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Strong Savings


Modular construction can provide you with a cost-savings approach.  

By Grant Geiger

In the last few years, modular construction has experienced a significant uptick in popularity. A poor understanding of the process and common misconceptions inhibited some from adopting modular in the past, but today, it is swiftly gaining traction and embraced by top companies. Whether in hospitality, education, commercial real estate or healthcare, teams across industries are opting to implement “assembly” solutions for their projects in place of traditional on-site construction. Using a modular approach, buildings are expertly constructed to code and measurements room by room in a controlled, factory-like setting then delivered to the prepped site for installation. 

How does modular measure up to traditional on-site building? In several categories, data shows that the method comes out ahead. When compared to old-school construction, modular building practices speed up project timelines, increase productivity, reduce human error, eliminate common delays, increase worker safety and mitigate a number of liability issues. Another factor making modular construction a no-brainer for many companies? The cost-saving benefits. Here are a few key elements that often make modular the smart decision for a construction budget.

Shorter Timelines, Fewer Delays

A major factor impacting project costs is completion time. Traditional construction often takes longer than expected and each added week contributes to unprojected labor, insurance, travel and other costs. A recent report from McKinsey & Company found that large capital construction projects typically take 20 percent longer to finish and are up to 80 percent over budget. 

When considering the profit loss caused by the delayed opening of a facility, the costs rise even further. Using modular, projects are finished 30 to 50 percent faster, as the structure is produced in a controlled, off-site space and completed simultaneously with foundation and prep work on-site. Additionally, weather conditions and other external factors often interrupt on-site construction and cause costly delays. Modular eliminates these roadblocks, given 60 to 90 percent of the construction is completed inside a factory.

By implementing modular, companies are cutting down timelines, reducing costs and opening doors sooner, seeing a return on their investments in a fraction of the time. A good example of this approach can be found in hospitality leader, Hilton Hotels, which recently partnered with Finnish modular firm, Admares, to construct a luxury resort in the Bahamas. The firm built 269 prefabricated rooms in eight months – and faster than the project’s general contractors could finish the foundation, shell and core on-site. Typically, it would take an on-site general contractor closer to three years to build a similar structure.

Reduces Labor Needs and Common Frustrations

Modular construction projects also have lighter labor requirements. A team of experts handles factory production of the prefabricated structure and fewer workers are needed to staff foundation work and installation at the project site. Traditional on-site methods require a much larger lift. The current Stanford Hospital renewal project has an estimated 900 workers on its construction site and over 43 trailers. 

When worker safety is considered (and the costs of on-site accidents), modular building also comes out ahead. Indoor construction environments are proven to reduce the risk of accidents and other common liabilities that come with traditional on-site building.

Reduced labor needs can clearly bring down costs, but in today’s industry environment, the bigger draw is reducing dependency on the dwindling labor force putting a strain on project completion. We’re facing a significant labor shortage  – according to this year’s Commercial Construction Index, 91 percent of contractors, construction managers, builders and trade contractors reported difficulty finding skilled workers. Shifting to modular is an effective way to ensure a project stays on track and alleviate the construction labor crunch.

What’s more, traditional construction methods come with expensive on-site mistakes – whether caused by human error, design flaws or measurement discrepancies. Modular building improves accuracy via a controlled environment and cutting-edge technology used to design and create the structures. The process ensures that prefabricated units are designed exactly to code and measurements, eliminating on-site human error and defects. 

A Lean Approach

Another benefit of building with modular? The approach is propelling the construction industry forward to catch up with lean standards being implemented on a global level. Manufacturers across several industries – from furniture all the way to automotive and aerospace – are opting for leaner production, identifying ways to minimize waste and increase productivity. A significant part of this shift includes wider technology adoption in the space. McKinsey & Company’s Productivity Sciences Center found that construction is among the least digitized industries in the world, coming in second only to agriculture. 

When a building is created using modular construction instead of traditional, it cuts waste across the board. The environmental footprint of the labor force is reduced given smaller teams are needed for much shorter time periods. Using traditional on-site methods, it’s estimated that an average of 3.9 pounds of waste is generated per square foot of a building (i.e., a 50,000 square foot facility produces close to 200,000 pounds of waste). Off-site projects are significantly more sustainable because units are manufactured in an indoor, controlled environment – eliminating site and weather-induced damage that commonly cause excess material waste. 

Plus, unused materials can likely be used on another modular project at the factory, rather than discarding these on-site when a project comes to an end. Harmful emissions and costs associated with material delivery and other on-site transportation needs are also removed from the equation. 

Nearly every detail of a modular structure is produced in the factory environment – the only transportation need is the delivery and installation in the final stages. With all factors considered, let’s quantify the cost-savings benefits of choosing modular construction. How much can it help a team cut costs? Depending on the type of construction project, geographic area and other determining factors, using modular rather than on-site building can reduce costs by anywhere from 10 to 35 percent. Given the benefits of a modular approach, whether in terms of the timeline, safety and labor considerations, or simply cost-effectiveness, it’s expected to gain even wider adoption in the coming years. 

Grant Geiger is the founder and CEO of EIR Healthcare, an award-winning modular innovation firm bringing efficient industrial practices to healthcare, laboratory and life sciences. The company is innovating accessible healthcare using evidence-based design and modular technology to improve patient outcomes and value for all stakeholders – initially with its flagship product, MedModular, a “smart hospital room in a box.” Reach Grant on LinkedIn and via email at ggeiger@eirhealthcare.com.


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