Asset management of MMC Homes
It is easy to understand how the use of modern methods of construction (MMC) directly improves the preconstruction and build phase of a development for housing providers and developers. The potential for speed and design delivery as well as consistent quality standards through precision engineering means the upfront benefits of MMC are widely promoted.
However, as MMC becomes mainstreamed into delivery how can the sector provide assurance that those initial benefits will feed through into the long term asset management of the homes being built?
Do MMC homes provide different challenges to asset management teams for housing providers and local authorities?
First of all what do we mean by MMC? In order to understand the impact of an MMC home for a long term asset holder, such as a housing provider, it is useful to refer to the defined MMC categories now published by the Ministry of Housing, Communities and Local Government which places MMC into seven categories. Category 1 being fully pre-manufactured volumetric products which can be craned in as complete homes onto site, through to category 7 which covers improvements in productivity offsite thus reducing the amount of labour required on a site on a traditionally constructed project. Within that spectrum of seven categories are pre-manufactured component parts of homes such as panelised systems as well as kitchen and bathroom pods.
Benefits of MMC for the long term asset management of housing
Taking the example of a category 1 fully volumetric product which leaves the factory 100% complete, the housing provider should be able to receive assurance from the manufacturer that each element of the product can be identified and the source of materials confirmed along with requisite guarantees. This means that the allimportant golden thread of information can be preserved, as recommended by Dame Judith Hackitt, and which is now a central theme of the consultation on Building a Safer Future. A housing provider, working closely with the manufacturer, can establish where the individual component parts have been sourced and can influence what elements are installed in their homes. This also makes it much easier for a housing provider to store data about their homes digitally and to comply with the Building Information Modelling Standards (BIM) which could be mandated as part of the Government's latest consultation.
Therefore the importance of the ability of MMC to provide housing providers with accurate data on the construction of their housing stock should not be underestimated. In order to fully maximise the benefits it is essential that the development and asset management teams work closely together in specifying the makeup of the home and educate their in-house or outsourced maintenance teams on how to maintain and repair those products, where they may differentiate from elements in traditionally constructed homes.
Funders are asking for more data on the life cycle of MMC homes on the basis that they need to be confident that the products will not depreciate in value. For new MMC products a regular checking process can be implemented to provide security for both funders and housing providers that the durability of an MMC home is comparable to a traditionally built home.
It is important that the selection process for MMC manufactures includes evaluation on the longer life cycle costs and sustainability of their products and reduced asset management costs in order to potentially offset any higher construction and installation costs compared to a traditionally built scheme.
Tender documents need to be designed with the evaluation of longer life cycle costs in mind. The most recent Public Contracts Regulations 2015 make it clear that life cycle cost (eg non-price elements) of a product/ works/service may be taken into account at the point of procurement. Given this, clients seeking to evaluate the cost/benefit of a MMC solution versus a traditional build solution need to select a quality/price evaluation formula that anticipates and incorporates all of the non-price elements (e.g. ongoing costs), as well as the quality and price elements of a bid.
The traditional focus on lowest price scores the highest marks in price evaluation under a public procurement process does not allow for life cycle costing to be taken into account. However, there are price evaluation formula that can be used to focus on quality-driven, valuebased prices not lowest price. For example, by adopting an absolute price evaluation model (e.g. a price/quality ratio), a client is able to evaluate the quality and cost elements of a bid on its own merits and ascertain how much quality it is obtaining for the price of the bid, rather than seeking to compare two different methods of construction against each other on a lowest cost basis.
Latent defects insurers are also addressing the importance of designing out defects to maintain quality and can provide sign off at the milestone completion stages of each home either in the factory and on site to provide comfort to funders.
For a housing provider or local authority embarking on an MMC scheme for the first time it is recommended that the asset management teams work closely with the development team to understand the component parts of the MMC product and that the asset management team are involved in inspections in the factory environment to ensure that appropriate warranties and guarantees are requested from the manufacturer and any suppliers and subcontractors.
BIM should be used as a tool to create a long term data record for the asset management teams to use to maintain the MMC homes at the outset so that the life cycle costs of the MMC products are evaluated in competition with similar products. This can provide comfort to the housing providers and funders that they are selecting quality products on a long term sustainable basis.