Ambition vs. Reality: Can MMC Truly Transform the Construction Industry?

The UN-Habitat program estimates that by 2030, 3 billion, about 40% of the world’s population, will need access to adequate housing. This translates to 96000 accessible housing units every day. Modern Methods of Construction (MMC) holds the promise of helping builders and developers meet the rising demand for housing. However, it represents a profound transformation for the building industry. 

In this new episode of the WSP Anticipate Podcast, Nizar Jegham, Advisory Director – Digital at WSP Middle East, is joined by Dale Sinclair Director – Head of Digital Innovation at WSP in the UK, and Hussam Ali, Director of Modern Methods of Construction at ROSHN Real Estate, one of the major developers in Saudi Arabia. The episode explores the potential of MMC and analyses the trends and drivers of its adoption globally. It also highlights the lessons learned from countries pioneering this transition.  

Unable to listen to the full episode? Fast-forward to the key discussion points via the players above or read the key takeaways:

Discussion Points

01:50 - Introduction to MMC, DFMA and off-site and on-site manufacturing

06:00 - Drivers, enablers, and challenges of MMC adoption

08:40 - Lessons learned from the countries pioneering the MMC transition

13:01 - MMC adoption in the Middle East and the dynamics of adoption in the GCC

20:15 - The role of the government in supporting MMC adoption

24:20 - Criticism addressed to MMC

27:40 - Anticipating the future of MMC in the GCC region

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Transcript

The UN Habitat Program estimates that by 2030, about 40 % of the world's population will need access to adequate housing. This translates to 96 ,000 accessible housing units every day. Saudi Arabia, for instance, aims to increase the home ownership to 70 % by 2030. In a context of shortage of supply, Modern Method of Construction, or MMC, hold the promise of helping meet the demand by combining offsite

and on -site manufacturing, use of innovative construction technique and adoption of digital technologies. It also promises up to 20 % of savings in labor costs, up to 50 % of construction time savings. Nonetheless, MMC adoption represents a profound transformation of the building industry with a cascading impact on how designer, architect and contractors work. On the organizational structure and operating model of real estate developers,

but also on the regulatory environment. In this new episode of the Anticipate podcast, we will explore the potential of MMC, trying to distinguish the reality from the ambition. I am Nizar Jigam, Director of WSP Digital Advisory Services Middle East, and I am delighted to be joined by Hussam Ali, Director of Modern Method of Construction at Russian Real Estate, one of the major developers in Saudi Arabia and the GCC, and by my colleague Dale Sinclair.

Head of Digital Innovation at WSP. Dale, Hussam, welcome to the Anticipate podcast. A warm welcome to our listener. And thank you for joining us today. Thank you, Nizam. Very happy to be here with you. Yes, delighted to be here today. Starting by setting the context to the listeners. Hussam, we hear a number of terms. So can you help us define what is MMC, DFMA, and offsite and onsite manufacturing? Yes, sure, Nizam, sure.

MMC or what we call modern methods of construction is a term originally coined in the UK market. So it basically refers to seven major buckets of construction methodologies or modern construction methodologies. This includes 2D panels, 3D modules, sub -assemblies, additive construction, additive manufacturing, like 3D printing, and also some non -methodologies, some digital tools that we're using to optimize construction on the site.

rendering them cheaper, faster and better quality and so on. So this framework is called modern methods of construction. There's also another term highly being used in the market now. It's called DFMA or designing for manufacturing and assembly. And this is basically a set of both technical and architectural principles that are embedded in the design process, which basically renders manufacturing and assembly to be, let's say more efficient.

more seamless and reaping its full benefits. So these principles, you know, they include all the enablers like standardization when we talk about efficiency, simplicity, and also seamless manufacturing and seamless assembly on site. So this is what we call the DFMA principle. Finally, when we talk about offsite and onsite, when we talk about offsite, it's basically moving all of the construction processes, whether it's components or full construction modules or volumetric modules.

moving them to a offsite manufacturing location. More often than not, it's a factory contained under one roof. And onsite is basically everything that happens onsite. It's more manual, you know, it's labor intensive and so on. So there is, there is a tendency to confuse these terms sometimes, you know, just what we need to watch out for is MMC is the whole spectrum of solutions. Picking the right solution is what's required for every client in every project to pick the right solution.

