Is modular construction less costly than traditional construction methods?
Generally speaking, yes. Modular projects, much like conventional construction projects, come with a lot of variables. Availability and cost of onsite labor are key factors. In larger urban areas where labor
is scarce and/or more expensive, shifting construction to an offsite (often rural) location can yield significant cost savings.
The overall efficiency of the modular process also can lead to cost savings. With modular, fewer labor hours are needed to complete a comparable project, and waste is significantly reduced.
The shortened modular construction schedule can reduce the time
needed for a construction loan and dramatically advance the occupancy date—critical considerations for revenue-generating businesses such as hotels and fast-food restaurants.
According to the Smart Market report “Prefabrication and Modularization: Increasing Productivity in the Construction
Industry,” published by McGraw-Hill in 2020, 91 percent of all general
contractors reported a favorable impact from modular construction on project budget performance, with 48 percent indicating that costs decreased by more than 10 percent. More than two-thirds of respondents (68 percent) cited a positive budget impact of greater than 5 percent.
Additionally, on government-funded projects where Davis-Bacon and state prevailing wages typically apply, offsite fabrication is generally exempt from these inflationary rates. By definition, work done in a modular factory is “offsite.”
