UK MMC and Manufactured Housing Failures

How not to promote Modern Methods of Construction 

In Australia, Canada, the UK and parts of the US there are problems associated with low levels of new house construction, high prices, rising rents and decreasing affordability. Although modern methods of construction (MMC) cannot solve these problems on its own, it could make a significant contribution if restrictions on its use were relaxed, and governments developed effective policies to expand the market and promote its use. 

 

The UK Government has been a leading producer of industry policies for construction since the 2011 launch of the construction industry strategy, with an updated version following in 2016. Some parts of the strategy have been successful, developing the BIM Framework and BS 19650 standards and increasing the use of BIM with a public sector mandate (discussed in a previous post here) in particular. Also, between 2019 and 2022 the Transforming Construction Challenge completed 68 projects.

 

In contrast, the UK policy to promote manufactured affordable housing has been a notable failure. Over 2022-23 MMC companies that collapsed were Ilke, House by Urban Splash and Modulous, and L&G closed its housing factory (in image above). In late 2023 the UK House of Lords Built Environment Committee started an inquiry into manufactured housing, and this post is based on the report from the inquiry and transcripts of evidence given. The report (in the form of a letter to the Secretary of State for Levelling Up, Housing and Communities) provides some insight into an agency that has not published any data on the twin policy objectives of increased supply of affordable housing and increased use of MMC. 

 

Background

 

In 2017 the Government committed to increased housing supply using MMC by supporting the growth of the industry. MMC describes a wide range of non-traditional building systems and in the UK is divided into seven categories, from completely built offsite (Category 1) to completely built onsite with some automation (Categories 6 and 7). The policy to promote MMC was supported by the Construction Innovation Hub and the Advanced Industrialised Methods for the Construction of Homes (AIMCH) project, which both ran for three years over 2020-22 funded by UK Research and Innovation through the Industrial Strategy Challenge Fund.

 

The agency responsible for increasing use of MMC was Homes England, established in 2018 to fund new affordable housing (replacing the Homes and Communities Agency set up in 2008). The Strategic Plan 2018-23 described Homes England as ‘a new non-departmental public body, sponsored by the Ministry of Housing, Communities and Local Government … to accelerate the delivery of housing across England, except in London’ and explained ‘Our mission is to intervene in the market to ensure more homes are built in areas of greatest need, to improve affordability. We’ll make this sustainable by creating a more resilient and diverse housing market.’ There were six objectives in the Strategic Plan, the third of which was to improve construction productivity by supporting MMC:

 

We must embrace change to improve productivity and reduce the impact of the declining workforce. MMC has the potential to be significantly more productive than traditional methods of construction and greatly increase the pace of delivery. It can also improve the quality of construction, address labour and materials shortages and deliver a number of additional benefits such as improved energy efficiency and health and safety. As a result, developers are already introducing MMC. However, the MMC industry is currently immature with limited production capacity and supply chains. It requires stimulus if it is to evolve further.

 

We will support the uptake and development of MMC through a range of interventions. We’ll incorporate MMC into our building lease disposals to demonstrate a range of MMC products by supporting pilot projects on Homes England land. We’ll also encourage partners to use MMC through our provision of development finance to developers. Our Local Authority Accelerated Construction programme will also encourage more widespread use of MMC to help increase the speed of construction and build out.

 

 

Inquiry Report

 

After the collapse and closure of the two major Category 1 MMC businesses, Ilke Homes and House by Urban Splash, in late 2023 the UK House of Lords Built Environment Committee started an inquiry into MMC in housing ‘to explore the potential reasons for these failures, especially considering the support provided by the Government to the industry.’ 

 

The inquiry made some pointed observations. Homes England could not provide data on the extent of MMC across its portfolio, despite that being its measure of success, and has not developed an evidence base or published research on MMC as promised. An MMC Taskforce, which was expected to work on data and standards, has never met. Some key points from the report were:

 

‘we have been told … Category 1 housing is, or could be, more expensive than homes built using traditional construction methods … we heard that MMC homes are cheaper. These two statements cannot both be true’ (p. 3).

 

‘We have limited confidence that a coherent plan to encourage the use of MMC is in place and, owing to the absence of its publication, have found it challenging to scrutinise the Governments activity and spending’ (p. 4) 

 

‘It remains unclear both how Homes England is assuring itself that Affordable Homes Programme (AHP) providers in receipt of grant are meeting the pre-manufactured value (PMV) requirements and when this data will be published’ (p. 7). PMV measures how much of a project’s gross construction cost is derived from pre-manufacturing with all seven MMC categories contributing to a higher PMV. 

