Modern Methods of Construction Series: Episode 5 with Céire O’Rourke, Director of UK Clients and Markets at Laing O'Rourke

Innovation could be the “big winners” if procurement starts to focus on value and resilience rather than just price, Laing O’Rourke’s director of UK clients and markets has said in a wide-ranging discussion covering hospitals, housing and the modernisation of Britain’s construction sector.

Céire O’Rourke says that procurement must do more to encourage the uptake of factory-built space in order for the construction industry to really get behind the innovation agenda. She believes there is a huge opportunity to create jobs, reduce our carbon footprint and improve the economy’s resilience if more is done to encourage R&D spending.

Laing O’Rourke, the UK’s largest privately-owned construction company, has successfully implemented one of the country’s most advanced offsite manufacturing methodologies. Focusing on DfMA, Laing O’Rourke has spent the last 11 years investing over £200 million into its offsite manufacturing capability, which is spread across two main factories in Nottinghamshire and Oldbury.

“When we look at projects, we say can we deliver 70 percent of it offsite? If so, it leads to a 60 percent increase in productivity and a 30 percent reduction in delivery time.”

However, it isn’t just the pace of development that makes offsite manufacturing so impressive.

As O’Rourke puts it, “quality is one of the unsung heroes of MMC because by working in a factory environment the quality you can provide for the product is second to none.”

For more, read the full article on Property Week.

 

