Why modern construction methods need modern procurement

Procurement and the productivity gap

Think ‘modern methods of construction’ and the mind leaps to technology, like digital twins, robotics and other shiny symbols of an industry searching for productivity gains.

But according to Martin Fenn, Chief Delivery Officer at PT Blink, one of the biggest roadblocks isn’t technical. “Procurement models aren’t keeping pace,” Martin said on Altus Group’s CRE Innovation Series.

“Modern methods of construction need modern methods of procurement.”

Construction in the blink of an eye

MMC is pitched as a smart way to boost construction productivity, with fewer people on site and shorter programs that de-risk delivery. Yet conventional procurement structures weren’t designed for this. Payment milestones tied to site activity and risk allocation assumes a linear build.

PT Blink has created a scalable building system built on a post-tensioned steel backbone – the “PT” in its name. This can build in the “blink” of an eye, or at least cut project time by 40% and almost double the internal rate of return.

PT Blink’s project in the Brisbane suburb of Spring Hill shows the impact. The seven-storey apartment building structure was assembled onsite in just 11 days, slashing delivery time from 16 to eight months. Working within a controlled indoor environment eliminated weather delays and materials wastage, while reducing labour costs and improving safety.

“Construction is prone to human error. When components or entire buildings are manufactured in a factory, it’s a controlled environment,” Martin explained.

Margins, money and the missing MMC link

Governments are looking to MMC to deliver major infrastructure and housing programs faster. Developers see MMC as a strategy to reduce exposure to cost escalation, which Altus Group’s Q2 2025 construction price outlook puts at 7% in some markets.

But procurement reform is the missing link. “Money makes the world go round,” Martin observed. The problem begins with cash flow. Offsite manufacturing demands significant upfront investment, yet traditional contracts only release funds as work progresses. This leaves manufacturers carrying a heavy risk.

Lender and investor caution adds another dimension: Who owns the risk if a factory fails, or if components don’t meet performance standards? Uncertainty translates into higher risk premiums, tougher lending conditions and hesitation from insurers.

Margins add another layer. “It’s difficult for main contractors to innovate when they’re [operating] on low single-digit margins,” Martin observed. When constructors don’t make a healthy margin, insolvency risks rise and spare capital for R&D is in short supply.

Layer on what some call Australia’s “notoriously adversarial” contract culture – what Consult Australia dubs “Design, Construct, Litigate” – means disputes over variations and payments are rife, and it’s easy to see why appetite to adopt new methods falls.

Global frameworks to learn from

International pilots show how procurement reform can accelerate MMC. The United Kingdom (UK) Government has introduced a “pre-manufactured value” (PMV) requirement for some funded projects like affordable housing and healthcare projects, effectively mandating a minimum level of MMC content. This shifts procurement from lowest-cost tendering to structured innovation, giving manufacturers confidence to invest and lenders confidence that risk is being managed.

The UK Government’s Volumetric Modular Construction Research, published in November 2024, reinforces why procurement reform is so critical. Among its key findings are:

• Contract mismatch: Standard contracts don’t consider that up to 70% of project value can sit in the manufacturing package, leaving liability and accountability fragmented across multiple parties.

• Late decisions, higher risk: Too often MMC adoption is made after design has commenced. Without early supply chain engagement and integrated project management, risks ripple through a program.

• Modern procurement frameworks: Collaborative contracts are as important as technology. In the UK, the use of NEC contracts has supported MMC projects that cut waste and carbon emissions, integrate pre-installed services, and achieve consistent standards of quality, cost, productivity and safety.

In Australia, the threads are there – a few government pilots, procurement lists – but they aren’t yet woven into a framework that links public funding, MMC adoption and procurement reform. The first signs of stitching things together? The National Construction Industry Forum is investigating collaborative contracting models and the Australian Constructors Association is working on a strategy to accelerate MMC adoption.

What does modern procurement look like?

So, what would procurement reform look like? It starts with aligning payment structures to manufacturing milestones alongside site progress. It means using collaborative contract models that evenly spread risk and reward. It requires clear government policy signals, beyond pilots, with mandated MMC content.

It also means building capacity so industry professionals understand how to tender for MMC, evaluate bids and monitor delivery.

For Martin, MMC demands nothing less than a “whole mindset” shift. For Altus Group, modern procurement, measured against time, cost and quality outcomes, is the missing productivity metric. Without it, MMC will remain a promise of change.

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