The cost-benefit argument for OSC appears to have gone largely unmade.
Government pressure and coercion to adopt off-site construction and other forms of innovation has never been greater. The recent Design for Manufacture competition launched by English Partnerships has at its heart a clear aim to change the way housing is built by using new techniques and processes.
The Housing Corporation has also been instrumental in forcing through its innovation agenda in the affordable housing sector, demanding and promoting the use of off-site construction as a pre-requisite of public funding for developer housing associations.
The thinking behind this almost evangelical approach to industry transformation appears to be the belief that we lag behind our European counterparts in terms of delivery efficiency and product performance. And, so the thinking goes, if we can adopt manufacturing techniques and procedures, the industry will improve and give the customer or user more value for their investment. Given that this country spends in excess of £100bn on construction and refurbishment each year, perhaps this is not an unreasonable objective.
However, there is a lack of certainty that this approach is having the desired effect. Has construction productivity really improved as a result of implementing the off-site construction philosophy? Do we build better buildings more cost-effectively with these new factory-based techniques?
The cost-benefit argument appears to have gone largely unanswered, despite the welcome efforts in providing data by organisations such as Davis Langdon, Imperial College and Loughborough University. So far there has been great debate over the cost credentials of these new technologies and techniques, but very little independent and reliable research into generating the cost evidence necessary to verify the case for adopting these new technologies.
Suppliers and manufacturers have perhaps been slow in promoting their collective technology by making certain the cost benefits are understood by those in the industry who make the key business decisions on the choice of build method.
However the ODPM and English Partnerships have commissioned the National Audit Office to undertake a formal investigation into the cost implications of modern methods of construction in housing, to establish the cost benefits and issues raised by adopting these techniques.
Supported by MMC specialists, Mtech Group, and with assistance from Building Cost Information Service (part of RICS) and Salford University, the NAO has gathered cost and programme data from all construction sectors to establish the cost performance and process implications of using mainstream MMC techniques.
The NAO will publish the results of this wide-ranging investigation soon and it is expected to show that while the use of MMC may increase the initial capital purchase cost, the impact on the overall development cost can be very positive. Indeed, the study is believed to have established that if macro costs are included, such as early revenue streams and through-life performance, the cost advantage of many MMC technologies becomes even more significant.
It is hoped this NAO study will shed new and perhaps more informed advice on the anticipated outturn cost performance when building with MMC technologies. Perhaps more significantly the report is likely to identify the impact of the build process on the overall cost of construction projects. Previous studies by Salford University have identified the dependence of process and process control on the efficiency performance of the build programme.
Mtech Group has carried out many cost-analysis studies involving the use of off-site construction techniques. What has been most revealing is that in most cases the decision on whether to use MMC is typically based on applying simple substitutions in the cost plan. This approach invariably generates a cost plan that includes the increased capital cost of the MMC components or pre-assemblies and ignores any of the potential process benefits, and hence cost benefits, that should be achieved using these alternative methods of build.
This approach to cost planning, where it is assumed that all the design and construction processes will remain the same (traditional) irrespective of the build techniques being used, will always show that MMC is more expensive than the traditional site-based construction. And the way we typically record costs on construction projects means that we generally have little opportunity to prove any different at the end of the construction activity.
Our experience is that off-site construction techniques are more than simply substituting one product or build technology for another. Ideally OSC should be seen as the means of liberating the construction process, enabling buildings to be assembled in a wholly different manner, with controls over the process and the on-site activities that cannot easily be delivered with the traditional, all site-based method.
We eagerly await the NAO report, and hope that it focuses the industry on where costs are really incurred in the construction process, and how we can radically improve the long-term productivity of our industry.
Martin Goss is technical director at the Mtech Group.