Transcript

Andrew Teacher: Hello and welcome to today’s MMC PropCast. Now over the last week, we’ve been talking about modern methods of construction with some of the biggest manufacturers or some of the brightest and most innovative minds in this space. And when you finish with this episode, please do go back and download some of the previous conversations with L&G, ilke Homes, TopHat, Homes England, and Project Etopia. Now today’s conversations with Ceire O’Rourke, director, Laing O’Rourke, the UK is only to one contractor to be really focused on MMC in any meaningful way. But the company’s got a proud track record of investing millions of pounds of its own capital into innovation into offsite manufacturing. And as Ceire explained in our conversation recorded a little bit earlier on, it’s paying immense dividends for their business. I started by asking Ceire about the role of MMC in design for manufacturing and assembly (DFMA) plays in her family’s business.
Ceire O’Rourke: So offset manufacturing has been a key part of our businesses, sort of the vision of Ryan days for probably like 20 years. And but that all came to fruition 11 years ago, when we were able to open up our factory. And that just, it’s helped us to demonstrate the benefits that you have around modern methods of construction. So when you make an investment, like we have, it does change the way in which you go to work. So it’s about getting our engineers thinking differently. And rather than trying to think on the job when you’re on site, which you would normally do if you’re doing more of a traditional format. And just thinking on, you know, thinking on your toes, as in what’s the challenge today? How can we overcome this potential bump? What we’ve had to do with modern methods of construction to implement that you do all of that thinking ahead of time. So it was a real shift in mentality, how you set teams up, the tools that you give them. So it’s very much meant that we had to go down a digital route. So when we are working with our consultants, we ideally want to be working from one plan on a digital platform, so that when you get to site, you’re following that plan that everybody signed up to, and knows what their role is on the project. So I’d say it’s a game changer. And it was a game changer. It’s interesting now when you speak to the young people in our business, that actually for them that would have joined over 10 years ago, they say offsite manufacturing, design for manufacturing assembly, that’s just the norm now, that’s what you should be doing. And so it’s had a big change in our business, it’s probably meant there’s certain projects that we don’t necessarily put our hands up to be interested in because it doesn’t lend to the offsite manufacturing agenda. And we will have those conversations in the business when we’re looking at projects. Is this a project that does lend itself to offsites?
Andrew Teacher: So what is and what isn’t? Tell us a little bit about the projects that work and what don’t work? Because you’ve done some really exciting projects like the Crick Institute, and the Grange in South Wales. There have been some some fantastic projects that you’ve been involved with that have had a really high proportion of DFMA haven’t they?
Ceire O’Rourke: Yeah so, we inside the business have a metric 70/60/30. So when we look at our projects, we say, ‘Can we deliver 70% of the product offsite?’ And the reason why we want to set that metric is because if you’re able to do 70%, and produce 70% of the project off site, it leads to a 60% improvement in productivity. And which means you’re having to have less people onsite carrying out work. And then also what that does is it lends to a 30% improvement in time to delivery. So when we’re looking at our projects, we’re looking at the structure, we’re looking at the structure of the building, are there ways in which we can look at this in a precast format. So you’re also looking at facades. What you’re trying to do is break down the components of the project and see what components can be done away from the site that includes the mechanical, electrical plants. And so we’re looking at all of those aspects and just saying, as much as possible, take it away from site, make the sites as safe as they can be, but also create an environment where actually people want to come and work in construction, because we’re thinking about it slightly differently. So that’s pretty much that we there’s the main disciplines as they are on the structure, the mechanical electrical plant, that’s where we assess first and foremost.
Andrew Teacher: And so tell us a little bit about the South Wales project and the Grange. What enabled you to really create such a high proportion of that project offsite?
Ceire O’Rourke: Mainly the key driver around that was having a client that was open and wanting to have Laing O’Rourke involved as early as possible, that’s a key driver. Working with a design team that had ambitions to prove that offsite manufacturing does have huge benefits. We’re in a position now, we’ve handed over nearly 350 rooms to the hospital, which, as of the last two weeks, that’s a year ahead of schedule when we were due to have that building commissioned. So the biggest facilitator is having a really good design team. And that’s across all disciplines. So architectural, structural, mechanical, electrical, there’s consultants that are all pointing towards the same direction of wanting to prove that off site does work. And that’s what we’ve found on the Grange to the point where we ultimately believe we’ve got a blueprint of how you could deliver hospitals now, depending on their size, anything between two to three years. So we could be delivering hospitals a year, two years ahead of how they’re currently been delivered to the market.
Andrew Teacher: And what’s the response from the Department of Health on that? Because it strikes me that some critics of the offsite manufacturing universe would say, ‘well, it’s still a cottage industry, we’re still thinking about prefab’ – all the usual sorts of cliched stuff that people come out with. So I guess some would say, if it’s so great, why is nobody else doing it?
