Prefab housing is riding an unprecedented wave on the back of a housing crisis and a need for more sustainably built homes.
Prefab housing was once regarded as the poor cousin of traditional and more bespoke construction: a cheap, flimsy, temporary solution. But there are prefab houses still standing in Melbourne today which were shipped to Victoria from Singapore in the 1850s and have been heritage listed.
To say the concept is now experiencing a wave of popularity is an understatement. And there are so many terms for prefabricated housing it can all get a bit confusing: modular, flat pack, kit of parts, modern methods of construction. But Damien Crough, CEO of prefabAUS – the peak body for Australia’s off-site construction industry and a hub for building prefabrication technology and design – says prefabAUS now simply calls it smart building, “because it’s just a smarter way to build”.
Probably the most common form of smart building is volumetric: fully finished modules including finished wet area pods and more which are transported to site on a truck, dropped into position and in just weeks become a fully finished house.
Another form gaining popularity is panellised construction, or a kit of parts. Here, a building is broken down into floor and wall components, with each of these coming fully finished.
For example, a whole wall can be delivered to site complete with the window installed, external cladding and internal lining, and often with electrical cables in the wall. Like the flooring, which now comes in completely finished cassettes, it is all then simply craned into place and bolted together.
This type of building comes into its own in really tight sites or already built up areas where it can be challenging to deliver large building parts.
Smart buildings come in anything from basic starter kits such as granny flats, to really high end, multimillion, architecturally designed homes and everything in between, with the clientele to match. Additionally, there’s a huge and growing market in modular buildings for education, health care, age care, and retirement living.
Chief executive officer of Viridi Group Adam Strong says the core of his company’s business is in kit-of-parts production, and the bulk of his work comes through government contracts. In the past 12–18 months he’s seen a big push from governments to get behind prefabs, with designers and builders motivated now to deliver more sustainable, healthier and innovative building solutions.
Building components such as completed columns, wall panels, floor panels, and beams are all assembled on site, which in Strong’s experience is the most cost-effective approach.
Clearly, his clients agree, with the company having already completed a large project for the Defence department and several for schools. “We add a lot of value, and can do things very efficiently,” he says.
Another emerging prefab builder, FormFlow, whose beginnings were actually not in housing construction, is also experiencing increased involvement with government projects.
Managing director and co-founder Dr Matthew Dingle is a former boatbuilder and engineer who essentially fell into prefab building because he “loves turning good ideas into life”. After starting his building products and systems company in September 2016, he saw the modular building space as a way of showcasing his numerous inventions.
Among them is his patented FormFlow Bend; a metal bending innovation that he claims is world first, which has myriad prefab building capabilities and benefits – perhaps the most important being a seal against air, water, animals, and fire embers.
After cutting its building teeth on a major project for Samaritan House in Geelong – a series of units for homeless men – FormFlow has now been approached by the state government to do key worker accommodation for employees moving into Western Victoria.
Both Viridi and FormFlow also cater for individual homes, but there’s plenty in the government pipeline to keep more than two such businesses in work for quite a while.
As CEO of prefabAUS, Damien Crough has a unique overview of what’s happening in this emergent industry. And it’s looking really positive, he says. He cites one major prefab builder as having year-on-year annual growth of about 20 per cent.
“There’s so much certainty and so much less risk with smart building because when you design a modular building you have to design to DFMA (design for manufacture and assembly). Every component is modelled in 3D and fully costed, which helps to provide the customer with a very accurate cost for building.”
More of a sure thing
Financial institutions are starting to recognise that smart building is a lot less risky, too. With a conventional build in the suburbs generally taking about 12–18 months, prefab takes about 10–16 weeks from start to finish.
And everyone knows that in the current housing climate a lot can happen in 12–18 months. Interest rises and multiple material increases have severely impacted the project costs in recent years and there are always things that happen on site to exacerbate this when building traditionally.
