The Construction Industry Objectives

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Over a decade on form the original Egan Report 1998, many of the objectives set for the construction industry have not been achieved. The industry still fails to complete the majority of projects on time and budget and meet the needs of the consumers, not offering best value for clients and tax payers alike. Recent government targets, set out in the Communities and Local Government Report 2009, suggest that around 3 million new homes will be needed by the year 2020, with 240,000 new homes constructed per annum. With record lows in recent years and only 122,700 homes estimated to be completed between April 2009 and March 2010 can further adoption of MMC's aid the industry in tackling these issues.

The Study finds that there is a strong opinion within professional literature that increased adoption of MMC's is essential to address the issues facing the industry. It is established that there is a historical precedence of MMC use in the UK and that the negative connotations of this previous MMC failure are effecting its adoption today. Accurate valuation of the total market for MMC's is difficult due to the complexities and verity of the methods; however it has been shown that there is a general increase in the total usage in the UK, which is projected to continue into the near future.

The paper found the most significant drivers to an increased adoption to MMC's to be improved quality, reduced onsite duration and the skills shortage. The most significant drivers were found to be negative public perception, perceived or actual higher cost and perceived or actual higher initial cost. Suggestions to deal with these barriers were recommended and included, raising the profile of MMC'S to highlight the advantages and encourage tenders based on value as appose to cost and, improving education to promote a more skilled workforce.

Due to the interactions between the issues it was concluded that an exponential increase to the take-up of MMC's could be expected if the most influential barriers are tackled. This is because of the overriding potential advantages that can be achieved with the use of MMC's, showing that the barriers and drivers are significant in deciding whether MMC'S become commonplace among the UK construction industry.

Chapter 1

Context of Study and methodology



The building and construction industry is a large and diverse economy. Construction accounts for around 15% of the Gross National Product (GNP) of most developed countries, when including related industries, such as those involved with building products and designers for example. (Blayse, 2004, p.143 and Seaden, 2001, p.183)

As a result of a number of government reports in the 1990's such as, The Latham Report (1994) and the Egan Report (1998), an opinion of inefficiency within the construction industry formed. This negative opinion is echoed in a large proportion of the professional literature (Edge, 2002, p.1 and Goodier, 2008, p.169).

"Projects are widely seen as unpredictable in terms of delivery on time, within budget and to the standards of quality expected (...) It too often fails to meet the needs of modern businesses and rarely provides best value for clients and taxpayers."

(Egan, 1998, Rethinking Construction)

The Egan Report 1998 gave areas in which the industry can improve;

  • Product development to meet the needs of the client and consumer.
  • The employment of an integrated project process to utilise a multidisciplinary team.
  • Designing for construction in use by incorporating the contractors and suppliers into the design process to reduce defects and maximise quality.
  • Increasing partnering to drive down cost and increase value.
  • Training the workforce, to promote faster, safer and less costly processes.

Egan gave the following year on year performance targets: a 10% reduction in capital cost and construction time, a 20% reduction in defects and accidents, a 10% increase in productivity and profitability and a 10% increase in predictability of project performance.

Now more than a decade since the original Egan Report of 1998, has the step change that was proposed to bring construction to a level similar to that of other industries, such as manufacturing, been achieved? A Survey conducted in 2008 by Constructing Excellence (the resultant body formed to instigate the targets of the rethinking construction report of 1998) found that of 915 respondents, from different areas of the industry, most viewed Egan's drivers for change as still 'very important' in 2008, with only 48% believing that the projects they work on are completed to time, to budget and consistently exceed expectations. It was also found that 60% of respondents did not work on projects within an integrated multidisciplinary team.

Constructing Excellence Annual Report 2009, indicates that major targets set in the original Egan report such as cost, defects, meeting budgets and deadlines, and safety, none have been met, improvements however have been made. By 2007 there had been a 4% improvement in safety. Productivity was increasing steadily although it was found to be £11,000 short of Egan's targets, for value added per employee.It was found that the cost remained rather constant but in 2005 and 2006 increased by as much as 5%. It would appear that meeting deadlines and budgets are still problem areas for the industry with only 58% of projects completed on time and 46% completed on budget, quite a distance from the 100% target set by the 1998 Report.

"The levels of improvement we asked for have not been achieved"

(Egan, 2008, cited by McMeeken, 2008)

This data has shown that, albeit slowly, the industry is improving in certain areas, however the major problem areas of: cost, time, and productivity remain.

Along with these general industry shortfalls, there are problems with regard to the current state of the UK housing supply. Currently Government targets that were reiterated in the 'Government Response to the Communities and Local Government Committee's Report on the Department for Communities and Local Government Housing and the Credit Crunch', 2009, state that 240,000 new homes are required each year, with the government targets of 3 million new homes constructed by 2020. This year house builders are on course to complete around 122,700 homes between April 2009 and March 2010 (National House Building Federation, 2010) This under supply is a large issue to the industry and will be discussed in more detail in chapter 2.

This paper will investigate whether these issues can be tackled by an increased adoption of Modern Methods of Construction (MMC), and determine the impact of the perceived barriers to further integration, with the focus of the discussion considering private sector housing.

The definitions given by The Housing Corporation on what constitutes a modern method of construction, which will be adopted for the purpose of this paper, define MMC's under the following five subcategories: Volumetric, Panellised, Hybrid, sub-assemblies and components, and Non-off-site manufactured MMC. "Innovative methods of construction used on-site and the use of conventional components used in an innovative way" (Venables, 2004, p.2). What it is that constitutes an MMC and a detailed definition of each category will be discussed in more detail in Chapter 2.

