Jargon Buster
Modern methods of construction (MMC)
A wide spectrum of innovative construction techniques which spans offsite, near site and on-site pre-manufacturing, process improvements and technology applications.
Offsite manufacturing
A process whereby buildings, structures or parts are manufactured or pre-assembled in a factory setting prior to their installation on-site.
Panelised components
Pre-manufactured flat panel units such as panellised walls, roofs or floors consisting of framed or mass engineered timber, cold or hot rolled steel or pre-cast concrete.
Pre-manufactured value
Pre-manufactured value (PMV) measures the proportion of a project made up of on-site labour, supervision, plant and temporary works. By improving PMV, through increasing manufacturing and/or reducing site labour, greater efficiencies can be achieved.
Social value
The additional wider benefits that can be created by organisations and projects for individuals, communities and local businesses.
Sustainable development
Defined by the United Nations as development that meets the needs of the present without compromising the ability of future generations to meet their own needs. An approach that takes into consideration environmental concerns along with economic development.
Volumetric housing units
Factory-made three-dimensional units. Volumetric units can be brought to final site in a variety of forms ranging from a basic structure to one with all internal and external finishes and services installed, ready for installation.
The government has also published a guide explaining MMC terminology used across the public sector, as well as to increase awareness of the range of MMC solutions available in the market.
Opportunities for MMC in Ireland
Ireland will see an upswing in the utilisation of MMC, primarily due to its promotion in the public sector. The government is leading innovation and productivity with MMC incorporated into the Housing for All policy, recommending its use in tendering for social housing projects.
In July, the government published its ‘Roadmap for increased MMC adoption in Public Housing Delivery’ - representing a major public sector innovation and transformative initiative that will enable an increase in the procurement of new homes using MMC, with commitments including commencing 1,500 social housing units by the end of 2024.
Last year’s launch of Enterprise Ireland’s Construct Innovate Technology Centre, hosted at the University of Galway, should help drive further transformation in the sector, focusing on speeding up residential construction through MMC. Funding commitments of €5 million over five years aim to accelerate research and innovation and combine government, industry and academia.
New frameworks will provide sustainable and durable quality housing. All new dwellings (including prefabricated and modular build units) must comply with the building regulations and building control requirements and, for social housing, achieve a 60-year durability for all key elements.
Another advantage of framework-led MMC projects in Ireland is the prospect of steady demand to support the nascent supply chain, as opposed to a stop-start nature, which hampers a business’ ability to scale up or indeed be profitable.
With transparent or predictable order volumes, it can eventually become cost-advantageous both on an upfront and whole-life cost basis. Volume orders through demand aggregation or a bespoke procurement framework would add to MMC’s appeal.
According to a report by the Construction Industry Federation, in 2021, there were 111 companies in the sector with over €1 billion invested in offsite manufacturing capacity and capability. They cover everything from programming to 2D-panelised and 3D-volumetric, modularised plantroom units and complex M&E modules – supplying the commercial, industrial, life sciences sectors and semiconductor projects.
Currently, 42 Irish offsite manufacturers (OSMs) are exporting – linked with the European Green Deal scheme. The industry can also contribute to Ireland meeting its Climate Action Plan targets for the built environment.
Opportunities in Ireland have led to the likes of Volumetric Building Companies opening an international centre of excellence in County Monaghan – following demand for their steel-framed modular solutions in the healthcare sector.
Collaborative partnerships across the supply chain will be crucial in accelerating the use of MMC. There have been examples of agreement on the best use of materials and processes for the same house whereby separate contractors share materials, with units built on the development site then identical. If one falls behind schedule, another can step in so the programme stays on track.
Collaboration between local authorities to aggregate orders for identified development sites can also capture further economies of scale.
The government-published Design Manual for Quality Housing includes sample site layouts and design principles, which are extremely helpful to MMC manufacturers to target offerings towards the required housing typologies, urban design and place-making priorities of local authorities, as well as sustainability standards.
Key benefits of MMC
Reduces costs
Speeds up delivery
Generates less waste
Improves safety and quality/accuracy
MMC lowers construction costs when combined with a steady supply of standardised designs.
It helps make homes more affordable in Ireland at a time when developers are struggling to make projects viable. Cheaper unit build costs mean lower sale prices and rents.
