Increasing industry capacity and funding
Over the last few months there has been significant progress in advancing the use of modern methods of construction (MMC) in Australia. MMC ranges from products and kit-of-parts to prefabricated components to modular and volumetric buildings. This post looks at these developments and assesses the current use of MMC in Australia.
The post has three sections. The first is on the Commonwealth Government and national developments, covering the Australian Building Codes Board’s Prefabricated, Modular and Offsite Construction Handbook, the March budget and National Productivity Fund, the, the National Construction Industry Forum’s draft Blueprint for the Future, and the Commonwealth Bank of Australia’s MMC financing initiative.
Ther have also been developments around the states. NSW has a MMC Taskforce, in Queensland there was a change of government however no changes to the MMC policy have been announced. Western Australia is building industry capacity, and there have been deliveries of social housing in South Australia, Tasmania and Victorie.
Commonwealth Government and National Developments
ABCB Prefabricated, Modular and Offsite Construction Handbook
The Australian Building Codes Board (ABCB) is the agency responsible for the National Construction Code (NCC), and the WaterMark (plumbing) and CodeMark (product) Certification Schemes. The Handbook does not introduce any new standards, but ‘has been developed to increase the understanding and effectiveness of existing building standards and regulations’ and to answer ‘questions about determining evidence to support compliance and common NCC compliance risk areas.’
The Handbook published in December 2024 is not ‘a document that sets out specific compliance advice for developing solutions to comply with the requirements in the NCC.’ The emphasis is on Deemed-to-Satisfy (DTS) compliance when applying the NCC to residential buildings and shows:
1. How to determine the evidence required to demonstrate NCC compliance and fitness for purpose through documentation.
2. How to avoid common NCC compliance risks that affect MMC and other products.
The Handbook notes some products only require relatively simple evidence to demonstrate compliance. However, ‘complex products, including volumetric forms of construction may be subject to multiple NCC requirements and require extensive documentation to demonstrate compliance.’ Key points are
· Buildings using MMC, including prefabricated and modular buildings, are regulated in the same manner (except for plumbing products) as other construction products.
· There are 3 compliance pathways: DTS Solution, Performance Solution, or a combination of the two.
· The Handbook includes a 4-step approach to assist determining the evidence to demonstrate fitness for purpose and NCC compliance.
· Fitness for purpose is supported by evidence of suitability and construction/installation in an appropriate manner.
The Handbook does not address state and territory legislation covering planning, building and plumbing approvals, licensing, and mandatory inspections, and does not cover ‘the end-to-end process of the use of MMC … nor does it provide a how-to-construct or how-to-install manual for the thousands of products and MMC in use.’
Given the extent of what the Handbook does not include, how much of a contribution does it make to promoting MMC? First, it establishes the requirement to comply with current standards using the compliance pathways available, and the explanation of how to establish fitness for purpose is useful. Second, by discussing specific forms of MMC like precast, SIPs, wall panels, floor and roof systems and light gauge steel the Handbook is an important first step in determining evidence on compliance with the construction code.
March 2025 Commonwealth Budget
In the pre-election March budget the Albanese Government allocated $54 million to MMC, with $49.3 million to help states and territories develop programs to support MMC, and $4.7 million towards the voluntary certification process announced in November 2024. There are no details on what exactly this funding will cover, who will do it and how certification will be done, what might be in the MMC programs and whether they will be coordinated across the states is unknown, and approaches using volumetric, modular and kit-of-parts are not explained.
The budget allocation adds to funding in the $900 million National Productivity Fund announced in November by the Treasurer, which included an unspecified amount for removing barriers to MMC and improving development approval processes.
The Commonwealth also currently has two working groups, One is on MMC as part of a National Construction Strategy. The second is a Federal Treasury Workshop on Removing Barriers to MMC Finance. Ther are no reports from those groups available.
NCIF Blueprint for the Future of Construction
In March the National Construction Industry Forum released their draft Blueprint for the Future: A building and construction industry that works for everyone. The Forum is an advisory body under the Commonwealth Department of Employment and Workplace relations with 16 members from industry associations and unions and three ministers.
‘The Blueprint sets a path to address challenges and build a stronger construction industry. The NCIF identified eight themes, with associated challenges that included insights like contracts are unfair, procurement focuses on price, there are skills gaps, and under Financial Viability ‘Limited investment in innovation e.g. modern methods of construction, digitisation.’ This is the sole mention of MMC in a document called Blueprint for the Future. The following section on Opportunities includes contracts, security of payment, phoenixing and insolvencies, but not MMC.
