Modular Versus Panelized Construction
Date Posted: September 19, 2024
Posted In: Discussion, Offsite Construction,
From Offsite Builder: Offsite construction is a logical alternative to the inefficiencies of site-building, and the numbers show increasing adoption. In fact, the Modular Building Institute estimates that the market share for volumetric modular doubled from 2.9% to 6% between 2017 and 2022. In large part, this growth was because modular shortens project schedules by 30% to 50%.
However, as everyone in this industry knows, barriers remain to further adoption of volumetric modular. These include costs, logistics and questions about building performance.
Costs
Modular project costs are 5% to 10% less than site-built on average, and shortened project schedules provide owners with cash flow months earlier than with conventional construction. However, developer cash/equity requirements are higher: modular projects often require upfront deposits of 30% or more of the modular contract. The manufacturer needs these deposits to purchase materials and reconfigure production lines for each job. In a previous article (see “Modular’s Cash Flow Challenge” in the May 2024 issue), I detailed this financial challenge and described some industry efforts to address it.
Logistics
In terms of logistics, the main challenge with volumetric modular construction is the expense and liability involved in hauling modules over the road. A recent US Department of Energy study of more than 50 multifamily projects across the US identified panelized as a growing alternative in response to this challenge. (The study referred to it as “non-volumetric modular,” but we’ll use the term “panelized” for clarity.) Panelization involves the offsite prefabrication of building sub-assemblies such as two-dimensional floor, wall and ceiling panels.
Panels can solve some problems. For instance, unlike volumetric modular, in which the manufacturer must absorb the cost and inefficiency of manufacturing a new product for each project, panel manufacturers can produce standardized products that adapt to a wide range of projects and designs. This makes them better able to sustain production between project cycles, to make more efficient use of factory resources and to retain a more stable workforce.