The offsite industry is undergoing a massive state of change and development with interest levels in the process higher than ever before. Research being undertaken via Leicester’s De Montfort University by Professor Mark Lemon and Yann Bomken of Poplar Consulting, is trying to pin down how permanent and lasting this interest may be.
The early 2000’s saw a growth in the number of large automated factories that were built to deliver into the construction market. These included companies such as Advanced Housing Limited (AHL), Corus Living Solutions (CLS), Unite and Space 4 – the first three no longer exist and the fourth has a radically different product. In their place we now have new start-ups in Legal &General, Barcelona Housing Company and the recent announcement of Keepmoat working with Elliotts.
The research authors interviewed a number of individuals who had played varying roles within the offsite sector over many years. The intention was three fold – to elicit why the sector had not taken off in the manner anticipated, to establish the challenges facing the sector today and to explore what changes might facilitate sustainable growth into the future. Here is an overview of responses and are subject to the authors’ interpretation.
Market Change
Offsite product has been directed primarily at the repeatable module market and has latterly moved towards addressing the need for supply within the private and public residential housing sector. A number of considerations were raised with regard to this change:
- The private housing market has tended to be served by lower end technology products i.e. timber frame, with the motivation for switching to new materials or formats being driven in response to specific problems
- The embracing of innovation and more complete formats, such as full volumetric, has been seen primarily within the repeatable module market and to a lesser extent within public sector residential development
- The private sector is focused on delivering a return on investment for their shareholders – not on addressing the acute shortage of housing in the UK market. This is often seen as the job of government and is expected to be delivered through Registered Providers and Local Authorities
- The rise of the private rented sector (PRS), as opposed to open market sale, is refocusing development away from initial capital cost. Speed of build is seen as crucial as this leads to quicker revenue generation.
Last Time Around
There was some consensus among the respondents that the key to offsite success is the surety of an order book. One of the reasons the larger organisations survived for so long previously was due to the level of internal market demand. AHL supplied Barratt Divisions, Unite to their parent company and CLS had the security of 8,000 modules for the MoD’s Project Allenby Connaught. Space 4 continues to supply their parent company Persimmon Homes. While there were a number of reasons for the demise of these and other companies, their inability to command a sustainable external order book was an important factor.
In 2007 – prior to the economic downturn – the housebuilding industry produced 180,000 units. These were delivered predominately by traditional methods rather than offsite. However, during the recession it has been estimated that 400,000 skilled people left the industry and have not returned. This skills shortage will be amplified over the next few years by an ageing workforce with a similar number expected to retire. This questions the ability of traditional construction to meet housing targets and will reinforce the need for the new skills to deliver full volumetric product.
What is needed this time around?
A number of potential themes emerged from the analysis of previous failings and were identified as important to the future take up of offsite approaches. The need for longer-term support is paramount. One interviewee suggested that a five-year government commitment in orders would lead to new, and existing entities within the sector investing in factories and expanding capacity. When assessing market requirements, this would not appear to be a major stumbling block. Completions in residential housing in 2016 were just over 140,000 units, of which the private sector delivered just short of 115,000 while current annual estimates of requirements range from 220,000 to 300,000 per annum.
One lever for supporting the growth was considered to be the availability of land. Traditionally we have seen public sector land sold off to the highest bidder, and in many cases disappear into the traditional housebuilder’s strategic land bank. To achieve ‘additionality’ an increasing amount of this land needs to remain within public ownership. The introduction of the Accelerated Construction Programme is a move towards this, and although the scheme is aimed at boosting the initial number of starts, this will need to be maintained in subsequent years to support the required order books.
Knowledge and Knowledge Transfer
Key to unlocking the potential of offsite is better education about the sector. The vast majority of Further and Higher education courses in construction and construction-related subjects pay little attention to this approach. Consequently, offsite is seen as a novel, rather than mainstream, building method. A formal qualification framework is required to underpin these skills and a significant first step in achieving this would be to adopt the proposed framework contained in the recent CITB report, ‘Faster, Smarter, More Efficient: Building Skills for Offsite Construction’.
One concern shared by a number of interviewees, was that if the cultural change that accompanies, and drives the demand for these skills does not occur, then the industry may have to play catch up to competition from outside the UK with the corresponding loss of potential jobs throughout the offsite supply chain.
It was also felt by some respondents that underpinning this process of education and cultural change should be the primary function of industry bodies such as BuildOffsite which should be less inward looking and more of an advocate for the sector. Such an advocacy, alongside educational change, could support the introduction of new blood into the industry – particularly in the area of process engineering which will be required to meet quality, cost and delivery goals.
Finally, in terms of quality, the house purchaser of today is seen as more ‘savvy’ and the need for a better produced product is paramount if customer care costs are to be controlled. To achieve these improved levels of quality there needs to be a greater understanding of basic manufacturing systems and techniques alongside the introduction and use of alternative processes and materials.
While current housing demand means that there has never been a greater need for the offsite construction sector to be successful, the failings of the past need to be addressed and repetition avoided. The need for policy backing to ensure land availability and order book surety are critical. This needs to be supported by a comprehensive education and training programme about what offsite is and what skills are necessary to underpin it. In turn this will require the assimilation of new blood into all levels of the construction sector and most importantly will underpin a cultural shift that aligns manufacturing and traditional construction expertise in such a way that developments are delivered in the most appropriate and efficient manner.
Original Link - Offsite Magazine
