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Modular Construction: Pros and Cons for Contractors

8/3/20 – Ross Emerson

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The COVID-19 pandemic is presenting the construction industry with many challenges. Some contractors have seen projects temporarily suspended and others cancelled entirely. Against this backdrop, you may be contemplating a shift to modular construction, also known as prefabrication. Early in the COVID-19 crisis, China made news when it used modular means to build hospitals in a matter of days. But going modular isn't a slam dunk by any means. There are just as many cons as pros.

Defining the Term

The term modular construction generally refers to the process under which major building components called "modules" are manufactured offsite under controlled, factory-like conditions. A contractor can order these modules from the manufacturer and have them shipped to the jobsite where the construction company assembles them to create the desired result — which might be a health care facility, commercial property, apartment building or residential home.

Contractors follow the same building codes and quality standards as usual. But they can often complete projects in about half the time.

Several Benefits

There are several benefits — some obvious and others perhaps not — to using modular construction:

Accelerated schedule. First and foremost, the process usually saves time. You typically order modular components before foundations are poured. So, assuming delivery occurs on time, you'll likely be able to stay on schedule and avoid costly delays.

Improved planning opportunities. Using prefabricated materials minimizes uncertainties related to weather because you spend less time working outdoors. You may even be able to schedule module deliveries on optimal days for even quicker and easier assembly. As you familiarize yourself with the modular process and train employees, you can also integrate safety measures that include prevention of COVID-19 (and other diseases).

More efficient storage. Modular construction helps with common storage problems by drastically reducing the amount of raw materials (such as lumber and bricks) that must be kept on-site. This is especially beneficial for projects in downtown areas where space is often tight and streets are congested, making it difficult to move materials in and out.

Less dependence on skilled labor. Modular construction may help address the construction industry's ongoing shortage of skilled labor. With most of a building's major components fabricated off-site, you don't need as many skilled workers on the job site.

Waste. Most of the waste associated with the modules is generated at the manufacturing plant. Thus, you should see less scrap and other refuse on the jobsite.

Potential Challenges

On the other side, modular construction comes with challenges. You'll want to consider the following before deciding to adopt the process:

Standardization. Projects involving mass production on scale, such as modular construction, rely on uniformity and repetition. Therefore, buildings are typically standardized with little or no differences. At this point at least, the technology doesn't allow much creativity or distinct design elements. Attempting to customize the design will add extra time and costs to the project.

Upfront planning. Design decisions must be made at the start of the project. This requires all the involved parties — including the project owner, architects, engineers and contractors — to share the same vision from day one. The pressure is on to make final decisions on items such as exterior colors and finishes. If the team doesn't work together well, conflicts can occur.

Approval process. The approval process for modular work can be complicated. Because projects must meet federal, state and local requirements, you may have to deal with a vast array of rules. Additional inspections may be required, which can be time-consuming and disruptive.

Limited options. Currently, most modular manufacturers concentrate on the single-family home niche. This may make finding the right supplier for other types of jobs problematic. Your options may be limited, which could drive up costs and make scheduling more difficult.

Transportation. Because modules are prefabricated in remote locations, they must be transported to the jobsite and assembled there. There are dangers involved in shipping, including possible damage. And when repairs or replacements are needed, the project may be substantially delayed. Discuss with your supplier how it safeguards modules during transport and do some research into its record of safe transportation and customer satisfaction.

Financing. Because modular projects literally come together so quickly, most of the job costs may be due upfront. Before signing the contract, ensure you're working with a project owner who's aware of this and has adequate financing in place.

Worth a Look

Modular construction has been gaining momentum for years because of its efficiency and intuitive integration with technology. However, it isn't necessarily the best approach for every contractor. Study the pros and cons and talk with your VonLehman advisor before signing on to one of these projects.