Please turn your device to portrait.
Simon Croft on HIA’s efforts to support greater uptake on modular construction practices.
Michael Dolphin, publisher of Built Offsite, sat down with Simon Croft, Chief Executive, Industry & Policy at the Housing Industry Association (HIA), to discuss key findings from the HIA’s 2022 report on modular and prefabricated construction in Australia The report, which identified several regulatory barriers hindering the growth and adoption of these construction methods, served as the basis for a wide-ranging conversation on the challenges and opportunities facing the industry.
Built Offsite wanted to see how things have progressed since the report’s release, exploring what steps have been taken to address these barriers and how the industry is adapting to the evolving landscape of modular construction. Simon Croft provided valuable insights into the current state of the industry, highlighting ongoing efforts, remaining challenges, and the path forward for wider adoption of modular construction in Australia.
Q: How significant are the regulatory barriers identified in your 2022 report for the growth of modular and prefabricated construction in Australia?
A: The report identified a range of different regulatory barriers that are holding back the broader adoption and streamlined application of prefab modular components or systems in buildings in Australia. These barriers cut across not only building codes and standards but also more broadly at a state level, including planning rules and licences.
It covers a broad range of regulatory issues that haven’t really been fully explored over many years. There may have been past instances where only one component of the system was identified as a barrier, whereas this report aimed to identify a wide range of regulatory barriers.
Q: What specific challenges do modular construction companies face in obtaining planning and building approvals compared to traditional construction methods?
A: If you look at the building code and standards, or at state building or planning systems, they don’t explicitly reference prefabricated modular construction. Most are written with traditional construction in mind.
This acts as a disincentive and creates uncertainty for both building companies that want to use these systems and for approval bodies, such as building certifiers and those in the planning system. Without explicit references, there is uncertainty, which leads to different interpretations and inconsistent approaches.
Q: The report mentions the need for standardised terms in the planning system. How do you see the impact of implementing standardised terms for offsite construction in the National Construction Code (NCC)?
A: For manufacturers and suppliers, without that direct reference, it creates uncertainty about bringing new products and systems to market because they might be subject to varying interpretations or approvals.
There’s a leadership role here for the NCC, the code, and the standards to include explicit rules that acknowledge both traditional systems and these newer systems whenever new provisions are introduced. It’s really important for the Australian Building Codes Board and standards committees to consider this as another common construction method and to have tailored requirements to help break down those barriers.
Q: Can you elaborate on how the inconsistencies between states and territories in planning and building regulations affect the adoption of modular construction?
A: Planning systems typically assume you’re building a standard four-bedroom, two-bathroom, double garage house and don’t account for more innovative forms of construction, like modular systems. This tends to push you towards a standard design that doesn’t facilitate newer or more innovative construction systems.
Similarly, state and territory building systems are often set up with traditional construction in mind. For instance, deposit structures and inspections are written assuming you’re building stick by stick, with stage inspections for pre-pour, framing, lock up and slabs etc.. When you’re bringing in a full, enclosed system, these processes don’t align with the modular approach, which needs to be considered differently.
Q: What role do you think the Australian Building Codes Board (ABCB) should play in facilitating the integration of modular construction into existing building codes?
A: The Federal Industry Minister, Ed Husic, has shown leadership on this issue and has engaged the ABCB through national Building Ministers to develop, in the first instance, a guideline to clarify the current rules in the code and then to look at ways to fast-track and streamline the code for the future.
There’s a real leadership role for the ABCB to play here, and they are undertaking that work. We’re very pleased to see it and have been supportive and encouraging of this work over many years.
Q: How do the current financial and insurance structures limit the adoption of modular construction, particularly for small to mid-sized companies?
A: I’ll probably address this from the perspective of the current contract terms, deposit limits, and stages of completion, which are again written with standard stick-by-stick construction in mind.
For example, the system has a set deposit, a frame payment, a lock-up payment, but these don’t work as well for modular systems. We would like to see a tailored approach because there’s a lot more upfront investment in wall and floor systems when you bring them in, and it’s nearly a complete home. These deposit limits and payment structures don’t really fit this model.
Financial institutions set many of their payments around these structures. We would like to see a more tailored approach to better support companies wanting to invest and scale up to produce these systems, which require higher upfront manufacturing costs.
Q: What are the key challenges associated with the compliance and quality control of modular buildings, especially regarding enclosed prefabricated components?
