Modern methods of construction and ESG

The viral load

The construction industry faces the on-going challenge of labour shortages, exacerbated by the departure of EU labour, ageing workforces, and the pull of labour to major infrastructure and transport projects such as HS2. 

Margins have been significantly affected by the pandemic as final account negotiations are prolonged and the cost of materials and labour has increased significantly. As an example, the Department for Business, Energy and Industrial Strategy (BEIS) has reported that average costs for purchasing materials in October 2021 were 24.5 per cent higher than in October 2020, and labour rates in some regions have seen an increase of 40 per cent.

Modern methods of construction (MMC) and the emergence of a digitally skilled workforce create an opportunity for the industry to deliver both a more efficient delivery of projects and a greener asset.  

From design through to delivery, the industry must focus its efforts on finding innovative solutions at a quicker pace. Enhanced collaborative use of BIM technologies, digital twins, augmentation and virtual reality, along with design of new materials and robotic delivery, will help the progression towards smart infrastructure, buildings and cities.

Those businesses unwilling or unable to adopt new technology and digital strategies will become less attractive during the procurement stages, and fail to attract the next generation of workers to the industry. There is also a threat of tech companies seizing the opportunity to enter the market with digital solutions. 

Treading gently: Modern methods of construction 

The advances in hybrid or whole-modular construction are there for all to see. According to a recent Savills report, the percentage of new UK housing constructed using advanced building methods is expected to hit 20 per cent by 2030. In April 2021, a Dutch couple moved into Europe’s first fully 3-D printed home, in a world-leading example of adopting this rapidly evolving technology for residential use.

Crucially, modular builds are supported by government funding, and other MMCs are likely to join the list with the launch of the Whole Life Carbon Roadmap for the Built Environment.

Finding the comfort zone

As the 3-D printed home example shows, the appetite from buyers is there. It’s these trends and generational attitudes that will inform the design plans of the future. And it’s not just the construction that’s to come – the existing stock of commercial and domestic buildings also need investment to become energy-efficient. 

Deciding who will bear the responsibility for that investment will be the subject of heated debate. Contractors are under pressure during government and private tenders to deliver green and cost-effective solutions, but the government and end users are often unrealistic as to what can be achieved on a lean budget. They must be mindful of the already very low margins for contractors when completing projects. For private sector projects, the upside for construction businesses is that investment returns are much likely to be higher on more environmentally friendly stock, and finding access to funding for greener projects will be much easier.

According to the Department for Environment, Food & Rural Affairs (Defra), in 2018 63 per cent (137m tonnes) of the total waste stream in England was attributed to construction, demolition and excavation waste. While 92.3 per cent of non-hazardous site waste was recovered, this is a huge amount of waste created. Because modular homes are constructed offsite in a controlled factory environment, and use efficient designs that are continuously improved, it is estimated that waste generated through this building method can be cut to just 1.8 per cent .

Policy push

Government regulations are already playing their part in shaping what we’ll come to expect as standard features – charging points for electric vehicles, for example, are set to be a requirement for all new build houses in Britain from early 2022. But looking further ahead, should the government decide to invest in new roads with charging plates, or if public transport begins taking more commuters away from private vehicles, an EEV charging point at the front door may become a nice-to-have rather than a necessity.

The mandate for EEV charging points is an essential part of our transition to net zero transport, but this is just one part of making our transport system smarter. Investment in high-speed internet access, the energy grid and smart utilities is also needed if we are to realise the potential of smart city developments and continue striving for improvements in ESG criteria.

The challenges ahead should not be underestimated: The industry is expected to design and create greener and smarter infrastructure and buildings on thin margins and with a shrinking workforce. Achieving the advancement needed in MMC and smarter assets therefore requires collaboration across the industry and the supply chains.   


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RSM can help your construction business optimise its operational and cost efficiencies. Contact Kelly Boorman to find out more.

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