Chapter 2: Building better: the role of Modern Methods of Construction

Made for London: Realising the potential of modern methods of construction

Chapter 2: Building better: the role of Modern Methods of Construction

What are Modern Methods of Construction?

MMC is an umbrella term used to describe a number of different modern construction methods. Other terms used to describe MMC (or specific types of MMC) include:

  • Off-site construction
  • Off-site manufacture
  • Precision manufactured housing
  • Modular construction
  • Smart construction
  • Prefabricated housing

MMC involves the manufacture of housing from modular units or significantly scaled components, often using precision digital design for manufacturing techniques in off-site locations – in contrast with traditional construction where bricks, timber, raw concrete and structural elements are assembled on-site. MMC utilises many different technologies, the application of which varies according to site constraints and the requirements of the housebuilder, as well as access to resources and finance. 28

While many traditional housebuilders use some elements of MMC (such as bathroom pods), this report will focus on developments that are fully manufactured off-site, rather than those with some sub-modular components.

The raw materials used in MMC are similar to those used in traditional construction, but MMC systems normally involve replacing the inner concrete block with a frame (either timber or steel) or with precast concrete. Cladding finishes tend to be completed on-site in a traditional manner. 29

Types of MMC

Design for Manufacturing and Assembly

The digitalisation of the design process can allow for significant savings in both time and cost, as well as greater precision. Design for Manufacture and Assembly (DfMA) approaches that are commonplace in the aircraft and car industries are increasingly being employed by those in the MMC sector to assist with designing for manufacture. 30 For instance, Laing O’Rourke’s DfMA approach has been used by London’s off-site construction sector to ensure ease and efficiency of housing assembly.

Potential advantages of MMC

Proponents of MMC approaches often hail their advantages compared to traditional construction, whether due to reduced timescales, improved energy efficiency or lower build costs. 31 This section looks at these arguments more closely.

Off-site manufacture can achieve faster delivery on-site than traditional construction, once planning permission has been obtained. Research by AECOM indicates that projects using exclusively MMC can be constructed on-site in less than half the time of traditional schemes. 32 Our interviewees estimated that an MMC project can be completed in two-thirds of the time when accounting for manufacturing, site preparation and assembly. Other sources estimate that construction time for volumetric MMC schemes is 50-60 per cent that of traditional methods, compared to 30-40 cent for hybrid construction, and 20-30 per cent for panelised construction. 33

Although take-up is still limited, the speedier project completion afforded by MMC could make it a particularly attractive option for those seeking to minimise the time-cost of being on site and who are constrained by industry capacity to build out at pace. Examples might be housing associations, boroughs and local housing companies, build-to-rent investors and other developers building for the rental market. By contrast, private developers who are constrained by the “absorption rate” of their product may find this prospect less enticing, potentially slowing adoption.

Time is also money: the rapid nature of MMC project completion makes it particularly attractive to those in the build-to-rent sector – who can receive rental income faster – as well as developers who took out loans to fund the cost of land and construction in terms of interest.

Improved efficiencies in the manufacturing process and reduced construction time should therefore drive important cost savings. As well as costs being easier to predict, government has estimated the cost saving of MMC at 10 per cent. 34 Although the capital costs may not be less than on-site constructed projects, there may also be accumulated savings from earlier receipt of rent, as well as reduced waste and maintenance costs.

That said, the cost of MMC currently remains particularly high, owing to the limited number of manufacturers, the immaturity of the supply chain (discussed in Chapter 4), and the need to recoup initial research and design costs by many housebuilders. Although a government Housebuilding Fund has been established to help housebuilders secure loan finance, the high setup costs incurred during the research and design process can also act as a deterrent to manufacturers and SME housebuilders wishing to adopt MMC techniques (as discussed in Chapter 3).

Yet, with a growing skills shortage in the construction industry and higher than average labour costs in the capital – both of which are likely to increase the costs of traditional construction faster than MMC – the cost savings and certainties of MMC are likely to become even more appealing over time, particularly for the increasingly important build-to-rent sector in London.

Tight coordination, consideration and planning is required early in the project timeline to benefit from the cost and time savings that MMC can provide – though this also reduces the flexibility to respond to market changes, to which many traditional developers have become accustomed.

At present, the MMC industry lacks quantified evidence to compare the improved quality benefits of MMC with traditional building methods in absolute terms. 35 Yet many industry proponents are quick to highlight the potential of design-led MMC to improve reliability. Unlike on-site projects, manufacture in a controlled factory environment can also mitigate the risk of poor weather adding to construction time, affording improved cost certainty and accuracy.

The tighter controls and oversight afforded by a factory environment in which production is standardised should also result in more precise and consistent build quality.

Sustainable use of materials and energy efficiency

Fewer manufacturing defects and less traffic on-site means that a move to MMC can help contribute to a more environmentally sustainable construction industry that is less disruptive for local communities.

MMC also generates less raw material waste than traditional forms of construction, owing to its precise and standardised engineering process. The extent of waste reduction varies depending on the type and scale of MMC used; some estimates suggest that volumetric MMC building systems can reduce waste to between 50 and 60 per cent of that incurred through traditional building methods. 36 Government figures have estimated the reduction in on-site construction waste to be five per cent when compared to traditional building methods. 34

The transfer of manufacture to the factory setting can also result in the reduction – some estimates suggest up to 80 per cent – of traffic flows to and from the construction site, minimising the impact of local air and noise pollution and resulting in a safer environment for pedestrians and cyclists. 38

Precision engineering and manufacturing can also result in homes that are more energy-efficient than buildings erected by traditional methods of construction, thereby passing on cost savings to residents with lower energy bills in the long term.