Figure 1. NCIF themes
Source: NCIF Blueprint
The Blueprint is the latest in the long sequence of worthy, wordy, and optimistic documents that clearly explain the issues and problems, identify potential responses and remedies, and promote collaboration and cooperative tripartite solutions. How many of the 45 Opportunities it suggests exist will be realised is an open question, but the history of these proposals is not encouraging. For example, security of payment and the apprenticeship system have been reviewed and recommendations made but little has changed, phoenixing has not been addressed by ASIC for decades, proactive enforcement of regulations requires resources, and there have been numerous industry charters and codes of conduct. There is no commitment to any specific action by the members of the NCIF, and not recognising MMC (if done well) as a major element in future construction is a glaring oversight. The NCIF future looks very much like the present.
Commonwealth Bank MMC Financing
In January the Commonwealth Bank of Australia became the first bank to endorse MMC and provide financing, when CommBank announced a partnership with prefabAUS, and became the organisation’s first bank member. The bank agreed to sponsor the development of a standard form contract for MMC to simplify and speed up the process of financing a prefab home.
Limited to fixed price contracts for offsite work up to $1.5 million, CommBank offers construction financing while a prefab home is being built offsite, for the lowest of 120% of the land value or up to 60% of the contract price, or 150% and up to 80% from a manufacturer accredited by the bank. After final completion the home is inspected and the rest of the construction finance is released.
In October National Australia Bank announced $6 billion in funding for affordable and specialist housing by 2029, with modular construction playing a key role.
ABCB Building Product Registration Scheme Proposal
In September the ABCB opened public consultation for a month on a proposed risk-based Building Product Registration Scheme, aimed at addressing product conformity and traceability issues. Minimum standardised information for all building products would be required, with traceability through labelling and a national product register, compulsory registration of high-risk products, and voluntary registration for other products. It will take years for the scheme to be implemented. At the Offsite 2024 conference Gary Rake, the CEO of the ABCB, included the slide below.
Figure 2. Building Product Registration Scheme
Source: G. Rake Offsite 2024
On building products, in January 2025 the European Union’s Construction Products Regulation replaced the 2011 framework. This introduced Digital Product Passports (DPPs) to provide performance metrics, and compliance with sustainability and safety standards. For modular construction, DPPs presents significant opportunities because they enable tracking of prefabricated components through their lifecycle.
Around the States
New South Wales
In March 2025 the NSW government released its industry policy, covering housing, net zero and the energy transition, and local manufacturing, The policy links modular construction to increasing housing supply and affordability.
In August 2024 the Building Commission NSW released a position paper for consultation on Regulation of Prefabricated Buildings for a new building bill that would include MMC. The paper redefined prefabricated buildings as ‘building work’ not ‘building products’, and showed the stages in the delivery of a prefabricated building (Figure 1A), highlighted the role of the certifier and proposed consumer protections (Figure 1B). The draft of a new building bill has not yet been released.
Figure 3A. MMC stages
Figure 3B. MMC certification and consumer protection
Source: NSW MMC Position Paper
In the 2023-24 budget the Minns government committed $10 million for modular social housing trials. In July 2024 four sites in Port Macquarie and three in Wollongong were announced.
The Modern Methods of Construction Taskforce was established in November 2023 to investigate the ‘use and potential for off-site manufacturing in NSW Government housing projects.’ The Taskforce has met twice, with the last meeting in June 2024. Meeting notes are on the website.
In May 2024 the Homes NSW MMC Procurement list was opened for suppliers who provide off site manufacturing and prefabricated products. In March 2025 there were 28 suppliers on the list.
The Homes NSW MMC Program commenced in May 2024 as a partnership with the Building 4.0 Cooperative Research Centre (CRC) focused on developing strategies and methods to utilise MMC to deliver quality social housing faster. The Program aims to define products and components for design and construction of medium density homes (4-6 storey buildings) using a standardised kit-of-parts manufactured offsite (i.e. bathroom, kitchens, balconies).
NSW Department of Education 2024 Pattern Book set out standardised, repeatable designs for schools and preschools, and promotes modular and prefabricated construction for 3 storey new schools. Other school buildings including halls, COLAs, pre-schools, single and double storey buildings will be added to the 2025 Pattern Book.
