The Hospitality Industry is Eyeing Modular Construction with ROI in Mind

Marriott made big news last year when the company announced it was adopting modular construction to drive growth in North America. Despite the popularity of modular construction in Europe, where labor costs are higher and alternative construction methods are highly sought after to reduce costs, hospitality brands in North America have been slow to turn to prefab construction.

But Marriott saw what a lot of other brands are battling: skilled labor shortages driving traditional construction costs up, and unreliable or longer construction schedules thanks to external factors like weather delays. Rather than accept the rising costs and slower returns, the brand sought an alternative solution.

Modular construction is great for hospitality projects. Here’s why:

Fast-track your project and speed up your ROI

Modular construction can speed up build time by up to six months for an average 4-5 story, 100 key hotel. This is because the guestroom units can be produced off-site at the same time the foundation work and site prep is taking place.

Schedule delays and expensive labor costs undercut your return on investment. Modular construction can shorten the construction schedule, sometimes dramatically (by several months). Shorter construction times mean quicker occupancy, and quicker occupancy means you see a return faster.

Don’t skimp on quality

Modular construction hasn’t shaken the stigma of “lesser quality,” but the idea that hotels built using modular construction are of a lesser quality than traditional construction is ridiculous, and far from the truth. In fact, because of the factory like environments and precision of production for prefab materials, your modular project may actually be a higher quality. You don’t have to skimp on finishes or materials either – modular construction offers the same selection of materials as traditional construction. Oh, and with modular construction, there’s an extra layer between rooms (space between modules, and walls for each module) so your hotel will be quieter – something we can all appreciate.

Slash your budget

Accelerated schedules are just one way to keep your budget in check. Factory labor is consistent, and not susceptible to the same cost spikes that skilled labor trades are for traditional construction methods. The prefabrication process is also precise and controlled, so there’s much less material waste. That means the costs of skilled labor and excess materials aren’t passed on to you with modular construction methods.

Thinking about expanding your hospitality portfolio? Kuvella can help keep your costs down and make sure you get your ROI faster.

What “Factory-Made” Means for You and the Construction Industry

This morning, I rolled out of my factory-made mattress. I made coffee with my factory-made coffee pot. I cooked breakfast on my factory-made stove. I drove to work in my factory-made truck. I scheduled meetings with my factory-made phone and wrote this post on my factory-made computer.

When it comes to every-day convenience, factory-made is a reassuring description. We like to know that the things we rely on every day like our modes of transportation, our appliances, and our technology are assembled in an environment where the entire process is quality-controlled. It gives us comfort to know that millions of other vehicles were produced alongside ours, because we equate mass production of complex machinery with reliability.

It’s true, the factory production process does have higher levels of quality control. The iPhone you’re reading this on is identical in assembly in every way to thousands of others and thoroughly reviewed for proper assembly multiple times during production. Even though you’ve probably customized it with a case or a cover and reorganized the apps to your liking, the core mechanics are the same and that’s why you trust it.

If factory-made is a good thing for so many common items in your day-to-day life, why is it perceived as a negative when it comes to your home, your child’s school, the hotel you vacation in, or the doctor’s office you visit once a year?

Prefabricated construction, or the process of assembling pieces of a building in a controlled factory environment before assembling them on-site, is a common method of construction in many parts of the world. In America, modular or prefabricated construction is all too often seen as a “lesser” method of construction though, because of the “factory-made” proces

Why?

• Modular construction is faster than traditional/conventional construction.

• It’s more affordable due to things like reliable labor, reduced materials waste, and purchasing materials in bulk.

• It’s a very “green” construction method.

• And, just like the other factory-made products we trust every day, modular buildings are high-quality spaces, assembled in protected environments with strict assembly procedures, regulations and reviews.

• Plus, just like your phone, modular buildings are completely customizable. You can choose interior and exterior finishes and arrange spaces to your preference during design (you can also easily renovate or expand later), so your modular building or home looks nothing like anyone else’s.

There’s a double standard on “factory-made”, and it’s hindering the building industry. Interested in learning more about modular or prefab solutions for your project? Contact Kuvella today.

