What You Need to Know About Modular Building

Off-site construction has definitely gained some traction with contractors and building owners. According to the Modular Building Institute (MBI), modular construction accounts for about 3.2 percent of all new non-residential construction starts.  The residential sector is similar, with a slightly higher percentage in the northeast compared to the southeast. According to a survey by the National Institute of Building Science (NIBS) in 2018, 88 percent of respondents indicated that they had used some form of off-site (prefabricated, component) construction on a project within the last 12 months.

“MBI’s own industry analysis has demonstrated growth in market share over the past four years for volumetric modular construction,” says Tom Hardiman, executive director and spokesperson for the Modular Building Institute. “As the construction industry overall moves towards a more automated and industrialized process, the market share for modular will continue to rise.”

Labor, Housing Costs and Timelines Drive the Trend

 According to Hardiman, high housing costs and low housing availability are big drivers worldwide.  Labor shortages and higher wages for skilled laborers in key markets are also causing owners to rethink their construction strategy.  Additionally, building owners’ are looking for shorter construction time, and that leads many people to consider offsite construction. “When you realize that you can cut anywhere from 30-50 percent off your time schedule and open sooner, it makes no sense whatsoever to consider building any other way,” he says.

A study conducted by KPMG concluded that seven percent net financial savings were possible as a result of a shortened timetable. On the project they studied, it was as a result of being able to capture rental revenue sooner as well as avoiding inflated construction costs.

Modular construction utilizes the same materials and has to meet the same building codes as on-site construction, but construction takes place in an industrial setting away from the jobsite. Pre-assembled components are then transported to the jobsite for final installation.

Modular Applications in Building and Infrastructure

“Segments with repetitive design elements are ideal for modular construction,” says Hardiman.  This includes the hospitality, multi-family, healthcare, and student housing sectors.  Marriott has led the hotel industry using modular construction, working with Idaho-based Guerdon Modular Buildings. “About one third of our industry builds for the educational sector with office space making up about twenty percent,” he says.

Transportation and Lifting Challenges

Along with the advantages of modular building come a few new challenges such as transportation and lifting. Large modular units most often travel by road from where they are assembled to the final site location. Contractors need to adhere to local transit regulations for factors such as load limits and height restrictions, and this has design implications. There are also more cranes needed on the jobsite to put the modular units in place.  

Skender, a contractor with offices in Chicago and San Francisco, is a general contractor that turned modular builder. The company launched Skender Manufacturing in July 2018 to produce modular buildings and components with the goal of centralizing and stabilizing labor, standardizing processes and eliminating weather related delays.  According to the company, for its first multifamily construction project, 95 percent of each unit will be assembled at the factory, including electrical and plumbing.

Contractors facing similar labor challenges as well as those competing in sectors where modular building has taken hold, should do more than just take note of modular construction. Failure to adopt this trend might keep you from winning jobs. Time is money, after all. 

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