Ceire O’Rourke: So there’s a couple of things. The reason why it’s hard for everybody else to do it is because it does take a huge investment. So we as a business have invested specifically around offsite manufacturing, 200 million pounds which is one of the benefits of being a privately owned company, we’ve been able to push that agenda. I think it’s hard for other contractors and other companies to get involved with that because it does take a huge amount of investment. And you’ve got to make sure that your shareholders, the owners of the company are behind that agenda. And so I think that’s a key driver. It’s great to see that more participants are coming into the market. So for us as Laing O’Rourke, we welcome those that come into the market, because the more that do it demystifies, it makes this methodology of delivery and construction not seem such a risk, which is sometimes what puts both the private and public sector off from taking that approach to delivering their projects.
Andrew Teacher: I mean, is there a degree to which procurement needs to change to better recognise some of the outcomes here? Because, again, many would argue that procurement that focuses solely on price ignores some of the massive benefits that you’ve described around programme time, around cost certainty. And also, let’s face it, around quality.
Ceire O’Rourke: Yeah, quality is probably one of the unsung heroes, I’d say, of modern methods of construction. Because the working in a factory environment, the quality that you can provide to the product, is second to none. Everything is tested before it leaves our factories – once it’s left the factory, you know that it’s got the accreditation that it needs that once it gets to site, it’s simply put in the products in place. And so the procurement route is a challenge. And I think there’s a challenge on a number of things. Procurement route needs to be enticing for contractors. And what I mean by that is not just to award them for any particular reason. But if there was a way in which the market saw that you would be able to either negotiate, let’s say, or to have very sensible conversations around procurement or projects, because you are actually investing in offsite manufacturing, I think there’d be more people that are willing to partake in the agenda and wanting to push the market forward. The challenge that you have is when you have clients across all spectrums, saying that actually they want value, but when it comes down to the actual process, predominantly price is the big winner, that does not lend itself to be an environment where you have the market saying, ‘Well, if I invest tens, or hundreds of millions into a new way of working, I’m gonna see the benefits.’ Hospitals inherently across the country are having challenges of handing over critical care units on time, to budget, and to the quality that’s needed. However, we’ve been able to do that. So, we’d welcome to be able to share that knowledge. So that actually, we can do something for the greater good and actually bring in that sector to be delivering the hospitals that the patients should should have in place for them.
Andrew Teacher: So you’d happily sit down with with ministers and explain to them how they could evolve their procurement strategy to encourage more of this investment.
Ceire O’Rourke: We would absolutely welcome that conversation because there’s a common thread and they’re now seeing what’s the common thread and it’s not just down to us as the contractor. Of course, we are integral part of making that happen. But it is about having the right design teams, the right consultants working alongside you that understand where the challenges are. And that also, when you’re in those projects, there’s an ambition to keep improving. Because just because we’ve delivered a project now that’s what really well for the market, we should be now looking for the next generation. So what should the hospital in 10 years time look like? And if you’ve got contractors, and you’ve got a market that is excited about innovation, who knows what our hospitals will look like in 10, 20 years time, and that’s where I feel the market should be going. Because as a sector, we haven’t evolved. And we haven’t progressed as quickly as we should have. And I think now is the time for us to be doing so.
Andrew Teacher: One of the things that we’ve heard earlier in the week from L&G, and from ilkes Homes on the resi side is that they want to see government stepping up and being a driver for demand in those areas. Particularly where we need affordable housing, they want the government to say, ‘right, we’re gonna drive that demand’. It strikes me from this conversation, that the government could absolutely be doing that across education and healthcare, and in any other area of public sector demand by saying, ‘we’re going to award that work, and we’re going to really reinforce the need for you guys to invest by prioritising people that have invested’. And that do you agree could potentially create a scenario where more people take the hit that you’ve obviously done over the long term, researching and innovating and spending your own money to do that?
Ceire O’Rourke: Absolutely, I think the government has to lead by example. If the government is pushing that agenda, and because of the money that they have, and the spend that they need to do, their multiplier effect is huge. So if they’re able to do that across education, health care, residential, then absolutely, that is just a clear example of what the size of the prize could be. I think one of the challenges, though, is people have, and you mentioned this earlier, around prefabrication. When this was done, in sort of the 60s or so, off site meant that it was boxy, it felt boxy. It was small units that were put together. What we’ve demonstrated with some of the work that we’ve done, and what I know that L&G have done is we’ve demonstrated that actually, it does create open living. It’s not like we’re asking people to live in homes, that would be second class to what they’d get if it hadn’t been delivered by modern methods of construction. So I think it’s quite interesting. And I think the government has a huge role to play in this. And now is probably the time when we’ve got the challenges around COVID, you’ve got social distancing, you won’t be able to have as many people on the projects as were prior to this pandemic, so we’re going to have to think about things differently. You’re going to think about who’s on site, who needs to be on site, and actually how you shift that. And I think now is the time, the government has a huge opportunity to be leading by example. And it’s not about rewarding those contractors or supply chain partners that have been thinking about off site manufacturing, but it’s to demonstrate they’ve also got confidence in this methodology. And if you can go after that, with scaling, you can show how that can be done. I think it would be a big statement.