tailored for the project's goals and so on. Thank you, Hossam. Dale, maybe building on what Hossam was just saying, we often refer to the use of MMC as a transition from a project -based approach to a platform and a manufacturing -based approach. Can you tell us a bit more about what this means? Yes, of course. So what we've been doing for hundreds of years is obviously focusing what we do on the traditional one -off project and

One of the beauties of construction is we take lots of small things to site and we put them together in different ways, which means that every building is unique and every building could respond to the context and the unique challenges of every project. But where MMC becomes much more effective is when we look at aggregating the content, because as we move to make larger parts and the benefit of larger parts is we've got less components coming to site so we can make buildings faster.

To do these, we really need to have repeatable content that goes from one project to the next. And one of the topics that we never talk about is that a lot of the content that we produce for manufacturing today is generated for one -off projects. So for example, we do cladding systems in the factory, but every project we have to go through the design process of design intent and then the manufacturer winning an award through a contractor.

and then doing their shop drawings. And that process is repeated. And certainly the whole idea of a platform approach is that when you start a project, and some people refer to this as left shift, is that you have that manufacturing content ready to use and to integrate into the concept design. And that process becomes incredibly effective because we are not creating content for every single project. And

to me becomes a game changer because it takes a lot of the heavy lifting away on the individual projects and allows us to really focus on the challenges that are unique to the individual project rather than trying to do thousands of pieces of information geared to construction. Thanks. Thank you, Dierd, for this accurate introduction. So maybe moving on and in the introduction, we mentioned the global shortage in housing supply. In your opinion, what are the main trends?

driving the adoption of MMC in the construction industry and what are the challenges hindering it? And also why you would consider this as a structural change or transformation and not another evolution of the industry? Yeah, sure. So I think one of the main reasons that we're shifting to offsite is we're seeing labor becoming a problem in every country in the world. There's lack of construction labor. So the shift to manufacturing

allows that to deal with that in a number of ways. First of all, we can build factories close to where people are and that drives social value propositions. So the construction workers are no longer driving to the site, they're driving to a local factory which obviously reduces carbon. And of course in a factory we don't need to use a lot of the skilled labour that is inherent in a construction process, we can use unskilled labour.

But more importantly, we might come onto this later on in the chat as well. In a factory, it's much easier to introduce automation and robotics and other elements that will improve productivity. So productivity and labor, think, are some of the key aspects because the construction industry has been trying to change its productivity for decades unsuccessfully. And I think for me, that's really one of the things that underlines why construction has reached the end of the road and why we're trying to push

more content into the factories. But the second part of this is also allows us to build faster. So in a world where we have demand for bringing housing to the market quicker, offsite manufacturing allows us to do that. So not only can we deliver projects quicker, but we can deliver more projects with the same number of factories, with the same number of human designers or labor.

Really, I would say it's those two elements. It's the labor and the speed which then push the productivity. I think that's the two key things. And I think this does happen at structural level. As I say, MMC is not really effective fully on a single project. You really need to take it to a program level for it to be much more effective. you. Hussam, the adoption of MMC is a strategic area of focus for Russia, probably for a number of reasons that Dale was mentioning.

You will tell us more, I hope, later in the chat about what you're doing in Russia. But based on the analysis you've done and the research and the observation of the market, can you share with us a couple of examples of countries you think they are pioneering this transition, as well as maybe what can we learn from them? Yes, sure, Nizar. Well, mean, historically, if you look at countries, especially in the Far Eastern region, you know, when we talk about Singapore or Japan,

are now increasingly more China. These are pioneering countries. They've been looking at this program of modern methods and modern methodologies for decades. Japan has started very early, I think post World War II and all the destruction that has happened in the 1940s. They had a very pressing need to replace their built environment. The economic boom that ensued also right after World War II, it's estimated that homes are delivered faster in

hundreds of thousands, you know. So the driver for MMC in Japan has been to basically deliver faster and to better quality. So they took on the lead in developing the whole prefabricated homes, you know. And when I talk about prefabricated, I'm not referring to prefabricated, very simple dwellings. They're very decent, very compact, yet high quality living units. So they delivered those in their millions.

