FROM POLICY TO PROGRAM

Across the globe, recognition of offsite construction as a solution to challenges endemic to the construction industry – from skills shortages to housing affordability – is on the rise. In Australia, code changes and initiatives such as the Victorian Government’s Construction Technologies Sector Strategy are helping drive uptake. Overseas, governments from New Zealand (KiwiBuild) to Singapore and the UK are identifying ways to pump prime the sector. Certainly the high profile government led initiatives in Australia that have gained recognition in recent times have focused on schools upgrades. The Victorian School Building Authority (VSBA) has been a recent contributor to an uptick in offsite construction, in particular through the establishment of the Permanent Modular School Building program. Meanwhile School Infrastructure NSW was created to plan, deliver and maintain the expanded program of capital works there with a budget of around $4.2 billion to be spent on 120 new and upgraded schools.

Such initiatives are increasingly being recognised as offering hope of a trickle-through effect to other sectors such as affordable housing.

However, according to a leading industry identity in the Australian social affordable and housing space, government ‘intervention’ into driving the sector will only gain traction once industry trailblazers pave the way. Robert Pradolin has spent much of his career in residential development and founded Housing All Australians three years ago as an advocacy group recognising the future societal problems augured by lack of appropriate housing. “Without shelter for a growing segment of the population the long term political, financial and social costs are huge,” he says.

Currently 1.3 million households are in a housing dilemma, predicated to increase to 1.7 million by 2025. While the government is attempting to grapple with the enormity of this challenge, the market and industry must take the lead with prefabricated and offsite solutions, says Pradolin.

Pradolin’s ultimate vision encompasses an ongoing pipeline that will support the offsite industry with certainty of demand and underpin affordable housing with certainty of supply. It’s a challenge that government alone, hamstrung by election cycles and other variables, finds hard to stomach.

“Industry has to lead the discussion in this space. Ultimately we want government to come running to us.”

Nick Strongman, CEO of project management specialist Sensum, who works with entities such as the VSBA on the schools upgrade roll out, confirms the initiative has helped fine tune offsite construction for outcomes that may be applied across other sectors.

“The Permanent Modular School Building program was set up as a pilot to provide a structured and supervised way, to test a range of current and new providers to the Department allowing them to have an opportunity to build their knowledge about prefabricated permanent buildings through a formal pilot approach,” Strongman says. “The objectives of this pilot program included introducing to VSBA some contractors who are expert in production of high quality and architecturally pleasing prefabricated buildings.”

Other objectives include ensuring mass production capacity is available when required to deliver architecturally designed buildings, ensuring capability to address one-off and nonstandard requirements where bespoke designs may be warranted, promoting local jobs and local content consistent with the Local Jobs First Victorian Industry Participation Policy; and promoting the objectives of the government’s Construction Technologies Sector Strategy. Released in March 2016, in Victoria, the Strategy contains objectives around strengthening market competitiveness in offsite construction and the advancement in the use of BIM.

States such as South Australia and New South Wales have also announced modular programs for the delivery of government education infrastructure, similar to that of the Victorian program; a momentum which, says Strongman, comes on the back of the success of the Permanent Modular School Building program.

In addition, the Victorian Department of Health and Human Services recently released a tender in March 2019 to establish a Modular Building Panel to assist in the delivery of social housing.

“DHHS has a requirement to deliver 1000 houses and have identified a requirement to leverage offsite. This will be a great opportunity for the industry to show what can be achieved in the affordable housing market,” says Strongman.

“We are currently working closely with multiple government agencies to help them realise the benefits of offsite construction in their projects,” he adds. In terms of the potential ways in which government could be doing more to foster offsite, governments could go further, however.

“As with most clients, governments need to start thinking about and implementing offsite into their planning and business cases early on. Too often offsite is looked at as a last resort, the knight in shining armour, to come and save the day. This puts unnecessary pressure on offsite construction and it has the opportunity to negatively impact its perception further.”

“As with most clients, governments need to start thinking about and implementing offsite into their planning and business cases early on. Too often offsite is looked at as a last resort, the knight in shining armour, to come and save the day. This puts unnecessary pressure on offsite construction and it has the opportunity to negatively impact its perception further.”

Nick Strongman, CEO, Sensum.

Other potential stimuli for offsite are also coming on stream. The Victorian government is moving to embrace The Build-to-Rent (BTR) model as one solution in easing the state’s rental accessibility crisis; facilitating planning assessment, establishing an industry working group, supporting BTR in community housing, clarifying taxation arrangements, and making the case for BTR to the federal government. Within this BTR space, the suitability of offsite methodologies is widely recognised.

