complete bedroom and bathroom components) to panelised systems and facades. When deciding whether to adopt modular construction processes, the potential time and cost advantage needs to be weighed against the possibility of increased costs. If sufficient economies of scale are achieved, modular construction may allow for cost savings and the ability to flexibly locate construction activities can result in a significantly shorter programme. However, modular construction often requires significant investment with a primary contractor designing and manufacturing the modular elements; placing that contractor in a strong bargaining position and increasing default or insolvency risks. Modular construction can also create additional quality control and interface risks – if the modules are defective, or unable to be integrated with the development. These and other risks can be addressed, although the best way to do so will vary from project to project. Key measures include requiring the provision of adequate manufacturers’ warranties and, where modular components are paid for before delivery to site, ensuring that title transfers on payment. Transfer of title should be addressed at all levels of the supply chain to protect against contractor and sub-contractor insolvency1. New technology presents an exciting future for industry participants, provided that potential risks are kept in view and proactively managed.
About the Authors
Patrick Daley Senior Associate, Hong Kong
Colleen Galbraith Senior Associate, Hong Kong
Formed by the combination of Bryan Cave and Berwin Leighton Paisner, global law firm Bryan Cave Leighton Paisner LLP is purposely structured in a way few other law firms are, as a fully integrated international team that provides clients with clear, connected legal advice, wherever and whenever they need it.