Obviously they have a track record of the research and development. The government was highly involved in promoting that, working with academia and academic institutions and so on. You will find that in Singapore also, maybe the set of driver's is very similar, but also unique in its own context. So Singapore, as you know, they have the housing development board of Singapore. They were tasked and mandated by the government to deliver upward of a million, if I'm not mistaken, a million or two million homes in a short period.

So again, they worked with the investors, all the stakeholders, manufacturers, universities to come up with an integrated way of delivering that transition and that transformation. So it wasn't a walk in the park. It involved a lot of hand -holding. The government took the lead. They addressed key questions like regulatory compliance. So they developed those frameworks, working with the various stakeholders. They worked with universities to make sure

the proper innovation and research and development is well funded often by government bodies. And also last but not least, they looked at the challenge of the lack of available or at that time, you know, lack of available skill sets in the market. So again, there was a lot of investments geared towards developing those kinds of skill sets. You know, when we talk about MMC in modern methods,

There's more kids on the digital side. So also the government made sure that by the time the industry is fully matured in the past decade or two, know, all of the skillsets are available. There's a lot of efficiency in the factory. So there's a lot of productivity, higher productivity when compared to traditional construction on site and so on. When you look at China, I mean, I'll give you the last example very briefly. know, China, you may have been aware of all of that publicity surrounding

high rises or skyscrapers built within two months. Very mind boggling development, you ask me. China is a huge market, with an upward of 400 or 300 million people wishing to buy homes. They have a mature real estate industry. There's a high degree of repeatability, and that's what MMC and industrialized construction necessitate, is that high degree of standardization and repeatability.

And that is very prevalent in the Chinese market. And they use that to their full advantage to reap the benefits and so on. now, know, MMC is picking up hold, taking hold all over the world. I would argue that the labor shortages that Dave has mentioned, you know, they're taking hold across the globe. We're going to have an increasingly aging population as we progress in the coming few decades. So the question of low productivity and construction is going to have to be addressed through industrialization

modern methods, offsite methods. So I think this is going to be a trend. It's picking up as time progresses and so on. As it is a global trend and maybe, I mean, taking the experience or the examples you mentioned, Sam, and looking at the Middle East and the GCC, we observe a gradual adoption of MMC and digital technology in the building industry with obviously the promise of cost and time efficiencies and of more sustainable buildings.

So in the UAE, we noticed the presence of a growing number of modular solution manufacturers. Also, major developers in the regions are exploring the adoption of MNC technology. In Saudi, there is more than one trillion USD planned to be invested in real estate and infrastructure projects. So mega developments such as Neom or large developers such as Roshan are triggering innovation in construction and the adoption.

of MMC and offsite manufacturing. So, Hussam, can you share with us your view on the level of adoption of MMC in the region, GCC, in general, and in the Kingdom in particular? And who or what is driving the transition to MMC compared to what you mentioned in terms of global trends? Yeah, sure. Well, the adoption of MMC in the GCC is, I would call it, fledgling.

relatively still in early days, but perhaps more so in the kingdom of Saudi Arabia. But I believe in the UAE, it's been somewhat more prevalent in the last couple of decades for various reasons. know, I mean, the UAE has hosted several global events, know, their hospitality capacity in terms of number of rooms and so on has exploded since 25 years ago. So I think the pressures on the built environment there has been prevalent. But as of late, you know, when we talk

the GCC economies or what's increasingly being called now as the Falcon economies, after what the term of Tiger economy is introduced in the Far East. Now it's the time of the Falcon economies. There's huge economic programs. When we talk about the economic diversification plans of the government, that's putting a very heavy strain on the built up environment. And I'll give you a very good example. In Riyadh, in the Kingdom of Saudi Arabia,

been in agreement to host the Expo in 2030 and of course the World Cup by 2034 and we're looking at various other events being lined up. So at the moment the hospitality capacity is quite limited you know and if I'm not mistaken I've read somewhere earlier as of late there's around 200 000 keys that have to be rolled out across the kingdom within five or six years. That's quite mind -boggling right?

