Modular Construction - An Opportunity in the Wings
"Modular construction becomes a great opportunity to rework your building processes for more efficiency, better teamwork, more transparency, and ultimately for more effectiveness," writes contributing author Jennifer Castenson for Forbes.
But it comes with challenges too, such as building from a clean slate and tossing the processes you may have used in the past. Also, it may require a different work culture to keep the project on time and within budget.
Castenson writes, "The team is different, relationships, accounting, labor, design, process, organization…, and the list goes on."
But there are benefits, including saving on the construction timeline. Here are two examples of how companies saved time in their builds.
- The Annex project of 36 units, a 37,500-square-foot project, was finished six months faster than what a comparable site-built project would have needed.
- 4125 Chestnut a multifamily project made up of 75 modular units for a total of 130 units, in Philadelphia, took 11 months versus a project of that size typically taking about 24 months.
In addition, those time savings transfer to reduced carrying costs and the ability to increase cash flow.
What about the risks?
Side-by-side comparisons show that modular construction is less risky than conventional construction. However, financiers may have limited exposure to such projects, and getting financing could be more difficult.
Further, when construction starts at the factory, builders may be required to provide a deposit to "reserve a place in line" and for materials.
As with any project, sticking to a discipline will help you to succeed. "Many developers have incredible examples of time and cost savings, in different parts of the country, on different types of projects. The examples are becoming more and more frequent," Castenson claims.
Tackling a project of this magnitude, whether your first or your tenth, requires working with your accounting and advisory team. Contact us before your start your next project to provide the much-needed guidance you need.