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Stanhope's £2bn offsite deal offers O'Rourke breathing space

Tom Fitzpatrick

The alliance between Stanhope, Network Homes and Laing O’Rourke is another step in the right direction for a ‘new way’ for construction.

Mixed-tenure housing, including build-to-rent, affordable and private sale will be factored in from the start of the trio’s first scheme: a £200m regeneration of a former industrial estate in Southall, west London.

Laing O’Rourke’s offsite facility in Steetley will provide component parts, from balconies to bathrooms.

With the trio seeking planning permission as a joint venture, it offers the chance for Laing O’Rourke to digitally design and manufacture core elements offsite. Bringing offsite construction, mixed-tenure housing and a sense of place with offices and retail together from the start represents an approach that should bear fruit.

This is a massive deal for Laing O’Rourke at a defining time in the organisation’s history. 

It is due to release long-overdue accounts this month, which are likely to show it has incurred big losses for a second successive year. This is mostly down to a disaster of a job in Canada, which the company wants to fully account for in its financial statement so that it can move on.

Its results will pique the interest of national media this time – unlike the results published in December 2016 – due to what’s happened at Carillion.

But the organisation is continuing to pick up high-profile work and has the backing of long-term collaborators such as Stanhope and British Land, as well as pinching Hammerson’s £700m Brent Cross expansion from the favourite, Sir Robert McAlpine.

When I interviewed Ray O’Rourke last year, this deal with Stanhope was precisely the type of “offtake” agreement he was looking to get in place.

“This is an instrument used in the oil and gas industries where organisations would be persuaded to sign up to take a quota of product on a per annum basis over a five to 10-year period,” he said.

Now, Mr O’Rourke will be doing everything in his power to persuade Heathrow to choose its Explore Industrial Park at Steetley as one of its offsite hubs.

Heathrow said last week that it wants other major infrastructure clients like HS2 to use its selected offsite hubs, where components will be assembled before being transported to the airport’s third runway project.

This comes at a time when Laing O’Rourke has also been shortlisted alongside Canary Wharf Contractors and MTR to build the £1.65bn HS2 Euston station.

The extent of the Canadian hospital losses will no doubt be eye-watering. But rather than tighten its belt or downgrade its ambition, Ray O’Rourke continues to set his steely sights on a longer-term prize.

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