Mark Farmer: Insurance and construction sectors ‘must come together’ on MMC | Latest news
The rise of modern construction methods (MMC) “as a whole, the concept is here to stay”, meaning the insurance and construction industries need to “come together” to “understand the difference between the systemic risk and random risk “, according to Mark Agriculteur, founding director and general manager of Cast Real Estate and Construction Consultancy and author of the 2016 report The Farmer Review of the UK Construction Labor Model.
Speaking at an ABI webinar on June 16, 2021, titled Insure the buildings of today and tomorrow: adapt to face the evolution of future risks and claims, Farmer explained that MMC is “a progressive problem that the construction and insurance industries need to come together to figure out how we’re going to do it in a way that everyone feels comfortable, that we’re not creating. of unforeseen consequences, that insurers recognize the arbitrage of risks to better build things ”.
“That’s really the goal here. It’s not about building a different way for fun – it’s to create a better solution, ”he added.
At the “heart” of MMC, for example, is the drive to remove random and systemic risks from the construction industry.
Farmer said, “This is a really, really important question to understand and understand what we are talking about in relation to MMC.
“This fatality which [MMC] is only to grow as a home building field means we just have to establish this relationship between the insurance underwriting industry and the construction industry to understand the risk and understand the difference between what I call systemic risk and random risk.
“It goes to the heart of what MMC is really trying to do. It is a question of eliminating the random risk which one currently observes on the sites, of unpredictable failure because variable and [based on] manpower and manpower and the competence and skills of those involved.
“[On] the other side of the coin is systemic risk, or something in a manufactured systems approach that is done poorly and is poorly done over and over again. We have to eliminate this through technical robustness and testing and [research and development] and share evidence and data with industry.
Definition of MMC
In 2019, Farmer worked with government and industry organizations such as ABI to define CMD. This working group divided MMC into seven different categories:
- Category 1: Pre-fabrication – 3D primary structural systems, such as offsite modular construction.
- Category 2: Pre-fabrication – 2D primary structural systems, such as offsite panel construction.
- Category 3: Pre-fabrication – Unsystematic structural components.
- Category 4: Pre-manufacturing – Additive manufacturing, for example 3D printed components. Although this is not currently used in the UK, Farmer predicts it will materialize within the next five to ten years.
- Category 5: Pre-fabrication – Non-structural assemblies and sub-assemblies. Farmer said this is commonly used, but little known to insurers.
- Category 6: Traditional building, labor reduction / product driven site productivity improvements. Farmer noted that this category includes innovations in construction methods, such as modular wiring and siding boards – techniques designed to reduce the labor required to put materials together.
- Category 7: The site process led to improvements in labor reduction / productivity. This category is for site-based improvements, such as the use of robotics. This raises other insurance questions: is a robotic mason more risky than a manual, human mason?
These categories are important in deciding insurance risks “because some of them are structural and performance related and others are unaffected in this area of building performance,” Farmer added.
He believes that the “unified” MMC standards should be defined by the government. These should describe the insurance requirements for proof of resilience, the performance of MMC buildings in terms of risks such as floods and fires and cover issues related to repairs, maintenance and maintenance. adaptation of buildings in open source.
For him, these are “really important questions that must be answered”.
Quantity versus quality
Previously, MMC was “all the rage,” Farmer said, but he thinks the most recent increase in attention is “different this time around,” which is why MMC needs to become a priority for the insurance industry.
In addition to the “overall changes that are taking place in the housing market and in the construction market in general”, Farmer cited changing attitudes in government as another key factor in the adoption of the law. MMC.
“The idea of building 300,000 homes per year, or whatever the manifesto’s political commitment, in the past may have been at the expense of quality. I think we are at a time in the market where this is no longer the case, ”he said.
“We have politicians who now understand that society expects quantity and quality to coexist and that this forces the political agenda in many ways on a range of different fronts, all of which have implications for the abandonment of traditional methods of construction. “
Another factor influencing the popularity of MMC is the “structural decline of our construction workforce,” Farmer added.
“This is something I reported when I wrote my government review in 2016, that we had irreversible attrition in the construction workforce – we have more people retiring each day. year that we have not arrived in our industry, ”he explained.
“We have Brexit superimposed on that and, along with Covid, has forced an acceleration in the exodus of parts of our construction supply chain, particularly in Eastern Europe. And we have this big challenge of climate change and building the resilience that we need to build things differently, which involves different skills.
“So if we’re going to build green and rebuild better, that actually means re-skilling and upgrading the skills of parts of the workforce.”
Additionally, the Covid-19 pandemic has also sparked on-site productivity issues, which could be remedied by an off-site MMC approach.
Farmer said that when construction staff returned to a “socially distant mode of work,” it “meant that even though the site’s total production was down, productivity both individually and as a team rose.”
He explained, “It’s really systematic about the lack of productivity we have when we avoid sites with a lot of manpower doing things on top of each other, damaging each other’s work, creating flaws. and manufacturing problems and problems of coordination and mismanagement.
“This obviously has direct ramifications for the insurance industry in terms of the performance of buildings and the way they react in terms of technical robustness, resilience and durability.”
Recent research by Farmer’s Company points out that MMC is here for the long haul.
By interviewing developers, investors, home builders and housing associations with a combined pipeline of more than 120,000 units over the next three years, “there is a strong recognition that they will spend more in addition to MMC over the next three years, ”Farmer said. .
“In fact, more than a quarter of these developers have said that more than half of their pipeline will involve MMC during this period, proving that this whole question of MMC adoption is here to stay.”