Taking Issue with the Word Temporary: Stop Describing Modular Construction as Temporary Buildings

We all know what the word temporary means. It’s used to describe something that isn’t permanent, or that will only last for a limited amount of time. Temporary is a word you use to describe cheap kids’ tattoos, or your life situation in college when you needed a place to crash (“just need your couch for a few days, dude, it’s temporary”).

It is not a word you should be associating with modular construction.

Despite this, I see it all the time. In comments on articles about the rise and benefits of modular construction: “I’ll keep my traditional construction, thanks. Modular is fine for temporary buildings.” In posts about modular buildings as solutions to natural disasters: “It’s good they have temporary places to go.” In response to research on modular solutions for school districts in crisis: “Modular, like portables?”

No. Not like portables.

Not like gran’s trailer.

Not like pipeline man camps.

Modular buildings are permanent solutions offering a substantial array of benefits to almost every building type you can think of, from homes to hospitals.

The modular construction process is safer for urban development and campus construction. It offers an elevated level of quality control for building materials, more reliable scheduling, and limits the amount of time for on-site construction activities.

Modular buildings could be the key to solving the housing crisis plaguing our major cities.

Modular buildings could be the answer to dwindling school budgets and aging school facilities.

Modular buildings are the answer to quickly rebuilding after natural disasters and better preparing for future ones.

But we can’t move forward and talk about real, permanent solutions if we’re slapping the word “temporary” in front of them.

Is Modular Right for You? A Look at the Benefits Across the Building Industry

Did you know over 60% of entities using modular and prefabrication construction processes now having been doing so for at least five years? The process isn’t new, and there are a lot of reasons driving users to make the switch, including: improving productivity, increasing competitive advantages, and generating a greater ROI.

Contractors, engineers, and architects have been applying modular construction techniques to a wide variety of building sectors and areas of usage to great success for years now. These have largely included healthcare facilities, academic buildings and dormitories, manufacturing buildings, hotels and motels, and mixed use and multifamily developments, though there is opportunity to employ modular design and construction to municipal buildings, data centers, and many other building types. Because modular building doesn’t have to be “all or nothing”, meaning parts of a building can be prefabricated while others are built using conventional construction methods, modular allows for flexibility in design with plenty of added benefits.

Are you an Owner, a Contractor, an Architect or an Engineer? Here are some reasons you should consider modular and prefab construction, if you haven’t already made the switch:

Owners: Building Information Modeling (BIM), the building visualization tool of choice for most architects, engineers and contractors now, as well as modern materials and manufacturing, have propelled modular construction into the 21stCentury. You have an opportunity to significantly improve your ROI and benefit from reduced project costs and accelerated project schedules without forfeiting design or quality.

Architects: As Owners turn to modular construction, so should you to remain competitive. Understanding the applications of modular and prefabrication construction will allow you to educate clients on both the benefits and drawbacks of this construction method and help them to select the correct design and delivery method.

Contractors: You don’t have to leap in all at once. Start incorporating prefabrication and modular building into your pre-construction planning and reap the benefits of a more efficient project. From increasingly reliable schedules to improved project cost estimating, modular building can have a significant effect on your business.

Engineers: A significant number of engineers already use modular or prefabrication to some extent. Modular and prefab elements can enhance structural integrity and systems efficiency when selected based on quality.

Whether you’re an Owner considering a new project, or an Architect, Engineer, or Contractor looking for a competitive advantage, modular may be the answer.

Missed in History: The Evolution of Modular Construction

How long do you think modular construction has been around? What were the first modular buildings? Where did this whole thing start?

You might have guessed that the first modular buildings were residential – and you’re right, though you probably weren’t thinking of the first ever modular homes, which were actually constructed in Australia almost two centuries ago.

Modular construction has been around for almost 200 years, though it’s only started to gain traction as a mainstream building process in the last decade. Why is the history of modular construction important though? Modular processes today don’t look anything like the modular processes of the 20th century. But when we look back, we can see commonalities in efficiency and quality, and the foundation for the emergence of modular construction as we know it today.

Australia, 1837

Henry Manning, a carpenter residing in London, built components for a “Portabel Cottage” which he advertised in The South Australian Record. Manning built the components in London, then shipped them to Australia. One of his structures, a Quaker Meeting House, is still standing in Adelaide today.

