What are Modern Methods of Construction and how can they impact productivity?

Modern Methods of Construction (MMC) focus on off-site construction techniques, such as mass production and factory assembly. There are seven categories within the MMC Definition Framework covering seven types of material and four types of buildings, from houses to high rise apartments.

The Productivity Institute’s initial research is based on Pre-Manufacturing – 3D primary structural systems (Category 1). This is the most advanced form of MMC, and wholly replaces traditional methods of construction by assembling most housing components in a factory environment, with more standardisation, less waste, and minimising the need for skilled trades that are in short supply.

Future research will expand to Pre-Manufacturing – 2D primary structural systems (Category 2) and – Pre-Manufacturing – Non-structural assemblies and sub-assemblies (Category 5).

Productivity in the construction industry and government targets

Construction productivity is low and productivity growth has been flatlined for decades, despite numerous government initiatives to drive improvements. New homes standards – particularly with respect to sustainability – are higher than ever before and the expectation is that homes built in 2025 and onwards will be carbon neutral.

Government targets of 300,000 new homes in England each year are far out of reach for traditional builders and the skilled pool of labour needed is limited. Factory produced homes using MMC promise quality, speed, and scale, but the firms who provide this, typically new entrants, often lack the right business model.

Driving change in UK housing construction

Research from Professors Jonatan Pinkse and Graham Winch and Research Associate Dr Suzanne Peters has found targeted efforts to better support these methods and the firms implementing them could help reach housing targets, especially in social housing, in the most sustainable and efficient way.

MMC – including factory-produced volumetric modular homes and panelised systems – have been positioned as a critical part of the solution, but they have yet to gain the needed traction.

The research captured industry perspectives on the current dynamics of productivity growth in the housing sector and specifically opportunities for improvement in the face of increasing sustainability requirements and constrained labour supply. It identified five issues that limit the use of MMC to improve productivity in housing construction and provided policy recommendations that can simultaneously improve conditions.

Key Findings

Ensuring demand, training for different skills, and improved regulatory processes could pave the way for dramatic improvements in the pace of new homes construction and enable much-needed productivity growth in the housing construction sector.

Opportunities to support the sector include shoring-up demand of MMC, supporting a more MMC-oriented skills agenda, and addressing the issues in attaining regional planning and land-use approvals. The key recommendations are:

• Labour market requires new skills. To deliver at pace and meet quality standards, both offsite and onsite aspects of MMC require skills and understanding that differ from traditional methods. 24
• Projects must better accommodate the unique aspects of combining onsite and offsite methods. A cohesive link between offsite and onsite work is critical to the success of projects and this has been a major challenge.
• Land use approvals are a massive challenge for the industry regardless of the construction method. Seeking regulatory approvals from local authorities is consistently the most unpredictable and time intensive part of the building process.
• The desire for flexibility limits productivity growth. Flexibility in home design and materials is desired by homeowners and regional authorities, which can limit the productivity gains of factory methods to the construction of social housing.
• The industry is not incentivised to change. The construction industry is notoriously slow to change and cautious of risking delivery by trying new methods and materials.

Raising awareness through a House of Lords inquiry

Jonatan and Suzanne gave oral evidence at the Built Environment Committee’s inquiry ‘Modern methods of construction – what’s gone wrong?’

“There are many people in the industry who believe that, with the current way of building, they will not be able to meet future standards (of energy efficiency). They have to change how they are building a house, and there are not really more people coming into this sector, so it seems almost inevitable that you go for further automation. That is why we are discussing MMC, because it is one of the ways you could do this. This is the reason why we started this research, because we are being funded by The Productivity Institute. This sector is a drag on productivity. It really needs a lot of people. How can we maybe do it in a different way, so that we do not need that many people, because they will simply not be available in the future?”

Professor Jonatan Pinkse, Built Environment Committee oral evidence session, 14 November 2023.

This led to widespread media coverage in the sector in the UK and abroad, with firms reaching out to the researchers.

“You two came into that enquiry and …you gave them facts … my shoulders dropped and I thought they’re right, it is absolutely right, modular housing is a thing, it’s going to be there. Look at wind turbines, look at electric cars, look at all those things, it’s going to happen, houses are going to be built in factories, doesn’t matter what ( failed MMC business) Ilke did and what the other people did.”

Feedback to the researchers from MMC business, Boutique Modern, after the House of Lord’s appearance.

Since their HoL appearance, the researchers have been approached by worldwide engineering firm Atkins Realis to do a deep dive case study of their subsidiary Edaroth (Everyone Deserves a Roof Over Their Head) which is focused on delivering sustainable social housing using MMC. They have also subsequently met with DHLUC and Homes England. The Competition and Markets Authority’s report Housebuilding Market Study also referenced the inquiry.

Read Driving change in UK housing construction: a Sisyphean task? by Suzanne Peters, Jonatan Pinkse and Graham Winch.