Standard Construction Contracts vs MMC Contracts

• Published date: 01 July 2021
• Subject Matter: Corporate/Commercial Law, Real Estate and Construction, Contracts and Commercial Law, Construction & Planning
• Law Firm: Shakespeare Martineau
• Author: Ruth Phillips and Louise Ingram

As modern methods of construction (MMC) continue to grow in popularity, it is vital that developers are aware of the differences between MMC contracts and standard construction agreements. A lack of understanding could lead to an unsuitable contract and disputes later down the line. So, what do developers need to know?

Understanding standard construction contracts

Standard construction contracts often include monthly payment instalments, with developers able to monitor the process of the build and ensure everything is on track. In the event of a delay, developers can halt payments until problems are resolved, and remain safe in the knowledge that if building work must cease, there is still a structure on site to work with.

Although logistical planning is still required within standard construction contracts, there is no need for additional thought around transportation and security to be outlined. As the houses are built on site, those logistics are already catered for.

'Ownership of materials' is a key part of any construction contract. Traditionally, ownership is passed from contractor to developer at the time of delivery. However, the process can be less straightforward with MMC, as the structure is delivered in one go, so the passing over of ownership needs to be carefully discussed.

The difference with MMC contracts

When it comes to an MMC contract, a greater awareness of its unique requirements is essential. Due to the build taking place off site, the developer must take into consideration that payments will have to be made for homes that have yet to reach the site. Therefore, it is better to make flexible stage-by-stage payments rather than set monthly instalments.

For example, deposits can be made as the manufacturing process...