In early April, the government published the new Modern Methods of Construction (MMC) Definition Framework. This document is one of the outputs of the Ministry of Housing, Communities and Local Government MMC Working Group. This group was convened at the beginning of 2018 to follow up on a commitment made by government in the Housing White Paper to help build confidence in the use of MMC across industry, specifically amongst lenders, insurers and valuers.
While the uptake of different design, manufacturing and construction techniques is clearly on the rise as housebuilders and developers grapple with the increasingly risk-laden world of traditional delivery, it is also clear that many see risk in change itself.
This is amplified by the fear of systemic failure, when a new, innovative building system or manufactured product has a latent repeated problem that manifests downstream and creates a "product recall" scenario that we see in manufacturing from time to time. The working group has therefore been looking at better unifying the warranty and assurance market and how it robustly approaches MMC accreditation to give confidence to those underwriting lending or insurance in the UK new-build housing market that risks are minimised. Good progress has been made in this highly complex area and I am hoping to report separately on our outputs later this year.
In a world where data is becoming more and more important, the formal structuring of information is the beginning of a much bigger journey towards the creation of big datasets from which technology-enabled analysis can drive much more powerful informed decision making. This includes for those mentioned above that are underwriting financial risk, as well as policy makers and for the industry at large to better understand what MMC really means, how and where it is being used and to create ongoing feedback on performance.
For this reason, a relatively simple but powerful output from the MMC Working Group has been the new definition framework. It is hard wired into the ongoing work of mortgage lending, insurance and valuation confidence building and technical accreditation so is designed to serve a much bigger role with key stakeholders who hold the real keys to unlocking the growth of MMC in the UK.
At its heart it sets out seven new categories starting with structural building systems or elements (the highest deemed risk of failure) through to non-structural assemblies and elements, through to construction material innovation that reduces site labour and finally process innovation that reduces site labour. One of the categories also covers structural and non-structural additive manufacturing – or 3D printing to give it its more common moniker. This is not really happening beyond prototyping and testing at them the moment but the definition framework needs to be future proofed as much as possible.
The framework has two more dimensions of categorisation. Firstly, building height, which is another proxy for building complexity and risk that lenders and insurers and technical accreditors are interested in. The new height banding also aligns to the "High Risk Residential Building" (HRRB) cut-off of 10 storeys for fire safety purposes. The second extra dimension is materiality. This is specifically relevant for building systems that are replacing or part substituting more traditional site-built masonry or concrete elements. The ability to define the primary material, whether it be timber framing, mass-engineered timber, cold- or hot-rolled steel or precast concrete is important in understanding market segmentation and also in capturing building performance or underwriting risk issues or exposure.
What the framework also really shows is the ability to increase "pre-manufactured value" (PMV) through a combination of different techniques. The government is expecting to see increased PMV across all asset classes as part of its Industrial Strategy Challenge Fund deal with construction, Transforming Construction. Many businesses will equate this move straight to offsite manufacturing or "modular" The definition framework explains PMV and puts in the context in the framework and is also agnostic to whether you manufacture or process improve offsite, near site or indeed on site. It also sets out a broad spectrum of approaches, which can equate to the same PMV improvement. This effectively gives developers and contractors more of a menu to choose from to influence what might be a progressive journey towards modernisation. I am heartened by the very positive feedback I have had, including from at least two major housebuilders, in seeing this document as a guide to developing their own innovation strategies.
The real power of the definition framework though will only come from industry take-up and that is why it was so important to bring key stakeholders into the creation of this. The RICS, who were part of the team that developed the output, will be using this in a proactive way as part of its new guidance to residential valuation practitioners as well as embedding in the next evolution of the International Construction Measurement Standards (ICMS). Hopefully all of these measures will mean that we can better define the future of homebuilding in the UK and set a path for others internationally to follow.
