Go figure

Is it cheaper to build homes using modern methods of construction or using traditional build methods? That question has been open to much industry debate, with countless demonstration projects by both the public and private sectors proving both sides of the argument.

So when the National Audit Office announced that it was to look into modern methods of construction (MMC), the news was welcome.

At last, the industry thought, someone would come up with the definitive answer on the cost of MMC.

At the end of last year the NAO published its report, Using modern methods of construction to build homes more quickly and efficiently, but its conclusions on cost may not deliver the easy answer the housebuilding industry has been waiting for. On the one hand it concludes that, on average, many modern methods are more expensive than established brick and block techniques. On the other hand, it says that in the right conditions, an off-site solution could be as cost effective as brick and block, and perhaps even more so.

That doesn't make the decision-making process any easier for the average housebuilder with a 28-unit low-rise site in the Home Counties contemplating a shift away from traditional build to timber frame. But thankfully the NAO gives more helpful guidance.

The most cost-effective modern method was found to be open panel construction, most commonly used in the form of conventional timber frame, which was on a par with traditional build (see below left). Cost ranges for other technologies overlap significantly, which may explain why the live projects carried out so far have produced such widely varying results.

The report highlights a number of areas where MMC can be cost efficient. They are where:

• soil conditions are poor, and therefore lighter buildings may be needed
• the site is restricted
• the building goes higher
• homes have habitable space in the roof
• alternative cladding materials and roof designs are used.

By contrast, MMC might be less cost effective where:

When the benefits of reduced on-site working are factored into the calculations, using MMC has clear financial gains

• late design changes are made
• there are non-standard designs or designs are not suited to MMC
• the contractor or supplier is appointed late in the process
• there is no framework agreement with the manufacturer
• operations may have to be suspended - a high proportion of cost in MMC projects is committed earlier.

When the benefits of faster construction and reduced on-site working are factored into the calculations, there are clear financial gains to using MMC (see below right) that would be of most use to registered social landlords. By taking possession of completed homes faster, RSLs could access their rental income stream earlier and could draw down social housing grant earlier, reducing interest payments on capital to fund developments. By moving a large part of

the housebuilding process to a factory where production quality can more easily be controlled, both snagging costs and the need to carry out on-site inspections are reduced.

Catch 22

However, the BURA report, Modern methods of construction - evolution or revolution? also published late last year, argues that MMC is stuck in a Catch 22 predicament. MMC costs will be reduced when more developers buy the technology, it says, but developers will not buy the technology until costs reduce. It says that only when there is a significant move towards mass production of multiple units will costs be dramatically reduced, and that the present project-by-project process with different specifications works against economies of scale.

The NAO report agrees that factory costs need to be reduced to increase competitiveness but adds that there is the potential for a 15% price reduction in off-site elements for volumetric and hybrid construction. Off-site technology consultant Mtech believes that price reduction could happen fairly soon. Mtech group technical director Martin Goss says: "We believe there will be substantial growth and maturing of the market place in the next five to 10 years. For the majority of the off-site supply chain, particularly for the volumetric and hybrid systems manufacturers, the market demand for off-site products has not met their expectations for growth. This has meant that, for many producers, their investment in factory and plant is not being fully exploited and hence the market price for the product is far too high."

But Goss adds that the backing of key players such as English Partnerships, the Housing Corporation and BAA will be key to delivering reduced prices for all.

The NAO report Using modern methods of construction to build homes more quickly and efficiently is available via www.building.co.uk/reports