Andrew Teacher: Absolutely. I mean, are there some entrenched interests that we need to sweep away here because again, there have been moves over the years, particularly in the housing side of the world to try and drive standards up, to try and make homes more sustainable. The code for sustainable homes, brought in in the early days of David Cameron’s government, a lot of these regulations was swept away by people saying, ‘Oh, we can’t quite afford to do this’. So what would you say to ministers that are going to be perhaps a bit afraid about backing some of these forces down.
Ceire O’Rourke: And I would challenge anybody that says they can’t afford to do it, because we’re a privately owned company. And we’ve managed to do that ourselves. So I think actually, what it is, is wanting the sheer will and desire to actually bring construction into the modern day. As a sector, it really hasn’t progressed. When you look at the similarities between construction automotive industry, we should be thinking about it in that format. So I think it’s a change, and always whenever you’ve got to change, it feels uncomfortable. And nobody wants to be the person or the organisation that maybe got it wrong. And actually, when you’re doing those changes, you’re not going to get it right every single time. But that’s why you got to keep going back. Our 11 years has not been plain sailing in offsite manufacturing. And I’m not going to sit here and say that we’ve not had bumps in the road. But every bump that we’ve had has made us go back and actually rethink about things and look at that innovation, which has got us to where we are now. So I do think there are entrenched views. But I would hope that if both private sector and public sector got behind the value that offsite manufacturing can bring and were to work with the contractors and supply chain partners that are demonstrating that value, and take a bit of a leap of faith in this, I absolutely think some of those entrenched views will soon be voices of people that are just looking like they’re resisting the way the market needs to be heading to.
Andrew Teacher: How do you manage and bring the supply chain with you? Because I guess it’s very easy to compare life in aviation and aerospace and I guess the reason why those guys have been able to innovate largely is because the supply chain is a lot narrower, isn’t it? And they depend on the finance from the top guys. And that keeps everything within its own microuniverse a little bit more, whereas you guys, and people in this world have got many hundreds of different parties all across the sphere. So how do you bring the supply chain with you on this journey?
Ceire O’Rourke: So I think there’s a couple of things in that. First of all, when we’re engaging with our clients, we’re asking to be having as early an engagement as we possibly can. So ideally, you’d love to be in at concept stage as a contractor so you get to help shape the design of that building, so that the building has been designed is a building that can actually be constructed. Realistically, we might get in at earliest, stage two, maybe stage three, and then what we do differently inside Laing O’Rourke is that we bring our supply chain partners with us. So we’re always talking to them about our pipeline so they can actually see the work that we’re actually going after, and it’s about treating them as that it’s a partner. It’s not just suddenly ‘Laing O’Rourke have won a project, now supply chain, can you just come in and price this?’ We absolutely actively ask for dialogue with them. We look at the designs that we’ve got, we work collaboratively, we ask them look, is there a different way that we can approach this or maybe we’ve got a challenge on the structure and actually having a conversation with your list supplier really early on unlocks something. So rather than doing things in silos, you bring them all in together. And I think one thing that’s slightly unique about Laing O’Rourke is that our history is that we were part of the supply chain, before we became Laing O’Rourke, so we haven’t actually forgotten about where we came from. So we absolutely welcome that conversation. And for me, it’s very simple. And it’s having a valuable relationship with your supply chain partners. Unfortunately, because of the stresses we’ve seen in the market, the numbers of supply chain partners that you can work with is shrinking. So whilst that’s not ideal, there are elements of that, that means actually, there’s a smaller pools for us to have to engage with. And it’s in times like this, though, working with the supply chain partners is really valuable, because for them, they need to see that pipeline, they need to see where that works coming from so that they can continue to make those investments.
Andrew Teacher: Yeah, yeah, absolutely. And we talked a bit about sustainability. But let’s go into that a little bit more, because it’s an area where the architectural profession has been very vocal about this, they’ve been all sorts of climate marches, which again, you don’t see many contracts or businesses getting out there and protesting in Westminster about the environment. But clearly, there’s a huge opportunity here isn’t there to reduce waste, to use many less toxic materials and generally move our whole economy towards more of a zero carbon footing. So is there an education process that needs to occur here with some of the wider design community to get them more on board with this? Because ultimately, the more people you’ve got singing off the same hymn sheet, the easier presumably it becomes, because as you’ve explained, having that early dialogue and being there, stage one, stage two is absolutely critical for your approach, isn’t it?
