Beware of New Risks Emerging Around the Construction Corridor

04/08/20 General

A levelling up of the disparities in construction activity across the UK is something under the spotlight, as the country also seeks to increase construction productivity, in line with Government targets.[1]

There is a clear North-south divide when it comes to construction, as well as clear differences in the two parts of the country when it comes to employment opportunities, investment and quality of life. By narrowing productivity gaps, it is hoped that a more uniform construction sector can be created.  However, new risks could also come to the fore.

One strategy for regional construction work parity surrounds modern methods of construction (MMC) which can be carried out at any location, rather than on-site.  What is created through off-site construction is then taken to whichever site requires it and dropped into place.

It is this flexibility which underpins a drive to create a “construction corridor” in the North of the UK, which could create sustainable jobs and boost the Northern economy. The project is set to be driven quickly now that Mark Farmer, Chief Executive of the Cast Consultancy, has been appointed to manage the delivery.[2]

This will take the pressure off the existing situation in London and the South East, where there is a marked construction skills shortage, and it should also allow Northern construction projects to benefit from more affordable land and labour costs.

However, currently only 7% of contracting is handled off-site and those most experienced in delivering construction in this more modern way tend to be found in the south.

MMC will constitute a step-change in the construction sector but will also come with a risk, as there is comparatively little know-how in how to manage MMC projects within the Northern construction sector.

Any move to use skilled workers from the south on Northern projects, could have repercussions in terms of mental health impacts, if workers do not see their families for considerable periods or have to travel long distances to work.

Gaining clarity as to appropriate insurance covers for MMC-focused projects may not be simple, if you do not have a knowledgeable broker to advise on possible risks. Off-site risks can be very different from on-site ones, with manufacturing premises likely to be at the heart of the protection need.  Fire and flood perils, malicious damage protection, business interruption and engineering inspections are all likely areas needing to be covered.

The need for Professional Indemnity (PI) cover will continue and protect a specialist against, allegations of negligence or poor advice.  Construction sector companies will know that PI cover is not readily available to them and finding an insurer can take some time.  Cover is more likely to be offered to an existing customer whose history of claims is known. How PI insurers will view MMC specialists will be interesting to see.

Working with a broker will be one way to ascertain what is required and which risks need to be covered.  Often, a site visit will be part of the process and a key part in determining the risk.  If you need assistance with insurance for your construction project, please get in touch.

Sources:
[1] https://www.constructionnews.co.uk/tech/offsite-mmc/offsite-construction-has-a-big-part-to-play-in-levelling-up-the-uk-09-03-2020/
[2] https://www.housingtoday.co.uk/news/farmer-to-promote-mcveys-construction-corridor/5102566.article