Scott Tacchi, Head of MMC at Sir Robert McAlpine, argues that for the true benefits of MMC approaches to be fully understood, a comprehensive breakdown of the cost-benefits, to provide the data and information necessary to effectively implement MMC practices from a cost reduction perspective, is required. He says this is a practice that has been ‘hugely beneficial to projects’ such as the government’s New Hospital Programme
Much has been published exploring the benefits of Modern Methods of Construction (MMC) in the healthcare and wider construction environment – it makes processes faster, improves quality, reduces defects, and is cheaper. However, having been an advocate for the use of MMC in the sector over the last five years, and passionate about the benefits I have seen (and commissioned) that can be brought by greater offsite manufacture, I am still left unable to demonstrate on a spreadsheet the actual pound and pence benefits to the bottom line at tender stage.
This stems from an industry-wide fear of commercial intelligence, or commercial sensitivity, that has spread to client bases across the sector – ultimately leading to the refusal to publish any realistic data or comparisons that can be used as a benchmark when comparing offsite with on-site. Articles on new-build hospitals, office blocks, or schools, rarely ever include a true breakdown of actual costs in building, running, and maintaining the site.
Need for a comprehensive breakdown
Is it any wonder that there is misunderstanding on the cost-benefits and value of MMC? What is needed is a comprehensive breakdown of these costs to provide the data and information necessary to effectively implement MMC practices from a cost reduction perspective – a practice that has been hugely beneficial to projects such as the government’s New Hospital Programme (NHP), aimed at completing 40 new hospitals by 2040.
Integrated Health Projects (IHP), a collaboration between Sir Robert McAlpine and VINCI, has embraced the NHP approach to standardisation, platform, and industrialisation for healthcare, where we are seeing tangible benefits that will have positive outcomes on the bottom line. Serving as a case study, the ProCure 23 (P23) MMC tool could be similarly implemented across other sectors, as it brings the following benefits
P23 MMC tool
In January 2023, P23 introduced the ‘MMC tool’. With a minimum target of 70% ‘Combined MMC Value’, this challenges design teams and contractors to look at all aspects of the build to optimise project delivery. The tool has been adopted by NHP and NHSE, and is ‘pass / fail’ at Final Business case stage. The benefit of this approach is that it outlines for comparison, in a structured manner, a methodology all those delivering for programmes such as the NHP need to follow to satisfy that the design and components are as optimised as reasonably possible, while balancing costs against original cost plans.
This challenge is not one to take lightly, and requires every member of the design team to work collaboratively to balance. The bigger picture benefits of this new approach are described under the following categories of standardisation – MMC category 0, MMC category 7, and improved programme scheduling:
MMC Category 0
A true development within the P23 and NHP programme has been the development and implementation of the MMC ‘Category 0’ to supplement the seven MMC categories already recognised. The focus of Category 0 is within the early design phase, and addresses factors such as robust and optimised area scheduling, grid spacing, approaches to a unified digital model, digital project management, and design through pre-construction innovation. Again, as with the above, it might been assumed by the layperson that of course all of these techniques for design optimisation and implementation during the Royal Institute of British Architects (RIBA) design stages 1 to 4 would naturally be undertaken. Unfortunately, that has not been my experience.
MMC Category 7
‘On-site’ methodology under Category 7 has existed since the seven MMC categories were coined. In the past, this meant simply ensuring that the trades were optimised in terms of sequencing, but now there is a new approach to productivity gains being led by digital and robotic innovation. Packages such as ‘Dalux’ or ‘Field View’ – which can assist in organising multiple small teams with ease – instantly see projects progress, and catch any tasks that may be falling behind before they delay the project, and share critical project information with external parties. This can be done through the use of dashboards and reports linked digitally across the whole team, which can vastly speed up delivery and assist with time and cost-critical decision making. Robotics, in the form of Buildots, HP Smart Print, and Hilti’s Jaibot (to name but a few), can also dramatically speed up on-site reporting, remove repetitive tasks, and improve health and safety practices
Undoubtedly, time on site equates to cost. Site preliminaries can run as high at £10,000 per week on large hospital projects; a £300 m hospital which remains on site for 36 months can ultimately amount to costs of £1.6 m in preliminaries alone. Reducing time by even a third can yield savings equating to £500,000. The approach being taken to standardisation and MMC within the NHP programme, as outlined, can realistically expect significant time savings to be produced.
