Modular construction is a method in which instead of building assets such as houses, office blocks or bridges from scratch on a construction site, many asset components are built off-site. These are then shipped to the site, and assembled together.
Ironically, modular construction is not a new construction method, for example, it was used in Japan in the late 1960s and 1970s. It is always been known for the speed with which assets can be built and for lower costs than traditional methods. However, back in the days, due to poor construction quality, the popularity of this construction method declined.
But, modular construction is making a comeback in recent times. This is primarily due to innovation in construction methods and processes. As new materials, information and technologies become more readily available, they are being used to improve the quality of these assets while benefiting from lower costs and faster construction. During a pandemic, construction companies can continue to operate in a safe, reliable and controlled manner by using modular construction methodology.
Some consider this to be a suitable solution only for the affordable housing or build-to-rent market segments. Many consumers still believe that luxury homes must be built in the traditional way and resist the idea that large-scale luxury homes can be built in factories. There is also the perception that modular design cannot build aesthetically pleasing luxury homes. The word "modular" itself is part of the problem, and the word "offsite" is a more neutral word. Offsite comes in a variety of forms, such as modules, panels, walls, rooms, structures, and components, enabling the creation of high-quality, complex and unique buildings using modern construction methods.
Despite challenges, the future of modular construction or offsite construction looks promising. Some of the major developers have already invested heavily in building their own manufacturing facilities and believe that modular homes are the future.
Perhaps we should look at what's happening in the world to understand what's going to happen next, as there are large regional differences in the adoption of modular homes. According to McKinsey and Company report, Scandinavia leads the way, followed by Japan and Germany. With successful project implementation in these countries, others will also follow suit.
Let's have a look at BoKlok (made by IKEA + SKANSKA) as a very interesting example of what we can expect in the not-too-distant future. BoKlok combines the construction experience of one of the largest construction companies in the world (Skanska) with one of the retail companies (IKEA), which specializes in standardization, logistics, procurement and assembly. It's a new concept for housing.
With 25 years’ experience, the extensive BoKlok partnership takes the strengths from each company and creates a pioneering concept where innovative, industrialized construction meets the human aspects of what a home should be.
BoKlok homes are built primarily from wood, using a smart, industrialized and efficient process. Homes are completed off-site in a safe and dry environment using modern methods of construction. This enables predictability, high quality and low costs. BloKlok homes are safer as 90% of the work is completed in the factory and only 10% out on the construction site. This means fewer people working on sites, for a much shorter duration, creating less waste. People working in the factory are working more efficiently and typically travelling shorter distances than those on site. They are more sustainable and green as well.
The unusual partnership between IKEA and SKANSKA indicates the need to look at the processes required to implement effective business models for modular home construction from a whole new perspective. You need a model that focuses on standardization (LEGO thinking), logistics, inventory management, picking and bills of material, manufacturing and assembly. However, you should also be able to master some of the traditional methods of running a construction business. In short, a successful modular manufacturing business must be a hybrid business (manufacturing + supply chain and logistics + construction).
This is perhaps the biggest obstacle for traditional homebuilders transitioning to a new way of working because a different mindset, different processes, and different business systems are needed to be successful.
Technical Requirements for the Modular / Off-Site Construction Model:
Moving to the Off-Site Modular Construction Model has significant benefits with the potential to significantly reduce costs, shorten project lead times and improve quality.