The acceptance of modular homes as part of the UK housing market is growing fast. Neil Toner and Mark Davis discuss what you should consider when embarking on an MMC project
Modular housing is an important and emerging part of the solution to our housing crisis. While modular homes benefit from being precision engineered in a factory rather than being built outside, social landlords should be aware that modular homes pose some different but surmountable challenges which should be considered before embarking on modern methods of construction (MMC).
The first thing any organisation should address is how modular fits into their corporate strategy. Are you trying to deliver houses quicker, save money, reduce energy bills for tenants or achieve decarbonisation targets? The chances are that if it is any of the above then modular can, if carried out correctly, help.
Within the UK there remains a stigma surrounding 'pre-fab' which is borne out of post-war emergency housing schemes. People forget that many of the homes built have long outlasted their intended temporary lives.
Development teams can and should go and see modules in showrooms and completed developments. They should talk to modular scheme residents and they should bring their boards with them. It is essential that both the board and delivery team are comfortable.
Once you have seen that the product is up to your standards, it's time to find the right partners to help you through the process and bring everything together. You'd be wise to embark on a small pilot project first and embrace it as a learning experience.
Contracts for traditional build projects have had hundreds of years to develop and have pretty much reached a steady state. In reality, there are industry-standard positions on most of the points of a contract using traditional build.
However, modular homes require different contracts because they are built significantly differently.
A traditional building contract will contain clauses that entitle the client to inspect the building site. The whole concept of inspection is completely different on a modular project as so much of the works are carried out away from the site.
The high-quality modular housing contractors which Public Sector Plc work with all develop and assemble their homes in the UK, but organisations should be aware that some are made outside of the UK and they should ask for clarification on where the homes are built.
Waiting until the modules are delivered isn't recommended as it will be too late then if something is wrong. This is especially the case with something such as the electrics, which are hidden. Make sure you are able to inspect the modules as they are built.
Copyright is likely to be a bigger issue than in traditional build. There is not much valuable intellectual property in a brick. Contrast that with modular constructors spending millions developing modules.
They are, understandably, protective of their creation. But any developer wanting to develop a series of buildings across an estate will be keen to secure the intellectual property rights in how a building goes together.
Transportation and storage become a key considerations with the delivery of the modules from factory to site. Risks such as delay can occur if proper due diligence hasn't been undertaken on the route, and damage, possibly hidden, if adequate care isn't taken during delivery. A client will need to ensure that liability for these risks is adequately covered and will need to ensure appropriate inspection rights during this critical phase.
One of the biggest areas of contractual change is ownership of 'materials'. Very broadly, as a matter of basic law and subject to the precise details of the contract, ownership of materials such as bricks will pass to the landowner as they are incorporated into the building.
That's a gradual process as the building goes up brick by brick. With modular, however, up to 60% of the money can be spent before modules appear on site. A client needs to ensure that ownership of the modules, and even the elements of the modules, passes to them - even when they are still at the factory. This is dealt with by 'vesting certificates', and the contract will need to include detailed provisions for those.
This is a risk for modular builds more so than traditional construction. There is not a greater risk of insolvency happening as most modular contractors are backed by tens of millions of pounds of investment. However, there is a greater fallout if insolvency does occur.
If a contractor goes into insolvency on a traditional build it is relatively easy to get another to finish the job. On modular projects, where the modules are the key component of the project and made by a single company, that's not so easy. There are ways to mitigate against this risk and it's important to ensure that contractual issues are adequately addressed.
Modular construction gives rise to issues that are different from those presented by traditional build contracts. Those differences need to be acknowledged and addressed, but if they are then modular will likely become a popular choice of social landlords' development teams and boards.
Sourced by: insidehousing.co.uk