Reduces project timeline by up to 60%, as using a controlled offsite environment improves reliability and certainty across all stages of the construction programme – from design programming with BIM to bypassing the need for scaffolding with crane drops.
MMC drives down the high level of site waste from leftover blocks, planks and other materials.
Offsite also improves sustainability credentials by reducing the waste and environmental impacts arising from traffic congestion, noise and air pollution during the construction process.
Quality is easier to verify and monitor in an offsite factory environment using digital measurement.
Spending less time on-site reduces the health and safety risks associated with traditional construction sites.
Furthermore, the location of factories can add social value, boost local employment along with an upskilling of the workforce.
Barriers and considerations
Supply chains still need to be developed
Long-term pipeline requirement
Structural integrity and fire safety
The methodology for selecting, combining and delivering materials can also be improved for sustainability purposes. There is potentially a case for nearshoring and creating offsite manufacturing hubs near airports and ports to reduce carbon footprints arising from logistics transportation.
Factories need a long-term guaranteed pipeline to ensure sufficient orders for viability. However, the Irish property market and construction industry can be volatile and characterised by boom and bust.
Structural engineers and fire and rescue services are key stakeholders that should be engaged in the design process as MMC continue to evolve.
Is there a downside to MMC? The threats to widespread adoption:
Capacity, utilisation and profitability of offsite companies in Ireland
High order volumes and a steady flow of current work are essential ingredients for a successful OSM company to operate.
Indeed, a high factory utilisation is required in order to remain in business and become profitable given the cost structure, which has a high fixed cost base. Therefore, the right sizing of factories to meet a market’s baseline demand is an essential factor in an OSM supplier’s ability to deliver.
Figure 1
Impact of offsite manufacturing factory output on profit. Indicative 500-unit factory capacity
OSM companies operate manufacturing businesses with substantial initial investment and relatively high overheads associated with running a factory and its fixed labour force. They need, above all, a steady flow of work. Thus, keeping unit costs low depends on high utilisation, which can be much more challenging to achieve in construction than in, say, an electrical car factory because the offsite manufacturer is multiple steps removed from the commercial/sales decision-making and the size of orders. Consequently, there can be significant variations in unit costs depending on the utilisation level.
Lessons from abroad
Australia
MMC can go a long way in improving the fiscal sustainability of a country’s health system as well as its agility to respond to demand for services. The use of MMC in healthcare can be seamless where patient bedrooms and ensuite layouts are identical.
In Australia, the government of Victoria recently invested $52 million in delivering three new regional alcohol and drug residential rehabilitation facilities using MMC.
An example of the speed of delivery MMC offers is the first stage of the Northern Hospital, built on top of a two-storey carpark, where 127 modules were in place in just five weeks.
The need for a design that includes a home-like experience combined with a structured environment where people experiencing addiction can develop coping skills and address underlying issues also demonstrates MMC's flexibility in being able to incorporate various elements in the design process.
Across the Mental Health Beds Expansion Program, feedback from patients and staff enabled the mass-produced module to be built with all its fixtures and finishes, helping them understand the scale, sound and feel of its space.
There will also be better scope for the reuse or recycling of modules if the facilities are no longer required or need relocating.
One solution to addressing housing shortages touted in New South Wales is a ‘pattern-book’ approach to planning, which could help simplify and accelerate housing approvals. Uniformity of design for low-rise apartments built at scale would be fast-tracked to approval under state government plans. Such an initiative would be tailor-made for MMC, with the sharing of automated designs among developers working together.
United Kingdom
Robust design and manufacturing procedures are essential in MMC; otherwise, potential pitfalls arise when buildings are, for instance, exposed to harsh environments or terrains.
Caledonian Modular has recently made headlines in the UK after a Department for Education review found issues relating to the structural integrity of two secondary schools and a primary school in England. A weakened ability to withstand high winds or heavy snowfall forced them to close.
With extreme weather events becoming more common due to climate change, the quality and regulation of materials and processes in creating modular buildings that can adapt to changing weather patterns is essential.
A laudable approach from Legal & General Modular Homes included design features and technologies such as sustainable building fabric, heat pumps and solar photovoltaic cells, which helped achieve an EPC rating of A on homes across their portfolio.
