In February 2017 the government issued a white paper that acknowledges the housing market is “broken”, admitting we need to build as many as 275,000 homes a year compared with the 190,000 last year.
The white paper outlines four steps for achieving this greater volume:
- Planning for the right homes in the right places (principally by using local and neighbourhood plan policies)
- Building homes faster (mainly by better linking infrastructure with housing development, more efficient development management and addressing skills shortages)
- Diversifying the housing market (focusing on increasing the numbers of small and medium-size builders, promoting more forms of tenure and encouraging ‘modern methods of construction’)
- Helping people now (by helping meet all of the population’s diverse housing needs)
The second and third items on the above list are in alignment with the industry’s increasing use of modern methods, notably off-site modular construction, and it will be interesting to see how this plays out. There has already been an upswing in UK off-site construction over the past year. Residential is by no means the sole beneficiary, but the sector is well ahead of commercial, for example, with new residential manufacturing facilities set to disrupt a previously limited supply chain. Swan Housing Association has opened its new manufacturing facility in Basildon, Manchester developer Urban Splash has launched its customisable factory-built House product, and Laing O’Rourke has invested in a manufacturing facility in Nottinghamshire. Insurance fund L&G is building the biggest off-site factory in Europe to supply homes for its private rented housing development pipeline.
The principle is well-documented, focusing on moving from a construction to a manufacturing approach, using production-line techniques. A range of different technologies are used, in which a proportion of the construction is completed under controlled plant conditions and then transported to site.
The principle is well-documented, focusing on moving from a construction to a manufacturing approach, using production-line techniques.
At the bottom end, this refers to the fabrication of components such as door sets or chimneys, or the use of open panels - most commonly made from timber - which are finished and sealed on site. Next on the scale are closed panel systems, where wood, steel or concrete panels arrive finished and plastered, pre-cast concrete elements, and pods, typically used for bathrooms. At the technology’s maximum potential, full volumetric construction results in completed buildings transported to site.
Traditionally, modular providers have focused on utility design elements of schools, hospitals and hotels. However, the mainstream residential market is now making more use of the methodology, notably at component level. It won’t be long before fully modular schemes take a proportion of the market — if 20 per cent of new-builds were modular in five years’ time, we’d see a real step change in the market.
Modular offers some key strengths:
- Shorter time on site
- More labour-efficient
- More consistent quality
- Reduction of defects on site
- More efficient materials sourcing/logistics
- Waste reduction and other environmental advantages
- Improved site health & safety
- Eventual cost advantages through reduced programme and repeated design
- More accurate costing
- Aligns with BIM and facilities management objectives
- Shift-working can increase factory production, to cope with demand peaks
- Building Regulations compliance is more straightforward
The construction skills shortage will benefit, as at the production end, off-site utilises a less specialised skill-set. A workforce equipped to handle modular off-site production and installation will require less specialist training and will enable the industry to better utilise its trained skill-sets. Recruitment may also be easier, due to the cleaner, safer and predictable work environment.
The concept hasn’t always found favour with investors, insurers and mortgage lenders, but this seems likely to change in line with the improved product offering, and its associated quality/efficiency benefits. Institutional investment into the market is growing, with investors such as pension schemes increasingly regarding housing as an appropriate investment. And insurance giant L&G has certainly taken a lead, with its pioneering manufacturing plans.
The construction skills shortage will benefit, as at the production end, off-site utilises a less specialised skill-set.
The industry will undoubtedly need some culture change in order to maximise the opportunities. Some funders remain unconvinced about off-site construction, with resistance often focused on developers being less able to transfer construction risk by tying contractors down to a fixed price contract. Other challenges include the relative newness of the products coming to market, alongside the lack of availability of manufacturing facilities and of trained labour.
Is modular cheaper? The quick answer is no, not right now. We’re at the beginning of the product lifecycle and we’re not going to see economies of scale for some time. The costs are potentially more predictable and more accurate, and there will increasingly be cost benefits to build efficiencies and non-productive time.
Whole life costs can be cheaper — or better overall value. But it’s not generally the costs that are driving the modular initiative. It’s the other benefits, as outlined above. Currently we’re finding it’s cost-neutral.
Whole life costs can be cheaper — or better overall value.
Clients will need advice on their cashflow profiles. There is more activity earlier in the construction cycle than with traditional methods, so modular requires a greater upfront spend. Design certainty at an earlier stage is another element of culture change — modular offers less ability to make changes once production begins. The methodology lends itself to tightly specified, often branded, products, and that’s where we’re seeing the most recent spike in uptake.
At Faithful+Gould, we recognise the benefits of modular and we’re already supporting clients, historically with student accommodation but increasingly with mainstream residential. This is an exciting time; let’s hope the industry grasps the nettle.