MMC: What’s Next?   Tom Hedges April 16, 2024

MMC: What’s Next?  

In recent years, Modern Methods of Construction (MMC) has been hailed as a revolutionary approach to tackle the UK’s housing crisis, promising faster build times, improved quality, and enhanced sustainability.  

The allure of offsite manufacturing and assembly captured the imagination of policymakers, developers, and the public alike, positing MMC as the much-needed catalyst for innovation in the sector.  

However, the initial optimism has faced significant headwinds as numerous MMC companies in the UK have encountered financial instability or outright failure, casting a shadow over the sector’s purported potential. 

This article explores the current situation and what might happen next.  

What made MMC Popular?  

MMC is the result of many decades of innovation, evolving from pre-cast concrete to steel frames to the many techniques in use today, which include panellisation and 3D printing.   

Currently, 7% of construction projects in the UK have been delivered using MMC. While this doesn’t sound like much, Britain is actually a global leader in the sector. Homes England has pledged to use MMC for at least 25% of its projects and, despite the benefits below, the initial hype has not translated into any meaningful results, as we’ll soon discuss.  

The Benefits of MMC 

The following benefits are among the reasons the popularity of MMC surged:  

  • Efficiency and speed: MMC can significantly reduce construction time compared to conventional methods. The manufacturing of components or entire modules off-site streamlines production, and minimises potential delays caused by adverse weather.  
  • Less labour required: With a growing shortage of skilled labour in the construction industry, MMC offers a way to continue producing high-quality buildings with fewer on-site workers. 
  • Quality control: Factory environments allow for greater control over the manufacturing process, ensuring consistent quality and compliance with standards, which can be harder to achieve on a traditional construction site. 
  • Sustainability: MMC techniques often generate less waste and can incorporate materials and designs that improve the energy efficiency of buildings, aligning with growing environmental concerns and regulations. 
Where Did it All Go Wrong?  

The House of Lords Built Environment Committee established an inquiry into MMC after several major firms went under during 2022 and 2023. These companies were of the Category 1 MMC type – these are fully modular homes built in a factory, as opposed to Category 2 MMC which consists only of panellised systems. (Category 2 MMC has been performing better.) 

Ilke Homes and House by Urban Splash are two modular builders that went into administration in recent years, despite receiving significant investment from Homes England.  

Among the reasons property developers aren’t using MMC pertain to costs and issues with insurance and warranties. Some major housing associations have even stated that the reason they weren’t commissioning MMC developments was because the costs were up 50% higher. 

In addition, it can take a long time to obtain warranties, and insurers can be hesitant to accept compliance with building regulations as sufficient.  

Hesitancy from investors is another issue. This stems from the fact that MMC is still relatively new and therefore, lacks the standardisation of traditional construction methods.  

Findings from the Inquiry 

Highlights from the inquiry’s findings include the following: 

  • MMC is being used to successfully build housing abroad. In the UK, its use in the construction of non-residential and high-rise buildings, but it has failed to lead to the building of a meaningful numbers of homes. The Committee suggested that the government should ‘take a greater interest’ in successful overseas MMC projects.   
  • MMC has shown promise in terms of ensuring greater building sustainability. 
  • There is evidence that the UK government cannot achieve its housing targets without a significant contribution from the MMC sector.   
  • The government needs to develop a clearer strategy regarding MMC.  
  • There is contradictory evidence as to whether MMC homes are more expensive to build than traditional homes.  
  • The Affordable Homes Programme requires the use of MMC, but it has not been a strong enough incentive for the sector to gain much traction.  
  • A lack of data on MMC usage makes it difficult to measure progress. The Committee requested the government to release such data as soon as possible.  
  • Warranty and insurance providers should ‘act to compile and share the data they need’ and the government should make this expectation clear to the sector.  

While we’re on the topic of sharing data, Lord Moylan, Chair of the Committee, criticised  Homes England for not providing documentation on their strategy. They claimed it was spread over so many documents that it would be impossible to compile and share.  

The MMC Taskforce 

The MMC taskforce was established in 2021 to work on data and standards regarding the sector. Despite £10 million in investment at the outset, they have not met once. The Committee has called on the government to explain why the taskforce has been abandoned and how the funding has been used.  

What’s Next for MMC?  

Things may not look good for MMC, but it’s not a lost cause. And if the UK really does need it in order to meet its housebuilding targets, then one way or another, a solution is necessary.  

If the government takes heed of the Committee’s suggestions and clearer standards are finally developed, more investors may be willing to fund such projects.  

The Committee also stated that higher energy efficiency requirements could incentivise greater usage of Category 1 and 2 MMC. Considering the government’s sustainability targets, this prospect is promising.  

Conclusion  

The future of MMC in the UK’s housing sector is uncertain yet pivotal, and MMC remains a vital component in tackling the housing crisis.   

Notable setbacks have plagued prominent MMC companies, and it seems that we’re far from having a solution that will get things on track. The insights from the Built Environment Committee’s inquiry at least indicate some possible paths forward, such as establishing robust standards, which will increase investor confidence. The need for greater sustainability may also lead things in the right direction.  

Of course, a lot still remains unclear due to a lack of government data on progress and contradictory evidence about whether the costs are unfeasible compared to traditional construction methods. We’ll just have to wait and see what the government does with the Committee’s recommendations.  

In essence, while MMC has not been the silver bullet initially envisioned, it remains a critical component of the UK’s strategy to build greener, faster, and more efficiently, provided stakeholders collectively navigate the complexities ahead. 

At SDS, we provide market leading financial appraisal, housing project management and land valuation software. We also offer consultancy services to assist with appraisals, viability and more. To enquire or book a demo, contact us today.  

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