Cost is still the elephant in the room when it comes to offsite construction

Over the past 20 years, we’ve seen the market mature, with the most capable suppliers investing in top talent and efficient processes.

Social housing organisations, too, have moved on, learning from mistakes and creating user-friendly ways to procure MMC at affordable prices.

Government support for offsite is also driving momentum, along with a widespread acknowledgment that our housing crisis can no longer be solved by traditional construction alone.

As a result, MMC costs are coming down. Housing associations and councils tell me this regularly but to bust the offsite price myth once and for all, we need hard data.

That’s why I’ve been working with several housing providers, each using MMC at scale, to gather their figures.

Abri, one of the largest housing providers in the South of England, has run numbers on several sites.

For MMC schemes ranging from 40 to 60 homes, a cost of around £1,300 per square metre for the supply and instalment of a fully completed and commissioned house is consistent. This is roughly the same as bricks-and-mortar costs for similar sites.

In west London, RHP got costs on an MMC scheme for 40 to 60 apartments. Based on a clean site with standard footings, the price came in at £3,000 to £3,250 per square metre. This is slightly under the cost of traditional for the same scheme.

Halton Housing, based in Cheshire, is currently planning a number of MMC schemes. Some of the initial costs from the framework for net-zero offsite homes are on a par with costs for traditional net-zero homes.

LiveWest, the largest housing provider in the South West, has analysed prices from MMC manufacturers to identify the difference between delivering standard house types via traditional and offsite.

Results show there is a 10% to 13% increase when using MMC, but that’s likely to be offset by savings associated with high-quality offsite systems, where less maintenance and retrofit will be required.

These figures are all compelling, but to shift people’s perceptions on MMC in the long term, there are further steps to take:

Share cost data

Providers are still reluctant to share the prices they pay for MMC and how these compare to traditional because of the variables involved, which make comparisons difficult. There is also a nervousness about revealing what’s been previously seen as sensitive commercial data. This needs to change – the sector must become much more transparent about how MMC costs measure up against bricks and mortar. An open, honest approach will benefit everyone.

Evidence savings

We don’t yet have hard proof that maintenance costs will reduce with MMC homes, despite this being likely due to the control and precision of manufacturing methods. Asset management teams in housing organisations will have to gain experience repairing MMC homes and then forensically gather evidence of reductions in downstream maintenance costs. This is a big piece of work and must be managed carefully.

Think long term

In some areas, MMC may cost more than traditional, but finance directors and their boards must take the long view. For instance, a better fabric performance now means that energy bills for residents and retrofit bills for providers will both decrease. Also, when the ongoing volatility around materials and labour costs for traditional construction is factored in, the price certainty of MMC is increasingly attractive. And as relationships and processes become more streamlined, it’s likely that offsite homes will be built faster than traditional, so preliminary costs reduce, loan interest decreases, and rental income comes in faster.

Aggregate pipelines

Unlocking the manufacturing conundrum around scale and efficiency is the last piece in the cost puzzle. By combining demand and creating a regular flow of work for manufacturers, we can bring costs down further. That’s the beauty of producing homes in factories. The more you make, the cheaper it gets for everyone.

Trina Chakravarti, project director, Building Better