Breaking down barriers to Modern Methods of Construction - Intellectual Property Rights

Modern Methods of Construction (MMC) is changing the delivery of construction projects. Intellectual Property - is it a barrier to collaboration and scalability of MMC?

25 February 2020

The popular image of MMC is of an off-site manufactured volumetric scheme, but the spectrum of opportunity is so much wider, including panellised systems and manufactured sub-assemblies.

MMC is not limited to off-site fabrication; but includes:

  • on-site factory facilities – long used in infrastructure projects
  • 'platform construction' methods where low tech pre-manufactured elements combine at the site with precision manufactured components or nodes to create the required structure through a variety of standardised patterns.

Collaboration, rather than hierarchical management of construction contracts is the key to making MMC work. Improving productivity, gaining better predictability of build time, better management of risk and the reduction of costs and waste through MMC needs new contract structures and ways of working.

MMC, Design for Manufacture and Assembly (DfMA), and other disruptive technology and collaborative methods of working have the potential to transform the way that the construction is delivered. 

The uptake of such disruptive technologies has been relatively slow. One reason may be that MMC requires a fundamental shift in the way in which the industry approaches key areas of construction IPR.

IPR and MMC: Making the path easier

MMC requires a new way of thinking and approach to information sharing and management. Openness, collaboration, early involvement, and a willingness to cooperate by all parties from the outset of a project, on their own, are not enough. There is a tendency within the sector for information to be “siloed”, with knowledge being hoarded rather than shared. We take a look at the reasons :

Fear of opportunism/ loss of economic control:

  • Ownership of IPR has long been something to be legitimately protected to reflect the intellectual capital that it represents. Where traditional delivery of construction applies, each element of design being capable of identification and where copyright is the key IPR, the simple tool of a controlled permission or 'licence' from the owner to the user of IPR has worked tolerably well.
  • Construction IP is now multi-layered and increasingly combines the creation and use of both copyright and design right. There is no longer simplistic separation between those who design and those who construct.
  • Some are reluctant to participate in higher levels of BIM, without a better way of protecting IPR. This is more prevalent in BIM Level 3, which poses a higher risk due to the potential for input from contributors to be indistinguishable. 
  • The degree of standardisation that would see manufactures of construction materials for MMC work to a common template achieving a robust degree of interchangeability demands a totally collaborative approach and agreement on an element of open source IPR. If that were possible, we could boost MMC take up and overall sector efficiencies. The challenge is to build confidence that this can be done in a managed way.

 Confusing management of IPR with liability for the use of a design:

  • The ownership of IPR, the right to use that IPR and liability for the use of that IPR are each separate concepts that can be independently controlled by contract but often are not. Designers and their insurers have concerns that where collaboration applies, the designer may involuntarily expand liability for use of the design unsustainably. The boundaries of risk allocation become blurred where MMC applies.
  • Insurance: The concerns above raise questions relating to insurable liability and the adequacy of insurance products to deal with professional design liability in an MMC scenario. New insurance products will be required that are better aligned with collaborative working principles, building on the principles of integrated project insurance. For this to happen the insurance market needs to gain trust that risks are properly controlled.

Offsite-manufacturing:

Where MMC includes material Off-site manufacturing, discrete issues apply: 

  • Insolvency: From a developers’ point of view, where off-site manufacturing is used it will be important that it has sufficient IPR rights in the case of contractor insolvency to enable a replacement contractor to produce offsite-manufactured components that properly interface with those already produced; this remains a key risk and impediment to funding until clarity on open source information emerges;
  • Licences: What rights are granted to a developer to enter off-site manufacturing facilities to inspect and test;
  • Sub-contracting: how IPR and ownership is dealt with in the contractor’s off-site manufacturing sub-contracts; and
  • Risk allocation: Who is liable for loss and/or damage caused by faulty design, design interface and integration, and repair/replacement of materials needs careful consideration.

Do Standard Forms deal with IPR in an MMC context?

Most traditional forms of construction contracts (design and build, standard building contracts, and the like) inadequately manage the IPR nuances and allocation of risk to make them suitable for MMC.

If alliancing is adopted, there are existing multi-party forms of contract or contract overlays which make provision for a collaborative style of working. These include PPC2000, the NEC4 Alliance Contract, and FAC-1. Each of these forms of contract deal with IPR in a slightly different way but essentially seek to grant the necessary reciprocal licences to allow the operation of design modelling for the purposes of the project and limit a party’s liability for the misuse of its design.

The suitability of each of the standard forms for a particular project given the nature of the project and funding source would need thought. Some form of bespoke contract provision is required to get all parties comfortable and to provide a framework for management of IPR that does not get in the way of MMC delivery. 

The way forward

MMC is at a #beta stage of development. It is unlikely to reach its potential until the key issue of interoperability between the systems of different manufacturers and processes can be dealt with. This will need an element of open source IPR. Doing this first can be uncomfortable.

The car industry – long held up as vastly more efficient than the construction industry, is facing similar issues, with the move to EV and the lack of a full understanding on shared platform and battery interchangeability.

 IPR does not need to be a barrier to collaboration and MMC, but, at the moment, an individual project approach has to be used. 

Bespoke forms of contract and different commercial and legal arrangements that move more comprehensively from hierarchical to collaborative will emerge. Many principles will be borrowed from complex infrastructure and IPR will mature to be an enabler and not a barrier to collaborative procurement.

To understand and reap the benefits of MMC, the market – clients and funders - have a big part to play and the whole supply chain will need to engage.

This article was written by Ellen Williams and Sophie Smith.

Key contact

Marcus Harling

Marcus Harling Partner

  • Construction and Engineering 
  • Transport and Regeneration
  • Modern Methods of Construction

Subscribe to news and insight

Burges Salmon careers

We work hard to make sure Burges Salmon is a great place to work.
Find out more