We know how important upfront costs of homes are to our sector, so we’re developing more case studies comparing costs for Modern Methods of Construction (MMC) versus traditional. Keep an eye out or get in touch for more details.
The volatility of the marketplace has been unparalleled, with existing shortages of materials and workers intensified by rocketing demand for net zero and building safety. Brexit and Covid disruptions have continued to impact the economy, pushing up levels of inflation and contributing to issues around supplier capacity. The extreme instability around materials costs was highlighted recently when it was reported that some construction suppliers are providing quotes valid for only 24 hours.
The headline feedback is that our manufacturing partners are not suffering as much as some of the traditional contractors our members work with.
Where traditional contractors are unable to get lump sum prices and for some members, leaving 20 – 25% of the costs in contract open to change, most of our manufacturing partners are seeing a 5 – 10% increase in costs across a basket of goods. Even then, they can guarantee any increase in prices for significantly longer. This is because they’re able to buy early, and buy in bulk.
They aren’t, however, immune. Costs for timber and steel are affecting everyone, and our partners had hoped by now they’d settle down but that hasn’t been the case. Particularly troublesome products are radiators (as pressed steel comes from Ukraine), bricks (as both the raw materials and gas used to make them have increased) and paving costs (which are up 200% in some parts of the country).
So, our partners will need to protect themselves too. For some of the MMC providers that means keeping an even closer eye than ever on supply chains and shortening the period on quotations for contracts.
A year on from our first MMC Category 1 framework going live, we’re now in the process of agreeing prices for the next year. The result will be another round of fixed pricing, providing our members with cost certainty and getting them off the market roller coaster that housing providers using only traditional construction are on.
We’re also about to launch a shortlisting tool that will help members narrow the field between our Category1 (modular) and Category 2 (panelised) partners on all sorts of criteria including specification, design and location.
By Trina Chakravarti, Project Director at Building Better
20 July 2022
Membership of Building Better is open to any housing association or local authority housing provider in England and Wales.
