The recently published National Planning Framework in Ireland is a sweepingly impressive document in both its scope and ambition.
It sets out to plan for a population growth of 1 million people in the next 20 years, including additional 660,000 jobs in a sustainable way that will attempt to redress the mistakes of the past.
It succinctly sets out the current and future challenges such as low quality of life in Dublin in particular, disproportionate economic concentration in and around Dublin and our aging populations
At €116 Billion, it is the largest capital planning framework ever envisaged in the state.
There is an impressive list of headline building projects including;
- Three hospitals for dealing with elective surgeries to cut waiting lists
- 2,600 extra acute hospital beds by 2027 (four years ahead of Bed Capacity Review)
- Hundreds of new community nursing home beds
- Major primary care investment
- New IT system for HSE
- New agency to speed up home construction
- Funding to replace Garda PULSE system
- €1bn for Rural Regeneration Scheme
- New control centre for Dublin Airport
- New schools in at least 23 counties
- Millions to upgrade ITs
- Regeneration of Waterford Quays
- Second runway for Dublin Airport
- Metro North
- DART expansion
- M20 from Limerick to Cork
- Children’s Hospital
- Athlone and Sligo to get special status for growth
Source; Irish Independent 15.02.18
This is an impressive list of projects which would stretch the current capacity of the construction industry on their own. Add to this then the significant investment in housing and private development and the seeds are sown for significant demand driven inflation.
The Housing Gap
The report states that in order to provide accommodation for the growth in population, it is envisaged that 500,000 new homes will be required in the next 20 years, or an average of 25,000 residential units to cater for the additional population growth.
It is expected 40% or 10,000 units per year will be delivered within existing built up areas.
Current housing completions are estimated at less than 10,000 per year. It is not known what the true figure is because official methods for collecting data are fundamentally flawed.
In order to make up for low levels of building since 2010, it is estimated that 35,000 houses a year need to be built up until 2027 which means we’re currently producing less than 30% of the figure needed.
The Skills Gap
At the peak of the construction industry in Ireland in 2007 there were almost 300,000 people employed. At the depths of the downturn in Q1 2013, the total stood at approximately 97,000. It has subsequently recovered to about 145,000, still only half of the peak.
With the economy now close to full employment and only about 12,000 young tradespeople in apprenticeships, there is going to be a major squeeze in labour supply.
This will have the result in making projects becoming unviable as wages increase due to demand to a scarcity of skilled labour to deliver on the plan, not to mention all the private sector development planned.
The UK Housing Crisis
Similar supply side problems exist in the UK. Like Ireland, there are not enough young people entering apprenticeships. Recent uncertainty around Brexit has led to a huge reduction in the number of Eastern European construction workers on which the industry now depends.
Since 1970 the number of UK housing completions has been on a long term downwards trend.
It is estimated that 300,000 housing units per year are needed to keep pace with demand and the number needed just to catch up with past shortfalls is two million homes.
Currently, total housing output is 165,000 units per year.
This has had a host of social and financial implications. The real cost of housing in terms of multiples of earnings has increased dramatically since the 1990s in particular as demand for scarce housing as driven up prices.
Socially, the housing shortage has created a generation know as ‘generation rent’ where young people, often saddled with student debt and insecure employment have currently little hope owning their own home.
Could Modular Construction Be The Answer?
On site construction by its nature is unproductive, dangerous and wasteful.
Construction labour productivity has stayed stuck for the last 25 years while manufacturing has increased productivity per worker by 70%.
Off-site and modular solutions are the obvious way to address all of these issues. It would deal with the skills shortage, the productivity aspect and allow fast deployment on site.
Modular & off-site construction is especially suitable for building
- Student accommodation
- Hospital bedrooms
- Shared living developments
- Key worker accommodation
Modular is an ideal solution for restricted and inner city developments as on site labour is reduced by over 80% and deliveries are considerably reduced aswell.
There are several reasons why modular has not been used widely to date.
Factors limiting their use range from lack of suitable systems with certification, cash flow and lack of willingness to depart from the familiar have all constrained its use.
Another key factor that MMC Quantity Surveyors (MMCQS) have identified is a lack of the current market and cost knowledge also current cost management and contractual systems are not suitable for modular.
MMCQS has over 10 years’ experience working with directly with several modular manufacturers through our associations with leading off-site design consultants. This makes us uniquely positioned to guide clients who want to explore modular as construction solution,
All the existing parameters for construction are largely redundant when applying modular solutions. Historical cost data becomes irrelevant as the modular component can comprise over 50% of the value of a building.
There also needs to be an in depth understanding of the multiple systems on offer to cost model and select the most suitable system for a given project.
Each project requirements will be different, and each different situation will need a different solution to ensure that cost, quality and speed targets are met.
MMCQS are experts in the area of cost planning and cost management of Modern Methods of Construction (MMC). We work closely with some of the leading consultants in off-site and MMC methods in the industry.
If you have a project that you are considering for modular or off-site construction be sure to talk to us to see what your best options are, advice on budget, procurement and implementation.