Despite decades of innovation in the offsite/MMC sector, the industry continues to face persistent challenges.

Nowhere is this more evident than in Category 1 modular volumetric systems, which despite their efficiency and scalability on paper, have struggled to establish a sustainable business model in the residential sector. The high failure rate of Cat 1 companies stems from a fundamental disconnect between factory-based manufacturing and the realities of onsite construction.

Issues such as inadequate site preparation, poor integration with traditional building methods, and inconsistent housing regulations have made large-scale adoption difficult.

To truly improve housing productivity, the industry must shift its focus from an over-reliance on fully offsite solutions to a more integrated approach that balances the strengths of both factory and onsite processes, as Professor Graham Winch, Professor of Project Management at Alliance Manchester Business School, explores.

Despite enormous progress in MMC over the decades, the industry still faces significant hurdles. The focus on Category 1 modular volumetric systems has been particularly problematic. While Cat 1 solutions offer advantages in terms of stackability and efficiency, there is a fundamental issue with their business model.

The failure rate of Cat 1 companies has been alarmingly high, primarily because modular volumetric systems do not provide an entire house – they only offer a structural subsystem. These modules must then be integrated into a broader construction system, which has proven difficult to scale due to the challenge of maintaining continuity in the production process.

A fundamental flaw in Cat 1 construction is its approach to site preparation. Instead of designing foundations to fit the modular units, the process often involves adapting the modules to the existing foundations, which leads to inefficiencies.

Additionally, modular units require rapid roofing to protect them from the elements, but traditional tiled roofs cannot be craned into place, necessitating manual labour that introduces delays and risks. The prevailing mindset of ‘getting off site’ rather than optimising onsite processes has further hindered the success of Cat 1 approaches.

Another major issue is the lack of standardisation in housing regulations and approvals across different regions. Local councils impose varying specifications, creating significant barriers to scalability. Weather conditions also play a role, but their impact should be mitigated through better planning.

More fundamentally, housing remains a capital-intensive sector that is highly sensitive to economic fluctuations. The capital-intensive nature of modular construction makes it particularly vulnerable to interest rate changes and market downturns. Unlike other products, housing demand cannot be easily stimulated through marketing or discounting due to its high land value component.

‘Manu-structure’

To achieve meaningful progress in MMC, the industry must develop strategies to buffer against economic volatility. One promising alternative is Category 2 (Cat 2) flat panel systems with standardised connector systems.

This approach offers greater flexibility while still allowing for modular elements such as prefabricated bathrooms and kitchens. The key advantage of Cat 2 systems is that they require lower capital investment, reduce transportation costs and allow for more efficient onsite assembly.

The relationship between site and factory production must be carefully rethought. Rather than attempting to shift all construction activities to factories, the industry should focus on optimising both offsite and onsite processes.

This aligns with the concept of ‘manu-structure’, a hybrid production system that combines the flexibility of construction with the efficiency of manufacturing. A more integrated approach would also require better oversight of local subcontractors and service providers to ensure consistency and quality throughout the process.

Ultimately, while technology plays a role in improving housing productivity, the primary challenges facing MMC are organisational rather than technological. The private sector, driven by economic cycles and interest rate sensitivity, will continue to dominate housing production.

However, regulatory changes, such as the Future Homes Standard, present an opportunity to drive meaningful progress by setting national standards that encourage innovation.

The industry must move away from an obsession with fully offsite solutions and instead focus on better integrating onsite and offsite processes. Ultimately, improving housing productivity requires a holistic approach that considers the entire production system rather than just factory-based solutions.

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