The Keys to MMC – 5 key considerations to accelerate housing delivery using Modern Methods of Construction

The 5 Key Factors

01 | Early consideration of MMC for a site
MMC benefits from settling on a design early to maximise price efficiency, as future changes involve potentially costly amendments to the manufacturing process. Developers and procuring authorities can collaborate with manufacturers to identify designs that work with their preferred house types.
Manufacturers should be able to adapt designs to local vernacular provided this is determined and costed early in the process. Several manufacturers have worked with housing providers to understand requirements and offer products to suit.
This may, however, require adjustment to standard procurement processes. Many authorities may run their procurement based on a traditional build, i.e., an architect-led, pre-determined design tendered on a turnkey basis with little need for coordination with manufacturers. They may have established supply chains using local and/or regional subcontractors. This is where a bespoke procurement framework will be valuable to allow resource-constrained affordable and social developers and procuring authorities to consider the available MMC housing designs that may be suitable for a site. The framework could also include suppliers of all required contracted services.

02 | Understanding MMC suppliers’ offering – design and planning
Some developers and authorities may have concerns that use of MMC may complicate the planning process. This may be alleviated through reforms to planning in a number of jurisdictions that limit the scope for objections to pre-approved housing types, particularly for priority housing driven by authorities. It is also helpful for planning teams to be aware of the cost of MMC design change – namely amendments to production machinery calibration and materials orders. Providing input at outline design stage and during pre-planning consultations can mitigate this cost.
Each procuring authority may have preferred house types and designs, and to date many have not standardised for social and affordable housing. However, manufacturers are very willing to engage in explaining product offerings and may make adaptations to preferred designs if engaged early. Upfront spend – irrespective of order size – is needed to adapt product offerings and calibrate production processes, so the larger the order, the lower the unit cost.
Procuring authorities can achieve significant cost savings by including selected MMC designs in their list of standard housing types, conducive to placing orders at scale. This can include standardised housing modules that may be configured in different ways to provide a variety of housing types and tenures. Some governments have published design manuals or pattern books for priority housing types, including design principles and sample site layouts. These can be extremely helpful to MMC manufacturers to target offerings towards the required housing typologies and urban design and placemaking priorities of authorities, as well as their sustainability standards. Collaboration between authorities to aggregate orders for identified development sites can capture further economies of scale.
The framework route also facilitates volume orders. Procuring authorities can provide valuable input on preferred designs at the time the framework is created to ensure selected providers offer housing that meets their needs. Significant savings have been achieved by Housing Associations in the UK – key providers of social, affordable and mixed tenure housing – through collaborations and procurement alliances to place orders totalling 500+ units per annum. Alliances such as Build Better and Advantage South West have set up procurement frameworks from which all members can commission orders.

03 |  Contracting considerations and direct relationships with the MMC supplier
Many MMC housing providers are specialised in the efficient and sustainable manufacture of housing and on-site installation rather than the groundworks, civils and engineering work and other aspects of a build. These may be most efficiently delivered by a separate contractor, however standard turnkey-type or design and build contracts, aligned to a single main contractor structure, may not facilitate this or allow a procuring authority to engage directly with the manufacturer. Some MMC manufacturers offer to act as a main contractor to ease the process for clients while understanding matures. However, this is less than optimal from an expertise and efficiency perspective.
A helpful step would be to include in an MMC procurement framework, lots for all attendant categories of works as well as for the manufactured housing, plus the form of collaborative/partnering contract that better suits a manufactured rather than turnkey solution. This may be similar to the NEC 4 contract suite or the ACA Framework Alliance Contract used in the UK by the Crown Commercial Services on modular frameworks.
These contracts include appropriate scheduling, risk sharing and compensation arrangements between the parties in an MMC build.
The procuring authority may need to consider supplier payment, integration and programming to a greater extent than with traditional build. There may be a learning curve for the rest of the supply chain, though early engagement with all parties can minimise teething issues and potential cost overruns. A coordinating official or central team for local or municipal authority MMC builds could be a valuable facilitating resource to provide the additional contractor oversight until the process becomes established.