This paper will focus on the major issues regarding Modern Methods of Construction. It will investigate the conclusions made in research by Goodier (2006), NHBC Foundation, (2006), Pan, (2006) and Pasquire, (2004) for example, that MMC's can offer improvements in cost, time, defects and address the skills shortage within the industry. The dissertation will also examine the disadvantages and potential barriers to MMC's that was suggested in the reading, such as negative public perception, increased cost compared to traditional methods and increased quality.


How significant are the drivers and potential barriers to an increased adoption of Modern Methods of Construction?


  1. To establish the potential advantages to be made by the construction industry by increasing the adoption of modern methods of construction.
  2. To establish the extent to which perceived barriers and drivers are effecting further integration of these methods.


  • Establishing the past, present, and future predictions of MMC use in the UK.
  • To ascertain the potential effectiveness of an increased adoption of MMC's to the construction industry.
  • To determine the influence of the barriers and drivers within the industry that may be effecting the integration of these methods.
  • To suggest solutions to the problems associated with MMC's.


The barriers and drivers of MMC's within the construction industry are of a qualitative nature, for example people's perception of techniques. The dissertation aims to gather and present the consensus of opinion within and around the industry from authoritative sources, which are discussed below.

The most recent information will be used when available along with data from the past decade or so to show general trends and presidents, however data published in 2009 often refers to figures collected in 2008 for example, this will be stated where relevant.

The more significant issues surrounding MMC's will be determined and discussed in detail due to time restraints, however the other related issues may be referred to.

Due to the close proximity of Modern Methods of Construction and Innovation in construction, this paper will not attempt to separate the two items. This is because work produced by The Housing Corporation includes innovation as a modern method of construction. "Non-off-site manufactured MMC'S" (...) "innovative methods of construction used on-site and the use of conventional components used in an innovative way" (NHBC Foundation, 2006, p.3)


The question chosen had spurred a wide ranging literature review. The research has been directed and focused with the use of the aims and objectives to identify consensuses and contradicting opinions. The evaluation of the research will be presented in an unbiased objective manner, with all sources used being recorded evaluated and reviewed.


The research approach taken was of an iterative process, similar to that seen in figure 1.0. The general literature review first undertaken allowed for the broad area of research to be identified. From this a topic was selected and the central research question posed.

Figure 1.0 - Overview of a simplified research process

(Grey, 2004, p.4)


Following completion of the general literature review it became apparent that secondary sources of information would be sufficient for the context of this study. This was because of the large volume of recent academic and professional literature on the subject and the qualitative nature of the issues.

When using secondary sources of information however, it should be noted that caution is needed. The information will require a degree of validation and verification to ensure authenticity and reliability. Naoum (2007) recommends that the following questions are asked of a source before it can be subjectively used in a piece of academic writing.

  • Is the material factually accurate
  • Is the material reliable and would the same results have been found if the work was carried out by another person?
  • Is it systematic in its approach and is any information lacking form the source?
  • Is the material bias or representative in any way?
  • Why was the work performed?

Sources that meet the requirements of these points have been used for this dissertation; however triangulation has been used with certain journalistic sources that are discussed below.

Qualitative data will be used, from reputable sources, as a basis to indicate discussion and debate. As a large proportion of the information to be used in this paper is qualitative in nature, not only the validity of the information will be investigated, but also its age due to the current development of the issues.


As stated previously, information from a wide range of sources will be used, with older information being used to show trends and historical presidencies. It should be noted however, that in certain cases where there has been little development of the issues that would affect its validity or application to the discussion, older sources will be used. Below is a discussion of the types of sources to be used in this paper, along with their merits and limitations.


Academic journals make up the majority of the sources used as the bases for discussion in this paper. The ability to verify their authenticity due to the peer reviewed nature of the work makes them an ideal source of information. Investigation of the references within the work also allows for a more thorough understanding of the topics.


Published reports have been used to a limited extent in the research. Often they are commissioned by reputable organisation such as BRE or the National House Building Federation and give a useful quantitative opinion of a qualified professional in the field. Caution should be used when referring to some of these sources as depending on the location within the industry, other points that are not of importance to the organisation will not be included.


Information from professional journals and other journalistic sources such as newspapers and personal communications will not be used to a large degree within this paper. This is due to the difficulties associated with determining validity and the bias opinion that is likely to be underling within the work.

Sources of a journalistic nature however, may be used with caution in certain circumstances when an overwhelming consensus of opinion can be shown, in which case the triangulation of sources may be used to show a general trend. This involves the use of three or more independent sources that have formed a similar opinion being used. Although, efforts will be made to insure that this is not heavily relied upon.


Books have been used to a limited extent in this paper. This is due to the constantly changing environment in which the central research question lies and the lack of depth and current relevance provided in these sources when compared to others. Books that have been used are primarily for definition purposes, or will not have been effected by external factors, for example Grey (2004), providing general information on methods of research and evaluation.


Internet sources will only be used where the authenticity of the information can be established. Internet pages that have evidence based information, such as that of the RICS, or are from persons with the required professional expertise, will be referred to.


Chapter 2 of the Dissertation will firstly establish the factors limiting the construction industries ability to change. It will then go on to define what constituted an MMC and give a detailed description of the five subcategories and give indications as to the past present and future levels of usage of the methods. The state of the UK housing supply will be discussed at length and it will be established whether and increased adoption of MMC's could help to combat the issue.

Chapter 3 will establish the drivers and potential barriers to further integration of MMC's and then aim to determine which of the issues are most significant. The issues chosen will then be discussed at length, with recommendations of what can be done comprising the 4th Chapter.

Chapter 5 will conclude the dissertation, giving areas that are recommended for further investigation.


This section has established the context of the study within the construction industry. It detailed the issues surrounding the sector and proposed that MMC's may be a possible solution. A central research question was posed as the result of a literature review, with aims and objectives established. The research methodology and types of sources to be used were discussed in depth and the structure of the report outlined.