Queensland
There was a change of government in October 2024 when the Crisafulli LNP replaced the Miles Labor government. So far there have been no changes to the MMC programs of Homes for Queenslanders or QBuild announced.
The Homes for Queenslanders policy aims to deliver 53,500 new social homes by 2046, The Miles Government June 2024 budget included $2.8 billion for up to 600 modular homes in 2024-25, with the goal of social housing production of 2,000 homes by 2027-28. There are 11 industry partners: Ausco, Fleetwood, Hutchies Modular, Modscape, Blok Modular, Eco Cottages, James Engineering, ModnPods, Saltair Modular, Volo Modular, and WestBuilt.
In February two modular homes were delivered to Thallon in South West Queensland, as part of the Quickstarts Queensland initiative, built by Oly Homes. By October 2024 Fleetwood had delivered 40 of 60 homes contracted. In September a Cairns project commenced for 490 homes built by Modscape and FCC Construction, funded by ANZ, Housing Australia and the Commonwealth and State Governments.
QBuild has three Rapid Accommodation and Apprentice Centres for MMC, in Brisbane at Eagle Farm and Zillmere, and Cairns. Qbuild has standardised floor plans for four house types: studio; 1 bedroom; 2 bedroom; and 3 bedroom.
Victoria
In December 2024 the Federal and Victorian governments announced joint funding for a $50 million Future of Housing Construction Centre of Excellence (FHC CoE) at Melbourne Polytechnic’s Heidelberg campus, the first training facility in Australia focused on MMC, expected to start in a temporary location in mid 2025.
In September 2024 the Victorian Prefabricated Construction Directory was published, with profiles of 24 firms using MMC in Victoria. All were manufacturers, eight firms coved all five capabilities of architecture, assembly, engineering, manufacturing and project management.
Western Australia
Before the March election the Cook Government said If re-elected it will commit $50 million to boost modular and prefabricated housing. The Housing Innovation Program will provide competitive grants of up to $3 million for WA-based businesses involved in modular or prefabricated housing.
In addition to grants, the government will allocate $20 million in low-interest loans to help businesses adopt new technologies and expand their operations. Opportunities identified include automation in steel frame and concrete slab manufacturing, enhanced wall and ceiling construction processes, and expanded capacity for window, door, and cabinetry production. There is already an $80 million allocation for transportable classrooms by 2026.
In February 2025,16 modular tiny homes for Geraldton were commissioned from Summit Modular for delivery in mid-2025. In January three new modular homes in Manjimup were delivered by Fleetwood.
In October 2024 eight two-bedroom modular social homes in were completed, built by Murray River North and Modularis. In September the Federal and WA Governments provided $6.3 million for 12 social modular homes built by Dale Alcock Homes in Perth. In August Sheraton College opened a modular two storey building from Ausco Modular.
South Australia
In March Renewal SA’s Office for Regional Housing began a pilot program of six homes, expected to be completed by September 2025, constructed using SipForm structural insulated panels (SIPs), a prefabricated building system manufactured in Perth.
Tasmania
In February six new modular units were installed in Burnie, built offsite by Podmatrix. The government has a target of ‘more than 200’ modular homes over the next four years.
The Chandler Critique
David Chandler became the inaugural NSW Building Commissioner in 2019 after the Mascot Towers building failure highlighted the extent of building defects and non-compliance with the NCC. He was responsible for implementing the NSW construction reform strategy, establishing the Building Commission with 400 inspectors, introduced the iCIRT ratings scheme for developers and contractors, and decennial liability insurance for apartment buildings. By the time he stepped down in 2024, his focus on consumers and compliance had begun restoring public confidence in new housing.
Soon after finishing as Building Commissioner, he gave a presentation on MMC at the Offsite 2024 Conference. His concern was that ‘An unregulated MMC market could introduce a new cohort of modular building defects.’ Chandler has supported MMC for many years, for example he was involved in setting up the Centre for Smart Modern Construction at the University of Western Sydney in 2017. However, in his presentation he argued there are unresolved issues with MMC, such as integration of components, fire and water management, training and qualifications of workers, compliance of offshore suppliers and quality of components. He emphasised the lack of performance measures and data on MMC. The slide below is from the presentation with a list of issues that he believes need to be addressed.