A: It’s challenging to change the mindset when people are used to building a frame onsite and then inspecting it. When something is built offsite, potentially even outside the country, there’s uncertainty about whether and how it meets the code—what’s inside that wall or floor system.
The current building regulatory system doesn’t really accommodate this. Another related issue is when a modular system transitions from being just a product to becoming part of an actual building, and determining where the liability lies. This is something we need to address, as it can be a barrier to adoption.
Q: The report suggests that education and upskilling are essential for the industry. What specific initiatives does the HIA recommend to better educate professionals about modular construction?
A: We’ve been really encouraging the adoption of common terms and language within building codes and the development of a handbook to clarify how the current rules apply to modular construction. Without this clarity, there can be a lot of inconsistency in how different people interpret what’s required.
Additionally, it’s important to educate on how these very product-specific systems interact with other systems within a building. Just as we transitioned in the past in building wall and roof frames onsite to using prefabricated trusses, a similar transition and mindset change would apply to using a greater volume of modular wall, floor, and roof systems. Equally it’s crucial to understand how these components work together and for correct installation onsite.
Q: How can government incentives be structured to encourage the use of modular construction in public and private projects?
A: The government has a leadership role to play here, especially with their own projects, such as social or community-affordable housing. They can showcase demonstration projects to highlight the benefits of modular construction.
There’s also a strong interest in secondary homes or mobile homes, which ties into this approach as well.
Q: How do you see the role of third-party certification in increasing confidence among consumers, builders, and regulators for modular construction?
A: New Zealand has taken a pathway where they certify the manufacturing process, which we are watching closely in Australia. This approach could help overcome some of the uncertainties about how modular systems are assembled and whether they meet all the relevant codes and standards.
Certification or approval of the manufacturing process could provide much-needed assurance and confidence. We believe this is an area worth exploring, and the ABCB has been asked to consider it as one of their options. While it’s a longer-term goal, we are closely monitoring international approaches, including New Zealand’s.
Q: How can Australia learn from international practices in countries like Japan and Sweden, where modular construction is more accepted?
A: The Housing Industry Association is part of an international housing association, and we recently had a meeting where this topic was discussed at length. Many countries around the world are looking at prefab and modular systems, with some already having a greater uptake than Australia.
In our report, we discussed some of the differences in these systems, such as those in Japan and Scandinavian countries, which have higher adoption rates. We’ve taken some recommendations from these countries, particularly in fast-tracking housing, addressing skill shortages, and managing quality compliance, as well as simplifying building codes and standards.
There’s a lot we can learn from overseas, and we’re actively looking at these approaches. The conversation we’re having here is very consistent with those happening in other developed countries.
Q: The report highlights the need for new standards specific to modular construction. What areas do you think should be prioritised in the development of these standards?
A: Our structural standards already facilitate this to some extent, but we would like them to be clearer in how they apply to modular construction. Our fire safety standards also support this. However, other areas, such as energy efficiency, weatherproofing, cladding systems, and condensation management, are often written with traditional construction in mind and don’t work as well for modular systems, which are often single-element types.
These are the areas we need to focus on when writing new standards and codes, ensuring they account for modular construction as an equal, relevant, and viable form of construction, just like any other traditional methods.
Q: In what ways can the HIA collaborate with other industry bodies and government agencies to streamline the adoption of modular construction across Australia?
A: We are working very closely with the ABCB and a range of other industry bodies on the next stages of work stemming from the building ministers’ initiatives.
We were also in the past part of the Pre-Fab Innovation Hub, which produced seven reports. We would love to see that work reinitiated, as the industry has come a long way since those reports were developed. We collaborated with prefabAUS and several other organisations on those developments, and we encouraged the government to revisit some of the projects and recommendations identified in that work.
We are also working closely with state and territory governments on these issues and other relevant federal government agencies.
Q: Do you have any further thoughts or comments you’d like to add?
A: The only other point I’d like to make, Michael, is that we’ve been discussing the opportunities and challenges in delivery of the government’s ambitious housing agenda of building 1.2 million new homes over the next five years.
Prefab, modular, and 3D printing all have a key role to play, but they’re not the solution in and of themselves.
They are an important part of the government’s strategy to meet housing targets, but they’re not the full solution or a silver bullet. They will contribute alongside a range of other measures and reforms that need to be implemented.
Michael Dolphin: Thanks very much for your time Simon, and great to speak with you.
Simon Croft: My pleasure.
Download the 2022 report (pdf) HERE
See: https://hia.com.au/our-industry/prefab-and-modular-construction
