What’s wrong with UK construction?

A roundtable discussion with business leaders from across the UK offsite sector was recently hosted by networking facilitator Anna Whiting and chaired by reputation management specialist Joanne Bridges to look some of the key issues and drivers for change in the modular sector and the wider construction industry

There is deep concern in the UK offsite sector currently that the recent spotlight on modular housebuilding is not a true reflection of the wider sector.

There is still a critical need for disruptive technologies to stimulate innovation, improve productivity, reduce environmental impact and address some of the fundamental issues facing construction clients in every subsector of the market – from housing to healthcare and education.

Why is construction preventing MMC from thriving?

According to Andrew Glossop, technical director, MEP4 Offsite: “There is no doubt that these are very challenging times for UK construction… the S&P Global UK Construction Purchasing Managers’ Index has been below 50 (ie in contraction) month-on-month since the end of 2022. In that context, it should come as no surprise that record numbers of UK construction companies are facing financial difficulty. Whether they are modular builders, or indeed any other type of contractors or subcontractors.

“The recent House of Lords Report fell into the trap of asking – MMC: What’s Gone Wrong? That is starting with the hypothesis that there is something ‘wrong’ with MMC, and we just need to find out what it is, presumably to fix it.

“A much more appropriate starting question might have been – What’s wrong with UK construction that is preventing MMC from thriving?

“This would raise many root cause issues, such as inconsistent policy decisions (shall we mention 16 housing ministers since 2010?), poor and inconsistent planning rules, NIMBYism, fickle and short-term investment decisions, profiteering (rather than opportunity sharing), anti-competitive behaviour (ref the CMA’s recently launched investigation – it’s about time!).

“And yet many offsite specialists keep their heads down and carry on doing a great job for their customers. We make no apologies for highlighting the benefits of what we do: our propositions reduce installation time by up to 80%; reduce the risks associated with poor and inconsistent build quality; reduce the risk of snagging; increase productivity for our customers; and increase cost certainty (by removing the risks).”

Andrew concluded: “Have you ever heard of poor plumbing springing a leak and bringing down ceilings, requiring a complete refit of the plasterboard and wall finishes? Our proposition removes that risk, to the point that we are prepared to warrant our assemblies for 10 years. Just one more benefit of ‘rethinking construction’.”

The critical juncture for UK construction

The construction industry stands at a critical juncture.

Charlotte Garrett, head of strategy at KOPE, explains: “The offsite sector promises accelerated project delivery, improved sustainability, enhanced quality and greater cost certainty. These are all absolutely vital needs but for these challenges to be addressed, there have to be more collaborative conversations to better align customer expectations with the capabilities of those systems and their providers.

“Despite years of investment, too many modular businesses are vanishing from the industry, signalling a systemic issue that extends way beyond the system manufacturers. The housing sector is on its knees and labour shortages are only going one way.”

A construction sector beset with challenges

The challenges in UK construction remain. There is a shortfall of at least 250,000 workers to meet demand by 2025 – a shocking statistic. Productivity is now 7% lower than it was in 1997 – compared with +27% for the rest of the UK economy.

Stephen Wightman, director and UK MMC lead at AtkinsRéalis, said: “More than 4,000 construction businesses went into administration in 2023. The cost of avoidable errors is an astonishing £21bn. And less than 3% of site workers are female.

“Offsite can help to address all of these challenges – and whether you are an advocate for offsite or in-situ construction, those issues really do need addressing to better support the UK economy and society in general.

“There needs to be a full assessment on each project to ensure the most appropriate building technology is being used and that genuine benefits can be delivered to all stakeholders by taking an MMC or offsite approach. Selecting the most suitable MMC technology will help deliver project success and minimise risk.”

Nigel Ostime, partner at Hawkins\Brown, added: “The cost of labour and materials in MMC is on a par with traditional methods and yet quality and building energy performance are typically superior. The issue from a client perspective, though, for Category 1 suppliers is the financial stability of the manufacturer and the degree of risk involved.

“Modular manufacturers, because of the set-up costs and factory overhead required, need consistent demand. These businesses also need to optimise human and other resources, which requires a steady flow of orders.”

The underlying concerns about the quality of MMC and modular specifically are no longer valid. Technology and quality assurance have been totally transformed since the early examples in high-rise, affordable residential developments.

