An Integrated Approach to Modular Building

OP COMMERCIALBy Lisa Dal Gallo and Alan Bishop

An integrated project delivery (IPD) approach that includes prefabrication and modular construction offers a project team one of the best solutions to overcome the labor and material challenges plaguing the construction industry today.

As early as 2002, a majority of construction workers were 55 years of age and older and there were not enough younger people entering the workforce to replace them. Unfortunately, the situation has not been remedied and the need for construction workers is forecast to grow 12 percent annually between 2016 and 2026. Compounding the need for labor is that fact that over the past 50 years, the average growth rate for labor productivity in the construction industry was -0.4 percent. This means builders are not efficiently using the labor resources that are available. Material costs are also up and projected to increase 2 to 3 percent in 2018. These problems are not going away without new approaches. 

Every construction project offers an opportunity to improve efficiency and reduce waste. One tool to address both issues is implementing more prefabrication and modular construction. Pre-manufacture of project components offers a safer working environment, improves labor working conditions, increases productivity, and reduces waste. Fabrication off-site also allows for a more controlled environment for skilled tradespeople, which results in improved quality control. Modules can be completed in advance to decouple time-consuming skilled work from the project site reducing schedule and weather delays, and modular components can be delivered in sequence from trucks to accommodate a constrained site.

Advantages of IPD

Many market segments are using modular construction. For example, entire classrooms are now being constructed in factory settings, trucked to site, and assembled over a cast-in-place slab with utility rough-ins. Likewise, hospitals are using prefabrication for all major mechanical, electrical, and plumbing components as well as headwalls and footwalls. Hotels and hospitals are prefabricating bathrooms that are delivered fully wired, plumbed, trimmed, and then pushed into place and connected by laborers. Prefabricated concrete plants have also become more sophisticated to allow prefabrication of floor panels, walls, and ceilings that have more variations in each piece and have integrated utilities.

However, despite the well-known benefits, modularization has not been widely adopted. One reason is because it requires extensive planning and coordination early in the process between designers and builders, and standard traditional contracts don't require early involvement. Under traditional contracting, the project design is prepared in isolation without input from key participants and the project is constructed on-site in accordance with the design. Traditional contracting methods also make it difficult to fully use building information modeling ("BIM") and Lean processes and procedures. 

IPD requires early involvement of key project participants, eradicates blame amongst the key project participants, and encourages best value by aligning the owner's and key project participants' interests with the project outcome through shared risk and reward, and waiver of certain liabilities. Key project participants include key designers and the general contractor and its key subcontractors, which should include fabricators for significant modular construction. Ideally, key participants make up 65 to 70 percent of the project cost. Unlike traditional delivery methods, each key participant is vested in the project outcome because they have placed 100 percent of their profit at risk. IPD also calls for use of building information modeling and Lean processes and procedures. Both tools increase collaboration and productivity and decrease rework and waste. 

Aligning Interests

IPD requires the coordination and cooperation necessary for prefabrication and modular construction. Early involvement of key participants optimizes design, eliminates rework, increases labor efficiencies and allows the project team to make informed decisions with the owner – such as electing to use modular construction. For example, the integrated team can use BIM to model the design to the level of development and accuracy required for prefabrication minimizing misalignments and field conflicts. Because of the accuracy and level of development of the model, material sizes and quantity are known reducing material cost and waste. Also, fabrication can be achieved off-site in a controlled working environment increasing product quality and labor efficiency because skilled labor is allowed to focus on constructing all of the pieces at once, rather than in a piecemeal fashion at the site. 

The current state of the construction market requires a shift in thinking to accommodate the shortages and inefficiencies in labor and to help reduce material waste. Prefabrication and modular construction can be adopted more broadly through use of IPD because IPD requires the necessary early involvement and collaboration of the key participants and financially aligns their interests with the project outcome. 

Lisa Dal Gallo is a partner with Hanson Bridgett LLP in San Francisco. She is also the firm’s construction practice group leader and IPD/BIM co-practice group leader. With more than 30 years of experience in the construction industry, she advises clients regarding design and construction deal structures, utilizing collaborative and integrated delivery processes, and drafting bid documents, contracts and BIM protocols for large private and public works. 

Alan Bishop is an associate with Hanson Bridgett LLP in San Francisco and is part of the firm’s construction and IPD/BIM groups. He focuses his practice on performing transactional work and litigation for the construction industry.

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