H2.0 standardisation
The NHP’s Hospital 2.0 modelling, which brings the benefits of standardisation and industrialisation to the design and manufacture of new facilities, has built on the Platform 2.0 programme, and will create a set of standards governing layouts, critical dimensions, and standard workflows. This may come as a surprise, as Healthcare Technical Memoranda (HTMs) and Healthcare Building Notes (HBNs) have been about for years. Unfortunately, this is not the case: nearly every hospital has different grid spacing and floor-tofloor heights. There has, up until now, been no benchmark for standardisation. However, the benefits of standardisation are apparent: with standardisation comes repetition, and with repetition comes the ability to bulk purchase, which in turn comes with reduced cost. Furthermore, the standardisation approach has produced a ‘schedule of accommodation’ that looks to minimise waste and save double-digit percentage floor area within current hospital designs
With the new NHS Net Zero Carbon targets now in place, an approach to standardisation and rationalisation of facades will be another priority, accounting for approximately 10% of the cost of a hospital. If a 10% cost-saving is achieved on this one item, that could ultimately account for a programme-wide saving of £1 bn.
For this to be remedied, what is needed is a fundamental mindset shift that transforms attitudes within the industry away from its cost obsession and towards embracing the opportunities and benefits MMC can bring on a wider level, particularly in terms of productivity improvement: after all, package price is only one dimension in a three-dimensional world
Assessing cost alone cannot quantify the benefits of MMC to quality, speed, and health and safety of projects industry-wide; neither can it quantify the environmental and social value benefits, as staff are no longer required to travel across the country to reach sites, reducing miles of unnecessary travel.
Investment into facilities
We also have to address the cost that the construction industry will need to bear in readying itself for the delivery of the multi-billion NHP programme. This will include considerations such as investment into MMC manufacturing facilities for MEP module components, new facilities for two-dimensional composite panels and pre-wired walls, and design fees to complete the development of Hospital 2.0 components sets – allowing the development of manufacturing facilities to produce them, borrowing costs to fund the investment, which will only be recovered through Overhead and Profit training and recruitment considerations. All of this will need to be recovered before the MMC solutions start reducing the outturn costs of the schemes.
It has been suggested in the past that projects may benefit from running two cost plans; one traditional and one utilising MMC to compare and contrast. My response to this is that MMC is not a ‘bolt-on’ at RIBA stage 4. The true benefits of standardisation within all aspects of the design, such as with Platform-Design for Manufacture Assembly (P-DfMA) and digitisation, all need to be established at RIBA 0. These design aspects cannot then be ‘undesigned’ to give a true reflection on the new approach as compared with the current design approach which is sorely lacking
The role of Government and industry bodies
What is required of both Government and industry bodies is action: we need development in the space, rather than have the industry at a standstill, as it has been for the past few decades. These good and sensible practices outlined above must be implemented industrywide by the public and private sector alike. The responsibility also lies with us all individually – while we may be waiting for key players to take these initial first steps so we have a blueprint to follow, this only gives us an excuse for not acting ourselves. We must all individually, and together, as part of the wider construction industry, take these steps forward in order to develop and improve the state of current project cost breakdowns.
While politicians love numbers, this is only true until the numbers betray them: look no further than HS2 as an example; the project was estimated to cost £55 bn, until this skyrocketed to almost double at £98 bn. However the public craves the quantifiable absolutes by which to judge whether an outcome results in success or failure. Numbers are absolute. Therefore, it’s very dangerous for statement to be made over the precise cost savings that can be achieved by a singular MMC approach in health, or any other capital programme
However, through education on project cost breakdowns in relation to standardisation, rationalisation, DfMA, bulk purchasing, removal of waste, spatial optimisation, and improved health and safety – alongside faster, better quality, higher social value construction, and decreased carbon emissions, we at IHP do believe there is a way to make significant cost savings, potentially in excess of 10% of a project’s capital cost, or even double this.
Scott Tacchi
Scott Tacchi joined Sir Robert McAlpine (SRM) in October 2022 as head of MMC. Prior to this he was with the Department for Education (DfE) as head of the Modern Methods of Construction programme, the £3 bn offsite schools framework. His focus is to bring all the benefits of time, quality, safety, and cost savings that can be generated through the ‘integrator’ model of offsite construction and manufacture to supplier relationship management and the business’s clients. Prior to joining the DfE, Scott spent 20 years in consultancy, latterly as Regional director for PM & QS practices in the Southwest (with Ridge, Mott MacDonald, and Mace).