When Jan Mischke speaks to industry leaders about the benefits of modular construction they usually respond in one of two ways, he said. “They are either optimistic about the future of modular or they are really worried that modular companies are going to eat their cake."
Their fears are for good reason, Mischke, a partner a McKinsey Global Institute, told Construction Dive. Even though modular construction has penetrated only about 3% of the U.S. construction market, recent projects have drawn attention to the efficiencies that it can offer for commercial projects, he said. These include new hotels from Marriott and Hilton, Skender's multifamily projects and several McDonald’s restaurants in the United Kingdom.
Mischke is one of the authors of a newly released McKinsey study that found that modular can deliver projects 20% to 50% faster than traditional methods and shave up to 20% off a project's costs. The method also makes sense for contractors in labor-constrained markets, the study said, and lends itself to structures like schools and health care facilities that have easily duplicated floor plans with similar fixtures and fittings.
"It's great for temporary structures, too, like a school that's in use while the main building is being refurbished," said Mischke.
The study predicts that construction firms that embrace modular construction will see their roles change, shifting from less on-site construction to more of a commoditized approach. The McKinsey official said savvy industry leaders will see modular as a growth opportunity, not a hazard.
“I would encourage the leaders of E&C firms to think about what could be their sweet spot 10 to 15 years out,” he said. “It’s time to get moving.”
The role of technology
The McKinsey researchers noted in the report several ways that technology is playing an increasingly important role in the shift to offsite construction. Robotics and other automation technologies are enhancing and speeding up the manufacturing process, making it more like automotive production. Many modular players utilize virtual and augmented reality programs, which create digital models that allow customers to visualize and tailor designs before they are built, the report said.
Technology also is helping facilitate digitally-enabled, "just-in-time" delivery to the jobsite, which is critical because it is not efficient to stack and store modules for later use, the report stated. For example, programs like RIB SAA provide planning and robotics software for modular construction manufacturers. Once modules arrive on the site, automated cranes lift and move them into the required position.
Meanwhile, Lindbacks, a modular construction firm in Sweden, uses Randek’s industrial construction machinery to automate a variety of construction tasks including nailing, milling of openings, sheet cutting, gluing, inkjet marking, and sheet addition and handling.
Adoption will happen — but not overnight
Mischke named Katerra, RAD Urban and Skender as companies are leading the way in the movement.
As these industry disrupters streamline their supply chains and hone their production capabilities, the learning curve will get shorter, he said, comparing the current state of modular construction to the solar industry 20 years ago. “The more the industry makes inroads into modular, the more the costs will go down,” he said.
“It will take decades, not overnight, but it will happen,” he said.