Turkey, 1855

The first modular hospital was designed by Isambard Kingdom Brunel after Florence Nightingale, horrified by poor conditions in barracks and infirmaries, wrote a letter to the London Times asking for help. Renkioi Hospital was designed to improve ventilation and hygiene, and significantly reduced death rates.

America, 1908 

Almost 70 years after Manning’s Portabel Cottages appear in Australia, Sears Roebuck offered “build-a-home” kits, popularizing the first modular buildings in America. These kit homes came in over 40 styles and were marketed to people heading west during the California Gold Rush. The kits were shipped by train and arrived with all the necessities for assembly, as well as a detailed set of instructions. The homes were high-quality; at least two hundred are still standing in Illinois today.

Europe/America, 1930’s and ‘40’s

During World War II, the British used modular buildings for military housing and hangars, as well as temporary housing for British citizens that lost their homes. After the war, many American soldiers purchased modular homes when they returned to the United States.

America, 1950’s – early 2000’s

Through most of the late 20thCentury, modular buildings were mostly residential. Schools and some businesses and hospitals used relocatable modular buildings, but permanent modular construction was not well respected or adopted by most architects or contractors. Frank Lloyd Wright popularized modular for a brief period, but modular wouldn’t gain traction in mainstream construction for another several decades.

 

Present Day

Modular construction is more popular than ever and may have finally gained the respect it deserves from the building industry. What changed? The quality of modular buildings has been exceptional from the beginning (as evidenced by both Manning’s Quaker House and the Sears Roebuck homes that are still standing), though with new industry technology the quality of modular buildings may actually surpass that of traditionally constructed buildings.

Modular construction is also faster than it’s ever been. The 1,000 bed Renkioi Hospital was designed in just 6 days and shipped in 5 months. While the design might take a little longer than that for a modern modular building, it is feasible to construct a multifamily residential building in 6-8 months using modular methods. In 2013, McDonalds constructed a 43,000 SF restaurant in West Virginia in just 43 days.

Better, faster, cheaper, more sustainable. Modular construction offers a rare all-around positive solution to the current building climate, which is facing a labor crisis and skyrocketing costs for traditional construction.

Modular Construction is Finally Being Recognized as a Solution to the Housing Shortage

In the last decade, the number of residential construction workers has decreased by over 20%. Evidence of this decline is apparent in the housing shortage plaguing several U.S. cities and the lengthier construction schedules for new housing projects. Labor costs have risen steadily in the last few years as well.
We need more affordable housing options, and we needed them yesterday.Modular construction, with its highly accurate schedules and cost estimates, is probably the most effective option for combatting the housing shortage.

New York City issues first modular housing RFP

The New York City Department of Housing Preservation and Development (HPD) released an RFP (Request for Proposals) for affordable housing this year.While an affordable housing RFP isn’t uncommon for the city, what caught the attention of the building industry was the specificationthat the new mixed-use building be modular.

The department decided to explore modular options last year and requested information on modular housing for low-income tenants earlier this year.

What it means

Modular construction has long been stereotyped as a lower-quality alternative construction method. A pervasive myth that’s been tough for the industry to shake. The exploration of modular solutions by a major U.S. city could ignite a trend and finally give modular the recognition it deserves as a viable building alternative.

The initial request for information by HPD garnered 38 responses, which also indicates the market is ready. Modular companies are ready and willing to respond, and they’re eager to start discussions on development solutions.

Bids for the project are due September 10th.

The Great Labor Shortage

In November of last year, America’s construction industry hit a peak of $1 trillion in new projects. In 2017, the U.S. added approximately 210,000 new construction jobs.

Those are promising statistics, aren’t they?

If you want to take a quick read on the pulse of the economy in general, the building industry is a good place to look. New projects and new jobs generally mean a healthy economy. The construction industry itself, however, is in crisis.

As new construction projects increase, so does the demand for workers. Despite the demand, the industry is experiencing a labor shortage country-wide. Disaster-struck areas, such as Texas and Florida which were battered by hurricanes last year, or California which has been plagued by wild fires, are struggling to find skilled workers and feeling the financial strain as a result.

As baby boomers edge closer to retirement and immigration crackdowns continue, companies scramble to train and replace their workforce – or face a 20+ year skill gap. The less skilled laborers are, the longer it will take to complete a job; a cost issue contractors are coming to know all too well.

