Australia’s prefab challenge is no longer the factory

“Australia now needs a ten-year national mission for industrialised construction.”

(Main image: ModnPods’ Arundel manufacturing facility in Queensland, where modular housing is produced using lean manufacturing principles focused on streamlined production, waste reduction and shorter build times.)

For Associate Professor Ehsan Noroozinejad of Western Sydney University, that is the central challenge facing Australia’s growing push into modular, prefabricated and other modern methods of construction.

The country does not lack pilot projects. Nor does it lack manufacturers, researchers or construction technologies.

What it lacks, Noroozinejad argues, is a system capable of connecting them.

“We have many pilots, capable firms and strong researchers, but the system remains fragmented. Manufacturers face uncertain demand. Approvals vary. Finance is designed around on-site progress. Insurers are cautious. Training still separates construction from manufacturing and digital work.”

It is a useful starting point for the final part of Built Offsite’s series on Australia’s housing and manufacturing future.

Part One asked whether housing policy should also be industrial policy. Part Two examined the balance between Australian manufacturing and imported building systems.

Part Three asks the question that follows both: what would it actually take to make industrialised construction work at scale?

For Noroozinejad, the answer begins well before a module reaches the factory floor.

Give manufacturers something to invest against
Factories need orders.

More importantly, manufacturers considering new facilities, automation and workforce expansion need confidence that those orders will continue.

Noroozinejad argues governments could provide part of that certainty by publishing a clearer forward pipeline across social, affordable, key-worker and regional housing.

Where practical, demand from different levels of government could be aggregated, while common performance requirements and open building-system interfaces would allow engineering to be reused rather than recreated for every project.

“This would allow firms to reuse engineering, improve products and invest with confidence,” he says.

“It would also support mass customisation: repeat the hidden platform while allowing homes to respond to household, site and climate.”

Simon Croft makes the same point from an investment perspective.

“If Australia is serious about improving housing affordability and building a stronger industrialised construction sector, the focus must shift from short-term interventions to the long-term productivity reforms that enable sustained growth and investment.”

That shift matters because the investment horizon for manufacturing is very different from the political or procurement cycle.

“Manufacturers make investment decisions over decades, not electoral cycles.”

For Croft, regulatory stability and consistency across jurisdictions may ultimately do more to encourage investment than direct subsidy alone.

Government procurement still has an important role, particularly where the public sector is a major purchaser of housing and other buildings. But Croft argues it should provide clear market signals and predictable demand without prescribing particular technologies or business models.

Zen Haus Group Managing Director Jan Lienemann is equally direct about the need to move beyond proving the concept.

“Australia does not need more small-scale demonstrations showing that prefab can work. We already know it can work. The challenge now is creating the commercial, regulatory and financial environment that allows it to operate at scale.”

The factory cannot fix a bespoke housing system
There is another problem waiting when the work arrives.

Australia still designs and procures much of its housing as a series of individual projects.

Adam Dawson argues manufacturers are effectively being asked to industrialise inside a market that remains highly bespoke.

Every change in structural grid, span, roof form, service zone or connection adds another layer of engineering and production complexity.

Dawson’s answer is not uniform housing, but greater repetition beneath the architecture.

Standardise what residents rarely see — interfaces, engineering logic, service zones and compliance pathways — while retaining choice in the finished home.

That thinking closely matches Noroozinejad’s concept of mass customisation.

It also raises a broader question about where Australia should look for productivity gains.

The industrialisation debate often gravitates towards new modular factories and highly automated production lines. Dawson points out that Australia already has extensive prefabrication capability in areas such as frame and truss manufacturing.

Better design coordination and less unnecessary variation could allow those existing factories to operate more efficiently.

Industrialising housing does not necessarily begin with building more factories. It may begin with making better use of the manufacturing capability already in place.

Finance has to recognise where the value is created
Then comes finance.

This is where industrialised construction runs into a system designed around a very different construction sequence.

“Manufacturers spend money before a module reaches the site, while traditional lending often releases funds after work is fixed in place,” Noroozinejad says.

With offsite construction, substantial value may already exist inside a factory — in materials, labour and completed assemblies — while little has visibly changed on site.

Noroozinejad argues finance needs to recognise that through manufacturing milestones, suitable security arrangements and valuation models designed for factory production.

Lienemann sees the same mismatch.