Figure 4. Chandler MMC issues
Source: D. Chandler Offsite 2024
Since then he has frequently posted on LinkedIn about his concerns with MMC and its focus on producers rather than consumers. A lightly edited version of his post in response to the announcement of the CommBank financing of MMC is below:
‘Funding for prefab leaves many questions unanswered. Bringing Prefab Housing into the mainstream construction domain has been the quest of many for nearly 2 decades in Australia. Despite government endorsement, research grants, policy announcements and uptake by social housing organisations, there is still no clear regulatory or legal framework for this procurement method.
The first question deals with what building contracts are proposed to be covered by the prefab off-site payment arrangement? Who are the parties to these transactions. Will the home purchaser be required to authorise these payments? Will the home purchaser be protected by a Home Building Insurance Scheme if the builder of record has engaged or has been given permission by the home purchaser to procure between 60 to 80 percent of the build cost by way of prefab. Will the builder of record (which may include a licensed prefabricator) be satisfied that the on-site components of the work are adequately provided for? How might unforeseen variations be dealt with, especially with high LVR loans.
What criteria will CBA deploy to distinguish an accredited v unaccredited player? Will off-shore prefabricators be included in the mix? What happens if the prefab provider goes broke before the house is completed? There could be the discovery of building non-compliances post the occupancy of substantially prefab buildings. There could be a mixture where both on-site and off-site inputs give rise to a serious defect. What then?
There is a need for a full disclosure about all these issues, not just in the lender's interests, but more importantly for the borrowers. I am a proponent of modernising Australia's construction industry including the embrace of MMC. This evolution must start out as customer facing, or it runs the risk of undermining years of good work … unless consumers, compliance and public confidence become the centrepiece of these conversations, they are bound to end in tears.’
In a September 2024 interview Chandler argued for single-point accountability, ensuring one entity is responsible for the entire project, from design and manufacturing to onsite assembly, to create clear lines of responsibility and reduce the chaos caused by fragmented accountability.
Conclusion
In April 2025, what progress has been made in the promotion of MMC in Australia over the last year or so? One positive development was the Commonwealth Bank agreeing to provide mortgage finance for prefabricated houses. Another was the ABCB Prefabricated, Modular and Offsite Construction Handbook on determining evidence on MMC compliance with the construction code, a first step in the long process to arrive at a set of standards for MMC and a product compliance regime with digital product passports in Australia. There was also an unspecified amount for removing barriers to MMC and improving development approval processes in the National Productivity Fund announced in November.
Funding of $160 million for industry development is promised from governments. There is $50 million on offer from both the Albanese Commonwealth Government (if re-elected in May) and from the recently re-elected Cook Government in Western Australia, and $10 million from the Minns Government in NSW for social housing trials. The Federal and Victorian governments are funding a $50 million Future of Housing Construction Centre of Excellence in Melbourne.
In Queensland QBuild has three MMC centres operating and the Homes for Queenslanders program is still running, which will deliver possibly hundreds of prefabricated houses this year. Western Australia is building capacity and has delivered several projects over the last year. NSW, South Australia, Tasmania and Victoria have small scale prefabricated social housing programs. There continues to be demand for institutional buildings like schools and hospitals, particularly for regional and remote locations. All this adds up to steady if not spectacular production of MMC buildings for the public sector. However, the number and value of private sector deliveries of prefabricated buildings is unknown, as is the extent of prefabrication
NSW established a MMC Taskforce and in mid-2024 released a position paper for consultation on Regulation of Prefabricated Buildings for a new building bill that would include MMC. The paper redefined prefabricated buildings as ‘building work’ not ‘building products.’ The 2024 Homes NSW MMC Program is a partnership with the Building 4.0 Cooperative Research Centre on developing strategies and methods to utilise MMC to deliver social housing. The 2025 industry policy linked modular construction to increasing housing supply and affordability.
Therefore, on the one hand, there is currently substantial funding on offer for industry development from the Commonwealth and three state governments, and there continues to be institutional buildings and prefabricated social housing in regional areas delivered. On the other hand, when and what that funding will actually be used for is still unclear, and prefabrication is still reliant on public sector clients. There are also many unresolved issues with MMC, such as certification and product compliance, the regulatory and legal framework (which is what the funding seems to be directed at), the lack of standards and slow progress on updating the National Construction Code.
