Contract documents

July 11, 2023

Contractors working in commercial and residential construction continue to feel post-pandemic effects. Post-pandemic impacts that continue to plague the industry include labor shortages; supply chain issues involving materials, equipment and parts; project delays and cancellations; and other practical challenges affecting contractors.  After a taxing number of years dealing with these ongoing difficulties, could the increasing popularity of modular and pre-fabricated construction provide hope and promise of completing construction projects efficiently, on-time and more cost-effectively? Read further to examine some of the pros and cons for contractors working on modular commercial and residential construction.

Benefits:

• Accelerated schedule– Modular construction can keep projects on-schedule since contractors can order the components prior to pouring the foundation. Modules are oftentimes fabricated while the building site is being prepared, which can cut the time in half compared to traditional construction methods.  Contractors are also less at the mercy of weather. Barring shipping delays or poor planning, modular construction can help save time, project delays and weather uncertainty. Learn more about how pre-fabricated construction can impact schedule by viewing Modular construction: From projects to products (mckinsey.com).
• Safety and environmental– Modular components are fabricated in controlled, factory-like conditions, which can reduce some of the hazards associated with working outdoors. Pre-fabrication also proves to be more environmentally-friendly since it greatly reduces jobsite waste. See Environmentally Sustainable Benefits of Offsite and Modular Construction to learn more.
• Cost-effectiveness– With the automation of modular construction, contractors can save money on materials and skilled labor, which can reduce costs. Additionally, contractors can see cost savings associated with less waste and more efficient building process.
• Less dependance on skilled labor– Since building modules are created off-site and shipped to the jobsite, contractors rely less on skilled labor on the construction site to build from scratch.

Risks:

• Quality-control– While contractors must follow the same building codes and quality standards as traditional construction, there is the possibility of defects associated with pre-fabricated construction that can be a risk to both worker and client safety. Modular construction must also be transported, which can increase the risk of damage to components enroute to the jobsite. Having quality-assurance standards and checklists to ensure each component is without defect can greatly benefit the health and safety of the project.
• Installation– While contractors can benefit from less reliance on labor compared to traditional construction, there is the need for skilled labor to install modular components on the jobsite. Installation may require specialized equipment and labor to connect pre-fabricated pieces. Using skilled and experienced workers is crucial to ensure quality-assurance, reduce potential damage and maintain the structural integrity of the building.
• Financing– Modular construction can require an advancement of funds prior to the commencement of construction.

Modular construction has certainly gained momentum due to its many benefits but may not be the right fit for every contractor or project.  Contractors should carefully examining the benefits and risks of this type of construction on their type of project to ensure it’s the right method of construction.  Review When Is Modular Construction Best Employed on Projects? to learn more about whether your next project should utilize pre-fabricated components.

AIA Contract Documents has provided this article for general informational purposes only. The information provided is not legal opinion or legal advice and does not create an attorney-client relationship of any kind. This article is also not intended to provide guidance as to how project parties should interpret their specific contracts or resolve contract disputes, as those decisions will need to be made in consultation with legal counsel, insurance counsel, and other professionals, and based upon a multitude of factors.