Housing construction may be feeling the brunt of the labor shortage, though. More than 1.5 million residential construction workers left the industry during the recession, and less than half of them have returned. Despite an increase in residential projects, homebuilders continue to struggle to staff projects, even though hiring and wages are up for construction workers.

Modular construction is one solution to the time and cost challenges the industry faces in response to the labor shortage. Single family homes and multifamily residences, dormitories and hotels, even commercial buildings, can be built in factories and shipped to the job site. Modular construction takes significantly less time to complete than traditional construction, and because the factory production doesn’t require the same level of skilled labor as construction trades do, modular construction isn’t facing the same labor issues. In fact, offsite construction is one of Construction Dive’s “8 Construction Trends to Watch in 2018.

Myth-Busting: What You Think You Know About Modular Construction

There are a lot of myths surrounding modular and prefabrication construction methods. At Kuvella, we get questions every day from people wondering if we “do the shipping container thing”. Sorry, we don’t. What we do in fact do is deliver high-quality buildings faster, cheaper, and more sustainably than traditional construction methods.

I’ve rounded up a few common modular construction “myths” for today, because it’s so much more than “the shipping container thing.”

MYTH: Prefabrication and modularization are new-age construction processes.

BUSTED. Prefab and modular construction processes have been around for centuries. As the techniques improve, the processes are re-emerging as “new” as more people hear about them. Sorry, folks. Just because you’re just now hearing about the amazing benefits and reliability of modular construction, doesn’t mean others haven’t been reaping the benefits for decades.

MYTH: Prefabrication means selecting from a set of pre-determined building types.

BUSTED. Remember when I said modular construction isn’t your sweet grandma’s trailer anymore? It’s not. Sure, some modular housing units come in cookie cutter selections (but so do traditionally constructed subdivisions that let you “choose from four unique floorplans!”) but just like traditional construction, modular is flexible and customizable. Yes, you can build your dream home using modular construction.

MYTH: Modular constructed buildings are of a lower quality than traditionally constructed buildings.

BUSTED. This one gets to me every time. Modular construction uses a controlled environment for production. That means that unlike traditional construction sites which are exposed to the elements, dirt, sun, wind, rain, and potential thieves, modular building components are stored inside where they are protected from beginning to end. We use tried and true assembly methods that are more accurate than traditional trades, and our buildings are designed and constructed to meet the same building codes that non-modular buildings are.

MYTH: You don’t need an architect for modular construction.

(SEMI) BUSTED: Some architects specialize in modular construction, and partner with modular builders to deliver some amazing projects. (That I bet you wouldn’t even know were built with modular construction methods just looking at them!) Some modular builders offer design in-house, but they still ensure their buildings are compliant with codes and standards for safety and sustainability.

MYTH: Modular construction is not permanent.

BUSTED: Of course modular constructed buildings are permanent! Are they more easily renovated or removed due to the nature of their assembly? Yes. Are they intentionally built to be removable? No. Modular buildings are constructed on permanent foundations the same way traditionally constructed buildings are. There’s nothing “temporary” about them. In fact, the things that make them seem temporary (their ease of renovation) actually help to ensure that modular buildings are more resistant and reliable in disaster situations. Modular homes constructed with steel frame hold up better against disasters like wildfires and floods than stick-built (wood frame) homes and are more easily repaired after a disaster.

Your turn.

What questions do you have about modular or prefab building? I want to help you sort out the myths and the truths, so ask away.

What is Modular Anyway?

There are a lot of misconceptions about what “modular” means. When we talk about modular construction, it may conjure images of temporary structures like mobile homes, or novelty commercial sites like hipster brewery hangouts made from shipping containers.

Modular isn’t a temporary building or even a building type. It’s a method of construction and understanding that difference is critical to understanding the advantages of utilizing a modular building system.

The Basics

  • Modular buildings are assembled in controlled factory settings off-site.
  • The prefabricated finished products are covered and transported to the site, where they are then assembled by a builder.
  • Modular building systems can be used for all types of buildings: residential, commercial, healthcare, laboratories, offices, retail.
  • Modular buildings are built to the same standards as conventional buildings.

