Traditional vs Modular. Choosing the best development option with Kreo

TLDR: We are not unbiased. We believe in MMC and that the traditional way of building should be changed. In this blog we compare the pros & cons of each development option and our tool to compare them, Kreo Modular. We also examine a particular use case of modular vs traditional with some assumptions and conclusions.

Introduction

The recent resurgence of modular construction appears to be here to stay.
Major developers are creating their own specific manufacturing arms for modular construction, Berkeley Homes being an example of this with the emergence of Berkeley Modular. Similarly, housebuilders are pledging to provide higher volumes of their homes via this construction method, something we saw with Barratt Homes who delivered on their promise to provide 20% of their homes via MMC by 2020.

We are also seeing large amounts of investment into this facet of the industry. Recently Impact Capital Group acquired modular manufacturers, Lesko Modular, for an undisclosed sum and with £100m in private equity backing. Katerra received huge backing from Softbank in 2018, and Google and Amazon have also invested heavily in modular home builders.

So what is it that is driving this level of interest from major organisations? Can we objectively say that a modular approach is better than the traditional one or vice versa?
We explore questions above by drawing comparisons between the two construction methods below:

Cost

Modular construction enables on-site preliminary work and off-site construction work to begin at the same time and presents its major advantage over traditional construction – speed. According to the McKinsey report on Modular Construction in 2019, modular schedules can be 20-50% quicker than traditional builds. These time savings should not be underestimated as time-related charges (preliminaries and overheads, site accommodation, equipment rental, etc) account for upto 50% of the total build costs.

The effect of increased speed is of course a faster return on investment for the client with lower site overheads for the duration of the project. Hence, even if the construction costs were the same, the effective cost of the development is lower.

Additional factors driving down the comparative cost of modular construction are:

  1. Automation. Machinery and robotics are being used in modular construction which automate some typical human tasks. This means that smaller construction teams are able to operate a higher level of productivity than is typically possible in traditional construction. The capabilities of automatic machinery is only likely to improve over time.
  2. Lower risk of cost overruns and delays. Modular offers much higher cost and time certainty than traditional because of fewer risk factors that drive cost increases and delays - fewer people and fewer trade contractors on the construction site to manage, fixed cost of units, greatly reduced rework and variations and much lower contractors’ overheads (preliminaries, equipment costs, etc)
  3. Quality of workmanship and rework costs. Due to tighter control of the production process in factory settings and precision engineering, the quality is much higher and the rework costs tend to be lower in modular construction when compared to traditional construction. As a result, this expensive and time consuming process of fixing design errors and production quality issues on a construction site is almost completely eliminated.
  4. Material costs. This factor can actually go both ways (see below). Precision engineering used in modular construction means that there is less waste in comparison to traditional. The improved engineering means modular buildings tend to be better performing and can provide drastic savings in building maintenance fees further down the line. Both of these factors drive down the effective cost of modular materials.

However, there are certain factors which increase the cost of modular construction in comparison to traditional.

  1. Facility costs. Building and maintaining a manufacturing facility for offsite construction is very expensive. Hence if the client has their own facility, or even outsources manufacturing to third party suppliers, this is reflected in the building costs.
  2. Logistics and transportation. This needs to be considered as the components that are built offsite have to be both transported and assembled on site. Depending on the distance of the site from the manufacturing facility, and the transport restrictions en route for the vehicles carrying the components, these costs can be high.
  3. Securing finance. This is more difficult for modular construction as it typically comes at a higher rate of lending. Banks are wary of the higher bankruptcy risk that comes with modular construction, as the market participants tend to be less well-established operators. This is expected to improve over time, however, as operators establish a track record of sustainable operation bringing confidence to lenders.
  4. Material costs. As mentioned above, these can also be more expensive for modular builds as a higher standard of materials is needed when using automatic machinery. Similarly, as the structures built in a factory must be able to withstand transportation and assembly, a higher volume of materials is used when compared to traditional, hence making it more expensive.

Given all of the points above, it is fair to say that a cost comparison between the two construction methods could favour either method depending on the project specifics. It is important to note though that the potential for the costs of modular construction to drop as innovative manufacturing techniques continue to improve and as more competing operators enter the market.

Design

The design for modular building projects has to be finalised at a much earlier stage than traditional builds. The reason being that the design must take into account manufacturing and assembly, whereas traditional designs can be far more fluid, often only finalised once works on site have begun.

This can be interpreted both positively and negatively in favour of modular construction, as one could see there is increased certainty throughout the supply chain, but it could also be viewed as being too rigid and expensive to adapt should unavoidable changes happen that force a change in design.

The SEISMIC initiative to standardise components for school construction is a good example of how bringing certainty to the supply chain is helping to deliver more schools in the UK.

