I'm delighted that Burges Salmon will be hosting a further Net Zero roundtable to discuss vertical farming and other innovative methods of food production with an examination of the role that these projects can play in achieving Net Zero targets and wider sustainability goals.
Following Aberdeen Standard Investments recent commentary (https://www.aberdeenstandard.com/en/insights-thinking-aloud/article-page/vertical-farming-the-future-of-food-production) on issues and opportunities surrounding vertical farming (and ahead of our round table), this post provides some thoughts on some construction issues that we have encountered on such projects.
Construction and procurement considerations
From a project delivery perspective, developers, funders and the supply chain will need to plot a way through construction and procurement issues, drawing on experiences and methods of delivery from different sectors including energy, real estate and farming. The following are some issues relating to construction and procurement worth giving close consideration to at the outset.
Design & build vs. multi-contract
Clients will need to assess whether it will be possible to get full design and build comfort from a single contractor, and whether this approach offers the best value. As in other sectors, it’s likely that projects will have to pick from a relatively limited number of suppliers prepared to offer a true wrap solution, in part due to the varying levels of complexity of the overall design and construction, wider demand, and the early stage of development of some of the technology and processes involved. Developers may elect to adopt a multi-contract solution, whilst managing and mitigating interface liability and other contractual risks. From our work on these projects, we are seeing movement towards a particular solution but this remains an area for consideration.
Vertical farming projects involve the design and construction of a range of components, some elements of which will be suited to delivery under contract forms such as JCT and NEC, others (such as power infrastructure and M&E packages) being more suited to forms such as FIDIC or MF/1. These contracts can all work in different scenarios and for different scopes, but contract form selection is likely to be particularly key to promoting a smooth procurement and negotiation process, given the range of components forming the overall project. This will be all the more important when dealing with international suppliers and contractors. Advisors should be steering clients based on experience but also considering familiarity of the client with such forms and any particular strengths that the projects teams may have in using one form or the other.
Given the central role that design, software, automation and AI plays in the construction and operation of vertical farms, intellectual property rights will be of key importance to any project’s overall success. Licensing arrangements with the supply chain, professional team and operators will need to be carefully considered and negotiated, particularly where new solutions are developed and where scale and repeat projects are sought.
As the linked article notes, the potential for less land usage and the deployment of urban sites in the future is a key selling point for vertical farming. Repurposing existing assets in urban locations to deliver vertical farms may yield a significant benefit in terms of cutting transport cost and carbon emissions.
We are very excited to be working on some pioneering schemes in this area and look forward to further discussion on these issues with our clients and stakeholders at our upcoming roundtable. It will be very interesting to monitor the development of this industry.