Modular Building Institute
Permanent Modular Construction Annual Report 2019 | Modular Building Institute

Frequently Asked Questions

To what code are modular buildings constructed?

It is helpful to think of “modular” as a construction process rather than a building type. A modularly-constructed building simply means that the materials were delivered to an off-site location (the modular manufacturing facility), assembled in components or three-dimensional building modules, then transported to the final site for assembly. As such a building constructed in this manner must still meet all the same building codes and requirements as if it were built on-site. This is most commonly a version of the International Building Code (IBC) in the U.S. or the National Building Code (NBC) in Canada.

Do the buildings last as long as site-built? Same quality?

A building constructed using modular methods will last as long (if not longer than) a traditional site-built structure. Again, the building is constructed to the same building codes, and must meet the same wind, snow, and seismic conditions. While there is limited research to prove this point, one such study does exist. Following Hurricane Andrew in 1992, FEMA commissioned a study called “Building Performance: Hurricane Andrew in Florida” comparing site built, modular, and manufactured housing. In that report, FEMA found “Overall, relatively minimal structural damage was noted in wood-framed modular housing developments. The module-to-module combination of the units appears to have provided an inherently rigid system that performed much better than conventional residential framing.”

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Is modular construction cheaper/less expensive?

Generally speaking, yes. There are a lot of variables with a modular project, just as there are with a conventional construction project. The availability and cost of on-site labor is a key factor. In larger urban areas where labor is scarce and/or expensive, shifting construction to an off-site (often rural) location can yield significant cost savings.

Additionally, the overall efficiency of the process can lead to cost savings. Fewer labor hours are needed to complete a comparable project and waste is significantly reduced.

Lastly, the shortened construction schedule can reduce the time needed for a construction loan, and can dramatically advance the occupancy date, critical considerations for revenue generating businesses such as hotels and fast food restaurants.

MBI partnered with other organizations to fund research conducted by Professor Ryan Smith at the University of Utah to analyze several modular projects compared to similar site built “peer” projects. In all but one of the comparisons, the modular project was found to be more cost effective.

McGraw-Hill published their Smart Market Report titled “Prefabrication and Modularization: Increasing Productivity in the Construction Industry.” Through an Internet survey of hundreds of AEC professionals, the report found: “65 percent report that project budgets were decreased—41 percent by six percent or more.”

2020 Modular Construction Industry Reports from the Modular Building Institute

Isn’t this a new, untested method for construction?

Far from it! A report from 1670 indicates a prefabricated building was shipped by boat from England to the United States. In the 1800s, demand for modular housing increased as the country expanded westward. During the Gold Rush of 1849, more than 500 preassembled homes were shipped from factories in New York to destinations in California.

In the 1920s, Sam Kullman began manufacturing the popular “Kullman Diners” along the northeast coast.

In 1933, the first of Franklin Roosevelt’s New Deal communities, Arthurdale, West Virginia, was established. All types of modular structures were shipped there: post offices, stores, homes, and schools. After World War II, modular construction offered fast and low-cost homes to returning servicemen.

In the 1940s, the industry began to expand into commercial projects with the founding of industry giants Williams (now WillScot) in Baltimore, Maryland and ATCO in Alberta (now a multibillion-dollar global corporation).

In 1969, Zachry Construction utilized modular construction techniques to complete a 21-story modular hotel on the Riverwalk in San Antonio. The hotel, still in operation, was the tallest modular building in North America until the recent completion of the 32-story Pacific Park building in Brooklyn, New York.

Disney Corporation followed with completion of its Contemporary and Polynesian Resorts in 1972, constructed by U.S. Steel. There is a long history of innovative companies successfully utilizing modular construction techniques.

I’ve heard about “pop-up” or project specific manufacturing plants. Is that the same as a modular factory?

The modular factories detailed in this report are not project specific plants. Rather the companies build for a number of clients within a given geographic region (typically about a 500-mile radius from the factory). MBI has seen some examples of general contractors renting vacant warehouses near larger project sites and using these “pop-up” factories for some preassembly work and for materials staging and coordination. These are not automated plants and often do not incorporate assembly-line processes or lean manufacturing techniques. Rather these locations are often just an extension of the existing job site.

Do prevailing wages apply for work done in a modular factory?

No. Davis-Bacon rates and state prevailing wages laws typically are limited to the work performed “at the site.” By definition, work done in a modular factory is “off-site.” That said, there are many considerations and nuances to understand about applicability of prevailing wages. Often state laws vary on this subject, so when in doubt, seek a legal opinion. Also, if a factory is established for a specific project and intended to only serve that project (see the pop-up example above), it will be considered an extension of the jobsite and prevailing wages will likely apply.

So, why hasn’t it caught on before now? Why the sudden interest?

Until recently, developers and contractors seemed content with the status quo, regardless of the inherent and understood inefficiencies. Planning and preparing for those inefficiencies seemed easier than learning a different way of building for many.

Today, developers and owners are facing the “perfect storm” in the construction sector, including:

• A widely recognized skilled labor shortage that won’t get better anytime soon
• High housing costs and low housing availability in urban areas, a condition that is worsening
• A widely documented lack of productivity in construction
• And, as previously mentioned, the increasing need for shorter construction schedules.

Adding to those factors, the construction industry has more fully embraced innovations and technologies that are leading towards more of an “industrialized construction process.”

Lastly, consumers (especially younger, more environmentally-conscious ones) are demanding greater accountability regarding wasted resources and the massive amount of construction debris that ends up in landfills annually. Modular construction is a proven solution to reduce construction waste.

Where is the industry headed? What other trends do you anticipate? Will this interest lead to greater adoption of modular construction?

Over the past five years, MBI has seen a shift towards more steel frame modular construction. Five years ago, about 80 percent of the North American industry was utilizing wood-frame modules. Today, it’s about 70 percent wood-frame. We are also seeing a trend towards taller modular buildings here, also contributing to the increased use of steel. North America actually lags behind several countries in terms of construction innovation and advancement. In places like the U.K., Singapore, Australia, Japan, Sweden, and China, industrialized construction processes are more widely accepted. Many of these countries faced the same challenges we have in North America today. Not surprisingly, we have seen several examples where the building modules were fabricated outside North America and imported and incorporated into projects here. The concept will catch on. It’s realty a question of whether the North American construction industry is concerned enough to get on board. If history is any indication, we will see a significant shift towards modular and off-site construction techniques over the next five years as greater numbers of the skilled labor force retire. The construction industry will (and must) evolve into a more industrialized and automated process – it’s just inevitable. Every major industry has undergone this same transformation. The construction industry is the last holdout while clinging to a lost cause. The companies that modular now and build it into their strategic plans will be more successful soon. In North America, the movement has begun. We are seeing some large general contractors establish their own modular divisions, while others partner with existing modular manufacturers.

How many square feet does the typical manufacturer produce in a year?

This is where the averages can be misleading. The number of modules a particular manufacturer produces in a given year depends on a few variables such as the type of project the company is building, the level of customization involved in the project, and the scope of the manufacturer’s contract (i.e. did the customer want certain work to be completed on-site). Based on overall data obtained from 37 manufacturers in the U.S. and Canada, the average square footage produced in 2017 was 122,000. At roughly 800 square feet per module, that equates to about 152 modules annually. However, this figure should not be used as a measurement of a company’s efficiency or success.

Where can I learn more about modular construction?

The Modular Building institute’s website,, is loaded with case studies, research, articles, and links to companies in your area.

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