 

‘The current approach taken through the AHP does not stipulate the use of Category 1 and 2 MMC. The requirement for 55 per cent of the PMV of the home to be MMC allows many housing associations to use MMC from Categories 3 to 7 … the majority of MMC delivery has a low pre-manufactured value’ (p. 8)

 

‘We were particularly disappointed by the attitude of insurance providers and the warranty providers towards MMC. The extensive time periods it can take to obtain warranties and the reticence of insurance providers to accept compliance with building regulations as sufficient is having a detrimental impact on the delivery of MMC homes’ (p. 13).

 

'Homes England made significant investments from the £4.5 billion 2015 Home Building Fund which directly supported Ilke Homes (£60mn) and House by Urban Splash (debt facility of £26.9mn and equity of £3.1mn). Homes England expects limited recovery of its investment into Ilke Homes and full recovery of its loan to House by Urban Splash, though not the equity’ …  'it is still unclear why Homes England chose these two companies and what its selection criteria and objectives were’ (p. 15).

 

‘It is also unclear why the Government is not allowing experienced international MMC companies to apply for procurement processes and stipulations. Volumetric MMC housing is successfully delivered in other countries. The Government should ensure that its procurement practices do not limit the ability of successful MMC companies from around the world in moving into the UK market’ (p. 16).

 

‘we came away from our inquiry with the impression that the Government had too easily accepted that undirected and nonstrategic investment of public money was the obvious way of providing this assistance. We say that because the Government has not set out clear objectives for the investments and funding it provided. Nor did Homes England give us any clear metrics as to how success (however defined) was to be measured and over what timescale’ (p. 18).

 

The report also pointed out that ‘MMC has been commercially successful in other sectors and blocks of flats, as illustrated by build to rent and student housing’ (p. 3). In evidence given by industry to the inquiry affordable housing is not a viable market segment for MMC because traditional methods are cheaper in some parts of the country and volume manufacturing requires an  sustained high level of demand, so for the failed companies the ‘level of investment expended relative to the demand was the fundamental flaw’. Examples given of successful MMC projects in the UK were medium and high-rise buildings, hospitals, prisons, detention centres and defence housing. 

 

Conclusion

 

What does this tell us about Homes England’s MMC policy and implementation? There are a few basic principles for industry policy. The first is to be technology agnostic, meaning the funding should be allocated on the basis of meeting the policy objectives, not on the basis of a preferred technological solution. In this case there was no good reason to prefer Category I MMC builders over Categories 2 – 5, and there was no evidence that the final cost of Category I volumetric buildings were cheaper that alternative MMC builds. 

 

The second basic principle is to avoid picking winners. If funding is to be provided it should be available to any firm that can meet the criteria set and policy objectives. Making equity investments in firms, as Homes England did, is not appropriate and has a long history of failure. Typically, industry policy funding is through either credit support or incentives, rarely a combination of both, as many studies of policies in different countries for specific industries have shown.

 

Finally, industry policy funding will be most effective when used to stimulate demand. Homes England contracted a total of £137mn to local authorities to deliver 9,969 homes using MMC in Categories 1 to 5, although the inquiry was unable to establish how many had been delivered. The Affordable Homes Programme made funding available to housing associations using MMC through strategic partnerships, long-term deals under which partners must build at least 1,500 homes and deliver 25 per cent of those homes using MMC. However, the inquiry found the majority of AHP houses had a low PMV with a lot due to Categories 6 and 7. Here the objective of increasing offsite manufacturing was undermined by accepting onsite work as MMC. 

 

UK manufactured housing provides a good example of how not to do industry policy for construction. The ‘undirected and nonstrategic investment of public money’ was both wasteful and probably ineffective (given the lack of data on outcomes). Homes England did not develop standards or provide data that would have encouraged insurance and warranty providers to support MMC, and excluded international firms with experience with MMC from entering the market that could ‘help improve the maturity of the market, and provide the data and evidence called for by warranty and insurance providers’. 

 

The concluding paragraph of the inquiry’s report pointed to the complex interplay of factors involved in unblocking supply of housing in general and increased use of MMC in particular:

 

It is possible that real barriers exist in the form of resistance by planning officers and undue risk aversion on the part of warranty providers, insurance companies and banks. Our short inquiry did not establish clear evidence to make that case, but we believe the Government should look more carefully at how these parts of the housebuilding ecology are working, as well as taking a greater interest in overseas examples of success with modular construction. 

