Article on The Future Looks Bright for Modular Construction in the Commercial Industry

The Future Looks Bright for Modular Construction in the Commercial Industry

Thanks to its success in the residential industry, modular construction (also known as off-site construction) is steadily building support in the commercial industry. A Dodge Data & Analytics report finds that 61% of firms plan to adopt off-site construction in at least 10% of their projects in the next three years.

Although it’s getting more attention now, modular construction has been used for decades in numerous industries. However, when considering off-site construction versus traditional construction for a commercial project, three key factors need to be addressed.


Factor #1: Is it advantageous to shift from traditional construction to off-site construction?

With traditional construction methods, all portions of a commercial building are built on-site. With off-site construction, large portions of the structure are built away from the job site. Types of buildings can range from apartment complexes to dental offices.

With a modular construction project, designers and contractors fabricate three-dimensional modules of the building in a factory. These structures are complete with ceiling, walls, flooring, electrical and plumbing fixtures, and interior finishes, like cabinets and counters. They are then transported to the construction site and assembled.

For many commercial projects, off-site construction has its benefits. Among them are:

  • Faster Builds, so projects can be completed faster. While foundations and site work are being conducted on-site, modular construction work can be performed simultaneously. Plus, weather delays are minimized. This approach can save time, in some cases as much as 60 percent of the overall schedule.
  • Less Waste, since modular construction is focused on limiting waste and maximizing recycling within its facility. A recent study showed up to a 90 percent reduction in materials.
  • Ease of Storage, especially on job sites with limited space for staging and moving the materials needed for the job.
  • Accessibility Savings since modular construction plants are often located in competitive areas for finding skilled labor. Plus, workers remain easy accessible in a fixed location. Additionally, modular factories are typically situated within easy access to raw materials or logistic connections, providing up to 25 percent in savings on overall construction costs.
  • Adaptability, Rapid Response and Consistency, as evident by the field hospitals erected within days during the Covid-19 pandemic. Additionally, construction is done in a safe, controlled factory environment, where health screenings and social distancing can be easily accomplished. This controlled environment also allows for consistent, quality builds.

However, off-site construction has its downfalls and may not be suitable for all project types. Among the challenges are schedule delays and cost overruns. Often times, the type of construction project will dictate whether it’s beneficial to shift to modular construction. Some things to analyze are:

  • Cost savings: Often times, geography and an area’s labor rates dictate whether off-site construction provides savings over site-built construction.
  • Labor Availability: In many areas of the U.S., there is a shortage of subcontractors and other crew members for on-site construction, compromising the schedule to get the project done on time.
  • Financing: Until the modules are affixed to the foundation, they are not considered real estate. Due to regulations, financial institutions may not be able to provide a real estate-backed construction loan for modular construction.

Using the value engineering process early in the construction project will help in evaluating whether savings can be realized by utilizing modular construction.


Factor #2: Do building codes and other regulations make it worthwhile for modular construction?

Off-site construction must adhere to the same federal, state and local laws, building codes, standards and industry regulations as traditional on-site construction.

Because building codes and regulations vary by state, they lack the consistency modular construction needs to save time and money. Some municipalities also have additional regulations for modular construction, hindering the process even more.

According to the International Code Council (ICC), modular building codes and standards are in use in all 50 U.S. states in some form. Some states may be using the 2009 codes, others the 2015 ones, and some the 2018 codes.

The 2021 codes published by the ICC are aimed at bringing greater consistency to modular regulations, however it is up to the jurisdictions to adopt this most recent version.

Because of this variation, contacting the authority having jurisdiction (AHJ) is recommended before beginning the design work. Knowing ahead of time what the AHJ will and will not accept, as well as the permit, inspection and certification process for the modular sections, helps in deciding whether off-site construction is worthwhile.


Factor #3: Does modular construction make sense for your industry?
Using off-site construction is gaining traction in some commercial industries, however, it may not make sense for others. Here’s a side-by-side look at when modular construction does and does not make sense.

Modular Construction Makes Sense When: Modular Construction Doesn’t Make Sense
The building has standardized and stacked units, like hotels, healthcare facilities and apartment buildings. With buildings that have unique designs or distinct features that cannot be mass produced.
Most of the design and engineering work can be completed up front. If a front-loaded design process is not feasible or finishes, furnishings and appliances cannot be purchased before the work begins.
The logistics risk is low for transporting the modules from a nearby facility to the project site. Transportation and logistics are risky, such as when the modular construction facility is not nearby, there are module size limits on roadways, or there is a lack of capacity for a crane to lift the modules across the depth of the job site.

Off-site construction comes with significant savings, which is why its usage is trending upward. Some reports have the savings in construction costs in the U.S. as high as $10 billion annually and the reduction in schedules as much as 50 percent.

The future looks strong for modular construction, especially as awareness and experience grow and the industry becomes more open to change and a new way of approaching a commercial construction project.