The construction industry has been eagerly anticipating the successor to the existing £500 million modular building solutions agreement. The old arrangement was put in place three years ago and involved five major companies, Caledonian, Elliott, McAvoy, Portakabin, Wernick as well as 18 smaller enterprises. The new pan-Government Offsite Construction Solutions (OCS) framework deal, worth £10 billion, moved a significant step closer with the announcement of bidder days during January and February 2022.
This innovative initiative is a response to the growing shift towards modular design as a way to deliver construction projects quickly and at lower cost than by traditional practices. In 2020 several contractors including Laing O'Rourke and Wates were awarded contracts for a £3 billion modular schools framework for England. In 2021 two more major agreements in the sector were reached to provide housing. One was a £1.1 billion deal which was soon followed by £600 million offsite housing contract involving Ilke Homes, Impact Modular and TopHat.
By the end of 2021 Ilke Homes had secured £60 million of investment to expand its modular housing capabilities, and Legal & General had put an extra £6 million into its own modular business. Another strong indication that offsite modular construction is finally coming of age was the reported growth in the industry's research and development spending on modular construction methods.
The new agreement is set to last for seven years and will supersede all previous deals. The intention is for it to serve the needs of government departments, arm's length bodies and public sector organisations in the sectors of local government, health, education, housing, charities and the emergency services.
Once the bidder days have been completed we should see the drafting of procurement documents in May, publication of the OJEU notice in July with the framework award itself announced in January of 2023. For the remainder of the decade it will cover the supply, design, delivery, construction and maintenance of buildings across the UK.
Modular solution to affordable housing shortage
There is a consensus across the political divide in the UK that we face a critical shortage of affordable housing. Since the peaks of the 1950s and 1960s the rate of construction has steadily fallen even as demand has increased. The emergence of specialist modular construction comes at the perfect time for what are called MMC, Modern Methods of Construction, to reverse that decline.
Someone who has worked in this sector for over 30 years is Graham Edward, the MD of Edward Architecture in Leeds. He is optimistic that modular building will provide an effective, low-cost solution which will meet the highest standards while cutting the time to deliver in half.
Edward said: "Our inquiry level and order book for MMC indicates that the market will further accelerate in 2022. The Government's enthusiasm is accelerating this modular market growth. We are finding that local authorities and housing associations represent the core of the modular client market. This has been generated by government grant funding aimed at promoting modular construction. There is definitely a modular revolution amongst local authority and housing associations."
He went on to explain the environmental benefits of offsite modular construction: "Modular construction has several sustainability benefits. Streamlined design and efficient production reduces waste to landfill. By producing buildings in a factory setting the quality of elements such as insulation and airtightness can be better assured. It is easier to control energy use in a factory setting than in an open construction site."
For those who remember the post-war prefabs, some of which endured long after they were expected to become obsolete, the idea of modular construction may not seem like a step forward, but MMC has advanced to such an extent that at its best modular construction is indistinguishable from traditional builds. The government's OCS initiative is very much a positive step into the future.