 

This situation is not unique to the UK. Australia, Canada and parts of the US all have similar problems associated with low levels of new house construction, high prices, rising rents and decreasing affordability. Although MMC cannot solve these problems on its own, it could make a significant contribution if restrictions on its use were relaxed. Demonstration sites where examples of modular building are on show could be established. Some publicly owned sites could be recycled and reserved for modular buildings to create a market. An independent agency could collect data on costs and performance. Lending and valuation guidelines could incorporate energy savings from modular buildings. Local governments could be given incentives for allowing new modular buildings and/or extensions to existing houses. Social housing could be required to use MMC. A levy on embodied carbon in building materials would favour modular building, which typically has less waste and lower use of cement and concrete. 

 

MMC is not only Category 1 3D buildings. It includes panellised and structural systems, pre-assembled floor and wall cassettes, kitchen and bathroom pods, and manufactured components such as facades and windows. Many of these are already widely used outside residential construction, and given the opportunity can be used to increase the supply of new housing that is so urgently needed in many places. The focus in the UK on failures of manufacturers of single houses has obscured the success of MMC in medium and high-rise residential buildings and for a wide range of commercial and institutional buildings. 

 

 

Note. Homes England lost another £9mn invested in Stewart Milne, a house builder that failed in January. 

 

 See also https://gerard-de-valence.blogspot.com/2022/09/comparisons-of-construction-to.html 

3D Concrete Printing and Digital Construction

 Onsite and Nearsite Production

 

There are three methods for 3D printing: stereolithography, patented in 1986: fused deposition modelling, patented in 1989: and selective laser sintering, patented in 1992. It didn’t take long before research into 3D concrete printing (3DCP) began, focused on developing the equipment needed and the performance of the materials used. Twenty years later there were over a dozen experimental prototypes built, extensively documented in the 2019 book 3D Concrete Printing Technology: Construction and building applications, which also has details on the materials science required to identify successful mixtures and admixtures. The information needed to create a 3D blueprint is generated during design, and it is a relatively small step to move from a BIM model to instructions for a 3D printer.

 

By 2022 the commercialisation of 3DCP was underway, with two types of systems available. One using a robotic arm to move the print head over a small area, intended to produce structural elements and precast components, the other a gantry system for printing large components, walls and structures. The Additive Manufacturing Marketplace has 34 concrete printing machines listed, ranging from desktop printers to large track mounted gantry systems that can print three or four story buildings. Companies making these machines are mainly from the US and Europe, and the table also has details on the type and size of a selection of machines. There are also several companies offering 3DCP as a service at an hourly or daily rate.

 

One of the most advanced 3DCP companies is Black Buffalo, a subsidiary of South Korea’s Hyundai group based in New York. Their NexCon gantry system takes around 11 hours to build and eight hours to take down. Using a proprietary ink developed over a few years of research involving a lot of trial and error (and getting approval for building codes), the machine can print up to four stories with a crew of five people. One person is required to monitor the nozzle and insert stiffening frames every few layers to provide structural strength, the pump needs two people and a helper, plus a site foreman or engineer. As well as walls it will print floors and precast elements. Black Buffalo expects to sell over 100 of these printers in 2022-23, and they are available for rent at $1,000 a day. 

Some companies making 3D concrete printers

Company	Machine and Sizemeters	Type	Cost in US Dollars
Black Buffalo United States	NexCon 1-1   3 story                        4 story	Gantry	$400,000 $750,000
COBOD Denmark	Bod 2 14.6 x 50.5 x 8.1	Gantry	$200,000 to $1m
Imprimere Switzerland	BIG 3D 5.7 x 6.0 x 6.2	Gantry. Prints large components	$1,757,000
ICON United States	Olympus 2.6 x 8.5 x 2.6	Gantry	$150,000
Constructions 3D France	Maxi Printer 12.2 x 12.2 x 7	Mobile robotic arm on 4 legs	$495,000
Luyten Australia	Platypus  6 x 12 x …	Gantry	$36,000
PrintStones Austria	Baubot	Mobile robotic arm on tracks	$150,000
Massive Dimension United States	MDPC 2 x 2 x 2	Fixed robotic arm	$80,000
CyBe Construction Netherlands	CyBe RC 3Dp 2.75 x 2.75 x 2.75	Fixed robotic arm	$205,000
MudBots United States	MudBot 3D Up to 22 x 22 x 15	Gantry	$35,000+
WASP Italy	DeltaWASP 1 x 1 x …	Robotic arm	$100,000+