With prefab, you know when a job is going to be completed, says Crough. “You really are de-risking your whole project to weather, site conditions, market conditions and so on, and I think the financial institutions are starting to recognise that. It’s far more reliable.”
FormFlow’s Matthew Dingle cites the occasion of the first residential building the company built where the client asked their bank for an installment and the bank went to site and found nothing there. So the client directed the bank back to the factory, by which time FormFlow had gone four or five steps beyond where the bank expected them to be.
It all turned out well in the end, and these examples are becoming less of an issue now, says Dingle.
Serving the circular economy
Along with the benefits of tighter tolerances and less wastage, better sealed buildings and more energy efficient homes is the contribution prefab construction can make to the circular economy. Because the buildings are designed for manufacture and assembly, they’re also designed for disassembly, making them easier to reuse and recycle than conventional buildings. You also know which supplier the components have come from and exactly what’s in them because it’s all embedded in the design.
Prefabs are designed exactly the way you would a conventional building, with a 50-year design life and everything to meet the current codes and standards and regulations, but with between 50 and 90 per cent less waste, says Crough.
The impact of spiralling costs
While not immune to the impact of the spiralling costs which are knocking the stuffing out of so many in the construction industry right now, prefab home manufacturers can provide guaranteed costs where conventional builders can’t. With all components and materials required in the factory from day one and ensuring seamless production in prefab, timelines with traditional building are more fluid, leaving projects vulnerable to anomalies such as material supply and cost escalation.
Significant growth predicted
Prefab currently makes up about 5 per cent of the industry and Crough says it is likely to grow to 15 per cent in the next three years and 30 per cent by 2032. That’s significant growth, but is it enough?
With the Australian population predicted to grow from around 26 million to almost 40 million in the next 20 years, housing will become even more critical than ever. So, industrialised digitalised construction is definitely the future, Crough says. And with that comes the challenge of how to skill up for it.
“We’ve got the traditional trades that we will always need, but we also need the super-tradie who has the knowledge of logistics and project management and planning; who can coordinate the delivery and install of the prefab components.
“Everyone is recognising that prefab and what we call Industry 4.0 – the digitalisation of the construction sector – is really going to be the enabler to a smarter, built environment and a more sustainable circular economy.”
Viridi is certainly enjoying solid growth. After setting up its factory in Campbelltown almost three years ago the company will turn a profit this financial year and is tracking according to its forecast and plans. Turnover is expected to be about $40 million this financial year and that will increase to $65 million next financial year, with a goal to be turning over $100 million in three years, Strong says.
But being the only manufacturer of timber-based structural solutions in NSW, some competition would be welcomed, he adds. With solid demand expected over the next two to three years, the market “probably needs three Viridis”.
And while Dingle says FormFlow has had a tough start to the year, it’s now starting to look up, with orders flowing in.
But it doesn’t mean they can be complacent. As a fairly small business, with only about 15 people employed, FormFlow will do only about $4-6 million worth of work this year. And with a nervousness in building generally at the moment and building companies falling all over the place, he says the business has to “earn its stripes” and deliver more of its large projects to win people’s confidence.
Attracting the bigger players
The prefab mentality is also steeping into some of Australia’s bigger companies, with positive signs the industry and the market understand the benefits of offsite and modern methods of construction.
Clough says companies such as Multiplex, Lendlease and BlueScope now recognise that this is the future and are developing their capabilities to incorporate more prefab components into their large scale commercial ventures, whether as bathroom projects or facades or other elements. BlueScope is supporting the greater use of prefab construction with its roll-formed steel framing TruCore, among other innovations.
Building your future
For anyone thinking of building or even getting into the prefab business, Crough recommends making the prefabAUS website and member directory the place to start. But if looking elsewhere, he says, avoid companies displaying lots of “nice glossy pictures and renders but no real homes”.
For businesses, Clough recommends dipping your toe in the water and starting small, with prefab elements or components. “Build your capability and capacity that way,” he advises.