Modular methods of construction – lifting the UK’s productivity barriers

Modular methods of construction (MMC) have long been heralded as the future of the building industry. Yet despite the strides made in addressing the issues that people felt were holding back its implementation – like collaboration across the supply chain – onsite construction is currently still considered the “go-to” approach.

For decades, there has been a push for innovation. Sir John Egan called for “radical changes to the processes through which [the industry] delivers its projects” in his Rethinking Construction review just over 20 years ago. And while those radical changes didn’t happen at the rate and pace he envisaged, recent announcements in the sector reflect the type of progress he sought to prompt.

But the benefits of MMC go beyond speeding up the delivery of new homes. The efficiency gains extend to cost too

Clearly, the driving factor here is the UK’s unprecedented demand for housing, with the government’s pledge to increase housebuilding rates – at speed – and meet the ambitious targets of 300,000 new homes a year being an example of a catalyst for this. Communities secretary James Brokenshire also recently announced £250m-worth of funds to support housing, with a quota of 650 homes being built through offsite construction, which has put pressure on firms to deliver.

Naturally, housing associations are following suit. L&Q most recently unveiled plans to ramp up offsite construction to ensure all new homes are built using some form of MMC by 2025. And in September, offsite specialist McAvoy Group announced it was aiming to make a mark in housing with a new seven-day foundations-to-occupation modular system for all tenures.

But the benefits of MMC go beyond speeding up the delivery of new homes. The gains in efficiency extend to cost too. By driving up productivity, shorter project lifecycles reduce the costs of site management and facilities. KPMG’s latest report on smart construction found that despite increased construction costs associated with one-off offsite projects, financial net savings of 7% were possible as a result of the shortened construction period. These savings enabled faster rental revenue income and savings from lower construction inflation costs. On one project – the development of a 50-storey central London office building – net savings were £36m.

Ultimately, fundamental changes to the sector’s approach are needed so that all in the industry can reap the rewards that efficiencies of cost, scale and productivity will bring.

MMC also has a significant role to play in overcoming skills shortages in the construction industry, a perennial issue but one likely to be exacerbated by Brexit as fewer EU workers come to Britain. The industry is struggling to provide the skilled workforce needed to meet the demand for current and planned projects, which reduces the ability to plan successfully and deploy resources across a portfolio. Offsite manufacturing can attract and develop resource from across other industries and those with experience in other factory environments can transfer their skills to the offsite industry.

MMC is making headway with endorsements from government and from other key players in the industry. But for offsite construction to become the preferred delivery model, conditions must exist where offsite solutions are actively considered, not only for housebuilding, but for the entire construction industry.

We must move beyond volume targets and set quotas for offsite construction on projects over a certain size to ensure innovative practices are embedded in the manufacturing process. Ultimately, fundamental changes to the sector’s approach are needed so that all in the industry can reap the rewards that the efficiencies of scale, cost and productivity will bring. 

Jonathan White is UK head of infrastructure at KPMG