Nigel Ostime agreed: “MMC provides the best outcomes for sustainability and tolerances, reinforced by warranty schemes like BOPAS. Quality is proven to be easier to control in a factory and the testing of building systems can be more rigorous given the economies of scale.

“With the increasing demand for Passivhaus standards, particularly in Scotland, which is consulting on the mandatory raising of energy standards for all new homes, the case for offsite manufacturing becomes even clearer and even more compelling.”

The growing confidence in UK offsite

Nick Fulford, CEO of nHouse, said: “We are seeing more developers and self-builders than ever before expressing a strong interest in offsite. They are comfortable to test it out and see it as less of a risk. These customers are more informed and awareness of offsite construction has grown, helped in part by programmes like Grand Designs. That means a growing acceptance and a drive for offsite.

“There is a clear frustration that traditional housebuilders want long lead times, construction is too slow and the quality of construction isn’t there.

“The wider construction sector is much more accepting of panelised systems and bathroom pods rather than full 3D volumetric. So do smaller steps need to be taken before construction can be modernised and transformed to address the challenges?

“However, there are numerous SME offsite businesses that are flourishing and growing. My view is those firms that have started in a smaller way and matched their investment and production capacity to their pipeline have been able to create a model that is more sustainable. And because they have grown organically, they have had the time to learn lessons from every project and hone their offer and model. This leads to growth without the need for huge upfront capital investment and public funding.

“And as SMEs grow sustainably, there will be more evidence of success and confidence in the approach to bring more customers into MMC.

“When the UK government finally gets behind the level of affordable housing needed nationally, it is very hard to see how the traditional construction sector can either service that demand or scale up quickly enough.”

Analysing the headlines

Emma Feaver, COO of nHouse, shared her views of the recent headlines: “The current news agenda suggests that the delivery model of modular construction in housing cannot work and yet many of those voicing these opinions have used this for their own business gains, pitching MMC, and in particular volumetric, against other solutions!

“My belief is that there is a place for all types of construction – some projects will lend themselves really well to offsite manufacturing and others will better suit in-situ building methods, or indeed a hybrid of both methods.

“BUT the MMC sector is working extremely well in some areas. SMEs like nHouse, TALO and Enevate Homes have approaches that deliver from both a commercial perspective and for the end user.

“Housebuilding clients are asking for faster, more quality focused, energy efficient homes. This choice isn’t available from a catalogue or a mass housebuilder, but it is a standardised way of building that is adaptable to suit the needs of the customer.”

UK offsite: Where now?

It is absolutely clear that the industry needs more data to evidence the success of offsite to prove the benefits – and a shared vision from the sector, customers, government and the supply chain.

Charlotte Garrett explained: “To drive meaningful change, we need a fundamental shift in mindset and approach across the construction sector.

“Embracing offsite construction methods requires a holistic change in how projects are conceived, designed and executed. Collaboration among stakeholders, regulatory support and a commitment to innovation are key drivers for change.”

Katie Rudin, housing and residential lead at Akerlof, said: “Some councils are looking at different funding models and routes to improve the viability of MMC and how project risks can be shared. Project bank accounts, for example, are being used with some success across the industry to improve procurement routes for MMC.”

Nick Fulford looked at this in more detail. He said: “We need a long-term vision from a consortium of emerging and growing companies to drive for standardisation – not in design but in the fundamentals like materials and processes.

“We need fewer, resource-intensive, monolithic factories which struggle to get to capacity. The playing field needs levelling out with no more government subsidies that allow just a few manufacturers to sell at below cost. This only distorts the market. We need patience, because this is a journey of decades and not just a few years.

“We need a supply chain which is more geared up to service the MMC sector and which is investing in innovation to improve quality, sustainability, speed and cost efficiency.

“We need a level playing field on standards, so MMC isn’t cost penalised – because traditional builders don’t have to deliver to the same level of quality or compliance.

“And we need major construction clients, such as housing associations, developers and local authorities, to provide more support, patience and acceptance that by supporting MMC now, they will reap rewards further down the line because they will then have a more diverse and much heathier construction supply chain.

“The main drivers for change will, I hope, be driven by house buyers and their demand for better homes with more variety and much better quality.”