Ceire O’Rourke: Yes. And yeah, I would agree, it is really important. I think before us, as a contractor comes out with a sustainability agenda, I think we actually need to understand where we are today. And actually, sustainability in this market has meant something very different five years ago than it does here today, when you’re looking at the inputs going into buildings and the materials that are being used and the waste. So what we’re doing inside Laing O’Rourke is that we’re assessing where we are. And actually, really, because of our offsite, we’ve probably had a sustainability agenda without necessarily actively putting that label on there. So we’re just trying to find out where is our base, and then we need to set the ambitions of where we want to go. Because there are ways in which you can look at different product sets that you have inside buildings around the frames or facades and actually looking at the materials that you’re using. If you’re looking at residential, if you’re looking at a particular product, say looking at drylining, is there a way actually, if we were to do the drylining in a factory, does that mean there’s less waste on site that’s just going into a skip that then is just going somewhere that has no use? So I think there’s elements, but what we need to do is get that landscape first and then see all the different components. And as well, for me for this to be a successful agenda, you can’t go after everything, which may not necessarily satisfy the clients, whether it be private or public. But if you try and go after everything, we might actually achieve nothing. If you break this down into bite sizes, there’s every chance we’ll be able to succeed, and also like everything it’s going to take investment. So that investment I personally don’t think should just sit with the contractors and the supply chain partners. It has to be everybody in this together. So consultants and clients all on board to actually make the investment. So for example, if a client wants to build a sustainable building in central London, they may have to accept that it can’t be done exactly the same price here in this market as traditional, is everybody going to buy into that? So I think it’s everybody coming together, it can’t just be at the foot steps of just one particular organisation.
Andrew Teacher: And presumably, digital tools play an absolutely critical role in measuring and benchmarking this performance. And it’s something I know that you guys have invested a lot over the years as well. So how do we streamline that? Because again, the whole architecture construction community has embraced BIM, certainly on the public sector side, but it’s not exactly swamped people so much on the private side of development, has it?
Ceire O’Rourke: No, I mean, digital engineering BIM has probably been slower to take on than people would hope. And for those consultants that have they’ve definitely seen the benefits. And it’s not only from the data capturing so that you can actually have real lifetime data as you go through a project. But it’s also some of those intangible risks that when you’re on a project and decisions are being made, you actually understand the full impact. The challenge is there isn’t a standardised system to use. So there are different interpretations of you know, the digital engineering. I’m not advocating that it should just be one system. But I think we need to figure out a way that the systems can talk to each other.
Andrew Teacher: It’s a bit like in your house, isn’t it? If you’ve got Google Home, and you want the thermostat to talk to the other thing, and you want it to talk to the TV, and you need 25 different voice control things just to do that! And sometimes you’re quicker just walking over to the radiator and switching it on.
Ceire O’Rourke: Exactly. And I think we need a way that people can be individual with how they go about their work, because that’s part of the consultants brand of how they in their people work. But when you get to site, you need a common platform that everybody can feed into. And I think if we were able to overcome that, that would really be a game changer in the sector.
Andrew Teacher: Yeah, I guess, essentially, like Android became a free tool platform on mobile phones. And that’s exactly the same principle, isn’t it? So a one size fits all platform that’s used on every single phone other than Apples. Let’s talk a little bit about the residential side of things. So one of the most iconic projects you’ve been involved with is Clarges, which had a blending of quite high end product and some affordable as well. What were some of the challenges there in terms of developing something right in the heart of Mayfair and Green Park? That must be quite challenging.
Ceire O’Rourke: Yeah. So for the people that are listening to this that know me know I’m not an engineer. So I’m not against the technical elements of that project. But the complexities that are high level, when you look at a scheme like Clarges was there was the Kennel Club that was actually in the position of where the affordable housing now is. And that needed to remain open whilst their new area was being set up so then they could just transfer. Then there was elements of the actual residential sector where actually the building itself had to build in two parts. Then add into that the location – one of the busiest roads in London, where you’ve also got local residents that don’t want a building site to be going on. The hours that you can be working. They’ve paid a high price for their addresses and a certain style of lifestyle. So having what they would see as contractors coming in, and what would be loud and noisy and dirty and disorganised is not very appealing. And actually, some of the compliments that we absolutely did get from the local residents was the way in which it was built from their perspective, they’re not interested in the