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The National Audit Office today released a report showing the potential for modern methods of construction to provide good quality homes quickly and efficiently. The NAO also provides guidance on identifying and managing the risks associated with modern methods of construction. This work responds to a request from the Office of the Deputy Prime Minister and the Housing Corporation for an independent examination of how to get best value when using modern methods of construction, and provides practical guidance to Registered Social Landlords and private developers.

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The NAO found that the use of modern methods of construction, rather than more established techniques, should make it possible to build up to four times as many homes with the same amount of on-site labour. This is vitally important when work for the London Olympics, coupled with government policy to build more homes, will place increasing demands on the existing pool of skilled labour. The NAO also found using modern methods of construction can reduce on-site construction time by up to half and that building performance can be at least as good as with traditional building methods.

The NAO found that cost ranges among different modern build methods can be comparable, depending on specific project circumstances. However, average costs of modern methods are currently higher than average costs of traditional methods. All of the building methods examined can achieve the target specificed by the Office of the Deputy Prime Minister and English Partnerships to build a home for £60,000.

Modern methods of construction pose a different set of risks to traditional building methods. The NAO found that most of these risks occur before the construction process actually begins, including issues around planning decisions, the availability of off-site manufacturing capacity, the delivery of necessary manufactured components and design changes. Mitigating these risks requires an emphasis on up-front planning – from building close relationships with planning authorities to understanding and communicating across the supply chain.

"Modern construction methods can produce important benefits for housing authorities and developers, not the least of which is the reduced emphasis on on-site activity. This is particularly important in a time of increasing demands on an already stretched labour force. As with any new way of doing things there are risks, but these can be mitigated through good project planning and management."

Housing and Planning Minister Yvette Cooper said:

"We must ensure that we build the new homes that the next generation can afford. This report shows that it is possible to build faster and cheaper using modern methods of construction whilst keeping the same high quality as traditional methods. We said it should be possible to build a high quality house for less than £60,000. Now the NAO has shown that is right."

Jon Rouse, Chief Executive of the Housing Corporation, said:

"For the last five years the Corporation has been at the vanguard of encouraging innovation and modern methods in order that greater numbers of much needed good quality homes may be delivered more efficiently. The results of this study clearly show that modern methods have a distinct and continuing role to play in the delivery of our £1.6 billion a year programme."


This report is supported by more detailed material available on an accompanying CD-ROM providing a firm basis for further improvements in using modern methods of construction. The background material includes a set of sample project plans, showing how plans need to be tailored to gain maximum benefit from modern methods of construction. Detailed cost figures are also available, outlining how we calculated costs and how cost breakdown differs across construction methods. Also included are scenario papers examining cost variations for other development types, and papers detailing the whole life cost and durability of a sample development.

Sir John Bourn, head of the National Audit Office


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