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Is modular construction the future?

By Dan Teuton
17 March 2021
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Modular construction is the term used to describe the process involved in constructing a building off-site which is faster, safer and more environmentally friendly, writes Alex Hurn, director of Sillence Hurn Building Consultancy.

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Modular construction uses exactly the same materials and design processes to achieve the same high standards of conventionally built construction projects, but in half the time.

Produced in modules and put together on site, modular development has experienced a stark rise in popularity as more developers and investors realise the many benefits that come hand-in-hand with creating a building in this way.

What are the benefits of modular construction?

Less materials – As the vast majority of module developments are created in a factory, these projects use a lot less waste and utilise recycling materials compared to the amount of waste on traditional building sites. This is great news for the environment.

No delays caused by weather – Unlike conventional building sites where the elements can delay work, 60-90% of the construction work on a modular project is completed in a factory, meaning there’s far less delays caused by adverse weather conditions.

More flexibility – One of the main benefits of modular buildings is the level of flexibility they offer. For example, they can be disassembled as and when required, with the modules relocated or refurbished for new use.

Safer and Faster Construction – It is proven that the ‘indoor’ construction environment reduces the risks of accidents and therefore, lowers the risk of liabilities to workers. Modular construction projects are completed 30% to 50% sooner than traditional construction.

 

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Funding and development of modular construction projects

Modular construction methods are used in a vast range of construction settings including residential home buildings, student housing, hotels and healthcare settings. Installed quickly and easily, with cost savings of around 20-25%, the same warranties are usually available.

There are lots of fundamental advantages to modular construction, however, with the large portion of construction being undertaken off-site, this creates issues with the traditional development financing setup. With traditional development finance the funder will usually have a security or charge over the property or land and the funder’s monitoring surveyor will certify the value of the works undertaken prior to releasing funds as the project progresses.

With monies being required to be released for works undertaken off-site this creates additional risks for the lender and monitoring surveyor. There are mechanisms for off-site works being valued with ownership transfer via vesting certificates and advance payment bonds but not all monitoring surveyors are familiar with these contractual matters. Assessment of production facilities can also be required which can provide difficulties especially when these are located overseas.

This additional appetite for risk is yet to be embraced by lenders across the market but there are innovative solutions that are being developed. Partnerships are being developed between lenders and modular construction firms where lenders are funding the purchase of land and modular construction firms funding the off-site elements of the construction works.

There are also still some reservations from high-street lenders on providing mortgages on completed modular construction residential units as they are classed as non-standard construction which provides a barrier for funds. Part of the reason for this is that terms like ‘pre-fab’ and ‘modular’ are somewhat still linked to post-war houses that were constructed quickly and generally to a sub-standard.

There is no doubt that modular and off-site construction has a big part to play in helping the UK solve the current housing crisis and deliver cost effective and design-led dwellings, but this is going to require further innovative and forward thinking from all construction stakeholders.

Linkedin2Alex Hurnsillencehurn.co.uk

For more information, contact Alex Hurn and the team at:

02380 014786 

[email protected]


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