Home » Modulous: Cracking construction’s biggest conundrum

Modulous: Cracking construction’s biggest conundrum

by Joe Broun
Chris Bone, CEO, Modulous

While many sat scratching their heads about the best way to deliver offsite manufacturing, one pioneering start-up was rapidly developing its own unique approach. Tim Clark caught up with Modulous CEO Chris Bone to find out more about the company’s innovative modular solution

Working out how to crack the conundrum of offsite production is arguably the construction sector story of the past decade.

From the publication of Mark Farmer’s Modernise or Die in 2016 to Legal & General’s ambitious plans to drive offsite manufacture from its vast Yorkshire factory, there is no shortage of proposals on how to overhaul the sector’s laggard productivity.

Within this crowded field, one new start-up aims to tackle the biggest challenges that MMC faces head on, and disrupt a sector which has long seemed ripe for innovation.

Modulous was co-founded by a team of technology, business, and construction specialists, including Chris Bone, its CEO. Bone has worked in property and construction for over two decades, including roles at Grosvenor Estates, British Land, LandSec, and the Crown Estate.

He says Modulous evolved from what was a contemporary consultancy as, in his view, traditional consultancy firms are difficult to scale up, and rely on increasing headcount to increase revenues. A combination of digital consultancy and offsite provider, however, seemed an opportunity worth exploring.

Bone says: “As a consultant, we saw armies of people sitting around tables arguing about how to design a building, and it just seemed nonsensical.

“What we quickly realised is that to effectively digitise ourselves, we needed a physical product.”

Kitting out

The USP for the company is to offer more than just a consultancy role, and place itself as the integral part of the construction process by supplying an in-house ‘Kit of Parts’, which can be tailored into the ‘digital ecosystem’ of a project.

Modulous undertook three years of research, which is still ongoing, to design off-the-shelf components that can help developers deliver off-site schemes at a higher quality and less cost. The results of the research programme have begun to take shape in the form of 1,500 components whittled down to nine sub-assemblies. According to Bone, these sub-assemblies form vital parts of Modulous’s design portfolio, which includes floor cassettes, wall panels and utility cabinets, and other sections needed for a typical construction project.

Modulous’s Kit of Parts comprises 1,500 separate components

Compared with other MMC operators, Modulous has eschewed the approach taken by Legal & General’s full-scale factory-led offer. Instead it relies on supply chain partners to deliver the offsite sub-assemblies for any project where they are needed. The aim is to be an asset-light MMC provider which can supply its concise Kit of Parts tailored to specific projects and regions.

By combining both aspects of the MMC sphere but avoiding the costly factory-led example, Modulous can be more nimble than rivals, and crucially turn a profit. The start-up has also invested heavily in its digital platform. Through providing multiple aspects of the design process, Modulous can offer construction firms and clients the products needed to make offsite construction more streamlined, rather than seeing contractor’s struggle to design equivalent modules themselves.

“We identified two reasons why MMC hasn’t taken off,” Bone says. “One is the capex needed to build the factory at the front end, and the other is the working capital needed during the various projects.

“Manufacturers have to buy all the products upfront and are not getting paid until it’s finished. We sit on a working group for Homes England, where some manufacturers say that up to 70% of their project is sitting in work-in-progress, and that can suck in funding.”

“As a consultant, we saw armies of people sitting around tables arguing about how to design a building, and it just seemed nonsensical”

Not content with stepping into the MMC production arena, the Modulous ecosystem has also been designed to bring on board landowners, developers, funders, designers, suppliers, and contractors into one area to streamline projects and facilitate funding – as well as identify plots that may be optimised for MMC construction.

Streamlining the production aspect by using sub-assemblies allows contractors and developers to free up working capital. Modulous is also keen to provide better quality than the ‘blocky’ porta-cabin-on-steroids solutions which have come so far.

