of projects, focusing on legal and contract risk. In our second alert, we will discuss the impact on project management and the suitability of the typical construction contracts for this approach to project procurement.

Authors: Vincent Rowan Shareena Edmonds Liam Hart

Back to the future…

Offsite or modular construction is not new: contractors have for many years sought to fabricate, offsite, structural elements or modules which, when fitted together on site, will form at least part of a completed project. Such techniques were typically developed for relatively simple elements or often repeated structures or for the more specialised areas of engineering required in, for example, the oil and gas industry. 

Now project sponsors and developers are embracing the deployment of offsite and modular construction for ever more substantial and complex project elements, across a broader range of project types. The aim is to achieve the levels of predictability and productivity necessary for the successful completion of projects – on budget, on time. Can this approach deliver the gains the industry seeks? What does this approach mean in terms of legal and contract risk?