Can industrialised construction fulfil Canada's housing demands?

The call to adopt modern methods of construction, referred to as industrialised construction (IC) in Canada, is growing, driven by housing shortages, demand for public infrastructure in all forms, pressure to build more sustainably and increasing labour shortages.

Unlike conventional construction methods, which are often labour-intensive and project-specific, IC focuses on creating more efficient, standardised and scalable workflows that optimise resources, reduce waste and improve quality.

IC therefore presents an opportunity to significantly increase productivity through advanced manufacturing technologies.

Despite these benefits, IC adoption remains uneven across regions and is constrained by regulatory structures, inconsistent procurement practices, limited financial and insurance familiarity, as well as gaps in workforce capacity and data systems.

International experience demonstrates that national IC roadmaps play an important role in accelerating adoption by aligning policy, procurement, finance, skills development and research priorities.

For example, the United Kingdom, New Zealand and Ireland have implemented structured frameworks supported at the national level to advance IC.

The United Kingdom has previously leveraged government-led standardisation and performance-based procurement to encourage market uptake, while New Zealand has emphasised system-wide alignment across policy, procurement and industry capability.

Ireland's approach has focused on productivity improvement and capacity development through targeted national initiatives.

National IC strategies combine three core policy mechanisms that address governance, market and capacity.

Procurement-driven approaches rely on public demand aggregation, standardised frameworks and performance-based procurement to create market certainty and accelerate adoption. In this context, government purchasing is a transformation lever.

The United Kingdom has followed this approach, where MMC frameworks and procurement reform have initiated a scaling of industrialised delivery.

Capacity-building approaches prioritise industry development, workforce skills and supply-chain scaling ahead of large-scale procurement intervention. New Zealand most clearly reflects this approach through its sector transformation strategy.

The Irish government has linked MMC adoption to productivity and housing delivery objectives.

While early adoption may progress more gradually without strong demand-side incentives, this policy approach is expected to ensure lasting change.

While this approach enhances legitimacy and coherence, it also risks slower implementation and uneven uptake unless complemented by stronger procurement and financial mechanisms.

To address these issues, the University of New Brunswick's Off-site Construction Research Centre (OCRC), the National Research Council of Canada, the University of Alberta and Cast Consultancy collaborated to deliver the Roadmap to Transform the Canadian Construction Industry through Industrialized Construction, Research and Innovation.

This project is intended to serve as a tool for aligning efforts, scaling up production and modernising Canada's construction sector at a national level.

The Canadian roadmap was informed by a multi-method approach involving literature review, regional workshops, industry interviews and a national survey.

The roadmap identifies potential for advancing IC through new solutions, including:

• policy and regulatory frameworks
• procurement models and performance systems
• financial and insurance services
• quantifying capacity and capability for IC
• research and data sharing
• mobilising solutions through awareness, training and collaboration.

For instance, while the National Building Code of Canada (NBCC) has broad recognition, its adoption and enforcement vary, with some provinces implementing additional requirements or modifications.

This lack of harmonisation complicates the approval process for IC products, as manufacturers must navigate differing standards and regulations in each jurisdiction. 

Although provincial and federal governments provide guidance, no overarching authority exists to unify the regulatory framework.

Consequently, organisations looking to introduce IC technologies must invest substantial time and resources to gain approvals across multiple jurisdictions, which results in escalating costs and market entry delays.

The roadmap includes solutions in the form of recommended initiatives to address policy and regulatory barriers.

To reduce conflicting rules and smooth the variation in approval processes across jurisdictions, the initiatives emphasise simplifying and harmonising these processes and aligning municipalities and the three tiers of government.

Inefficiencies in codes should be identified through policy reviews to streamline operations and improve scalability. 

Policies must be stable and long term in order to foster confidence in IC investments and reduce the risk of abrupt changes that could disrupt projects.

This would create a more predictable environment for developers, contractors and investors considering IC adoption.

These collaborative procurement models should quantify the value of IC, for example through a pre-manufactured index, and recognise the unique risks as well as benefits of IC for fair and efficient project execution.

One such approach is outcome-based procurement, which prioritises performance metrics and long-term value over traditional lowest-cost selection.

Additionally, programmatic procurement through aligned collaborations, such as public bodies aggregating demand and standardising technical specifications, can drive scale, improve consistency and enhance the impact of IC adoption.

Clearer language in requests for proposals specific to IC and modifications to existing industry standard contracts are both recommended, ensuring that procurement documents reflect the realities of IC delivery.

Without demand certainty, the financial burden deters small and medium-sized construction companies from embracing IC methods, despite the opportunity for long-term cost savings.

A demand-led transformation plan is pivotal in the successful conversion of government policy intent and industry ambition into delivery.

The evidence from the UK over the last four or five years in particular shows that industrialisation will not occur without a demand side intervention.

Any government policy or funding initiatives must be backed up with a 'pull through' plan, underpinned by public contracts and procurement conditions that facilitate new ways of working.

Conventional financing structures align with incremental disbursements for on-site construction, rather than large, upfront capital investments required for off-site manufacturing.

In addition, many financial institutions do not offer suitable financing products for IC, creating additional investment challenges.

As a result, developers seeking to adopt IC face higher financing costs and restricted lending options, limiting their ability to scale production.

To reduce the financial risk associated with IC adoption, the roadmap includes recommendations for government to underwrite lending against IC projects and introduce tax incentives specifically targeted at research and development for small and medium-sized enterprises.

Beyond government intervention, financial institutions can develop structured solutions tailored to IC, reducing financial risks and improving capital access for IC projects, alongside more flexible research and development funding mechanisms that reduce the administrative burden for smaller companies.

To build lender and insurer confidence over time, the roadmap suggests developing a best-practice pro forma template specific to IC for developers, as well as conducting targeted case studies to identify drawbacks and understand gaps in insurance products for IC.

Progress requires regulatory frameworks that streamline approvals and align codes, modernised procurement models and contracts that incentivise IC adoption as well as financial options that de-risk the upfront investment that off-site manufacturing demands.

Construction and cost management professionals are uniquely positioned to drive these changes by quantifying pre-manufactured value, advising on IC-friendly procurement structures and building the evidence base that lenders and insurers need in order to engage with confidence.