building itself, or the engineering smarts that got into it, actually how it impacted them. And for them to say that there was probably only one time maybe on a Saturday morning that they had to go and make a complaint out of the length of time it took to build that project, that’s a real win, because they were able to see firsthand how from an off site manufacturing perspective, the only traffic that you’d have would be lorries, but they’d be coming in dedicated times, because it always is just in time delivery. And also the workforce – there wasn’t as many people that were needed to be around and to be able to do the work that we required. And then once you’ve got to commissioning then you may have some more people coming in, but it’s all inside the building so it’s less disruption. And also to be able to deliver affordable housing in that area as well and demonstrate, you can provide an affordable element to a building that actually doesn’t compromise on quality or style or design was actually fantastic to see.
Andrew Teacher: Yeah, fair play to British Land for going down that route. As you said a bit earlier the clients need to really step up here. Going back to your DFMA badge, do you think we should look to get to a place where planning consents can be can be sped up or amplified or made more certain if companies embrace a high level of DFMA. Because most people wouldn’t have a a) clue what it stands for and b) what it means. Certainly ‘most people’ being people in the council planning committees, but if we can get to a point where a higher level of DFMA is something people strive towards, then that, again, is something that’s going to encourage and incentivize a lot more investment.
Ceire O’Rourke: Yeah, I think I mean, DFMA is Designed For Manufacture and Assembly. So it’s the first word that is the key, it’s the design, which leads into the planning. So for me, my personal view is we need planning to be a way where it’s – I’m not saying standardised or it’s generic across the country – but we need to find a way in which there is harmony across planning across different boroughs of different areas of the country. Because when you’re looking at either private developers or housing associations that have a desire to actually deliver a large number of homes, but every single application they put in is completely different, and has its different nuances. That first of all, from a design aspect takes away the benefits and the economies of scale of that manufacturing. So one of the negative connotations is that people will have a view that actually if you go down an offsite manufacturing route, every building is going to look the same. It doesn’t. Something that’s stuck with me and how I think about it is – designed for manufacturing is about standardising the invisible. So standardise the structure of the building but you can bespoke the visible which means that you still got different facades you can have on it, you can do different layouts, you can do different finishes inside the building so that you can meet the target market that you want to. But what we need to get away from is that every single building is designed differently. And if we could have that kind of conversation around planning and it could be done on a greater scale at one go, that’s when the providers of the housing will get huge economies of scale.
Andrew Teacher: Yeah, absolutely. So let’s bring it to a close with one final question for you Ceire. What would you like the government to do right now? Because there’s a clear opportunity to move things forward and obviously, this series of MMC week as we’re calling it with different parties and different companies, we’re trying to always bring out some shared ideals that we’d all as a sector like to further the political and policy agenda with. So from Laing O’Rourke’s perspective, if there were one or two or even three asks for the various ministers, what would they be? What do you think could make a real step change in a short space of time here?
Ceire O’Rourke: So the first one for me would be to look at their capital projects they’ve got, and actually maybe look at the procurement of those capital projects and see is there a way in which, coming out of COVID, is there a way they can lead by example, to demonstrate that they want to get behind the agenda of modern methods of construction to DFMA? That would be the first. So that can be both across any sector. And maybe it’s just one sector they pick, but have a clear agenda around that. So whether it is hospitals, or whether it’s schools, whether it’s residential. If it was to be residential, I think there needs to also be a sensible conversation with the housing associations. They’ve got current stock, but they’re having to go back, and look at the cladding on those buildings and those projects, which is obviously causing a huge constraint on them, and a financial resource. So I think the government needs to help them to continue to do that, but also help stimulate them to go and do new projects, but also help them and entice them to actually want to go down the DFMA route. So the offsite manufacturing because the old model hasn’t worked so we need to look at a new model. I think that’s an area that should have an element of focus, especially for me, and I sit here now, in the wake of COVID, where you’ve got a number of people that are having to just stay in their apartments. I think, absolutely, we should be looking at the quality that we provide for people. If there’s an environment where the way people interact with each other might slightly change, we should be making sure that people have homes, that they are happy to be staying in for longer period of time than they normally would have been. I’m not saying it’s going to stay as it is now. And so I think just generally for me, it is making sure that they lead by example and use this opportunity, especially with social distancing, we’re going to have to think about a different way in which we deliver and they have to lead by example.

Participants

Céire O’Rourke

Director of UK Clients and Markets

Laing O'Rourke

Mark Farmer

Chief Executive

Cast

Andrew Teacher

Managing Director

Blackstock Consulting