Why hasn’t offsite construction scaled faster? To answer that question, you need to realize that it’s not the factory’s fault. Yes, factories have constraints, but those are manageable. In fact, many factories are underutilized, with much time spent waiting on permits, funding, design signoff, or site readiness.
Compared to other industries, regulation is highly fragmented. The same car can be sold in 49 states (California has to be different), but with residential construction, codes and rules differ by state and even by town. Processes vary as well. Do plans need to be approved by a third party or by the state? Are third-party inspections acceptable? A factory that builds in multiple states needs to know.
In addition, local plan reviewers and inspectors’ interpretations of rules can lead to delays. In some cases, it’s intentional — attempts to streamline code processes can get derailed by local unions or interest groups. States without strong statewide modular programs make it difficult for the factory to be sure they are building it to the right code or expectation.
Then there is the logistics of the delivery and jobsite coordination. New-to-modular contractors/builders fail to understand the choreography of the jobsite. Foundations must be ready before the modules arrive. Cranes need access to the site and need to be placed with safety, cost and the speed of module setting in mind. Mismanaging these issues costs time and money. Offsite construction compresses the project schedule, but only if the site keeps up.
Lenders sometimes change rules at the last minute because of a previously undeclared policy that undermines the agreed-upon draw/payment schedule between the project owner and the factory. This adds stress to the logistical process, and can lead to additional costs and project delays that expose lenders to more risk: the very problems they claim they’re trying to mitigate.
Offsite doesn’t just require coordination; it requires integration. There are five major phases in delivering a modular project: Design > Manufacture > Delivery > Assembly > Site Completion. When each phase operates in a silo, there is no unified accountability.
Take the example of an architect who is not familiar with the modular process. That architect designs a beautiful building, but may also design it in such a way that it requires twice as many modules as it should. Or the architect may specify on-site finishes, rather than taking advantage of the factory’s efficiencies.
The project needs to be designed for manufacturing from the beginning. Although modular is a method of construction, the building is manufactured, not constructed. How best to design for manufacturing? The answer is that you need to get the design team, the factory, the GC and the site contractor working together from day one. A well-integrated process starts with communication and feedback.
Payment schedules and contracts should also reflect factory realities. Lenders who take the time to understand modular construction and the factory’s risks can create funding mechanisms that mitigate risk for banks without transferring additional risk to the factory.
Offsite construction isn’t constrained by what happens in the factory; it’s constrained by what happens around it. We engineered precision into modular production, but the surrounding processes are still fragmented, and this disconnect stalls projects. Until the industry aligns the full ecosystem around the factory, offsite won’t deliver on its promise. The factory is ready. The rest of the industry needs to catch up!
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Offsite doesn’t just require coordination; it requires integration.