I think the only way to be able to deliver such capacity or built up environment is through more industrialized versions of construction. know, everything that Dale and I have spoken about earlier in the podcast, when we talk about standardization, efficiency, integration, collaboration between various stakeholders, know, government, investors and manufacturers and so on. I think that's going to be a very good way forward. And when we talk about the government and their role in the midst of all this transformation.

You know, it's going to be very similar to what we've seen in Asia, developing that kind of regulatory framework, working with all of the stakeholders to develop those compliance regulations and so on. There's probably going to be a great deal of incentives being offered to private sector investments, whether they're local or foreign. We need to also be quite ambitious on the research and development and innovation fronts. know, mean, Singapore and Japan have done it decades ago. I think it'll take the same thing

in the GCC. And last but not least, the collaboration. mean, MMC and more industrialized versions of construction is all about collaboration, integrating and making sure a role for everyone within that life cycle of manufacturing, whether it's customers, whether it's investors, whether it's government investors or private sector asset investors, whether it's manufacturers or engineers and architects. They have to be more integrated. We have to embed

principles with DFMA very early on in the onset of projects in order to truly deliver the full benefits of MMC in the region. Any additional thoughts on the dynamic of this transition in the GCC, Dale? Yes, I think it's really, really exciting and Hussam's obviously picked up on a lot of the points

But I think when you have significant growth, it completely makes sense to shift that growth into the factory because then you'll get all the benefits that we've spoken about, faster delivery, improved productivity, less reliance on human labor and so on and so forth. But the big chicken and egg, I think, with MMC just now is around who is going to pay for all of these factories. Because the thing about current manufacturing processes

They are all based on orders that go downstream from a construction process. Now this left shift that I was talking about earlier on is in that kind of world, we want to have productisation. We want to pick bigger catalog or bigger products from catalogs. And what that really needs is for people to start investing in factories. And I you spoke about $1 trillion of investment in the KSA. And I think

actually requires say, if you just take 20 % of that, that's 200 billion pounds of production that's going into a factory. That's a lot of factories and a lot of investment, billions of dollars of investments in new factories. So for me, the big question is, it goes even above the program. So we've spoken about projects going to programs, but it's that whole ecosystem that really needs to be fought through. How do we get these larger products? And then the aggregation of demand from clients so

people can come into the country and I speak to manufacturers all the time that are really keen to come to the kingdom but they need that certainty of demand if they're going to invest in those facilities. I think the biggest piece of the jigsaw for me is how do you break that scenario and facilitate the funding of this whole new industrialisation of the construction economy. And I think the second point about the kingdom is that there is a reluctance to move away from

concrete into other technologies such as steel. I think some research to give the comfort that steel homes, you know, with the appropriate obviously technologies layered into them, I think that would begin to help the transition to other technologies because the scale of the delivery that's required in the kingdom is such that you can't just rely on one technology. You need to use as many MMC technologies as possible

possibly in the same project, concrete and steel actually to get the scale of the demand and to lean into as many manufacturers as possible. So I see a very exciting future in the kingdom, but it has to be done at that kind of strategic level with the government looking at how to create this whole new economy in the future. talking about the government and what Dale was mentioning.

The government, especially in the kingdom, wears multiple hats within the building industry by being a regulator, but also a client and an investor. So in your perspective, what is the role that the government should play to support this adoption of MMC and this transition as a whole? Right. There is three or four primary work streams or buckets of government that efforts that have to take hold. The first one is the regulatory framework for compliance.

You know, at the moment, more often than not, our building code is, you know, primarily built on more traditional forms of construction. would argue maybe precast methodologies and so on. But there's less visibility and less of a framework or of a regulatory framework or additive manufacturing, for example, when we talk about 3D printed homes and so on. So I think government needs to take the lead with all of their, the government bodies in defining and developing that perhaps with academia

Again, using that collaborative framework that I mentioned with academia, with existing manufacturers that are coming online in the kingdom and so on. There's also incentives. think incentives can be multifaceted. They could be financial. There could be some tax breaks, for example, for daring investors who are coming in and investing in this ecosystem. We could talk about free trade zones where plants can be located.

benefiting of knowledge transfer and the importation of that very important skill set that are missing more often than not. of course, research and development. mean, the government has been active on that front. There is a lot of good work being happening in some academic institutions and the reality elsewhere in the kingdom. I think more of that work has to continue. Making sure also this skill development effort is taking place. You know, we have

I would argue hundreds of thousands of workers that are very accustomed to traditional construction methods, but considerably less in the factory environment where manufacturing will take hold. So those kinds of working environments will require more digital skill sets, as I mentioned earlier, the use of BIM modeling, for example, the use of, you know, common data environment linking up the work effort between all of the stakeholders and so on. So that's going to take a while, but it can be done.

