Seizing the Modular Construction Opportunity
An executive summary from the CSA Group
Canada’s fast growing housing shortage has received significant attention recently. The need to build more facilities like hospitals and long-term care homes to prepare for an aging population is also looming. Could the potential of modular construction help accelerate the pace of building?
Currently, 4.3 million more homes are needed to help alleviate affordability and access issues, particularly for people with low incomes, students, and those who are unsheltered. Changing demographics mean that Canada will also require 199,000 new beds in long-term care facilities by 2035. But with an estimated 700,000 workers in the skilled trades expected to retire by 2028 and construction costs having risen by 51 per cent in recent years, new approaches are needed to meet this increasing demand.
The CSA Public Policy Centre’s new report, Seizing the Modular Construction Opportunity, highlights how innovative modular methods can help to bring various building forms—from single unit housing to complex high-rises—online more quickly. Owing to efficient manufacturing practices and controlled factory environments, modular can achieve completion rates that are 25% to 50% faster than conventional construction approaches.
Under the right circumstances, modular also has the potential to realize substantial cost-savings—upwards of 20%. And as Canada works towards greater circularity in the construction sector, modular’s standardized components allow for greater reuse and recycling which offer further opportunities to meet national sustainability goals. Though modular construction has seen strong growth in recent years—increasing from 2.14% of all construction starts in North America in 2018 to 6.0% in 2022—there are still several challenges hindering greater uptake in Canada.
The most fundamental barrier to modular construction is that it is poorly understood. From developers to tradespeople and key professionals like architects, engineers, and financiers, there is a general lack of awareness and technical know-how when it comes to designing, financing, and building modular projects.
Secondly, Authorities Having Jurisdiction (AHJs)—for example, the municipalities that oversee product safety, issue permits, and undertake inspections, or the provinces that approve changes to building codes—have limited experience with modular projects. This too often results in longer review and approval times, defeating the speed advantages offered by modular methods.
Thirdly, inconsistencies and gaps in building codes across jurisdictions make for a complex regulatory environment—particularly challenging when modular units are frequently manufactured in one province and transported to another for assembly. Building codes are also mostly silent on standards around transport, placement, and lifting of modules, which are important and unique aspects of factory-made buildings.
Finally, the way the public sector procures and finances construction projects is often at odds with how modular construction works. For example, large public projects like hospitals or schools usually come with highly prescribed architectural and engineering specifications that are more difficult for modular manufacturers to meet, given their set factory limitations. And while customization is possible to fit desired criteria, this can limit the potential cost savings that could otherwise have been achieved.
On the financing side, because as much as 80% of a modular project is completed in a factory, manufacturers require a much larger payment upfront to obtain needed materials and build modules concurrently. However, current practices among both private and public lenders rarely align with this approach, severely limiting the availability of financing options for modular projects.
If modular construction is to help Canada meet its unmet and growing infrastructure needs more quickly, cost effectively, and sustainably, governments at all levels must take action to enable an environment in which its potential can be maximized.
Download the complete version of the CSA Public Policy Centre’s new report, Seizing the Modular Construction Opportunity.
As a first step, provinces and territories can issue guidance materials and training to educate AHJs on modular methods and help clarify processes and responsibilities around certification, inspections, and approvals. This would allow projects to move forward more quickly and safely. Encouragingly, Ontario and British Columbia have already developed such materials.
Building code changes that enable modular construction are also needed. For example, the main standard used to certify modules off-site (CSA A277) is enforced to varying degrees across provinces in Canada, and its classification as an ‘administrative document’ within Canada’s National Building Code also creates uncertainty for local inspectors. While the most comprehensive solution would be consistent and harmonized recognition of CSA A277, an initial step would be to enhance education about the standard at the municipal level. Further, the recognition of CSA Z250—which addresses transport, lifting and placement of modules—in the National Building Code as well as codes at the provincial/territorial level could also support needed innovation in the building sector.
Next, governments at all levels should review their procurement practices to ensure bidding processes are more accessible to modular manufacturers and involve them earlier in the design and planning phases. More collaborative or integrated procurement approaches than the traditional ‘design-bid-build’ approach could help to secure greater cost-certainty and quality of construction, without compromising on the essential requirements of a given project.