The Advantages

  • Modular building can reduce construction costs by 10-20%.
  • Modular construction schedules are more reliable because they are not susceptible to weather delays due to the factory assembly process.
  • 60-70% Faster on-average construction schedules mean modular buildings can accelerate ROI.
  • Modular construction does not require the same level of skilled labor as conventional construction.
  • Pre-engineered elements contribute to the reduction of time needed from design professionals (architects and engineers) on your project.
  • Modular buildings cost less to maintain due to the durability of prefabricated materials.

Modular Building is More Reliable

  • The factory-like settings modular buildings are manufactured in shield materials from weather and other damaging conditions.
  • Storage of modular materials within the factory also protects them from damage and theft.
  • Production of modular components is highly-controlled, allowing for exceptional quality management.
  • Modular components are flexible and can be easily adapted for future needs.
  • Modular buildings can also be easily expanded or reused.

Modular buildings aren’t trailers or novelties anymore. Modular means a highly sophisticated and advantageous method of construction that is cost effective, reliable, and sustainable. Amidst persistent labor shortages and an increased demand for faster construction, modular construction – with its flexible solutions and clear advantages – is the way of the future.

Modular Construction is the Future

There, I said it. Go ahead and disagree, but there is compelling evidence suggesting that modular is the way to go for new construction projects. With advances in the manufacturing process, the average person peering at a building can’t tell the difference between modular and on-site construction.

But you know who can tell the difference? Owners. Developers. Our clients who reap the advantages of off-site construction. They see the difference in cost savings, in scheduling, and in their ROI, while their tenants enjoy all the comforts of a modern building.

Let’s take a closer look at those advantages, shall we?

Setting the Stage

Developer A has a prime site downtown slated for a new mixed-use residential/commercial building. Developer B has the prime site directly across the street from Developer A and plans to build a similar mixed-use development. Developer A hires an architect, who designs the new building, and later puts it out to bid. Developer B also hires an architect but plans to use modular construction.

Both projects are carefully planned, engineered and designed to meet building regulations. When the design is finalized, planning permissions are in place, and contractors are on board, building begins.

Developer A’s traditional contractor begins with site development, leveling the ground, installing utilities, and pouring foundation. Once the site is ready, framing begins. Once framing is complete and walls are up, various trades (mechanical, plumbing, electric, roofing, etc.) start their scopes of work. Construction is delayed during a snowstorm, and the plumbing sub takes an extra two weeks to complete their scope because they don’t have enough skilled laborers to get it done in the given timeframe.

Developer B’s modular construction process runs a little differently. While the site is being prepared, the building components are being concurrently assembled in a controlled factory environment off-site. The frame is assembled, and walls and insulation are added in a process similar to that of an assembly line. Once the components have reached a certain stage of assembly, they are transported to the site and installed. Interior and exterior finishes are completed, and Developer B has a new turnkey development ready to rent out.

I like to imagine Developer B looks at the still-being-constructed Development A smugly as they rent out the last space in their building.

The Advantages

Who wins in this scenario? Both buildings appear to be of good quality when they are finished, though Development A might have suffered some materials damage during the snow storm… and how confident can we be in the new laborers the plumbing sub used?

I’m not going to trash traditional construction, and I’ll give Development A the benefit of the doubt and assume they thoroughly inspected and replaced damaged materials, and the plumbing sub did an excellent job, even if it did take longer.

But that last point is a big one. It took longer.

Development B enjoyed several benefits as a result of choosing modular construction, not the least of which is that their development was completed months before Developer A’s, allowing them to snap up new tenants and start seeing a return on their investment faster.

Developer B saw the advantages of modular construction, including:

  • Cost Savings – no wasted materials, delayed schedules, or costly labor.
  • Time Savings – no time lost due to weather, theft, or unskilled labor.
  • Labor – modular assembly doesn’t require skilled laborer, making it cheaper and more reliable to staff
  • Quality Control – modular building environments are highly controlled and protected from the elements, and modular buildings are designed to the same regulations as non-modular buildings
  • Site Impact – minimal impact to the site (thus minimal restoration required at the end of construction), as well as advantages in maneuvering/staging a space in a busy area (downtown)
  • Sustainability – lower potential for excess material or generation of waste in the production environment
  • Material Use/Economies of Scale – modular manufacturers negotiate better pricing due to the volume and consistency of their orders, translating to cost savings for their client

So, who would you rather be? Developer A, or Developer B?