NHBC Roundtable Proof of Performance

Following on from the publication of its guide – ‘Modern Methods of Construction: Building on Experience’ – NHBC held a roundtable session to discuss where offsite methods sit within the housebuilding sector in 2021 alongside the benefits of NHBC Accepts.

‘Modern Methods of Construction: Building on Experience’ is a broad review of what has happened across the offsite and ‘non-traditional’ housing arena through a range of different technologies and advancements since the 19th century, including how the help of government support and use of offsite construction has ebbed and flowed.

The guide helps to establish some historical context and introduce lessons that can be learned from the past. The offsite sector has often encountered and investigated the same issues repeatedly and is characterised with periods of innovation and enthusiasm before a relative return to ‘normality’ and traditional techniques.

“Historically the failures and shortcomings of offsite are often what attracts attention,” said report author and founder of Studio Partington, Richard Partington. “There is an element of experimentation that often falters when its diverges too much from the basic principles of understanding construction. Sometimes the learning doesn’t continue very well across generations.” Over the years, different sectors have found their own route to technological solutions for what they are trying to achieve. There has become a realisation that a home isn’t just a ‘flatpack of superstructure and windows but is a whole system that has to work together.’ Certainly, rapidly changing environmental standards and a generational housing shortage has focused minds at every level of the built environment on how to improve the delivery of new homes. “You have the potential with offsite systems of thinking about the integration of elements that historically have not fitted together that well – ventilation, hot water supply, heating and renewables,” adds Richard. “So there is a real opportunity to get these things thought about in a more integrated way.”

The UK has had a chequered history regarding prefabrication. The curious mistrust and lack of uptake is not replicated in the same way elsewhere. For example, the Nordic countries have long seen offsite methods as an efficient and environmentally friendly way to build. Swedish provider BoKlok are now here in the UK ‘transposing and transplanting’ technology that is already mature overseas and presenting it to the UK market in a different way.

BoKlok has huge experience in developing and manufacturing homes in the Nordic region and has developed around 12,000 homes in Sweden, Finland and Norway. The homebuilding joint venture sees homes built primarily from timber, using a smart, industrialised factory process. “When I talk to my Swedish colleagues,” says Graeme Culliton, BoKlok Managing Director and Country Manager. “They struggle to understand why we have this cultural hang-up about MMC. They don’t have that. Also, we don’t talk to the customer about modular in detail – it’s just not an issue really.”

So while the owner of a home may not necessarily need or want to know about its offsite manufacture, when it comes to the thorny issues surrounding warranties, accreditation, valuation and how long an ‘asset’ will last, there is a struggle to embed understanding in what the various offsite technologies offer. The offsite sector is constantly having to prove what it can do – often above and beyond the parameters set for traditional masonry construction.

Quality Bar

Is there a fundamental lack of understanding or an unconsciousness blocking of the disruptive nature of offsite? The bar of quality and acceptance seems very high. “One of the biggest challenges we have had is gaining accreditation, as the bar is high,” says Nigel Banks, Special Projects Director at Ilke Homes. “But having gone through that process we have a much better product as a result, I think the bar is at the right level.” The deeply embedded and possibly invested interests of ‘traditional methods’ has created a cloud surrounding risk and an uncomfortableness that exists about some offsite systems. “We are not judged against traditional methods of construction,” says Oliver Novakovic, Technical and Innovation Director, Barratt Developments who has championed offsite for many years at the highest level. “We are judged much higher than that.”

If there is a significant offsite technology failure, the knock-on effect across the industry and supply chain means that everyone runs the risk of being damaged by the same issue – so how do we regulate where the quality bar is set? Industry benchmarks are part of the role of NHBC in setting where and how high this level is. As Richard Lankshear, Head of Innovation at NHBC says about these higher bars of attainment. “There is good reason for it. When it comes to innovation in construction, not much of it is intrinsically or particularly innovative. We know the materials and how they work, we know what can go wrong with them, so the design of most offsite systems can be assessed against conventional design. The innovation is in where and how they are assembled – that is where the risk lies. Also, a system can be produced to very high quality in a factory, but there is the potential for a systemic problem to be built in, so a defect could then be rolled out across multiple homes. That is a particular risk that we think needs to be looked at in more detail.”

Many within the finance industry, mortgage providers and lenders/ investors view offsite manufactured homes as new and ‘different’. They are seeking confidence that these homes are created using a viable and reliable system. “We have to recognise the fact, that while we may be comfortable with the offsite approach,” adds Richard. “There are many others that are very cautious. So we must not hide behind the fact that we want to assess offsite to a very high standard.”

Understanding Buildings Better

For Wayne Hill, Production Strategy Director at housing association L&Q, a key task is to understand the delivery of a home as a ‘product’ and a manufacturing problem, so they can understand their portfolio and customer better and provide products that they are happy to put at the heart of every home. “We want to understand what we are building,” says Wayne. “We want information so we can analyse what can be standardised, go through the different systems that provide for a particular element – i.e. capacity, sustainability, cost, weight etc in the long term, then select what is best placed to succeed. Although there is capital investment in building a prototype for example, it will save us in the long term. We might save 10-20 times more money than we spend on the prototype in not having to fix the problems that could enter the homes – it’s an investment rather than an expenditure.”

We need to think differently about how the offsite sector works and minimise the potential risk of failure across different individual factories – a shadow that seems to loom over the long-term confidence of offsite manufacture. In creating many smaller, innovative and diverse market suppliers (unlike the more ponderous volume builders albeit with huge firepower and concentration) the risk in under capitalisation and the supply chain slowing up or falling over a cliff edge. Whilst ilke Homes, Top Hat, L&G Modular and Urban Splash have had multi-million equity investment, there is a danger that not enough due diligence is done when selecting manufacturers. Choosing your provider ‘based on product rather than on balance sheet’ and the resultant risk of failure is sometimes not given the focus it should. “We recognise the broader the market the bigger the risk of failure of independent operators,”  says Nigel Barclay, Assistant Director & National Head, Homes England. “So the answers rests in standardisation and interoperability across the industry that will get a project finished.”

For many manufacturers and operators in the offsite arena the future challenge rests simply with the financial market and the banks. Accessing funds and proving long term asset value is a pivotal requirement for future growth – is offsite capable of supporting long term debt? “The answer is a resounding yes,” says Andrew Smith, Director, Savills Affordable Housing Valuation. “What we want to do in every instance is treat this product identically to a traditional home but with certain checks and balances. We can offer advice but it’s up to the banks whether they accept it.”

With the construction focus increasingly shifting to greener thinking and with the recent acceleration of green targets to 2030 and 2050, it begs the question – why would you build a brick and block house now when you know that in 10-15 years’ time you will need to retrofit expensively to reduce carbon? Why not just save it now by building with offsite methods? So there is an element of futureproofing involved when choosing an offsite product. Although banks are not lending against sustainability criteria alone, investors want to know how their assets are going to perform over a long period of time and the importance of green cannot be overstated. “There is an appetite for more energy efficient buildings,” says Nigel Banks, Special Projects Director, Ilke Homes. “Buildings that are built to the Future Homes Standard (FHS) and don’t need retrofitting. Low energy, greener and more sustainable buildings are more appealing to lenders and the demonstrating less need for retrofit in the future. This does give an ‘increased’ view of value.” “It’s not all about securitisation and valuation but is about long-term performance and value,” adds Graham Sibley, Senior Business Development Manager at NHBC. “The process of NHBC Accepts can give confidence that homes will perform in the same way as a traditional house, and they can lend on the same terms.”

Tackling Perceptions

Using technology to build faster and more accurately offers a more accomplished and sophisticated reason to choose offsite delivery. Multistorey student accommodation for example can be made up of a variety of elements that are factory produced including the introduction of bathroom pods, panels, building quickly and robustly. “The emphasis should be presenting this as technically sophisticated and leading edge,” says Richard Partington. “We ought to be educating the insurance and banking world about where things are heading. Not using the benchmark of brick and block to secure a loan. The perception that traditional housing is somehow more robust is absolutely wrong.” Certainly, the narrative surrounding ‘traditional versus offsite’ needs to change. The constant improvement process taking place within the offsite sector, where each iteration of an offsite system is better than the previous is a slightly underappreciated concept. But the availability of hard data and quantifiable proof of what offsite can offer is always a common obstacle. “We will treat offsite identically but to get to the stage where we can convince the lenders it should be treated identically – we have to provide extra information,” says Andrew Smith.

For all the robust testing, certification, validation and benchmarks that can be attached to a product, it’s all down to whether it is installed correctly onsite for the real test. “Trials and pilots are important to monitoring,” says Oliver Novakovic, Technical and Innovation Director at Barratt Developments. “How you measure and the information that you gather is critical in giving lenders confidence that you are operating in the right way. The more volume we deliver, the more accuracy and technical input and information you get and importantly the more efficient you become.”

Building a level of confidence for the market and showcasing offsite systems as aspirational and desirable product is now so important. Bypassing the constraints of traditional construction and site-based issues surrounding weather and on-site workmanship or even access to the right materials, the adoption of offsite would seem to be yet again entering a historical purple patch. The post-WW2 boom in offsite delivery and ‘prefabs’, saw architects and politicians get behind the economics of building at speed – if arguably not the longer-term quality – in this new 21st Century era the time has arrived to match the need to build at speed with additional technological advances that would have been regarded as science fiction in the austere 1940-50s.

Confidence is Everything

The post-pandemic world wants reassurances more than ever that offsite methods deliver housing quality but provide an investible asset. The whole gamut of financial institutions need to be educated more about where the strengths and benefit of offsite methods rest. The question is how best to isolate ways on how to present offsite’s case for investment, quantify risk and convince them of quality and performance surety. It’s also all about the house itself – lower heating bills, quality workmanship and sustainable, flexible homes, a great living environment – is something the average resident is concerned about more than how the home was built. Driven by the zero carbon agenda, the market for energy efficient homes delivered through a speedy, streamlined manufacturing process would suggest there has never been a better time to adopt offsite methods.

“NHBC has a responsibility to support innovative construction,” says Graham Sibley. “But in a public and transparent way – as we have done with NHBC Accepts – to help lenders and investors to have the confidence to use offsite. We are committed to do that in the future.”


See full roundtable write up in the latest Offsite Magazine

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