Why Do We Build So Wastefully?

In today’s construction climate, where cost and sustainability have huge implications for developers and contractors, Martin Goss of Offsite specialists Mtech Consult considers the stark realities of traditional methods vs the advantages of eco-modular building and asks “Is it time to change the way we construct our homes?”

The coalition government has promised to complete its review of funding for affordable housing by October; until then, Housing Associations, Local Authorities and the affordable housing supply chain are forced to sit it out. Whilst there is any number of permutations the government could consider, we have to accept there simply isn’t the money to fund affordable housing in the way it has been through the National Affordable Housing Programme.

Over the last 8 years or so, we have become accustomed to building affordable housing with government subsidies equating in many cases to over 50% of the build cost. Whether this has led the industry to be profligate or, at the very least, less efficient than we should have been, is open to debate. However, it’s clear we need to take a long, hard look at what we do and how we can improve.

Cost Reduction is King!

We may have to build with less grant money, or... at the risk of being controversial... consider the feasibility of building without grant aid at all.

This may sound too revolutionary for traditional contractors used to a build cost in the region of £100k per dwelling. And I do recognise this cost has come down, but that’s been achieved by reducing their margins or those of their sub-contractors, which in turn has reduced labour rates. We all know these are temporary reductions; once there is an upturn in the economy, wages and margins will return to pre-recessionary levels, possibly even higher as the skills shortage starts to bite.

If we are really to deliver affordable homes at zero grant funding then we need to build at around £50k per dwelling, equating to the 30 year capitalisation on minimum social rents. Many in the industry will consider this unachievable. Yet from research Mtech Consult has undertaken over the past few years there is perhaps a different story to tell.

We have looked at the cost base of other industrialised sectors, such as automotive and consumer goods, and compared this with the non-industrialised house building sector. Some interesting figures have emerged!

• In manufacturing a consumer product, materials typically account for 60% to 70% of the ex-factory cost, with the remainder roughly equally split between labour and contribution (overhead and profit).
• In the affordable housing sector, typical material cost of an average 3B5P home is less than £13k; just 16% or so of the delivered cost of the building.

Even allowing for the high labour cost of constructing onsite rather than in a factory environment... government figures show an onsite operative is just 1/3 as efficient as an operative in a factory... it still leaves an enormous gap.

It is the size of this gap between traditional construction and conventional industrialised processes that demonstrates the potential for modular, factory built systems to deliver affordable homes, grant free.

So why are we still using such outmoded and inefficient build techniques?

Modular, Eco and Economical too!

Compared to factory built modular homes, traditional build is proven to be a very poor use of resources. Research has identified 68 different trade or profession interfaces required to deliver a single affordable home. Not a particularly efficient or simple process then? And one also shown to be typically less economical, less environmentally friendly and more time consuming than Offsite construction... so far less sustainable in the broadest sense of the word.

Factory based modular construction combines the efficiencies and cost savings of repeatable, controllable production processes with a truly sustainable approach – not just the add-ons such as PV panels, rainwater harvesting and the like (although these are much easier to incorporate in a factory build than onsite) – but a complete cradle-to-grave sustainability encompassing the materials used, manufacturing techniques employed, onsite activities, in-life performance and end-of-life disposal.

Eco-modular construction, embedding true cost-down rather than the temporary blip of slashed margins and wage rates, is the sustainable way to build the large number of houses we now need. As the UK’s leading specialist Offsite consultancy, we are all too aware that previous attempts at industrialising housing did not prove entirely successful. In many instances the failures can be attributed to a resistance to change, but today’s radically different financial scenario is without precedent... we have no option but to change!

Offsite manufacturing has innovated and moved on; Offsite systems are in mainstream use throughout the construction sector, delivering quality buildings with the individuality and local vernacular we all crave. So, if industrialisation has reduced the cost of delivery for other consumer goods sectors, then why shouldn’t it work, at least to some extent, for the affordable housing sector?

And why wouldn’t the speculative, private development sector follow suit?