Bone says the platform also allows developers to also look for land and financiers to access the system with funding requirements for projects. The system then matches up the opportunity, funding, product, and construction plans in one place to optimise the life-cycle of the development. Whether it is Transport for London looking to provide new homes above one of its stations or a utility company aiming to develop part of its unused rural estate, Modulus can provide a library of options to get the best result for all parties.

Janet Stephenson, managing director of Modulous’s US arm says: “There’s a lot of demand for modular and modern methods of construction. However, there’s still an interest in not changing [working practices] in order to get it. And so, unless you have the tools to say, here’s how to achieve your aim, you are still going to get a very context sensitive solution to your site […]

“When you really take a solid look at what the market needs, and what developers actually need to meet their unit mixes and overall demands for multi-family housing, you can boil it down to actually a very, very small number of units that in a various number of configurations can meet the individual demographic for that locale.”

Scaling up

Arguably the hardest task for Modulous will be convincing developers and clients that the firm’s unique proposition can deliver homes at scale as seamlessly as anticipated. Bone and Stephenson are aware of the risks posed by scaling up the business. US offsite technology start-up Katerra, which was founded by Tesla’s interim CEO Michael Marks and backed with an $835m investment from Softbank, filed for bankruptcy in June 2021.

Modulous picked up where Katerra left off by hiring four of its senior staff, including Stephenson, and bringing their expertise into the fold. The new US division aims to test-fit and adapt the UK business model for the US.

four katerra bosses lead modulous' US expansion
Modulous hired four senior staff from Katerra following its bankruptcy filing

In terms of start-up capital, in June a trio of investors including Blackhorn Ventures, cement manufacturer CEMEX Ventures, and Canadian investor Ground Break invested a combined £5m into the Modulous. The aim for the near future is to sign up delivery partners to deliver projects and complete a ‘series A’ funding round – which has been valued at £13m.

Bone declines to share revenue details publicly, which is to be expected for a start-up; however, he believes a final ‘Series B’ funding round after the current ‘Series A’ is enough to see the firm through to profitability, stating that post series B the business “will be at a scale where it starts to grow under its revenues”. 

Alongside securing investment and building out its Kit of Parts offer, in the UK the firm has also sought out partnerships with the likes of Homes England and Bristol City Council, as well as becoming a certified member of the UK Green Building Council. Modulous will be building a pilot project in Bristol over the course of 2022.

Bone says: “Next year, we’re looking to do between 500 and 1,000 homes between both the US and the UK. And that will then scale quickly, and almost exponentially, because when you begin to build homes you start to bring in more delivery partners, and they bring their projects into the mix and more developers are bringing in more work. The whole thing will go through that sort of hockey-stick curve.”

Another factor in the rise of MMC, which may well play into Modulous’s hands, is the top-down push from both central and local government to drive up innovation and change in the sector. 

Bone notes: “Homes England is an exemplar for mandating certain amounts of funding and ensuring it’s used with MMC firms. I think the government’s affordable homes financing has the same mandates. From government down [such as offsite or MMC], it’s starting to happen, I think, now we’re starting to see local councils mandating for offsite.”

He adds: “We’ve got a project we’re working on in Lewisham, and the developers were told they would only gain planning permission if it was built using MMC. That’s a great example of how local councils are starting to drive change locally.”

Read more on Modulous:

The fact that more flexible assembly facilities can be setup locally on projects rather than immovable offsite factories has been a bonus for Modulous with schemes looking to hire local labour. In all, however, the main aim is to scale up the role of MMC and help alleviate the housing shortage – which is worldwide. Bone says 500m homes are needed per year globally.

He adds: “Our investors didn’t invest in a home builder. They invested in a technology platform that enables others to deliver homes.

“And if we’re actually going to have any impact whatsoever on the housing crisis, there’s got to be to allow many, many people with the technology to enable each of them to deliver more than they can at the moment.”

Main image: Chris Bone, chief executive, Modulous. Words by Tim Clark

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