Modern Methods of Construction: overcoming the challenges

Trina Chakravarti, Project Director of Building Better at the National Housing Federation, discusses how housing organisations can overcome key challenges to adopting Modern Methods of Construction (MMC).

Much has been written about why housing organisations have been slow to adopt MMC, but far less about what they can do to get started. Through our Building Better project, we know almost a third of developing housing associations are either committed to or interested in using MMC over the next two years.

Four key reasons which inhibit the use of MMC were cited. Based on almost 100 conversations with housing associations up and down the country, here we offer possible routes to overcome those challenges.

1. Low-risk appetite at board level

Solution: procuring collaboratively gives boards comfort in a shared risk-and-reward model.

An aggregated pipeline from housing associations enables continuous throughput, reducing the risk of suppliers going bust. Bringing together housing associations in an alliance to procure homes reduces risk. Upfront costs can be shared and the more housing associations are involved in aggregation, the greater the leeway for individual organisations whose plots are held up.

By procuring together and moving away from the traditional construction industry, we will be in a stronger position to influence the offsite sector. These manufacturers rely on continuous throughput, but this can be at odds with the business model of volume housebuilders. So their natural customers are those building with a high rented element, including housing associations.

NHF Building Better Team
Trina and colleagues promoting how the use of MMC can help housing providers at last year’s NHF Housing Summit

2. Not getting the right cost point

Solution: aggregated demand to enable the scale needed to provide cost certainty for the supply chain and a fixed price for housing associations.

Aggregating demand pipelines geographically and according to house type helps achieve repeatable demand. A pipeline and closer collaboration with clients enables suppliers to optimise manufacturing and reduce their price point.

3. Unable to find right provider because of too much variation in products

Solution: greater industry standardisation and sharing insight.

There is confusion about the right MMC category, manufacturer and system to suit each development. A lack of scale from the sector has led to the solution being presented to us – and each product is different. More initiatives like the GLA, Cast and Brydon Wood’s PRISM tool, creating greater standardisation on the supply side, are needed so that housing associations feel confident to mix and match providers.

A valuable way for housing associations to navigate the market is to share information with each other. Building Better has set up a group of 15 housing associations to capture and compare information on partners, products and engagement including quality, satisfaction, price and timescales. If you are interested in getting involved, let us know.

4. Warranties, mortgages, valuation

One of the main barriers for housing associations is the fact that few funders will allow them to charge the new homes as security against future funding. This is still a sticking point for most lenders and therefore for finance directors and treasury teams.

Solution: collaboration on information and engagement across the sector, including with consultants, valuers and banks. Underlying all of the aforementioned barriers is the need for transparency and collaboration across our sector.

A simple proposition with clear, credible benefits, however, doesn’t mean there will be the required momentum behind it. New ways of doing things only happen because organisations like ours decide to do so and we are the only sector that can come together in this way.

For information on how you can contribute, get in touch.

 

For further information, contact Maggie Rafalowicz: maggie.rafalowicz@campbelltickell.com

This article is also featured in the latest CT Brief – Diversity focus 

Campbell Tickell is an established management and recruitment consultancy, operating across the UK and Ireland, focusing on the housing, social care, local government, sport, leisure, charity and voluntary sectors.

We are a values-based business and firmly place the positioning of our support and challenge on helping organisations to attain change that is well thought through, planned and sustainable. We want to help organisations create the landscape within which we ourselves would like to exist: fair, inclusive, diverse, engaged and transparent. We build from our values in how we approach all our work as a practice.

Find out more about our growth, development and regeneration services