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Having grabbed the headlines with its first modular scheme at Murray Grove, and committed to following it up with the bigger, brasher and just as modular Raines Dairy, how was it going to push back the boundaries of innovation in off-site construction next?

The answer is about to be revealed at Lillie Road in Fulham, west London. This time round, steel boxes will once again be stacked on top of one another, but the new innovation is a semi-modular scheme in which the bathroom and part of the hallway are made as modules in the factory, and the rest of the home is assembled on site from steel, loadbearing panels.

Too easy? Well, whereas most projects using bathroom pods involve simply sliding the pods into the building frame, here the pods are loadbearing and will be part of the structure.

"Peabody wanted to explore the benefits of a light-gauge, steel-panel system," says Julian Gitsham, team leader with architect Feilden Clegg Bradley. "One of the issues with modules is that you have to transport air in getting them from factory to site. We're trying to be efficient in transporting, so the small, high-value bathroom is a module, and the rest is being transported as flat pack."

The £7.4m scheme will be slightly bigger than Raines Dairy. It will include 65 homes, a mix of apartments, maisonettes and three- and four-bedroom houses arranged in three blocks, the largest of which rises to six storeys. Homes will be clad in terracotta stack-bonded block and terracotta rainscreen. Construction has just started and the project is scheduled for completion next spring.

"It should be quick to erect, much higher in quality and we will get much greater U values," says Gitsham. "In theory, build time will be 25% faster than traditional construction, but not as fast as pure volumetric."

Cost consultant Walker Management carried out a value-for-money analysis of traditional, volumetric and light-gauge steel-build methods for the project and all three emerged with similar results.

Forge Llewellyn, the steelwork specialist and contractor on the project, is providing the steel panels for the floors, walls and ceilings, and will for the first time be producing its own pods. Pod shells are made, like the rest of the steelwork, by Ayrshire Metal Products' works in Scotland, and then brought to Llewellyn's workshop in Milton Keynes where they are fitted out. The houses, maisonettes and apartments are being fitted with seven basic types of pods, each spanning from party wall to party wall, at a width of around 4.2 m and more than 2 m in length. Each pod weighs just over a ton and fitting it into the structure, will, says Gitsham, be like slotting pieces into a jigsaw with little room for error. "We have carried out load-testing and transportation tests. Tolerances are quite tight," he says.

The project is being carried out under a PPC2000 partnering-based contract in order to allow specialists such as Forge Llewellyn to be brought on board early and make maximum use of their expertise.

"It has been a constructive learning process for the whole team," says Gitsham. "It has stood us in good stead for the actual build."