And finally, last but not least, the collaboration that we talked about, you know, it's going to be, there has to be a cultural shift in the way that companies and manufacturers and owners operate. know, there has to be a more emphasis on collaboration on the common working environments and learning and the generation of data, data sets, know, large data sets. A very interesting point that Dale has mentioned earlier is productization. People sometimes have

difficulty in imagining how can we productize a home. A home is traditionally perceived as a very, very unique kind of personal living space, but we can break it down. When we talk about bathroom spaces, for example, whether it's inside a home or whether it's inside a hotel room or whether it's inside another asset type, you can argue that a bathroom is a bathroom. We don't need a million bathroom types in the kingdom. If we can define maybe 1 ,000 of those or 500 of those.

That's going to be the way forward for productization. And productization is not necessarily a bad word. It doesn't insinuate a lack of flexibility because a product following a productization effort is a well -studied, well -engineered product proposition. So it can be improved year on year and manufactured in a highly repetitive framework and so on. So basically it's the cultural and the cultural shift. And that starts not only with the government, but also in the private sector.

within professional practices and so on. On another note, there are a few criticisms addressed to MMC. One of them is the lack of proof of the cost saving despite the promise. As Hussam was mentioning, about productization, about revisiting the regulation, improving it. So these profound changes, are they worth the benefit, worth these changes?

This is one criticism. Another one is the client perception or the end user perception of the perceived quality of these assembled houses and residential units, for example. So what is your opinion? What do you think of these criticism? no, and these are really good points, Nisar. Tackling the cost one first, the House of Lords in the UK did a report on offsite manufacturing recently and one of its initial comments

was it observed that in the preparation of the report, lot of industry had said that offsite manufacturing was more expensive, whereas another part of industry was saying that offsite manufacturing was less expensive. And their view was, well, hold on a minute, it can't be both. So which is it? But the reality is, now based on what we've spoken about, is if you design for construction and push subsets of that into manufacturing,

that are not really geared to manufacturing and the factories that these go to are essentially just construction under a roof. Well, of course it's going to be more expensive, but we know that the best housing companies in the world are delivering, if you like, that are 20 % cheaper as a minimum over traditional housing costs. So housing should be delivered cheaper using offsite manufacturing.

one of the things that we've been looking at is what I would call the conditions for success. What are those drivers? And one of the things is actually, and again, Husam just mentioned that, is thinking like a manufacturer. So if we design for manufacturer, and again, Husam picked us up at the start, rather than designing for construction, we begin to make the right moves to driving the costs down using offset manufacturing. So I do strongly believe

If with those right conditions in place, we will deliver projects cheaper than we currently do. That's without a doubt. In terms of the quality issues, I think those are more to do with bias and we've had that in the UK for a long time to do with perceptions of a lot of the housing that we deliver post -war, for example, in the late 40s and 1950s is still around and there's a perception that prefabrication is not a good

But certainly all of the content I see coming out of factories, the quality is higher. So somehow we've got to overcome this bias and perception. Some of the issues we get on site are, yes, some of the detailing is not good. So we need to learn from all that detailing and where the quality issues do come with offsite. It's not necessarily bizarrely in the factory. It's how those offsite components are assembled. Zipping, we call it, are zipped together on site.

So the quality issues actually might not be the manufacturing itself, but the actual residual on -site work that's required. And I've also already mentioned the challenges to do with the shift from concrete to steel and other lining systems and the perceptions around that. Thank you, Dale. Thank you. Sam, maybe in the light of what Dale was sharing and what you have also shared with us, how do you see the use of MMC evolving in the region and in the kingdom?

in comparison with what is happening in other regions of the world? As we said earlier, I mean, this is a trend that's about to continue. It might not be self -evident in the next couple of years, although it's picking up. But I think on the long run, mean, when we talk about what we mentioned earlier as the ageing population problem, know, traditionally one of the major drivers of industrialized manufacturing is the low availability of labors, you know?