Job creation and inclusion

Increased take-up of MMC methods may also translate into improved health and safety standards in an industry that many consider to be unsafe. Nationally, 80,000 construction workers suffer work-related ill health each year. Though fully accident-proofing the construction industry is unlikely, MMC can contribute to this by moving manufacturing to a safer factory location, thereby reducing the time workers spend on site.

In addition, the skilled science, technology, engineering and mathematics (STEM) jobs offered by MMC – and a fixed working environment which offers the opportunity for split shifts – could help create a more inclusive workplace by encouraging more women into the industry. Government data recently revealed that women currently make up only 11 per cent of employees in the construction industry and earn on average 22 per cent less than men. 39

Policy support

GLA and boroughs

The Mayor’s draft New London Plan and Housing Strategy have both expressed support for “precision manufactured housing” (the GLA’s preferred term for housing built with MMC) in the capital. The Housing Strategy seeks to promote housing innovation, suggesting that improved construction skills training alongside a shift to MMC can help overcome the constraints of industry-wide skill shortages. 40 In a similar vein, the draft New London Plan backs the use of precision manufactured housing, at all scales, to both speed delivery and minimise waste. 41

In March 2018, City Hall announced £50,000 of funding to contribute towards the creation of a common framework for delivering MMC homes at scale in London. The remaining costs of the £147,500 project are being met by Legal & General Modular Homes, L&Q housing association, Transport for London, and Greystar (a build-to-rent provider). 42

The GLA and Londonboroughs are also exploring the potential of MMC to provide affordable temporary accommodation in the capital and maximise the use of available land. The Pan-London Accommodation Collaborative Enterprise (PLACE), backed by 18 London boroughs, London Councils and a GLA grant, is a special-purpose vehicle that plans to procure local-authority-owned MMC homes. The homes are intended to provide temporary accommodation on meanwhile or under-utilised sites. 43

Central government

Central government has long supported the adoption of MMC in the UK housebuilding industry and in infrastructure project procurement. Most recently, the government showed its support for MMC in the February 2017 Housing White Paper, which recognised the need for builders using MMC to access finance on the same basis as those building homes traditionally. 44 Correspondingly, the government established a Home Building Fund – a pot of £4.5bn – to help increase the number of new homes. 45 The Fund is intended to offer a flexible source of funding to housebuilders who would have otherwise been unable to secure loan finance to meet the costs of site preparation and housebuilding 46

Unlike other countries such as Japan, Germany and Sweden, the UK’s MMC industry is still developing, which makes it challenging for housebuilders to derive benefits such as the improved speed of delivery, quantity and quality of new homes in London. The next chapter will look at the current take-up of MMC in London.

  • 28 The National House Building Council (2016). Modern methods of construction: Views from the industry. Retrieved from:
  • 29 Construction Excellence in Wales (ND). BeAware Supply Chain Resource Efficiency Sector Report: Modern Methods of Construction (MMC). Retrieved from:
  • 30 Royal Institute of British Architects (2013). RIBA Plan of Work 2013: Designing for Manufacture and Assembly. Newcastle upon Tyne: RIBA Publishing.
  • 31 The Construction Industry Training Board (2017). Faster, Smarter, More Efficient: Building Skills for Offsite Construction. Retrieved from:
  • 32 AECOM (2017). Cost model: Modular Construction. Retrieved from:
  • 33 Off Site Hub (2017, October 18th). Optimum Selection for Efficient Modular Design. Retrieved from:
  • 34 Homes and Communities Agency (2015). Time and cost savings through off site manufacture of new homes. Retrieved from:
  • 35 Farmer, M. (2016). The Farmer Review of the UK Construction Labour Model: Modernise or Die. London: Cast Consultancy. Retrieved from
  • 36 Gray, D. (2016). DfMA in Housing. Laing O’Rourke Engineering Excellence Journal, (3), 56-58.
  • 37 Homes and Communities Agency (2015). Time and cost savings through off site manufacture of new homes. Retrieved from:
  • 38 Laing O’Rourke (2018). Modular Manufacturing. Retrieved from:
  • 39 UK Government (2018). UK Gender Pay Gap Data 2017-2018. Retrieved from:
  • 40 Mayor of London (2017). London Housing Strategy: Draft for Public Consultation. Retrieved from:
  • 41 See Policy GG4, “Delivering the homes Londoners need”, in Mayor of London (2017). Draft New London Plan. London: Greater London Authority. Retrieved from:
  • 42 Greater London Authority (2016). Promoting precision manufactured housing in London. Assistant Director’s decision. Retrieved from:
  • 43 London Councils and EY (2018). Temporary Accommodation, housing and homelessness: Solution Update.
  • 44 Department for Communities and Local Government (2017). Fixing our broken housing market. London: Department for Communities and Local Government.
  • 45 See HM Government (2018). Home Building Fund. Retrieved from:
  • 46 Homes England and Ministry of Housing, Communities and Local Government (2016). An introduction to the Home Building Fund. Retrieved from: