End of year market review 2020!

Following on from my article earlier in the year setting out the status quo and predictions regarding how Covid-19 was influencing the MMC industry, which was predicated upon current site productivity rates, private sector responses and an understandable shift from commercial to public projects, I thought it'd be worth following up with a roundup of 2020 from my perspective.

As a reminder my predictions as follows:

• Increase in affordable housing starts
• Planning relaxations
• Potential Increase in social rent (BTR) schemes
• More remote working, less commuting, less office space requirements
• Increase in vertically integrated delivery models
• Far higher uptake of offsite manufactured elements/solutions
• Less labour-intensive activities on sites
•  A move to more UK based component production
• Increased uptake of technology and BIM integration

Evidently, 2020 can be summed up best by Big Chris (Vinnie Jones) in Lock Stock “It's been emotional”.

It’s certainly been a year of market contrasts, with an even larger commercial to public sector swing than predicted. But has there been an increased uptake and where are the other opportunity areas for MMC sector in its entirety to really shine?

Undoubtedly, there is now a strong, but, niche need for Covid-19 Temporary/Emergency Hospital, PCR Testing Centres and subsequently ‘Pop-Up’ vaccination centres products multiple manufactures have seen record orders, Premier Modular (image shown) have successfully delivered multi million pound contracts for the NHS in recent months.

Another obvious choice would be projects delivered by other Government departments; Education projects are now flowing through the DfE ￡2bn MMC 1 Framework with contactors underway with the first tranches, recently the MOJ have released their super prisons programme for tender via the Crown Commercial Services Framework Lot 5, each prison being in the region of ￡300m and very heavily focused on standardisation, aggregation, supply chain and collaboration.

The public sector projects in general are on the rise “Up to ￡37 billion of contracts across economic and social infrastructure will be brought to market over the next year” according to Alex Chisholm (COO for the Civil Service and Permanent Secretary for the Cabinet Office) in the recently release ‘Construction Playbook’ which sets out the ambitions to improve the sector by establishing clear outcomes, avoid accepting low ball bids, better utilising standardisation of design and commonality to aggregate demand, help build the supply chain and make contracts fairer for all.

The Construction Innovation Hub are also delivering some great work around ‘value’ and have recently released the Value Toolkit which sets methodology to assist clients move towards a value-based decision making and procurement model focused on better outcomes and whole life cycle benefit.

Other market forces and considerations will drive clients ever more down the path of implementing offsite/MMC principles and solutions to deliver their outcomes. We are seeing a considerable increase in conversations around meeting net zero carbon and incorporating social value, which will drive clients towards MMC as a means of enabling this. We were delighted to hear about the new PPN 06/20 which becomes live on the 1st of January, which, whilst challenging, is music to our ears as this will encourage clients to think about how they design and procure to meet social value requirements which will inevitably drive an DfMA / offsite mentality.

With that said, for me, the biggest opportunity market and nut to crack remains social and affordable housing market. Clients are being faced with more and more pressures, not just those outlined above, but they need to start delivering in the volumes we need to meet the housing shortfall, we are delighted to be advising a number of high-profile housing associations on developing their holistic development strategies including aligning with the demands of the manufacturing sector, whilst clearly determining and meeting their desired outcomes and embedding digital tools to ease their development process.

Whilst I am pleased to say many of my predictions have come good, some of the broader issue remain slow in adapting. However, forever the optimist, this pandemic has by necessity, more than choice, acted has as a catalyst for these top 5 fundamental efficiency improvements:

• Good people can work remotely and autonomously, perhaps even more effectively?
• The collaborative technologies that were ‘nice to have’ are now absolutely necessary.
• MMC options are better suited to social distancing than traditional construction.
• Uptake of technology or least talk of it, particularly digitisation of the AEC Industry, is becoming ‘more normal’ in the remote working paradigm.
• Realisation that tangible efficiencies need to be demonstrated in a more competitive marketplace.

Fortunately, BD Solutions have been ahead of the efficiency curve for a while and it is good to see client groups ‘catching the wave’.

On the topic of demonstrating tangible efficiencies, we are particularly pleased to see an understanding developing that this should be an absolute requirement of any development MMC or otherwise, something that Homes England have taken on board with their performance monitoring programme, proving ‘it’s better’ is something we have been preaching for a long time now, often viewed as an on cost or after thought. Post occupancy evaluation (POE) and recording project data is going to be key to unlocking the sector after all if you can’t prove the benefits, why bother?

How many times have you read “50% quicker, 30% cheaper”? my reply is always ‘than what?’ The starting point of any improvement must be to set benchmarks and obtain robust evidence to back up the remarkable variables associated with people, processes and products of a huge industry like ours. Whilst there’s a lot of commendable and proactive ‘research’ going on, unfortunately, it often doesn’t bear up under the scrutiny of advanced research methodology.

Of course, it’s far easier to criticise than do, we are beginning to realise our very exciting goal to provide our clients with the tangible and demonstrable proof of the direct causal link between their key drivers (objective and subjective) and MMC choices as real-world facts and figures.

We will also be undertaking more detailed market research in the new year, starting with our own market efficiencies research focusing on the realities of digital innovation in the supply chain, whilst we have a pre-determined target list of volumetric, panelised and bathroom pod suppliers the more contributors the better, so please get in touch if you want to take part, it will require a 15-20-minute interview with one of our team to run through the questions.

Naturally, the data will be anonymised and will form part of our Supply Chain Insights Report to be released Q1 2021.

Things are on the rise for the sector, we have certainly had a record year as have many of our clients and industry colleagues. Let’s hope the MMC wave continues to grow and as ever, we are on hand to support our clients via our suite of technical and strategic support services! 

We are looking forward to 2021, regardless of Covid-19 and the impending Brexit! Warm wishes for the holiday season and here's to tackling whatever comes our way!