In New Zealand, Housing New Zealand has plans to supply government housing through pilot projects adopting innovative construction technologies. The KiwiBuild program, established last year as part of the new Coalition Government’s response to the housing crisis has recently come under scrutiny, with some homes struggling to sell. As Build Offsite went to press, New Zealand Prime Minister Jacinda Ardern reportedly confirmed the administration was addressing feedback from developers around improving connectedness between buyers and sellers.

Bumps in the road aside, KiwiBuild is notable for the scope of government’s vision and ambition. A KiwiBuild spokesperson told Built Offsite the New Zealand government’s housing agenda includes increased public and emergency housing for families in need, improving the standards of rentals and modernising tenancy law, banning overseas speculators from buying existing houses and adjusting the tax settings around property investment, and increasing homeownership while reducing the housing shortage by increasing the supply of affordable homes. This last is KiwiBuild’s central objective; over the next 10 years, KiwiBuild aims to work with the private sector to build 100,000 new, affordable homes and sell them to first home buyers.

KiwiBuild is getting affordable homes built in four ways: firstly, it’s partnering with the private sector, including buying off the plans – KiwiBuild underwrites a portion of eligible homes in new developments, which reduces a developer’s risk, creates efficiencies and enables accelerated delivery. Secondly, KiwiBuild is making land available for development, by identifying and acquiring suitable Crown or private land, and then on-selling it to developers with a requirement to build a percentage of quality, affordable new KiwiBuild homes. Thirdly, the program is targeting large scale projects – KiwiBuild is integrating affordable housing into major urban regeneration projects. Government-led developments are the fourth plank of the program. KiwiBuild is working with other government agencies, such as Housing New Zealand and Homes, Land Community (HLC), to include KiwiBuild’s affordable, high-quality starter homes in their developments.

To achieve the scale of homes required, KiwiBuild is engaging with off-site manufacturing suppliers, which will help bring homes to market faster.

“KiwiBuild stimulates the supply of affordable homes by working with property developers to build more affordable, high-quality, starter homes for New Zealanders who have been priced out of the market.”

“Offsite manufactured components are already in use in KiwiBuild homes, including the first homes completed. This will be taken a step further to help KiwiBuild meet its target of 100,000 homes and grow the offsite sector. KiwiBuild launched an Invitation to Pitch for Offsite Manufacturing procurement last year and received over 100 responses. KiwiBuild has invited 44 respondents to proceed to the next stage of the offsite manufacturing evaluation and present their proposals to KiwiBuild in the first part of 2019. Successful applicants will then be shortlisted and commercial discussions will begin in July.”

“KiwiBuild launched an Invitation to Pitch for Offsite Manufacturing procurement last year and received over 100 responses. KiwiBuild has invited 44 respondents to proceed to the next stage of the offsite manufacturing evaluation and present their proposals to KiwiBuild in the first part of 2019. Successful applicants will then be shortlisted and commercial discussions will begin in July.”

KiwiBuild spokesperson.

Turning to South East Asia, the Singapore government has made headlines in recent times with the launch of an Industry Transformation Map (ITM) in late 2017. This underpins the government’s strategy to improve the productivity of its construction sector, through the increased use of digital technologies and prefabrication building methodologies.

Significantly, the ITM was conceived to ensure succession planning in an industry previously reliant on foreign labour. With the improved working conditions of offsite manufacture intended to attract Singaporean workers, the objective was to attract new talent to a higher status industry requiring technical competency and offering better working conditions.

The Singapore government’s ongoing commitment to offsite is evidenced by a program to release land for projects which mandate the use of modular construction, in particular Prefabricated Prefinished Volumetric Construction (PPVC). The Government’s Housing Development Board is constructing 30% of all its new dwellings in concrete modular with the aim of 100% in five years’ time.

Singapore’s Building & Construction Authority (BCA) continues to actively promote PPVC. “PPVC is one of the game changing technologies that support the DfMA [Design for Manufacturing and Assembly] concept to significantly speed up construction. It can potentially achieve a productivity improvement of up to 50% in terms of manpower and time savings, depending on the complexity of the projects,” says a statement on the authority’s website.

