- The new Affordable Homes Programme contains plans to support the use of Modern Methods of Construction.
- The most significant of these is a need to measure and report on use of pre-manufacturing, with higher levels of grant on offer to incentivise this.
- To maximise delivery of affordable homes, NHC members should consider their approach to these new requirements.
What is it?
Government has recently announced an £8.6 billion funding package to build almost 120,000 new affordable homes in England as part of the £11.5 billion Affordable Homes Programme (AHP) from 2021-2026. The Affordable Homes Programme 2021-2026, managed by Homes England, has made Modern Methods of Construction (MMC) a key part of the grant programme.
The latest Affordable Homes Programme Capital Funding Guide sets out plans to support MMC developments: key elements of plans to do this include:
- Homes England is seeking a commitment from their Strategic Partners to make 25% of their bid MMC (chapter 9 section 3.5).
- Organisations can also make a Continuous Market Engagement bid whereby the process is more case by case (chapter 9 section 3.5).
Bids can be made by several registered providers as part of consortia. All agreed projects must start by 2025 and be completed by 2028. This commitment is made within the context of Homes England’s Strategic Objectives to achieve the aggregation of demand and generally boost construction productivity.
As it is a major part of how this new programme will operate as well as the first significant step in promoting MMC as part of an Affordable Homes Programme this brief will mainly focus on the concept of Pre-Manufactured Value (PMV) and what it means for new MMC developments.
What is Pre-Manufactured Value/PMV?
The AHP’s promotion of MMC in housebuilding is to be welcomed as it actively rewards those who utilise a form of construction which will likely boost productivity on a national level. Additionally, its use of Pre-Manufactured Value (PMV) to calculate MMC gives a clear framework for measuring progress.
To determine the proportion of homes being delivering using MMC, the Government has adopted PMV as a key measurement metric of its funding programme. This measures the proportion of the home that was manufactured off-site. Under the AHP, homes will only meet the requirement of being delivered using MMC if they have a PMV score of 55% or more.
- PMV Score
A Pre-Manufactured Value score is generated by an online calculator accessible via this link: Cast PMV Estimator (force.com).The score is said to effectively represent the proportion of work that takes place offsite. In order to qualify as an MMC project that is applicable for Homes England funding a development must have a minimum PMV score of 55%. If a project secures a higher score of 75% and above, then a greater amount of funding will be made available.
- How to get a good PMV Score
As stated previously a good PMV score is around 55% as this earns an MMC portion of Affordable Homes Programme funding. However, a higher score such as 75% or above will likely ensure access to higher grant rates for the units in question.
2.1 Single Highest scoring category
The most effective way to attain either of these scores is through the use of what the Government deems as Category 1 MMC which the calculator calls “3D Structural Systems”. These are otherwise known as volumetric construction methods and have an average PMV of 73.07% in houses and an average of 75% in any buildings larger than 5 storeys. The highest scoring single method for PMV regardless of building type is Category 1c whereby a structural chassis is premanufactured, the unit is fitted out internally and external cladding or roofing has also been done offsite.
- Mix and match Approaches
Although slightly less simple, mixing categories of MMC for a development is also possible to reach a higher PMV score, and secure the higher grant rate from the AHP/Homes England. Categories 2 (2D Structural Systems), 3 (Structural Assemblies and Sub-Assemblies) and 5 (Non-Structural Assemblies Volumetric Pods/Panelised) are the best choice for this as a fairly flexible combination of these categories will ensure 75% PMV.
- By-products of measuring PMV
It is important to note that as well as monitoring PMV, a PMV score can also illustrate other important elements about a development that might help organisations further emphasise the positives about how they design/develop their portfolio. For example, the creators of the calculator (Cast) state in PMV’s technical manual that a higher PMV can also lead to quicker on-site delivery, less disruption in local communities and a lower amount of embodied carbon in the built environment.
Government’s support for promoting MMC can be seen through several initiatives:
- The Construction Playbook, launched last December, introduces the possibility of not just longer-term contracts but also policies that encourage shared MMC requirements as well as more common standards like pre-manufactured value in public procurement.
- In March 2021, Government announced the formation of an MMC Taskforce with a remit to investigate the barriers to MMC and to accelerate the use of MMC. Membership of the Taskforce is being set up. The Taskforce will be backed by £10m of seed funding and will be based at DLUHC’s new office in Wolverhampton.
- A recent Government consultation on The Future of the New Homes Bonusscheme from 2022/2023 proposed options for incentivising homes built using MMC methods via an MMC condition on receipt of funding and a premium for MMC. You can read the NHC’s response to this consultation here.
- Homes England’s study with Atkins is testing the performance of a range of MMC solutions over the long term.
In summary, the new Affordable Homes Programme brings a stronger focus on the use of Modern Methods of Construction, the most significant change being the introduction of Pre-Manufactured Value, which gives a clear framework for measuring progress.
The kind of approach to tracking and encouraging certain kinds of development seen in this new iteration of the Affordable Homes Programme may be accompanied by additional calculators or metrics to promote decarbonisation and MMC in the future, especially if projects such as the aforementioned Homes England study with Atkins yields positive results.
As a result, it is recommended that to maximise the delivery of much-needed affordable homes across the North, NHC members should develop their approach to meeting PMV requirements through the use of MMC.
This will be the first of a series of MMC policy briefings produced by the NHC. For any policy enquiries about MMC and how the NHC can assist members who want to adopt it please contact:
Joseph Breen – Policy Specialist in MMC