That's in Singapore. We face that in Japan, increasingly now in Japan. For Saudi Arabia, it's the same, but for different reasons. When we look at the mature markets in Western regions like Europe, the aging population is also going to probably dictate that construction really, really picks up the pace of catching up to other industrial sectors. Because traditionally, the construction sector has been lagging behind in terms of innovation and manufacturing and productisation.

But I think ultimately, construction will have to be picking up the pace and adopting that transformation moving forward. So I think we have all the basic ingredients going on, or let's say the converging of all of these factors are coming in nicely now to make sure that this transformation does accelerate going into the future. And also Nizar, just allow me to add a very important note that we didn't mention so far in this podcast. It's the question of sustainability. When we talk

traditional construction, the way to handle sustainability KPIs, it's pretty limited because, know, mean, when the, let's take the example of traditional cast in -situ concrete. When we compare that to more industrialized versions of construction and manufacturing in factories, it's very difficult to track, for example, embodied carbon. But the digital skill sets that I talked about are going to help us to use building modeling.

techniques in order to really, let's say, assess what's our current environmental impact when we develop built up environment and how can we slowly but surely make sure that these numbers are decreasing by 2050. So I think sustainability is one of the key advantages of modern methods. It's a way that minimizes to a bare minimum the amount of waste that we generate as an industry and so on. So I think considering the great pressures on delivering sustainability targets,

MMC is also there to stay in order to help us deliver those ambitious goals. you, Hossam. Dale, any additional thoughts on the evolution of the MMC in the Middle East and the GCC? Yeah, sure. thanks, Hossam. I just realized that we hadn't picked up on sustainability. And you're absolutely correct. It's a key part of why the shift to manufacturing is important. Most factories have less than 3 % waste, whereas

Some construction sites can have up to 30 % waste. So that waste reduction is really integral to reducing the carbon footprint of the industry. think the final comment I would like the listeners to take away, Nisar, like today it feels like we're in this state of flux because we're trying to still do things traditionally and you picked this up at the start Nisar and certainly we see two trends into the future.

is optimizing construction processes. But our view is that as an industry, we should be much more assertive and passionate about offsite manufacturing. And I certainly see a future and a paradigm shift in the way that we make things. And that that future will be very different to what we do today. And we haven't spoken about AI in this call. We could probably have a podcast on that alone. But certainly using digital tools, program approaches, and a wide range of MMC solutions,

we think the future will be much, different. And I think the other topic that we've not mentioned around which Hussam was talking about was in that reduction, say in number of bathroom types is the ability to configure these. So that configuration process in itself allows, say the chassis of these toilets to be consistent, but we can perhaps have different sanitary ware and tiling and so on inside these. So there's different ways to allow

the manufacturing process to prevail and be much more efficient in this future. But I'm really, really excited about where we're going to be as an industry in 10 years time. I think it will be very different to today. It will take a lot of learning. So we are going to have to learn a huge amount. And as Sam is saying, there's a lot of collaboration with robotic companies, universities, and a wide range of entities that we need to engage with to get there.

But yes, I do believe that it will be very, very exciting in the future. We'll be delivering on the, you know, all of the different metrics and we'll have those productivity improvements. We'll be delivering more product with the same number of people. And I think my final comment is that we always talk about the three mantras of procurement being time, cost and quality. And the perception has always been that you can only have two of these.

we're already seeing offsite manufacturing delivering projects faster and with better quality. And I think with the right approach and that ecosystem and the program level approach, we can nail the third one. So I think the opportunity here is to finally be able to deliver on all three of these mantras. And I think that's a really exciting thing for the future. thank you, Dale. And with these final

I would like to thank our guests, Hussam Ali and Dale Sinclair for sharing their insight on a topic that I believe we will hear more about in the coming months and years. This was an insightful podcast, at least for me. I hope it is the same for the listeners as well. I would like to thank our listener. I hope you enjoy the session as much as I did and looking forward to another Anticipate podcast. Goodbye and stay tuned.