Raymond Chan is Project Director at Teambuild Construction, Singapore, a company working within this new construction landscape, and the PPVC supplier/ installer for The Brownstone scheme, hailed as the world’s largest residential demonstration of PPVC. He says offsite is a key strategy for Teambuild. “Since 2014, we have embarked on our PPVC journey where we become the first firm to adopt such construction methods for both public and private high-rise residential projects. We have also acquired a piece of land in Singapore for the construction of multi-storey, modern hi-tech production facilities for the production of PPVC.”

“Since 2014, we have embarked on our PPVC journey where we become the first firm to adopt such construction methods for both public and private high-rise residential projects. We have also acquired a piece of land in Singapore for the construction of multi-storey, modern hi-tech production facilities for the production of PPVC.”

Raymond Chan, Project Director, Teambuild Construction, Singapore.

“Our records show a 40% increase in productivity for projects using PPVC as compared to conventional methods,” Chan confirms. “Currently 9 out of 11 of our projects involve PPVC.”

In Hong Kong, the government is on a drive to transform the construction industry through the Construction Innovation and Technology Fund, promoting the innovation and automation, digitisation and industrialisation of construction. Modular Integrated Construction (MiC) is one of the methods currently being promoted.

A 500 module 18 storey building to accommodate staff at the Hong Kong Science and Technology Park recently commenced site works, with Australian based modular design specialist Alda Consultants acting as the project advisor. The MiC Display Centre was established late last year by the Construction Industry Council to showcase the government’s initiatives and a range of pilot projects to challenge conventional building methods.

Meanwhile in India a major housing program is underway for constructing nearly 10 million units by 2022 in urban areas alone. The government is exploring new global construction technology options towards fast delivery with quality and sustainability. And it recently launched a global challenge to identify innovative technologies that can be used for increasing housing delivery.

In the European market, pressing developments in the United Kingdom (at the time of writing still classified as EU) have fomented the offsite construction debate, not least due to Brexit-induced fears around further erosion of already scarce skills supply. The House of Lords Science and Technology Committee report ‘Off-site manufacture for construction: Building for change’, released last July, stated that the existing construction sector was inadequate to meet the UK’s demand for housing and recognises the need for both Government and the construction sector to urgently find solutions.

Mark Farmer, Founding Director & CEO, Cast Real Estate & Construction Consultancy, who authored the governmentcommissioned Farmer Review of the UK Construction Labour Model in 2016, notes that, amid this febrile atmosphere, the acceleration of digital technology is now promoting a new debate about how offsite manufacturing might be supercharged.

“At the moment, the bulk of the UK offsite sector is fragmented, poorly capitalised, not scalable and more ‘building in a shed’ than advanced digital manufacturing. A first wave of technology-led construction manufacturers is now appearing in the UK which is starting to disrupt the market and potentially will ‘skip over’ existing players through ability to offer digitally assured, customisable designs and manufactured products.”

He adds that the UK government is in the process of mobilising its own direct works program, aligned to the use of offsite and other Modern Methods of Construction. “Five major government departments spanning education, health, transport, defence and prison assets are moving to a ‘presumption in favour’ of using modern methods by the end of this year. This could have a major impact on reshaping the UK’s supply chains and procurement models with billions of pounds of spend potentially being redirected to centrally defined digital design platforms and standard component libraries to create a ‘kit of parts’ for public buildings.”

“Five major government departments spanning education, health, transport, defence and prison assets are moving to a ‘presumption in favour’ of using modern methods by the end of this year. This could have a major impact on reshaping the UK’s supply chains and procurement models with billions of pounds of spend potentially being redirected to centrally defined digital design platforms and standard component libraries to create a ‘kit of parts’ for public buildings.”

Mark Farmer, author, The Farmer Review of the UK Construction Labour Model.

At the same time, Homes England, the government’s agency controlling public land disposal and funding for housing, is increasingly influencing the private market towards adoption of innovative construction. One of the UK’s largest home builders, Berkeley Group, is currently building, just outside London, what will become one of the most advanced modular home manufacturing plants in the world, scheduled to go live in early 2020.

“The jury is still out on whether the UK has passed its ‘tipping point’ on the way to mainstream use of offsite,” says Farmer. “The biggest risk perhaps is Brexit related economic instability derailing confidence in innovation and R&D and delaying what is now an urgent imperative for change.”

Heading north, Sweden has long been regarded as a global leader and progenitor of offsite construction, having developed methodologies as early as the 1940s and prior, to enable building within the country’s harsh climatic conditions. In 1965, with a population of eight million and facing a looming housing crisis, the government initiated the 10-year ‘Million Homes’ plan, aided by factory-built housing and widely regarded as a benchmark-setting roll out.

