Blog Post: Potential Benefits of Modular Construction

Written by Greg McPherson

January 23, 2023

Cahdco provided me with the opportunity to significantly expand my knowledge about affordable housing at the Ontario Non-Profit Housing Association (ONPHA) conference. Although the topics varied significantly, I was especially intrigued by the presentation from BECC Modular about the potential benefits of modular construction for affordable housing. Ottawa Community Housing plans to use this alternative form of construction to build modular residences on Jockvale Road in Barrhaven. Thus, I decided to conduct some research on this topic and am happy to share my high-level findings with you.

Modular construction refers to construction processes to build prefabricated portions of structures at fixed locations and in temperature-controlled in-door environments. These modules are subsequently transported to the on-site location, and compiled into a structure. The final trades-work is subsequently completed to make the building operational. Modular construction follows the same milestones as on-site builds (feasibility, design development, construction, and warranty) and has to follow the same set of building codes and standards.

Businesses within this emerging industry (such as BECC Modular) believe modular construction can provide significant advantages to help with the affordable housing crisis. Although the benefits are manifold, this non-exhaustive list will briefly explore the arguments for reduced costs, reduced environmental impacts, and potential reductions in construction labour shortages.

Modular housing providers often argue that this method can reduce labour and materials construction costs. Tight process controls in a fixed, closed-door location can reduce the time to construct projects in comparison to on-site methods. Reduced time to complete projects invariably results in labour cost savings. Additionally, indoor construction prevents material spoilage due to environmental factors such as wind and rain. Reduced materials spoilage results in lower materials requirements to construct buildings and therefore lower costs. These claims have been validated by McKinsey’s report Modular construction: From projects to products, which states that modular construction can increase production speed up to 50% and reduce expenses by 20%. The benefits of cost savings to affordable housing include reductions in funding gaps, increasing the quantity of viable projects, and increasing the supply of affordable housing in Canada.

Modular construction can also help reduce environmental emissions and impacts in order to help meet the Government of Canada’s ambitious and upcoming net-zero targets. First, fewer spoiled materials results in fewer resources and therefore fewer emissions to create buildings. Second, fixed sites allow for standardized, economic, and efficient waste disposal in comparison to ad-hoc on-site disposal and transportation. Third, elevated supervision of module construction within a controlled in-door environment can result in lower on-site contamination and less energy consumption. Fourth, transport of prefabricated modules results in less transport of on-site materials and labour. This reduces emissions from trucks and transport. The University of Cambridge validated that modular construction can reduce emissions by up to 41-45% on student residential projects in London.

Although the causality may appear somewhat nebulous, modular housing could potentially ease the labour shortage in the construction industry. Potential entrants into the industry may prefer to work from a fixed location rather than travelling to on-site ones. Also, more streamlined construction processes may reduce the amount of labour-time per project and therefore the labour pool can accept produce more buildings than it could otherwise. Again, the potential is intriguing despite being speculative and could be studied in greater detail.
Modular construction could potentially yield benefits to the affordable housing sector. Clients would need to identify that they intend to engage in modular construction during the design/development stage and work with their development consultants to these ends. I hope this post helps clients consider alternative forms of affordable housing construction and use whatever method most suits their needs.

Sources
Archinect. (2022). New study finds that modular construction produces 45% less carbon than traditional methods. https://archinect.com/news/article/150313447/new-study-finds-that-modular-construction-produces-45-less-carbon-than-traditional-methods.

attainableHome. (2022). The Top 12 Modular Home Builders in Ontario. https://www.attainablehome.com/the-top-12-modular-home-builders-in-ontario.

BECC Modular. (2022). BECC Modular Our Processes. https://beccmodular.com/modular-process/

BMarko Structures. (2022). Cost and Time Advantages of Modular Construction. https://bmarkostructures.com/blog/cost-time-advantages-modular-construction.

BuilderSpace.com. (2022). Modular Construction: 16 Pros and Cons. https://www.builderspace.com/modular-construction-16-pros-and-cons.

CBC. (2022). Barrhaven to get affordable housing for families by end of 2022. https://www.cbc.ca/news/canada/ottawa/och-rapid-housing-barrhaven-jockvale-1.6335032.

KHL. (2022). What are the benefits of modular construction?. https://www.khl.com/news/what-are-the-benefits-of-modular-construction-/8024478.article.

Maynard, Kathleen. (2022). Modular solutions. Building Excellence, Winter 2022, 18-20.
McKinsey & Company. (2019). Modular construction: From projects to products. https://www.mckinsey.com/capabilities/operations/our-insights/modular-construction-from-projects-to-products.

Modulars.org. (2022). Modular Construction Benefits FAQ. https://modulars.org/faq/modular-construction-benefits.

Vertis. (2021). 10 benefits of modular construction. https://www.vertisbuilding.com/blog/benefits-of-modular-construction.

Greg McPherson

Financial Analyst

January 23, 2023