 

Concrete printing is only one part of the development of additive manufacturing. In mid-2022 the Additive Manufacturing Marketplace listed 2,372 different 3D printing machines from 1,254 brands. The number of printers and materials used were: 364 metal; 355 photopolymers; 74 ceramic; 61 organic; 34 concrete; 24 clay; 20 silicone; 19 wax; and 19 continuous fibres. Many of these printers could be used to produce fixtures and fittings for buildings. Producing components onsite from bags of mixture avoids the cost of handling and transport, and for large items avoids the load limits on roads and trucks. There are also printing services and additive manufacturing marketplaces being set up. These link designers to producers with the materials science, specialised equipment and print farms capable of large production runs and manufacture on demand. Examples are Dassault Systems 3DExperience, Craft Cloud, Xometry, Shapeways, 3D Metalforge, Stratasys and Materialise. 

 

Additive manufacturing is a major part of a broader system of production known as digital fabrication. Neil Gershenfeld described digital fabrication as turning ‘bits into atoms and atoms into bits’ using fabrication laboratories (fabs) producing ‘assemblers’ that provide the cutters, printers, millers, moulders, scanners and computers needed for designing, producing and reproducing objects. These tools include traditional subtractive ones for cutting, grinding or milling, but the focus has been on research into new methods of additive manufacturing using different methods of layering materials using 3D printers. Printing of metal, ceramic and plastic objects from online design databases is spreading from hobbyists and initial users to industry applications and wider acceptance. Gershenfeld, who founded the first fab in 2003, defined digital fabrication, as ‘the seamless conversion of design and engineering data into fabrication code for digitally controlled tools.’ 

 

At is broadest, digital fabrication is any means of turning design information into physical products using automated processes. There is a well-established global maker movement behind the growth of digital fabrication. In 2009 the Fab Foundation was established at MIT as a non-profit with annual conferences and providing educations and training. The Foundation coordinates an international network of 1,500 fabrication laboratories (fabs) in 90 countries, many in university design and architecture schools, and the ‘FABLAB Movement’ is an even broader collaborative effort that includes hobbyists and tinkerers working on digital design and fabrication code. This network takes existing technologies used in fabrication like cutting, milling and rolling done by numerically controlled machines, which have been around for decades, but uses them for design, which is new. The digital linking of design to fabrication is the beginning of another stage of development. The World Economic Forum also has a network of 14 Centres for the Fourth Industrial Revolution, and Autodesk has three BUILDSpace laboratories. The 2017 UK industrial strategy included funding for a manufacturing hub and along with aerospace and automobiles targeted construction, 3D concrete printing and OSM. 

 

Gershenfeld argues digital fabrication will follow a similar exponential development path as digital computers, with the number of fabs doubling every two years and their cost halving, making local production of many objects and items possible. Gershenfeld suggests the technology is now ready to become widespread, and is at a similar stage to PCs in the early 1990s:

Digital fabrication shares some, but not all, of the attributes of communication and computation. In the first two digital revolutions bits changed atoms indirectly (by creating new capabilities and behaviours); in the third digital revolution, the bits will enable people to directly change the atoms …. Across the global network of fab labs, we can already see a steady stream of innovations around cost-effective models for individuals and communities to make clothing, toys, computers and even houses through designs sourced globally but fabricated locally.

 

Digital fabrication is at or close to the tipping point, as its use extends from hobby to experimentation and adoption. Just as concrete in the early 1800s moved from the fringe toward the centre of construction as the underlying technology and equipment improved, fabs can follow a similar path over the next few decades of the twenty-first century. Although adoption is limited and is not deployed at scale, the technology is advancing rapidly and many demonstration 3D concrete printing projects have been completed successfully. In a 2020 report that has many examples of current use, ARUP argues: ‘The opportunities unfolding with digital fabrication not only demonstrate new techniques in full-scale pavilion fabrication, but also provide new methods to solve design, business and societal challenges.  Arup is one of a number of specialized consultants providing digital twins and design to fabrication capability on projects. 