“Without suitable finance, even very good projects can stall because the funding model does not match the delivery model.”

Simon McCarthy argues greater understanding among Australian lenders could also influence which developers are able to use industrialised construction.

International organisations already familiar with financing manufactured buildings can have an advantage when local developers are still trying to fit factory production into conventional construction finance.

The technology may be ready. The funding model has to catch up.

Regulation cannot keep starting from zero
Regulation presents a similar contradiction.

One of manufacturing’s principal advantages is repetition. Produce the same system repeatedly and its performance, quality controls and processes should become increasingly well understood.

Yet industrialised systems can still face repeated testing and approval as projects move between jurisdictions.

Noroozinejad argues for a clearer national pathway in which factory quality assurance can be recognised and supported by a digital record covering design, materials, testing, certification, transport and installation.

“National consistency must not mean weaker checks. It should mean fewer repeated checks and clearer accountability.”

Croft sees regulatory capability as part of a much wider question about whether Australia has the institutions needed to support construction innovation.

He argues standards, certification and approval pathways need to deal efficiently with new construction systems while maintaining the required levels of safety and performance.

But he also points further upstream.

Australia, Croft argues, needs a stronger national construction research and development ecosystem, connecting the research capability already sitting across universities, builders and manufacturers.

That includes a stronger research base behind the National Construction Code and Australian Standards, supported by building science, testing and performance evaluation.

The countries that lead in construction innovation, in his view, are not simply buying more machines. They are also investing in the evidence that allows new technologies and systems to be understood, regulated and adopted.

The skills gap starts at the drawing board
For McCarthy, one of the industry’s less visible constraints appears much earlier — in design.

Relatively few architects and engineers, he argues, are trained to work from the outset with proprietary kit-of-parts and volumetric systems.

That matters because industrialised construction works best when manufacturing informs the design from the beginning.

If DfMA enters after a building has largely been designed, many of the potential gains may already have been lost.

Noroozinejad sees the workforce challenge extending across the sector.

Digital designers, manufacturing engineers, robotic technicians and assembly specialists will increasingly work alongside builders, trades, certifiers and installation teams.

TAFEs, universities and industry therefore need training that crosses the traditional divide between manufacturing and construction.

Croft makes a similar point. The future workforce will need to combine conventional trade capability with advanced manufacturing, digital engineering and construction technology.

That combination is important because industrialisation is not simply about replacing site labour with factory labour. It changes where work occurs, how information flows and which skills are needed at different stages of the building process.

Noroozinejad also cautions against treating technology as the objective in itself.

“Technology should solve a delivery problem. It should not become an expensive display.”

DfMA, BIM, product libraries, automation and digital records matter because they allow knowledge to be retained and reused.

That is what manufacturing does particularly well: it learns from repetition.

Success should be measured by outcomes
The final question is how Australia decides whether any of this is working.

Noroozinejad argues governments, manufacturers, community housing providers, researchers and residents need better opportunities to test entire delivery systems under real conditions.

Demonstration projects can still play a role, but they should examine procurement, regulation, finance, construction systems and resident outcomes together — not simply prove that a particular construction technology functions.

McCarthy identifies a related weakness in the lack of comparable industry data on cost, time, defects and performance.

Lienemann similarly argues for comparing planned and actual delivery time, waste, safety, defects and building performance.

Croft is particularly clear about what the industry should ultimately be judged against.

“Success over the next decade should be measured by outcomes rather than processes.”

Those outcomes, he argues, should include more housing, improved affordability and productivity, stronger manufacturing capability, increased innovation and expertise capable of competing internationally.

Noroozinejad puts a similar horizon on the challenge.

“By 2036, success should mean a stable Australian MMC sector that delivers faster without lowering quality; offers real choice rather than identical boxes; cuts waste and carbon; creates skilled jobs; serves metropolitan, regional and remote communities; and can compete internationally.”

His final point captures much of what has emerged across all three parts of this series.

“The goal is not simply more factories. It is a housing delivery system that Australia can trust, adapt and sustain.”

That is also where Croft’s emphasis on long-term productivity reform lands.

The factory matters. But so do the procurement system feeding it, the finance model funding it, the standards regulating it, the designers working with it, and the research and skills base supporting it.

Australia’s prefab challenge is no longer simply proving that buildings can be made differently.

It is creating the system that allows those methods to become repeatable, investable and commercially durable.