Is Construction Management suited to modular construction projects?
The chances are, if asked; “Is Construction Management suited to modular construction projects?” The most likely responses would be; “What’s Construction Management?” or “I have never really given it too much thought.”
But actually, now may be good time to think about it as there is an increasing desire within government to consider volumetric construction methods as a means of tackling the housing shortfall.
To consider this question, we will look at three of the main perceptions of the modular industry, and then consider how construction management can assist with, or indeed, improve current practices.
Three of the main perceptions are:
- Modular construction is faster than traditional construction methods
- Modular contractors have much higher profit margins than main contractors
- Modular building and installation skills are not always suited to traditional construction methods
Are modular construction methods faster than traditional methods of construction?
Modular building methods can be a lot faster than traditional construction methods providing that certain conditions are met. These include;
- The building design must be suitable for adaption to modular construction. For example, typically there needs to be evenly spaced gridlines, regular shapes and degrees of symmetry.
- The modular construction element will usually be undertaken at the same time as the site preparation. With factory work being undertaken off site at same time as site infrastructure, foundations, drainage, transfer slabs and the like, there is no down time waiting for modules to arrive.
- The construction of the modules are such that they require minimal works after installation.
Construction management is often considered to be the quickest way of getting a project to site because the design is led by the construction and procurement programme. So, whilst the modular contractor will need to carry out some degree of design works, this can be programmed concurrently with the design of the site infrastructure by the client design team.
As a result, the modular elements should be ready to be assembled in the factory at the same time as the site infrastructure is being installed on the site. While the site infrastructure is being installed on the site, the client design team moves onto the next elements of the procurement programme.
This ensures that design keeps up with procurement and as soon as the modules are installed, the next trade packages are lined up and ready to continue making progress against the programme.
Do modular contractors have much higher profit margins than main contractors?
Modular building contractors do declare a far higher overhead and profit percentage than your typical main contractor. But why shouldn’t they?
They will often have at least one manufacturing facility in addition to the office facility a main contractor has. That facility needs to be paid for – it is very difficult, maybe impossible, to job cost a production facility. Of course you can build up a cost for materials, labour, plant and so on, allof which gives you a pretty accurate module cost. However, unless you can produce real time information for how much the production facility and all of plant used within it is costing, then it is impossible to build this into the module price.
As a result, modular building contractors typically charge around double what a main contractor charges for overheads and profit. So if your main contractor is charging 7.5%, a modular contractor might charge you 15%.
Where this really matters is if the client wants the whole package delivered. Going to a main contractor to deliver a modular construction is an option, but main contractors lose out on the opportunity to make buying gains as there are less trade packages. This reduces the opportunity to build a decent risk contingency and a more limited scope to increase the profitability of the project.
However, if a client goes to a modular contractor to deliver a turnkey solution, then they have to accept that they are going to be paying an extra 5-10% on top of the cost for any and all elements that aren’t part of the modular process.
This would suggest another area where use of construction management would make sense. The construction manager charges a fee for being Principal Contractor and managing the site. There is no additional mark up on the trade contracts. As a result, it would be a reasonable assumption that the client could potentially achieve significant savings.
But modular building and installation skills are not particularly suited to traditional construction methods are they?
It may be fair to say that modular building skills are not always transferable to traditional building methods. However, this may be a controversial point depending on who you speak to.
Modular construction might be considered similar to volume housing construction insofar as there are a number of elements to be constructed repetitively. But even volume housing sites require drainage / foundations / services / landscaping and this knowledge will have to be gained outside of the modular factory.
Once you start scaling up to larger projects and considering heavier engineering techniques such as large steel portal frames, reinforced concrete construction and the like, then the application of the modular knowledge is of limited use as the considerations change considerably. For example, you need to consider temporary works designs to first construct the means to be able to construct the final building. This level of complexity is a long way from simply assembling units in a factory before craning them into position.
It is this level of technical knowledge and expertise where a construction manager can assist both clients and modular building companies to deliver more complex schemes. An experienced construction manager will approach the problems holistically and look at the overall buildability of the scheme. Conversely, a modular contractor is more likely to take the default view of “What makes it easiest for me to put my modules in?” Unfortunately, this does happen and, when it does, can be extremely counter-productive.
Obviously, there are many more detailed points to be considered before coming up with a definitive answer as to whether construction management is suited to this type of project. However on the basis of the three points considered above, there is a sound argument developing that construction management is indeed well suited to the delivery of modular projects. Particularly when you start to scale up to more complex developments.
It would certainly appear that there is a very real potential for clients to make savings, as well as likely synergies to be exploited by modular contractors, through partnering with a construction manager to deliver their offer.