Why we don’t understand cost

It is really important to understand that the benefits of offsite are not direct cost based. Modular, for example, is not cheaper on a direct labour and material cost model.

However, it may be cheaper when all factors are considered such as delays, faster return on investment, earlier occupation, whole-life costing, energy efficiency – but these factors are not typically part of the cost analysis.

Stephen Wightman explained: “We need to fundamentally examine the process and the way projects and programmes of work are set up in order to properly understand the costs – that is the real cost, not what the estimate says – as real costs are widely underreported.

“Offsite solutions really should work for social housing but the cost benchmarks are still based on the mass housebuilding model. A large number of affordable housing schemes are actually delivered by mass housebuilders as part of Section 106 agreements.

“The construction industry is very different to other manufacturing-based industries in that the manufacturer of a product has little control over design and how it is used. Design is led by the client team and the manufacturer is expected to adjust its design to meet that requirement. This way of working really reduces efficiency; however, it may be insolvable!”

Katie Rudin, consultant at Akerlof, agreed that analysing the cost of MMC is a significant issue: “There are clear gaps within cost advisory services for MMC, particularly regarding the whole-life value and benefits afforded, such as lower carbon or carbon negative homes.

“There is currently no RICS guidance specifically for MMC calculations. This has fuelled debate and often results in uncertainty about whether modular or MMC solutions are cost-effective and provide good value.”

Why offsite needs process improvement

Key to unlocking MMC is improving the early stages of the process. Katie Rudin considered this in more detail: “Pipeline and demand aggregation have been cited as a major barrier to MMC, and yet planning authorities and housing providers across the country still have unique standards and requirements for projects.

“Research by the Royal College of Arts into the standardisation of affordable house type designs found that affordable housing providers are typically driven by circumstance to diversify their house types, to achieve space standards in non-standard and often constrained site arrangements.

“In contrast, the profile of private land can present fewer design and spatial constraints and enable the developer to design with rationalised housing types, realising the efficiencies and benefits that reduced variation affords.

“We must become more comfortable with standardisation to align with manufacturing processes and thereby generate efficiency improvements across the board.”

Anthony Greer, director of corporate strategy at TALO, added: “One positive change is for housing providers, along with MMC manufactures and other supply chain partners, to share a common vision of a project or development programme from the outset and look to each other to achieve exceptional outcomes as a team. This approach leverages the talents and skills of all parties as opposed to just ‘MMC being the solution’.

“This may also contrast with a mode of procurement that often looks to delegate risk rather than understanding it, at the cost of collaboration and achieving better outcomes together.”

Now is the time for education and collaboration

The Housing Festival will be launching a local government-led MMC Playbook this year to help address the UK’s structural deficit in housing supply for those in critical need. It will provide a series of strategy and planning tools to help housing associations and providers in their use of MMC.

There are also two MMC-specific alliances where lessons learned are being shared very successfully and which more organisations could potentially make use of. These include the Offsite Homes Alliance and Building Better, which are both alliances of registered housing providers/housing associations and local authorities.

Emma Feaver highlighted the importance of education: “In the past, MMC has been promoted as the answer to the housing crisis and the future of construction. Consequently, many traditional builders think we are the enemy. Architects who are unfamiliar with the processes struggle with the change, mainly due to a lack of education and training about what we do.

And as a sector, we confuse with our jargon. We insist our processes are better and it’s up to construction clients to catch up.

“We need to do more as an industry to promote ourselves, to give back, to educate and share our knowledge, and to accept that we can listen too.

“We should be more open to discussing the barriers for change, to collaborating rather than defensively shouting about the benefits. I think that would help us all to achieve acceptance to new ways of thinking to transform construction for the better and encourage more enlightened clients to engage with MMC.”


Chair – Joanne Bridges, director, Bridges Communications. 

Anna Whiting, facilitator.

Charlotte Garrett, head of strategy, KOPE.

Stephen Wightman, director/UK MMC lead, AtkinsRéalis.

Katie Rudin, housing and residential lead,  Akerlof.

Emma Feaver, COO, nHouse.

Nigel Ostime, partner, Hawkins\Brown.

Andrew Glossop, MEP4 Offsite.

Nick Fulford, CEO, nHouse.

Dr Anthony Greer, director of corporate strategy, TALO.


Joanne Bridges


Bridges Communications

MMC Awards 2024 judge





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