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Delivering MMC frameworks informed by real-time factory assessments

 

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

With the UK under pressure to deliver hundreds of thousands of new homes a year to address a chronic housing crisis, modern methods of construction (MMC) are increasingly recognised as a means to deliver quality housing at pace. Some reports indicate that MMC homes can be constructed at least 30% faster than traditional methods, and with up to a 25% reduction in costs.  MMC can also support the delivery of greener homes of a higher quality; components are less likely to be faulty because they are manufactured in controlled factory conditions, which can also lead to significant reductions in waste.

Despite this, the take-up of MMC has been modest owing to some trepidation within the sector. We believe this could be down to a misunderstanding of the barriers to entry into MMC, and complications with public sector procurement constraints. It can be seen as an expensive luxury, with many manufacturers working to their own designs, and complex to manage with new supply chains and stakeholders to work with. We have also heard the perception that public procurement constraints limit a local authority’s ability to develop the right relationships required for MMC.

However, through framework agreements, the contracting authorities can manage this process much more easily, with a single point of contact and access to technical expertise that aligns with all RIBA Plan of Work 2020 stages, from the initial stages through to design, construction, handover, and use.

Dedicated MMC frameworks

Earlier this year, our Modern Methods of Construction of New Homes (NH3) framework went live. It is the successor to NH2, which enabled £93.5m-worth of offsite homes projects with a total forecast value of £277m.
NH3 has been shaped by extensive engagement with housing contractors and manufacturers. It allows for a range of housing types, from low rise and medium/high rise, through to specialist accommodation such as care homes. The framework also provides for delivery of ‘room in the roof’ projects and adaptive pods.

Framework agreements like this allow relationships to flourish over a longer-term period and help set out an integrated supply chain. We see it as a vital tool to drive programmes for low-carbon, modern homes for housing associations and local authorities across the country

 

Quality assessments

Our commitment to becoming a Gold Standard framework provider means that as part of the development of NH3, we conducted an in-depth assessment of all potential suppliers.
This began with a questionnaire tailored depending on the workstream: 3D modular systems; 2D panelised systems; main contractors delivering MMC solutions; and groundworks and site preparation for MMC housing projects.

To evidence their capability to deliver MMC projects for the workstreams they had applied for, applicants to the framework were quizzed on everything from what training they provide staff with to how they demonstrate KPIs, and how they monitor customer feedback during projects. For consistency, two colleagues from our dedicated centre of technical excellence assessed each workstream.  Following this, we spent a day on site with each manufacturer to conduct in-depth factory assessments to assess their factory process.  Again, applicants were scored for the following:

Quality of products

 

Including structure, cladding, finish, and M&E installation, throughout the construction process from goods in down the production line to storage and dispatch.

Pre-manufactured value – what level of automation was used throughout.  Environmental and waste management – what measures were taken to minimise environmental impact and waste management. For example, how do they reduce energy usage on premises in terms of heating and lighting? How do they manage water usage during manufacturing and in the offices? Which materials are they using in manufacturing? And are there any EV charging points available to use?

Process management

 

We observed the quality control process for elements down the production lines, how products are marked up on the production line, the worksheets for products, and inspection and sign-off at each stage.   Quality of temporary weather protection during storage at the factory/on site and transportation.  Scores from the questionnaires and factory assessments were added together to calculate a final score, and those who scored the highest were awarded the highest allotted award.

 

Appetite for offsite

One thing that was evident during the assessment process was the sheer passion among industry professionals who want to champion and promote MMC. Fortunately, we are seeing local authorities beginning to look past the barriers to entry to see the value MMC can bring; our NH2 framework – the successor to NH3 – led to a pipeline of nearly 5,000 MMC homes across 133 projects. The government’s push towards MMC in its policies – especially the Affordable Homes Programme – should see this figure increase further.

 

CLICK HERE to find out more about LHC and its NH3 framework

 

 

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How LHC’s latest framework facilitates MMC

Housing is likely to be a key policy battleground for the next general election. The original 300,000 new homes target has never been hit and has been missed by at least a third year-on-year.

Some of the consistent solutions given to the UK’s housing crisis feature a combination of refurbishment and retrofit of existing homes, and new properties built using modern methods of construction (MMC).  However, big names in MMC have recently dropped away from the market, such as Legal & General, following a decision to close its modular housing factory, as well as Caledonian Modular and Urban Splash House.  Has this confidence in the ability of MMC to deliver considerable social and affordable housing been shaken?

There are positive stories to tell. These include the £70m investment raised by leading modular housebuilder TopHat to construct a new UK factory, and British Offsite’s move to a new £45m factory. Both companies plan to manufacture up to 4,000 new homes a year.

A dedicated framework solution
Underlining this confidence in the marketplace is LHC Procurement Group’s (LHC) recently announced £1.2bn Modern Methods of Construction (MMC) of New Homes (NH3) Framework. This construction framework for local authorities, social housing providers and other public bodies indicates a considerable level of confidence in MMC.

As the only framework provider with a dedicated MMC framework, LHC wants to help social housing providers in every part of the UK to deliver more homes much faster and with a lower environmental impact. Together with its MB2 framework, the NH3 framework covers the full range MMC categories.