As recently as 2018, the government could be seen to be playing an active role in setting the agenda for construction innovation. The ‘Policy for Designed Living Environment – 2018′ document cites central government as having a number of roles in which it must act as a role model – not least as a developer and property manager.

“Municipalities and county councils should act as role models when commissioning public environments, in construction projects and when managing property to ensure the design and management of high-quality environments with allround sustainability. Municipalities also have a particular responsibility to act as role models when creating public spaces and determining the location of municipal facilities.”

In particular, Sweden’s long tradition of building in timber is regarded as a legacy worth safeguarding through government incentives. “Technological developments have created conditions for increased use of wood, particularly in housing construction, and there is potential for development and growth of wood construction. Construction using sustainably produced forest products should be encouraged in order to increase climate benefit, housing construction, exports and employment across Sweden.”

In the city of Växjö, the municipality’s wood construction strategy exemplifies this philosophy. As part of the strategy Växjö Municipality’s set a goal that by 2020, 50% of new builds would be timber-based. An example of local schemes is the Skärvet Växjö development, which forms part of a long-term vision for a sustainable urban development along the railway line from Växjö city out to the lake Norra Bergundasjön.

In the NorAm market, the modular building is being recognised in the United States as one solution to multifaceted problems causing an historic and grinding affordability crisis. Carol Galante, I. Donald Terner Distinguished Professor in Affordable Housing and Urban Policy at UC Berkeley’s Terner Center for Housing Innovation, recently commented: “Housing prices for both homeowners and renters are going up at exponential rates compared to wages.”

“Housing prices for both homeowners and renters are going up at exponential rates compared to wages.” Carol Galante, I. Donald Terner Distinguished Professor in Affordable Housing and Urban Policy at UC Berkeley’s Terner Center for Housing Innovation.

The problem is acute in California’s Bay area, where construction prices have risen by nearly a third in the past three years, but is replicated in many markets across the US. Government is taking action, with recent developments emerging at a local city authority level. In Seattle, the King County Department of Community and Human Services (DCHS) recently launched a modular pilot encompassing three affordable-housing projects. The State of Washington contributed $1.5 million to the project. In March, New York City’s Department of Housing Preservation and Development announced plans to develop affordable housing units in Brooklyn using modular construction. The $70 million project, designed by Think! Architecture, will be the first under the Housing New York 2.0 program to use modular building methods for property owned by the city.

In Canada, evidence of governmental support for offsite methodologies is manifest. Kamal Sabaratnam, Vice President of Toronto based construction innovator H+ME Technology, describes the Canadian government’s support for offsite construction as aligned with “a general idea or philosophy in supporting the new technologies to facilitate home building using BIM technology and automation.”

In terms of the roles played by national, state and local agencies, building codes are a driver.

“The National Building Codes (NBCC) and our Provincial Code (OBC) provide the minimum standard to which new housing must be constructed. Naturally offsite construction will provide a better housing product from a structural standpoint and will be more energy efficient, although the codes currently do not differentiate between onsite and offsite construction.”

“The only code reference for offsite construction is that it should conform to the CSA-277-16 Standard. The CSA-A277-16 Standard is the ‘Procedure for Certification of Prefabricated Buildings, Modules and Panels.’ It provides the standard for prefabricated systems and focuses on compliance in accordance with a quality assurance program. H+ME Technology is CSA Certified to the CSA-A277-16 Standard.”

“The only code reference for offsite construction is that it should conform to the CSA-277-16 Standard. The CSA-A277-16 Standard is the ‘Procedure for Certification of Prefabricated Buildings, Modules and Panels.’ It provides the standard for prefabricated systems and focuses on compliance in accordance with a quality assurance program. H+ME Technology is CSA Certified to the CSA-A277-16 Standard.”

Kamal Sabaratnam, Vice President, H+ME Technology.

Challenges endemic to the Canadian market echo those throughout the world, and might be mitigated by government action, he says. “Generally the shortage of labour in our industry sector is one area the government could play a critical role, either through employee programs or incentives.”

Recognition of the benefits of offsite construction is a welcome development, Sabaratnam concludes.

“With Canada’s municipalities responsible for the local development plans for housing, which sometimes add development delays for approval and regulations, offsite construction will shorten the actual building time, facilitating the builder or developer in getting the product to market.”■