COMMENT Despite expectations of a slowdown in construction, demand for new buildings in the life sciences sector will buck the trend. A recent report by agency Bidwells showed that half of larger UK-headquartered life sciences companies need further lab or office space within the next five years.
But meeting this demand is no simple matter amid construction price volatility, supply chain disruption and inflation.
Linesight’s most recent commodities report flagged significant risks around labour availability and costs. Moreover, it is clear that the global supply chain crisis is shifting from being acute to a longer-term, chronic issue.
This is a problem for the UK economy because it hinders investors and developers from meeting the surging demand for laboratory space. The strain is already beginning to show – as of last summer, the Oxford and Cambridge science clusters had close to zero free laboratory space available for rent.
The lack of space, coupled with the challenges bringing forward building projects, could lead life sciences companies to abandon plans for facilities in the UK and look overseas instead.
Standardised approach
With the life sciences sector contributing £37bn pounds to UK GDP annually and supporting over 580,000 jobs, it is essential that investors and developers find ways to meet the sector’s demand for real estate.
By adopting a different approach based on standardisation, there is both a short and long-term opportunity to maximise cost savings and cut through some of the current supply chain barriers to delivery.
Adopting a standardised approach means using the 10/80/10 rule. Regardless of sector or specification, 80% of the building – the structure, the M&E, the heating, ventilation and cooling – is standard. It is effectively the same wherever in the world you build it.
The customisation happens in the other two sections of 10%. One covers the local building context – for example, electrical codes in Canada which will not work in the UK, or roofs in colder locations that need higher snow loadings.
The other 10% covers the customisation wishes of the occupier, namely the ability to modify the building in a particular way or by featuring elements like in-built fume cupboards.
This approach allows you to identify those core elements that have no need to change or that have no impact on the end-user and work with those in a standardised way.
In the current environment of supply chain disruption, this approach can deliver cost savings through a more strategic approach to the procurement of essential standard components, such as floor plates, heating, ventilation and cooling. Purchasing in bulk with repeat orders across multiple projects will enable greater cost savings and better supply chain security.
Additionally, the customised elements will only effect 10% of the total capex investment with this approach.
Follow that Mini
The automotive sector has adopted this 10/80/10 approach perfectly. Take the Mini. All Minis are essentially the same – gearboxes, platforms and so on – but at the edges, they differ. The context is obviously different, insofar as you will have left-hand or right-hand drive vehicles or emissions control systems which cater for the territories they are being sold into. And then a buyer can customise their car with different colour schemes, higher spec wheels and sunroofs.
Taking the standardisation route helps the automotive sector produce their products more efficiently, while also managing supply chain disruption risks through larger, repeat orders.
Construction can use this approach too, to deliver buildings on time and on budget, with standardisation.
Selling this idea to pharmaceutical sector clients should not be difficult. The sector is experienced with construction and understands that the majority of a facility will be the same as one in a neighbouring country. The sector also appreciates it will have the necessary contextual tweaks for that territory and can be customised appropriately to suit the needs of the end user.
A standardised approach could help combat the supply chain crisis and enable life sciences companies to continue to expand, despite the current challenging environment.
Nigel Barnes is head of life science, EMEA, at Linesight
