Is Modular Construction Right for Multifamily Development?
How to Evaluate Whether Modular Construction Makes Sense for your Project
Modular construction is a parallel path building method that can save time in construction by chunking a significant scope out of a building project (i.e.: housing unit, hospital room, bathroom, etc…), producing that scope separately in a factory while producing other parts of a building on-site, and then connecting everything together on the site to finalize the project. The seemingly simple fact of doing these things in parallel can shave significant time off of a traditional design-bid-build schedule. By producing modules in a controlled factory environment, a project can also achieve better quality, waste management, and working conditions for a builder.
“Modular” specifically refers to a subset of prefabricated construction that usually refers to a fully-assembled, three-dimensional space, like an apartment pod or house. While not beneficial for every project, modular is a compelling tool because generally, the more of the building scope that is included in the factory-built modular portion of the project, the more time and money can be saved.
For homes that require little to no customization, customers and developers can sometimes shave up to 40% off of a budget and 50% off of a building schedule.
Here are a few considerations that might help you to evaluate whether your project might be able to leverage the powerful advantages of modular construction.
Can the Project Use Pre-existing, Standardized Modular Designs?
Manufacturing is at its most efficient use when it is producing standardized products. There are some companies, like Cassette, who have taken this approach and pre-designed a series of products with known engineering and known pricing, rather than offering custom fabrication. If one of these existing products on the market can fit your needs, it can generally deliver a project with the lowest risk and highest economic benefit than other forms of modular. There are a limited number of these products that currently exist in the market, however the industry is growing, and will continue to do so as demand grows.
If cost or schedule is your #1 project driver, consider scanning the market, particularly in your geographic region, for companies and products who have already gone through the design, engineering, prototyping phase to develop a suitable product. If you are a first-time real estate developer, you may even want to do this before choosing a parcel of land to purchase, so that you can tailor the development to the specifications of a pre-selected product.
Pre-designed modular products deliver the lowest risk and highest economic benefits.
Is the Project Large Enough to Warrant a Custom Modular Product for Replication?
If your project is a multifamily development over 100 replicated housing units (or other identical elements, such as bathrooms), you may have sufficient scale to standardize your own production line for a single project. While this may not save as much time or money as a ready-made solution, with some discipline around design parameters and variations, a project can still save considerable money. The key is to generate enough scale and repetition on a single project or a portfolio of real estate developments to warrant a manufacturing method. In some cases this means restricting a project to a single floorplan or floor plate, and in other cases it may mean simply standardizing bathrooms. With an educated team and some good planning, the higher the scale of project repetition, the greater the potential savings.
Does the Project Have the Predevelopment Funds to Onboard the Design, Modular and Construction Team Early in the Design Process?
If you think you have a project of sufficient scale and repetition to leverage custom-modular manufacturing, here are a few best practices to consider before making a final decision:
Full team engagement upfront. Construction in general, is expensive once crews begin work en masse. As with other labor-intensive industries like movie-making, a little bit of time and money in the early planning stages is often the best money you will spend, in terms of guaranteeing overall project efficiency & savings when the job starts rolling. There is a specific dynamic that successful modular projects have in common - the team is all on-board very early. When the modular company, general contractor, and architect of record are all pre-selected and incentivized to collaborate from the earliest stages of the project, chances of success increase. Countless surveys of builders who have worked on modular projects show that pre-selecting a factory, general contractor, and architect as early as land acquisition has the highest incidence of predictability and success, and incentivizing collaboration upfront is key. Consider that unless your project is able to fund or resource upfront engagement from the core players, trying to fit modular construction into a bidding process may jeopardize your project outcome.
Pre-selecting a factory, general contractor, and architect early increases predictability and success.
Do your Floor Plan Sizes Marry Well to Transportation?
Modular housing is at its most efficient as a delivery method when the highest percentage of the work can be done in a volumetric module off-site, and delivered with relatively low on-site work to make that modular ready. Generally speaking (although a lot depends on specific travel path and distance between factory and project), modular floor plans that fit completely within 14’ wide interior spaces can take the most advantage of modular efficiencies, because they are allowable on most roads without police escort.
Now consider that a fully-sealed volumetric module can be 100% waterproofed - and in many cases can even have its final facade installed at the factory, as long as the entirety of a finished interior can be contained within a sealed module. Doing so reduces complexity and damage risk for the on-site crew completing the project. Alternatively, by requiring a penetration to connect modules within the interior space, one introduces risk of water intrusion during transport, again during installation, and yet again in perpetuity on the final project, since the waterproofing must be patched between modules on the job site. Not insurmountable, however, a defined cost and risk multiplier. In summary, modular offers the greatest benefits to clients whose projects fit easily within the dimensional constraints governing the path of travel. At Cassette we call this the “one box, one unit” effect.
If a larger space is required, and two modules must be connected on the interior for users - simply reducing the surface area of connection to something as small as a doorway can dramatically reduce risk and costs on-site.
If you think you might have an ideal project to consider for modular construction, here are a couple of best practices that will help to make your project a success:
Maximizing Efficiency by Letting the Factory Drive Design Decisions
In factory-speak, “same unit” means identical. An architect may mirror a unit across the hall and call it the same - but in the manufacturing world, these are two different SKUs because they require different setup & different instructions. To the extent a customer allows the factory to drive the design & repetition - and to the extent that each unique module is used >100 times on a project, the customer will experience an efficiency in manufacturing more akin to the manufacturing efficiency that she may be used to in other industries. So while a factory can do many things, and may offer to do so to please a customer or win business, not all of those things result in efficiency. Deciding to let a capable manufacturer guide the design will almost always result in greater cost efficiencies.
Allowing the factory to drive design decisions ensures greater manufacturing efficiency and cost savings through standardized module repetition.
Avoid the Modular Cost per Square Foot Trap
Don’t fall into the “module cost per square foot” trap. The on-site costs in modular construction are almost always what drive a project’s success and/or failure. On a recent modular hotel project in the U.S., 80% of the building was constructed in a factory, yet 80% of the final project’s costs were incurred on-site. The moral of the story is to look at costs holistically, on a project basis, because there is no such thing as a 100% off-site construction project. Everything built in a factory still needs to be connected to a site, and the entire process must be understood and accounted for, end-to-end. A module may be less expensive on a per square foot basis than another module when it comes to the factory price, but if it takes 3x as much to connect that module to the foundation and to complete other elements on the site, all of those savings add up to nothing more than a line item.
Need help evaluating a project? Want more info? Drop us a line. We love to talk about all things modular, so feel free to give us a call and let’s make some magic.
Summary
Modular construction, in various forms, can be a spectacularly effective tool for reducing construction cost and timelines. But like any other tool - understanding both its constraints and its greatest assets will help you to pull it out of the toolbox for the right projects, and to wield it effectively. Need more help deliberating on a specific project or question? Feel free to reach out for a free consultation with a Cassette expert.
