Though Modern Methods of Construction (MMC) are gaining traction across Australia and factory-built construction has demonstrated clear benefits favouring time, cost, certainty and sustainability, the uptake remains constrained by systemic barriers embedded within the broader construction ecosystem. These challenges are less about technical capability and more about frameworks that are built around building things onsite.

The regulatory hurdle

One of the most persistent obstacles to the adoption of MMC at scale is regulation. Planning and approval processes across Australia vary widely between states and local councils and even departments within them, creating uncertainty for projects that rely on prefabricated systems. Building codes and compliance pathways are often interpreted differently depending on jurisdiction, meaning a solution approved in one state may require redesign or reinterpretation in another. For designers and manufacturers, this inconsistency introduces risk and erodes the efficiencies that prefab is designed to deliver.

What makes it worse is the limited recognition of prefabrication systems within existing regulatory structures, leaving the interpretation to the designers or engineers – with the uncertainty, risk and rework adding to the cost. With offsite construction frequently assessed through frameworks developed for conventional builds, it’s left to project teams to negotiate alternative approaches, adding time, cost and complexity during approvals.

However, multiple government-led initiatives including a national roadmap for prefabrication, funding support for MMC programs, planning reforms, voluntary certification and funded research programs are beginning to shift the landscape.

Funding prefab

Funding models have also historically worked against MMC. Traditional construction finance is tied to onsite project milestones, leaving manufacturers in the prefab space to carry the burden of significant upfront costs when buildings are produced in factories. Until recently, only a small fraction of contract value could be released prior to delivery at site, making prefabrication financially unviable for many suppliers.

Although revised lending policies and new contractual frameworks driven by the shorter turnaround and lower risk profile of MMC projects compared to conventional site builds are beginning to address this imbalance, progress remains uneven. Full volumetric projects delivered through a single manufacturer are better positioned to access improved financing. Kit-of-parts models, which are more common in the current market, involve multiple manufacturers contributing various components to the finished product that is then assembled onsite. However, challenges around these manufacturers getting paid offsite ahead of assembly onsite remain – these can be addressed by productising the components and securing financing against them.

*GroupGSA delivered nine volumetric buildings for NSW Police, fully fabricated in the factory and delivered onsite at multiple regional locations (Image: GroupGSA)*

Australia’s geographical vastness

Australia’s dispersed population and vast distances make the establishment of large-scale volumetric factories capital-intensive and location-dependent. Transporting oversized modules across long distances can quickly erode cost and carbon advantages. As a result, scalable prefab solutions often rely on distributed manufacturing networks producing standardised components rather than complete buildings. The kit-of-parts model presents a practical solution, given that Australia has a mature supply chain of about 1,200 manufacturers of prefab components. By using the existing capacity and maintaining efficiency throughout – from manufacturing to transportation and delivery at site – the overheads from Australia’s geographical spread can be broken down.

The cultural block

To many people, prefabricated buildings can appear as underwhelming – this cultural perception remains a quieter but equally powerful constraint to acceptance. Prefabrication is still commonly associated with lower-quality outcomes or limited design flexibility, particularly in residential housing. Though there’s growing evidence of architecturally refined, high-performing prefab buildings across public and private sectors, overcoming this bias requires education about the technological and materiality progress made in this space, awareness on what’s possible design-wise, and visibility of successful projects delivered at scale.

The future is industrialised: Where is the workforce?

Australia’s construction industry is already in the grip of a labour crisis with not enough workers and trades available to keep up with the ongoing demand. In the industrialised construction world of the future, where 80% of buildings will be built in factories, workers will need to be highly trained and upskilled, combining their traditional expertise with digital capabilities and business innovation to perform hybrid roles from manufacturing prefab buildings and assembling onsite to maintaining them going forward. This transition demands new training pathways and cultural shifts within trades as the value addition moves offsite into a manufacturing environment.

Conclusion

Ultimately, the barriers facing MMC in Australia are temporary – reflecting an industry in transition, adapting systems built for the past to meet future demands. As regulation, planning, funding and procurement continue to evolve, prefabrication has the potential to unlock faster, more sustainable and more resilient construction across the country.

Main image: For School Infrastructure NSW, GroupGSA used both methodologies – volumetric and kit-of-parts – based on the typology of the buildings. (Image: GroupGSA)

Architecture & Design Team

Let’s connect!