Sustainability

Never has this been a more important consideration for building projects as planning authorities (and the world in general) become more aware of our social impact and ensuring that our global growth is sustainable.

Using renewable resources and reducing carbon emissions are therefore vital considerations for a building project. Modular seems to have the upper hand in this facet as although the use of these renewable resources is possible with either construction method, there is often less wasted material and better performing buildings produced through modular construction as discussed earlier.

Similarly, modular construction projects tend to produce lower levels of carbon emissions. The workforces are typically smaller, with less people travelling to site, and less fuel-powered heavy machinery on the site, all of which contribute heavily to carbon emissions.

Aesthetics

Modular construction is still grappling with the reputation of the post-war era of prefabricated buildings, widely regarded as ugly or lacking character.

However, as designers find innovative ideas to work with both panelised and volumetric components, this reputation is slowly being shaken off.

A recent quiz posted by Kreo asked participants to correctly decipher whether a building was built via the traditional or modular construction method based on its aesthetics alone. The average score for this test was 6/10, showing that the distinction between modular and traditional is not as simple as has once been.

With that being said, it is still fair to say that traditional construction offers far more variability in the design and aesthetics of a building than modular at this moment in time.

Coronavirus / Crises

A powerful and topical factor to consider is how construction will change in response to the ongoing Coronavirus pandemic.

A huge number of sites across the globe are shut and having to draft plans of how they can safely re-open. Modular construction presents an opportunity for safer building conditions as there tend to be less staff who can more easily adhere to the 2m distancing guidance.

Not only does it present the opportunity for safer working conditions, but modular construction also equips us to deal more effectively to the demands of a crisis. The rapid erection of modular hospitals across the globe has been critical in fighting the outbreak of Coronavirus, not least the modular hospital in Wuhan that was built in just 8 days.

How to choose which construction method to use for a building project?

This should be done at the earliest stage of a building project.

Every project presents a unique set of restrictions and development goals, and given the variety of factors that go into choosing your construction method, there is no objective answer as to which is the best. A thorough understanding of your development goals is needed to assess which method of construction is best suited to your project.

So how do we evaluate all of these points to make a decision about which construction method to choose for your specific building project?

This is currently done during the feasibility stage of a project, a manual, labour-intensive and expensive process where the site and market conditions are evaluated, and a conceptual building design and cost estimate drawn up using tools such as Microsoft Excel and Autodesk Revit.

We believe that the modular construction industry needs a new set of tools to demonstrate the value of modern methods of construction to contractors, architects and project owners who are still wedded to traditional methods. This is why we have developed Kreo Modular.

Kreo Modular is a web-based generative design platform which rapidly creates modular building concepts. Our users input their development criteria, and our AI engine suggests and ranks hundreds of different design options that meet this criteria.

Key volumes are extracted from each design and inserted into an NRM-based cost summary template, as well as a dashboard showcasing areas, unit mixes and more.

Each modular design you create, along with the analytics that go with it, can be replicated with a traditional frame for comparison at the click of a button.

The result is quick but comprehensive analysis that is helping developers make vital decisions early in their project lifecycle.

Learn more about our product below:

Kreo Modular. Key principles

The key principle of Kreo Modular is object-oriented design, where building components are pre-designed / pre-engineered for inclusion in module-based (solid element) construction systems.

We assume that everyone who wants to accelerate the design process during the feasibility study has their own kit of parts, which can be grouped into modules. Thus, one module is a group of parts. For example, a room module contains light gauge steel elements, insulation, plasterboards, doors, floor finish, ceiling system, window, etc.

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These parts are not required at the initial stage of the project, but if we want to reduce the level of guestimation we should operate by using the correct modules with dimensions and connections.

A bunch of pre-designed modules creates a modular system/ set of modules/ modular topology/ modular hierarchy. The modular system should be designed and fabricated in accordance within a few principles:

Modular
Modules should be designed as discrete units. Even if we have a corridor between apartments, this corridor should be designed as a set of cassette modules.

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Extensible
Users can add new modules in the system and describe how these new modules can be stacked with others

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Scalable
Subsystems or parts can be coupled/decoupled as required to accommodate specific design loads. Example: number of columns in row in module on the first floor and on the last floor

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Reconfigurable
Modules can be moved between locations Example: one bedroom apartment can be easily converted into a two bedroom apartment

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Fulfilling these principles may seem like a daunting task, but it is well worth it. You can design quicker, consider hundreds of design options, adapt your design easily through the RIBA stages of your project and this process is repeatable with future projects.

This systematic approach relies on good rule setting. Example of this are horizontal and vertical connections, placements, desired building shapes and more. Setting good rule sets means you do not require a huge variety of modules, but rather a well thought out system which takes into account MESR principles. Below you can see scheme how Kreo modules can be combined into units, and units can be combined into floor plan layouts. A library of 12 different modules and with core configurations can give you thousands of different floor plan layouts.