Addressing a UK-wide need
Though the scale and speed in the increase of homes delivered by MMC are under question, when done well it has the power to reduce construction time by up to 50% – and the need for affordable and social housing shows no signs of slowing.  In England, statistics show there were 59,356 affordable homes delivered in 2021-22, compared to 7,644 for social rent. This is against a predicted need of 1.6 million households for social rented housing, according to National Housing Federation (NHF) statistics.  At the time of writing, the social housing stock in Wales stands at 237,395, and the latest statistics from Shelter Cymru show there are 67,000 households on housing waiting lists in the country.  Meanwhile, the Affordable Housing Supply Programme (AHSP) in Scotland commits to delivering 110,000 affordable homes by 2032 to help meet the need.

How NH3 facilitates MMC
NH3 is a vital addition to support more programmes to build low-carbon, modern homes from housing associations and local authorities across the country. It will adopt MMC and offsite techniques to produce energy efficient homes for the communities they serve.

It replaces the previous NH2 framework, which has so far enabled £93.5m-worth of offsite homes projects with a total forecast value of £277m.
Shaped by extensive engagement with housing contractors and manufacturers, NH3 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 the way they want.

Through NH3, LHC is looking to support the public sector to increase the use of modern methods of construction and deliver low and net zero-carbon homes with high levels of pre-manufactured value (PMV).

CLICK HERE FOR THE LHC WEBSITE

 

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What you need to know about the Transforming Public Procurement checklist and upcoming Procurement Bill

 

 

 

Clive Feeney, managing director of not-for-profit construction framework provider LHC Procurement Group (LHC), discusses key things for construction leaders to be aware of in advance of the Procurement Bill.

Each year, the public sector spends in the region of £300bn through public procurement – accounting for around one third of all public expenditure and making it the largest area of public spending.

Regulations that govern how that money is spent are set to change in England, Wales and Northern Ireland. The four existing sets of regulations – Public Contracts Regulations 2015, Utilities Contracts Regulations 2016, Concession Contracts Regulations 2016, and Defence and Security Public Contracts Regulations 2011 – will all be replaced by a single, new regulatory framework.

The Procurement Bill will introduce the most significant changes to the way public sector organisations buy goods and services for a generation.

It followed the Government’s Transforming Public Procurement (TPP) Green Paper consultation response, published at the end of 2021, which demonstrated determination to put alternative assessment scoring front-and-centre over price, to drive both equity and economic improvement.

Headlines and next steps

 

Designed to introduce simpler rules following Brexit, the Bill also aims to strengthen contracting authorities’ ability to exclude suppliers who may have previously underperformed when delivering services to the public sector.

Following lengthy debate in the House of Commons, The Procurement Bill will also now include some key procurement principles and objectives:

  • Providing more opportunities for SMEs and local businesses through procurement
  • Including utilities procurement
  • The significance of social value
  • Offering rewards for suppliers who demonstrated potential for innovation and offered climate-positive and nature-positive sustainable products.

At committee stage, a total of 161 of 205 proposed amendments were agreed to. And now, at the time of writing, the Procurement Bill is nearing the end of its time in the House of Commons before amendments will be considered in the final stages and the Bill achieves Royal Assent.

While the new regulations won’t come into force until spring 2024 at the earliest, they will bring a step change in how public goods and services are bought and commissioned. There will therefore be a six-month advance preparation period in which buyers and suppliers can ready themselves for the impending changes.

There is no time like the present, and contracting authorities can start planning now to ensure they are ready to take advantage of the new regime.

An overview of the Transforming Public Procurement checklist

To help contracting authorities and framework suppliers prepare for the upcoming Bill, the Transforming Public Procurement checklist suggests initial actions in four key areas as follows:

1. Processes and policies

Make sure your current processes and procedures are robust in areas such as early market engagement and supplier evaluation/assessment, with governance documents that record key decisions.

2. Systems

Familiarise yourself with the document ‘Transforming Public Procurement – Our Transparency Ambition’ which outlines the government’s proposals to improve transparency of UK public contracts and spending.
Consider the readiness of your organisation to meet the new data requirements, including where data currently resides in your existing e-procurement systems.

3. People

The Cabinet Office will be providing a comprehensive learning and development programme to support everyone operating within the new regime and help you to understand what is changing from the current system.  Funded public sector places on the learning and development courses are being made available, so they are free at the point of delivery. There will be other training available for supply chain, too.
Think about who in your organisation should attend the training. If you would like to become an L&D super-user, contact your departmental or sectoral lead for Transforming Public Procurement or email procreformspocs@cabinetoffice.gov.uk

4. Transition

Ensure contract registers and details are up to date and conduct a review of pipelines to identify planned procurement activity over the next 18 months.

Engage with your key supply chain about the new regime. Direct them to the Transforming Public Procurement landing page at gov.uk for further information.

The complete overhauling of public procurement in the UK may seem daunting at first, but the four steps outlined above should provide clear direction on how your organisation can prepare now so that you are ready when the changes come into effect.

What the Bill demonstrates is the need for well-run, not-for-profit frameworks such as LHC. As a contracting authority, LHC develops and operates frameworks across England, Scotland and Wales through its five business units: London and South East (LSE) – across the capital and the south east as well as Home Counties of Bedfordshire, Hertfordshire and Essex; Consortium Procurement Construction (CPC) – covering the Midlands, Suffolk, Norfolk and North of England; South West Procurement Alliance (SWPA) – covering the South West of England; Scottish Procurement Alliance (SPA); and Welsh Procurement Alliance (WPA).

Procurement expertise and experience will be vital in the coming months to help unravel the complexities of a new regulatory regime, while ensuring consistent, social value-led framework development and management.

CLICK HERE for more information on LHC Procurement Group

 

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