However, the cessation of new modular production at its Yorkshire factory earlier this year is a reminder for Irish stakeholders that the ability to build at scale is paramount, as a healthy pipeline is crucial for profitability. In particular, planning delays, a common issue in both the UK and Ireland, can make modular housing businesses unviable.
Germany
Perceptions of MMC producing an inferior end product when compared to traditional methods are less prevalent than they used to be in Germany.
This change in MMC’s fortunes is partly down to the certifications and training available in Germany that attest to the high quality of modular housing.
The quality certificates available for MMC homes in Germany include the Golden Cube and the Hausbau Design Award. These allow successful modular schemes to be recognised and praised – encouraging future clients, homeowners and construction professionals to use these techniques.
Germany also has training schemes that teach modular construction techniques at higher education levels, which include wider engineering processes for modular factory environments.
Sweden
Sweden is a market leader in modular construction, with offsite manufacturing accounting for at least 45% of new homes, according to a study by the University of California, Berkeley.
While in Ireland, the government is focussing on MMC as a vehicle for more social housing, sustainability targets can also be an incentive.
Studies have found that swapping in mass timber for steel and concrete in mid-rise structures can reduce emissions associated with manufacturing, transporting, and installing building materials by up to 26.5%.
However, current building regulations limit Ireland’s use of wood in construction, preventing the use of timber frames in buildings more than 10 metres (three storeys) high.
The Timber Engineering Research Group at the University of Galway has taken the initiative to demonstrate the benefits and safety of Irish-grown cross-laminated timber. It compares well with commercial panels manufactured in Europe – performing well under fire loading and complying with European Structural Design Standards.
If Ireland is to meet its embodied carbon reduction targets, then closing the gap on timber-frame usage compared to European counterparts such as Sweden would be a significant enabler in both meeting housing demand and being environmentally sustainable.
Summing up
Ireland has strong momentum to create a sustainable MMC industry, which is being sparked by the government and taken up by an increasingly collaborative private sector. Benefits such as reduced costs and improved quality in a factory-controlled setting can help unlock previously unviable projects.
The use of MMC in housing construction should speed up delivery – helping to meet Housing for All targets and facilitate the ongoing transformation of the wider construction industry.
An increasingly visible pipeline of social and affordable housing orders, in particular, should lead to further collaboration on MMC between procuring authorities and MMC manufacturers. This can both future-proof housing supply, lend lessons to other sectors, such as healthcare, and better serve the economic needs of an everchanging Ireland.
Get in touch
Barry Keogh
DIRECTOR, COUNTRY HEAD, IRELAND
Research team contacts
James Garner
SENIOR DIRECTOR, GLOBAL HEAD OF DATA AND INTELLIGENCE
Nicola Sharkey
PROJECT DIRECTOR, INSIGHTS AND RESEARCH LEAD, INTELLIGENCE
Ned Chehalfi
RESEARCH MANAGER, INTELLIGENCE
Sam West
RESEARCH MANAGER, INTELLIGENCE
Edna Benavides
ASSOCIATE DIRECTOR, INTELLIGENCE MANAGER FOR EUROPE
Jayashree Srinivasaragavan
COST MANAGER, INDIA
Res Orgut
ASSOCIATE DIRECTOR, USA
Sherif Sweillam
DIRECTOR, HEAD OF BUSINESS OPERATIONS, EGYPT
Research team contacts
James Garner
Senior Director, Global Head of Data and Intelligence
Nicola Herring
Project Director, Head of Intelligence, UK
Edna Benavides
Associate Director, Intelligence Manager for Europe
Jayashree Srinivasaragavan
Cost Manager, India
Res Orgut
Associate Director, USA
Sherif Sweillam
Director, Head of Business Operations, Egypt
Sherif Sweillam
Research Manager, Intelligence, UK
View more reports below
Legal disclaimer: This report was prepared by Gleeds and is for general information only. Neither Gleeds nor any of their partners, directors, employees or other persons acting on their behalf makes any warranty, express or implied nor assumes any liability with respect to the use of the information or methods contained in this paper to any person or party. This document is subject to copyright and must not be reproduced.
The report was prepared in October 2023 and published 8 November 2023.
© 2023 Gleeds - all rights reserved
Gleeds privacy policy | Cookie Policy | Modern slavery & human trafficking statement | Equal opportunities & diversity policy