04 | MMC Working Capital Profiles and supplier financial resilience
Once mandated, MMC suppliers will need to set up their factory systems to manufacture the selected housing types. They will also need to secure materials upfront for the entirety of the order to enable several components to be produced in parallel. This requires a greater proportion of the development costs to be funded in the early stages of a development, prior to delivery on site.
It is helpful for developers and procuring authorities to understand and accommodate to this front-loaded cost profile. While the industry is still maturing, some manufacturers in the UK have absorbed more risk by permitting payments more in line with traditional build (staged payments in line with construction milestones). However, this puts pressure on working capital and could undermine financial resilience at a critical juncture for the industry. The need to fund the gap between upfront payments and early stage expenditure results in larger working capital needs that leave firms vulnerable to process delays. This has caused significant challenges for firms funded from sources other than patient capital.
The benefit of accommodating a realistic spend profile will be more resilient suppliers and faster housing delivery though multiple stages of the housing manufacture being able to progress in parallel, reducing construction times overall.
Working capital pressures will ease with regular order flow and pipeline visibility. However, working capital support, preferably from patient capital sources, or closer matching of the payment and expenditure profiles, is needed while the industry matures to build resilience.

05 | Long-term maintenance, repair and safety
Many MMC manufacturers have invested time with the maintenance teams of their customers to explain procedures and costs and will be very willing to do so with less familiar developers, housebuilders and procuring authorities.
In reality, MMC manufacturers are able to provide significantly more information on their buildings than typically provided with a traditional build, as well as being better placed to enforce quality control and standards through factory build:
Manufacturers can produce a manual that contains the location of first fix utility installations such as pipes and wires, instructions for secondary trades to maintain building safety and longevity and instructions for future adaptations to tenants’ needs.
Digital twins may be provided for each building containing all information for future maintenance or adjustment works.
MMC buildings for social housing in European jurisdictions are typically given warranties for the same duration (often 60 years) as new traditional build homes. MMC delivers a more sustainable construction product, and in terms of durability, quality has been found to be easier to verify and monitor in an off-site environment using digital measurement. Certifications are frequently carried out by warranty providers both in the factory and following assembly onsite to ensure quality and safety are maintained.
Industry stakeholders’ lack of familiarity with the durability, safety and long-term maintenance requirements of MMC buildings can be addressed through detailed engagement sessions as well as through the provision of warranties.

To conclude
The challenge
Established design, procurement and oversight processes may need to flex
The potential benefit
Sustainable, flexible housing with a lower whole life cost, delivered at pace

With an appropriate procurement and planning process, MMC can be used efficiently and cost effectively to accelerate housing delivery at scale. Order visibility and scale will strengthen sector resilience; either through collaboration between procuring authorities to aggregate demand and/or through a bespoke procurement framework for a suite of preferred, planning-compliant designs. Additional volume benefits could be captured by extending such a framework to providers of student accommodation or keyworker housing, particularly near to critical facilities such as hospitals. Patient investment capital and working capital support, or more closely matched payment-cost profiles, will yield long term benefits for suppliers of quality MMC products and build confidence in the sector. And in terms of cost, there is a growing body of data being collected across jurisdictions to evidence the whole life energy and maintenance cost savings of MMC housing. Order volume and visibility will speed the journey to cost parity, and eventually advantage, on an upfront basis as well.
MMC is not simply for affordable and social tenures, and its adoption across the construction industry will benefit both workforce resilience – attracting a greater pool of labour to provide our homes – and the delivery of all housing types. The public sector lead on exemplar developments has the potential to encourage the private sector to ramp up adoption and bring about a much-needed step change in housing output. With a clearly visible pipeline of orders, procuring authorities and MMC manufacturers can collaborate to meet and future-proof housing needs.

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