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Kreo Modular. How it works

Kreo Modular is a web-based design tool, optimising concept designs using your own design components. Hence, the first step is uploading your own modules to your Kreo Modular account (which you can create at modular.kreo.net).

If you do not have these components, Kreo offers a service helping you create them.

Once uploaded, the rules of connectivity for the modules need to be set so that in a few clicks, an entire buildings can be designed.

Similarly, rates information must also be added for your modules and components, so that each design automatically links to a cost estimate.

Once this is done you are ready to start using the application.

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Kreo Modular. Design

We have created our own modular system for demo purposes consisting of 30 residential modules and 8 core configurations. Add a parametric corridor configuration to the mix and voila - you have all the ingredients for designing a building.
In the scheme below you can see how we created these modules:

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And here you can see a bunch of buildings which can be produced with these modules:

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Cost data in Kreo Modular is connected with your design by default. Your specific unit rates are applied to a list of quantities to build a cost estimate for each project.

Kreo Modular. Estimating Cost

Cost data in Kreo Modular is connected with your design by default. Your specific unit rates are applied to a list of quantities to build a cost estimate for each project.

This cost estimate is applied to an NRM-based cost breakdown structure as seen below:

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Inside the cost breakdown structure itself there is a nesting that you can edit, modify, delete your cost rows:

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All quantities from the BIM model can be used to make cost calculations. If you want to calculate a cost estimate for something which physically doesn't exist in the model, for example access control systems for each building block, you can create a cost row using the 'number of blocks' parameter and adding a cost per block.

Modular vs Traditional in Kreo Modular

The process of creating a modular building in Kreo Modular should now be clear. The next question is how we can compare a modular building vs a traditional one within the platform?

Kreo Modular has a purpose-built converter to replicate a modular building model using a traditional frame.

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This traditional building model is connected with the same analytics as the modular designs.

To be able to compare these reports it is necessary to have a common basis in benchmarking. We collaborated with Cast Consultancy, who provided the actual rates for the UK construction market that were used to build the figures you see below.

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Above you can see a short version of comparison by categories (check out the full version at modular.kreo.net)

As we see there are a few differences in cost:

  1. Substructure. Here we see a difference due to our assumption that the modular building has a pad/strip foundation, but the traditional one has a raft foundation. In some cases, the cost for substructure can be the same.
  2. Superstructure and Fit-out. We put these two categories together because they follow the same logic. A huge part of superstructure is included within the modules for modular buildings as well as a huge part of the fit-out (for modular buildings this is just communal zones like the corridor and lift hall). Traditional building superstructure includes the full set of subcategories (frame, upper floors, roof, etc.) but modular building superstructure contains only the frame for basement and ground floor because the rest of the building is framed by modular structures. If we want to check the real difference for these categories we should sum the superstructure, fit-out and modular cost figures for both buildings. According to these numbers above producing modules at the factory is cheaper than producing the same amount of frame, external walls & fit-out at the construction site.
  3. On-Costs. We see differences here simply because all subcategories inside like PCSI fee, Preliminaries, CI fee, Contingency, IPI calculated by percentage from the Sub-Total Cost. To make this comparison even harder for modular buildings we leave Preliminaries as the same for both types of buildings, but actually modular building preliminaries will be always lower then traditional simply because of shorter construction period.

Even taking into account cheating from point #3 above, modular building looks more attractive from side of total cost. We get £55 207 per modular building unit in accordance with £68 140 per traditional building unit.

Above we just give you an example of one way to compare of modular and traditional building.

It is important to note that the differences in costs seen above are due to differences in each building model, which means that we are retards.

Although each company has its own cost expertise and rates, Kreo Modular gives a great opportunity to edit cost numbers and designs to choose the right option for the building.

Summary

As we modernise and continue to embrace technologies in construction, modular construction will undoubtedly benefit most from this, bringing more cost savings, more design options and quicker delivery times. Couple this with a growing global population creating housing shortages, along with the current Coronavirus pandemic, the speed at which we can deliver construction projects is likely to become increasingly important. Hence, it seems inevitable that the prevalence and popularity of modular developments are only likely to increase in the near future.

At Kreo we believe that MMC needs modern methods of appraising and designing, hence why we built Kreo Modular.

This application facilitates quick yet in-depth analysis for project owners before they embark on a building project, allowing them to make informed decisions based on the optimal design and construction method for their development.

Kreo Modular works with a building as a product, rather than a project. This is why with one click these modular designs can be converted into traditional designs, where Kreo switches the modular frame to a traditional frame. Both the aesthetics and cost estimates for each design can be directly compared within the platform, empowering you to make an informed decision about which construction method to use.

Try it out for free here here www.modular.kreo.net.

The Kreo Software Blog.