Another critical action the federal and provincial governments could pursue is revision to the financing criteria for housing developments to better align with the reality of modular’s front-loaded project costs. The federal government in particular has set aside billions of dollars for affordable housing development through the National Housing Strategy. This could be made more accessible to modular builders who have unique advantages in rapidly producing buildings with efficient floor plans.
Finally, more research and evidence are needed to inform policymakers, regulators, and private developers of modular’s functions, merits, and limitations. Though evidence from other countries is demonstrating important benefits, decision-makers in the public and private realm are more likely to be persuaded by Canadian experience.
Modular construction presents real opportunities to help Canada meet key infrastructure demands—especially in the housing sector—more quickly, sustainably, and cost-effectively. However, this can only be achieved with broader awareness and understanding of modular methods, greater regulatory consistency and guidance, and more compatible procurement and financing practices—all underpinned by an expanding evidence base. All levels of government have important roles to play in enabling this future and ensuring the full potential of modular construction is seized.
More from Modular Advantage
Homes as Essential Infrastructure
The housing crisis is nothing new. Across the world, federal, state, and municipal governments of all sizes are struggling with how to provide more affordable housing—quickly—to those who need it. In Canada, Paul Halucha, Deputy Minister of Housing, Infrastructure, and Communities Canada (HICC), argues that the federal role in housing has shifted from funding at arm’s length to actively shaping outcomes.
Building the Future, Offsite
In the face of a national housing crisis, England stands at a critical inflection point where innovation, scale, and public-private partnerships must converge to meet an urgent need: more homes, and fast. Homes England is helping reshape the housing market by actively supporting MMC through a strategic blend of land development, financing, and grants.
How POJI and MOKO Are Industrializing Modular Construction Through Automated Engineering Systems
Working with Scandinavian Industrialized Building System (SIBS), POJI and MOKO helped realize a modular city concept located in Järfälla municipality of Stockholm, Sweden, with 350 apartments, communal areas, restaurants, small shops, and a preschool in a pleasant mix with experiential architecture and greenery.
Inside Boutique Modern’s Mission to Make First Homes Affordable and Efficient in The U.K.
The U.K.-based firm has been in business for 12 years, manufacturing houses for both private clients and local government, with a large chunk of its business coming from “affordable” and social housing. Working in a 32,000 square-foot factory in Newhaven, Sussex, Boutique Modern is changing decades-old thinking about constructing houses, all through the use of modular.
BoulderMOD: Producing Affordable Modular Homes While Training the Workforce of the Future
Colorado has been hit with a double whammy—a decline in the number of skilled construction workers and an increased need for affordable housing. BoulderMOD, a partnership among the city of Boulder, Flatirons Habitat for Humanity, and Boulder Valley School District, is tackling both problems and helping others do the same.
Guerdon: Seeking the ‘Holy Grail’ of Modular Construction
Guerdon, a modular manufacturer in Boise, Idaho, recently won what Laurence (Lad) Dawson, CEO and Managing Partner, describes as the ‘holy grail’ for a modular manufacturer. The RFP calls for a pipeline of six projects, totaling approximately 570
units.
State of Modular in 2025: Facing Reality
The critical and urgent reality is that the modular industry needs to open the doors to collaboration across all sectors. The sooner we stare down these challenges, the sooner we can welcome a new reality where modular is the dominant way to deliver housing for better performance, quality and all at a lower cost.
Modular Multifamily Housing as a Scalable Solution to the Housing Crisis
GreenStaxx provides a real-world, scalable solution through its standardized library of modular-ready multifamily designs and its innovative triple-decker model. Together, these offerings address the industry’s two greatest needs: efficiency and adaptability. By focusing on quality, repeatability, and collaboration, GreenStaxx is helping move modular construction from niche to mainstream and offering a practical path toward solving the housing shortage.
Sealed for Success: The Role of Waterproofing in Modular Construction
Water is one of the biggest threats to any building, causing structural damage, mold growth, and costly repairs if not properly managed. Waterproofing is the first line of defense, ensuring durability and long-term performance. As construction methods evolve, so do waterproofing solutions – moving beyond traditional coatings to advanced, factory-ready systems.
From Volume to Velocity: Scaling Multi-Family Projects Without Losing Control
When projects grow too fast without the right systems, factories run into problems. They miss deadlines, crews burn out, and quality drops. Instead of steady progress, chaos takes over. Things slow down, even with more units going through. That’s because building more isn’t enough—you also need to build smarter. That means shifting focus from volume to velocity.