 

 

Onsite and Nearsite Production with Digital Fabrication

 

Digital fabrication is a technology whose use has a high probability of becoming ubiquitous. In construction, the focus so far has been on 3D printing of concrete, with experimental systems by the early 2000s, and by 2019 there were over a dozen examples of buildings completed using the technology.[i] However, the potential of 3D printing in construction is not limited to concrete. Once a BIM model of a project has been created it can be used to provide instructions for production of both structural and decorative components of a building. Mobile digital fabs in shipping containers can produce some of those components onsite. Local firms offering manufacturing on demand from print farms can produce large runs or specialised components, a nearsite form of production rather than OSM. 

 

The combination of digital twins and digital fabrication would be transformational if it allows onsite and nearsite production of some or many building components, by fundamentally altering existing economies of scale in the industry. As well as 3D concrete printing, other materials like steel and plastic can be used to make components and fittings on or near the building site. A modular fab in a container customised for construction, or even a specific construction project, can be set up onsite to produce components as the schedule requires. Large sites might need a fleet of fabs. Restorations and repairs can be done with replacement parts made onsite from scans of the original. 

 

Mass production will always have a role, but market niches currently occupied by some or many manufacturing firms may be replaced by new production technologies based on BIM, linking localised digital fabrication facilities with online design databases. Combined with robotic and automated machinery and assemblers, digital fabrication and standardised parts opens up many possibilities. Adding new materials to the 3D palette through molecular design and engineering, or upgraded versions of existing materials, may unlock other unforeseen design and performance options.

 

If this eventuates some, possibly a great deal, of the current construction supply chain based on mass-production of standardised components will become redundant. For example, an onsite or nearby fab with printers and moulders might produce many of the metal, plastic and ceramic fittings and fixtures for a building during its construction. These parts might be delivered by autonomous vehicles. The digital twin of the project, which might be outsourced, can link the design and fabrication stages to the site and the project. Digital fabrication produces components and modules designed to be integrated with onsite preparatory work and assembled to meet strict tolerances. Project management would become more focused on information management, and the primary role of a construction contractor might evolve into managing this new combination of site preparation work and integration of the building or structure with components and modules, some of which may be produced onsite in a fab if economies of scale permit. The strength of this effect will be determined by those economies of scale. Beyond site preparation other site processes may be restructured around components and modules that are designed to be assembled in a particular way, and machines to assemble those components and modules can be fabricated for that purpose.

 

If onsite and nearsite production becomes steadily cheaper the industry would, perhaps slowly, reorganise around firms that best manage onsite and offsite production and integration of digitally fabricated parts. Contracting firms would become more vertically integrated if they are fabricators as well, reinventing a business model from the past when large general contractors often had their own carpentry workshops, brick pits, glass works and so on. With outsourced business processes and standardized site and structural work, that fabrication and integration capability would be a key competitive advantage of a construction firm.  Firms will be integrating automated production of components with design and construction using offsite manufacturing and onsite fabrication, using platforms that coordinate building design and specification with manufacturing, delivery and onsite assembly. Open platforms will be like new digital ecosystems. Closed, internal platforms will be developed by larger, vertically integrated firms with the resources to manage the system.

 

Industrialised materials like concrete, steel and glass affected the organisation of onsite processes as they were improved with incremental innovations. The development of digital fabrication should follow a similar path to concrete, where over decades the machinery (mixers, pumps), processes (formwork systems) and materials (reinforcement, concrete strength, setting agents) were developed. Growth in digital technologies is faster than analogue, so instead of the many decades of innovation taken for concrete technology to develop, it might take a decade for digital fabrication to become cost effective if the cost of fabs falls and the supply chain of raw materials develops as it did for personal computers in the 1990s. Contractors would become more vertically integrated as they also become fabricators, managing a combination of onsite and nearsite production to deliver projects.

 

 

References

ARUP, Designing with Digital Fabrication, 2020: 8. 

Gershenfeld, N. 2012: 45. How to Make Almost Anything: The Digital Fabrication Revolution. Foreign Affairs,91(6), pp. 43–57.

Gershenfeld, N., Gershenfeld, A. and Cutcher-Gershenfeld, J. 2017: 7. Designing Reality: How to Survive and Thrive in the Third Digital Revolution, in New York: Basic Books., 

Sanjayan, J. G., Nazari, A. and Nematollahi, B. 2019. 3D Concrete Printing Technology - Construction and Building Applications. London: Elsevier.