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Construction Costs Set to Drop by a Third

Construction Costs Set to Drop by a Third
02 December 2021 | Updated 30 November 2021
 

New reports show that costs associated with modern methods of construction could fall by a third as demand in the sector grows.

Constructing Excellence, a not-for-profit construction membership organisation, revealed the report at its annual conference.

The report says that modern methods of construction (MMC) costs are currently around £3,000 per m2, owing to typically small volumes and short pipelines for manufacturers.

However, as manufacturers scale up and pipelines lengthen, it concludes that costs could fall to around £2,000 per m2.

The report also found that the average build is 72 weeks for a house built using MMC compared to 112 weeks for one built using traditional methods. This includes all stages of the build process, from pre-construction design to fit out.

The report was produced in collaboration with Building Research Establishment (BRE), Rider Levett Bucknall (RLB) and Bristol City Council.

 

"It is clear that the prominence of MMC is growing, accelerated by the growing need to rethink our approach to construction to meet pressing delivery challenges. However my view is that if we are going to truly advance the adoption of MMC and make it mainstream, we need to develop a much more tangible benefits case based on real data and evidence, not just warm words and positive sentiment."

–Alison Nicholl

Head of Constructing Excellence

 

KPIs for Modern Methods of Construction

 

The report, produced in collaboration with Building Research Establishment (BRE), Rider Levett Bucknall (RLB) and Bristol City Council also looked at KPIs for MMC - which have previously been unavailable - and how to benchmark these against existing housing delivery models, to quantify the benefits of MMC.

The KPIs by BRE identified include cost, time, quality, health and safety, labour requirements, environmental impacts, and local disruption.

As a follow-up to this report, Constructing Excellence is now planning to convene an MMC Group which will enable it to take ownership of gathering and measuring this KPI data across manufacturers and builds to drive further development in the sector.

Alison Nicholl, Head of Constructing Excellence, commented: "It is clear that the prominence of MMC is growing, accelerated by the growing need to rethink our approach to construction to meet pressing delivery challenges. However, my view is that if we are going to truly advance the adoption of MMC and make it mainstream, we need to develop a much more tangible benefits case based on real data and evidence, not just warm words and positive sentiment.

"What is already clear from this research is that delivery speed and qualitative benefits of MMC use are compelling which in turn leads to wider linked economic and societal benefits."

Richard Quarry, Partner and Head of Affordable Housing at Rider Levett Bucknall, said: "As we see MMC now becoming embedded within the residential sector, especially for our affordable housing clients, this report is extremely timely.  As well as demonstrating the benefits through time savings and build-quality improvements and addressing site labour shortages, focusing conversations around data capture and a rounded set of KPIs to quantify benefits will help to embed processes and drive further adoption."

When used appropriately, MMC has the potential to improve resource efficiency, build quality, environmental performance, and the predictability of delivery timescales. However, traditionally KPIs for MMC have been difficult to measure due to a lack of or limited data available on the impacts of this method of construction.

As a result, only 15,000 homes are currently factory-made each year, compared to the government's annual target of 300,000. It is estimated that around 3.9 million homes are required to meet current and future levels of demand; however, the consensus is that construction targets cannot be met without the extensive use of MMC.

Picture: a photograph of a person wearing a hard hat and speaking on a portable radio system

Article written by Ella Tansley | Published 02 December 2021

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