A projection that the cost of rapid-build modular homes more than doubled over the last two years to about €442,000 was one of the more eye-catching findings in the annual report of the Comptroller & Auditor General (C&AG).
Why has the cost risen so much?
The Government initially agreed in June 2022 to a pilot programme of 500 units across 20 potential sites to accommodate up to 2,000 people. This was projected to cost €100 million or €200,000 per unit. However, by November of that year, an Office of Public Works (OPW) review indicated the total cost would be €40 million higher.
This attributed the increased price to costs not included in the original budget, such as main contractor costs, VAT, direct costs to the OPW and utility contributions.
And the projected cost kept rising?
Yes. By January of last year, the OPW suggested the cost per unit would be €310,000.
The increase in the price from two months earlier was mainly attributed to the projected costs of site development works, which had increased by an average of approximately €18,000 per unit during that period. The OPW stated this was primarily because some of the proposed sites turned out to be smaller than originally envisaged, with capacity for fewer than 30 units, and with significant “unexpected abnormal site conditions”.
Has Irish house price inflation finally peaked?
Six months later, the OPW again revised the cost estimates per unit upwards, this time to €339,000. The Government was told this rise was due mainly to the size of the units having to increase to comply with housing standards and building regulations, a provision for potential site abnormalities/site enabling works and a dilution of economies of scale due to the smaller than anticipated size of some of the sites.
Between July of last year and January last the cost was revised on at least four further occasions. By last June, the projected cost per unit was €436,000.
How does the cost of modular accommodation compare with other types of housing?
Industry sources said the Department of Housing provides unit cost guidelines to local authorities annually based on tender prices for social housing schemes in the previous year. These include site development and building costs as well as VAT and utilities.
In 2022, a two-bedroom, one-storey building ranged from €203,200 in Co Roscommon to €390,700 in Dublin city. In South Dublin, the figure was €336,100 while in Dún Laoghaire Rathdown it was €351,100. In Cork county the figure was €265,900.
The OPW maintained in January that construction costs per unit in two social housing projects were €267,000 and €383,000, compared with €311,000 for the rapid build housing. But this did not include VAT and questions have been raised about whether the projects were comparable in terms of matters such as area, layout and facilities.
In June, the OPW maintained the cost per unit of rapid-build housing to be about €8,000 more expensive than a new home in Ireland as set out the previous year by the Society of Chartered Surveyors — €278,000 to an average of €270,000. However, the cost per square metre for the rapid-build housing was estimated to be 87 per cent higher.
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