News

By Dean Fazackerley, Head of Technical Procurement at LHC Procurement Group 

January 2024

With high profile business failures in the MMC space, it is understandable that there may be some hesitation in taking this approach when procuring projects.   

Reports into L&G’s modular housing business point to accumulated losses of £295m, while over £68m-worth of Ilke Homes’s £320m debt was owed to Homes England.  

Housing minister Lee Rowley has dubbed the sector a “work in progress”, dismissing the failures as “not unexpected”. However, while these challenges exist, the government remains committed to MMC, and several organisations and experts – including the British Insurance Brokers’ Association (BIBA) and a trio of Manchester academics – are campaigning for its increased use.      

They point to benefits including the ability to accelerate house building to meet the government’s 300,000 new homes per annum  target, and the positive environmental impacts through less waste, lower emissions, and the use of more sustainable materials.  

A 2022 study of two UK housing development schemes, which delivered a total of 879 homes under a modular system by Tide Construction, found that embodied carbon can be reduced by almost half when using MMC.  

For public sector clients then, there are positives to be had. And frameworks can help to reduce risk by bringing together clients and a pre-qualified supply chain that is ready and able to deliver. 

Gold Standard procurement 

To support achieving the Gold Standard – introduced by Professor David Mosey following the independent review of public sector construction frameworks – LHC recommends that every local authority, housing association and public sector client has a committed, and ideally approved, programme of work for at least three years ahead.  

A three-year pipeline gives the ability to work with contractors and their supply chains from the outset to secure components at a competitive and agreed rate, and to reduce the common stop-start, bottleneck issues when tendering and managing projects on an individual basis.  

They can also pre-assess the programme of works and provide better insights for the year ahead. This is necessary to a strategic alliancing approach, built on a foundation of collaboration, long-term commitments, and clear strategic priorities. 

In the world of MMC, becoming an appointed company on a procurement framework removes some of the associated risks for contractors; they can work collaboratively with clients via a framework to establish a steady pipeline of orders, develop new processes and methodologies, and break down some of the barriers to wider MMC adoption. 

The pipeline of work that can come from being part of a framework creates greater certainty and helps protect jobs for contractors who may be worried about the future. Traditionally operating on four-year cycles, frameworks can offer a more predictable calendar of work and create confidence, which in turn leads to investment in the skills and tools needed to deliver MMC solutions. 

As an MMC contractor, having awareness of a client’s longer-term pipeline also provides opportunities to plan work more efficiently, thus improving resource planning and identifying cost efficiencies, while driving economies of scale.  

Mutual benefits 

By collaborating and early supplier engagement via a framework, each company can benefit from one another’s insight and expertise, which develops strong contacts and increases the opportunity of appointment to future projects. When dealing with a new market approach, it also increases opportunities for shared innovation and developing a forward plan. 

Using a procurement framework also allows contractors to explore and mitigate potential risks – including rising costs – and agree how the impacts might be managed between them and the client.  

MMC frameworks 

Our NH3 (Modern Methods of Construction (MMC) of New Homes) framework has been developed to be a market-leading framework providing a wide range of systems and project delivery models to give public sector organisations the flexibility to deliver MMC projects tailored to their specific requirements and priorities. 

Covering low-rise and medium/high-rise dwellings through to specialist accommodation such as care homes, it supports public sector procurers to increase the use of MMC in their contracts and help to deliver low and net zero carbon homes with high levels of pre-manufactured value. It will also create the opportunity for procurement teams to access a wider range of MMC solutions and suppliers, encouraging greater collaboration between suppliers and clients. 

Meanwhile, the LHC Modular Buildings (MB2) framework provides public sector organisations with easy access to off-site manufactured, volumetric and panelised building systems for the use in non-residential buildings and residential projects where they are of mixed-use development or for student accommodation for schools and universities. 

To speak to a local contact about our public sector construction frameworks, visit https://www.lhc.gov.uk/contact-us.