Overcoming Client and Market Resistance to Prefabrication and Standardisation in Housing

Link Housing ResearchThe Context

UK Government and industry has long recognised that the construction industry, fragmented as it is, lags way behind many other industries in terms of efficiency gains. Studies such as those of Egan have emphasised the need for improvements in construction processes as a mechanism for both cost savings and a variety of quality improvements. With the realisation of the need for large amounts of new housing and the growth of concern for housing as a distinct construction sector, the need for efficiency improvements in the production of housing has been specifically recognised.

As part of this drive a number of projects have been funded dealing with different aspects of prefabrication and standardisation in housing. Following a tranche of funding dealing with aspects of the process and product of housing activity it was recognised that, whilst there is no real technical barrier to increasing standardisation and prefabrication in housing, there may be a considerable amount of resistance to innovative housing amongst clients and the wider public. This project was funded to shed some light on this potential resistance.

Some Definitions

The project encompasses a wide definition of both standardisation and prefabrication and early results indicated that many individuals and interest groups involved in housing have very particular mental constructions of these ideas. The underlying aim of the project is to improve the built environment and we are interested in any increases in levels of prefabrication - of components, elements, parts of buildings or whole buildings. We are interested in any increases in standardisation - of components, production systems, modular forms or house types or plans. By contrast many individuals and organisations typically construe standardisation, for example, as only applying to standard house plans: prefabrication as only to whole buildings.

The Project

The central idea behind the project is that, if we want to improve our new housing, we need to overcome resistance, in whatever quarter it lies, to the old ideas of pre-fabrication and standardisation. The main initial focus of the project was on the purchaser and end user of housing - that is the owner-occupier. However it became increasingly obvious from an early stage that the initial assumption - that resistance resided primarily with 'the public', was an oversimplification. The project is therefore also looking at resistance amongst a wide group of professionals and groups involved in the provision of housing.

The aims of the research are being achieved in a two stage process, funding for the first stage of which was granted by EPSRC and DETR (now DTLR. Central to the first stage is the development and testing of new, predominantly financial models through which the resistance to pre-fabrication and standardisation in housing can be eased. The second stage will involve the practical, on-site demonstration of both product and process developments which can increase market penetration of, and confidence in, pre-fabrication and standardisation. The second stage is a 'near-market', developmental phase which, it is hoped, will be carried out with industrial sponsorship.

There are many potential barriers to standardisation and pre-fabrication, some of which are historical and may not now be based on any real problems with modern methods. The project starts from the idea that the main barrier to the potential owner-occupier is an entirely rational economic one. This resistance relates to the dominant nature of the home in the UK as an investment, rather than simply a consumer good. Therefore, the main focus of the research is on the investment characteristics of both new forms of housing and the future client. The main aim of the first stage is to create and test new financial models for both owner-occupied and social housing, as a basis for the second stage development and demonstration of a practical housing project.

The opportunity to focus on developing new financial models is afforded precisely because of the potential introduction of new physical types of housing employing greater degrees of pre-fabrication and standardisation. Key aims in this latter process are to increase efficiency in the construction industry and reduce costs. These cost reductions, as well as moves towards more flexible 'lifetime homes' and houses with different life-cycle characteristics, provide both a financial resource and a challenge to the idea of the home as investment. The research is meeting this challenge by developing dynamic links between construction, manufacturing, financial and client sectors through the medium of a 'Technical Forum'.

Hypotheses

The project is based on an argument which goes as follows:

  • Problems in the engineering of prefabricated housing have been largely overcome and tried and tested technical and design solutions are currently available, whilst new ones are under development.
  • Many of these solutions offer advantages in terms of cost savings and improvements in the functionality of the living environment.
  • There remains a client resistance which presents a barrier beyond which manufacturers and constructors cannot step with ease.
  • That barrier is a perceptual one and can be summarised as: 'an acceptable pre-fabricated house is one which does not look as though it is prefabricated'.
  • Client resistance includes an emotive, irrational element.
  • The primary generator of resistance, which has a sound economic grounding, lies in the nature of owner-occupation, in which the home is primarily an investment, rather than a consumer good or a living environment.
  • This resistance is mirrored in the social sector, with risk-averse clients and a separation between capital and revenue budgets.
  • Currently, it is expected that it will be the client for innovative housing, rather than the construction or financial sectors, who is the primary absorber of any risks associated with procuring a ‘non-standard’ house type.
  • Overcoming barriers to pre-fabrication and other innovations in housing involves reconstructing the predominant financial model which ensures that construction, unlike other manufacturing industries, is perceived as a generator of capital investments.
  • The current financial climate, in which the consumer is becoming more sophisticated in using financial markets, offers the possibility of constructing and marketing such new financial models and products.

These ideas give us the possibility of creating financial models which allow us to investigate the potential 'trade-offs' between the house as investment and other, perhaps more ephemeral constructs. That is, the financial model is the measure against which other resistances can be gauged. It is argued that financial and investment issues need to be tackled before other barriers to standardisation and prefabrication in housing can be addressed.