What is Offsite Manufacturing / Modular Construction?

Offsite manufacturing or modular construction is increasingly being seen as an opportunity to drive change across the construction industry. Whether that be general contractors, specialty contractors, infrastructure developers, residential constructors or construction designers/consultancies.

In this paper, Chris Knight, Global Industry Director of Construction & Engineering at IFS, considers what this is, the challenges faced today, and sets out the opportunities for real change and what that could look like for the industry.

To start with let’s explain what the terms offsite manufacturing or modular construction mean. In its broadest terms they’re the practice of manufacturing components, assemblies or entire modules, typically in a factory environment, away from the traditional construction site, and then shipping them to site for assembly as part of the construction process.

Some governments and research organizations have tried to categorize what the terms cover, for instance, in the US a view based on complexity and scale by components is used as shown below.


Why do we need it?

Productivity in construction globally has hardly improved in the last twenty years and when combined with other challenges in construction like sustainability targets, build volume targets set by the market and government, supply chain issues, a lack of skilled labor, an ageing workforce and the poor quality of traditional construction, these are powerful reasons for change.

There are several drivers for change to using offsite manufacturing and modular construction which come from different directions but combine around the following key requirements:


Who’s driving the changes?


The use of off-site/modular construction is a wide-ranging term and vary in its application greatly its scope. It’s worth noting that off-site & modular construction has been in use for over 10,000 years dating back to the Mesolithic period and archaeologists have found examples of the same style timber framing structure still used across the developed world today.

Much like the Romans who used to prefabricate parts of their forts, they also used molds to create blocks and they obviously did it well as many of their structures can still be seen across large parts of the Europe and beyond.

In the 1840s modular construction was required to support the housing needs of the gold rush workers in the USA. 15. Through the industrial revolution many buildings saw the use of different types of fabrication with steel being a prime example. Across the world there are steel framed structures that manufactured off-site and assembled on-site as required.

Probably the most recognizable use of prefabrication came after the 2nd World War, with a solution devised by the UK government to temporarily house people made homeless during war. Between 1945-1951 over 1.5 million prefabricated homes were delivered. Many of these are testament to build quality that could be achieved as they are still being lived in today. But there is also a cultural stigma attached to ‘prefabs’ as they were never seen by most people as ‘proper’ houses, and that still holds true today.

There are parallels to this story in Japan, but a primary difference was that Japan maintained its level of production of modular housing for far longer than the UK. 15

Government Targets

Increasing there is a drive to use established manufacturing techniques to assemble components offsite and the range and types of these assemblies make it hard to categorize and consequently measure the true impact on market even at a regional level alone globally. But given the powerful drivers behind this movement, governments are increasing the pressure for change, for instance in Singapore the government requires developers to use prefinished modules for housing projects. In September 2020 the UK government, under Homes England, announced that housing associations must commit to building 25% of accommodation using off-site manufacturing and modular in order to secure funding. They stated the off-site/modular construction is ‘central’ to governments affordable homes program. 5

The UK government has committed £2.3 billion to a Housing Infrastructure Fund back in 2017 and has also defined how modular construction can be categorized. 13

Another example was published in September 2020, when Homes England announced that housing associations must commit to building 25% of accommodation using the process in order to secure funding. They stated that offsite manufacturing and modular is ‘central’ to governments affordable homes program. 9

Also, way back in 1974 the National Manufactured Housing Construction and Safety Standards Act of 1974 was introduced by The Office of Manufactured Housing Programs (OMHP) to establish federal standards for the design and construction of manufactured homes to assure quality, durability, safety, and affordability. 12

Staying with the US, they have created a new regulatory code (CC/MBI 1205 – 202) which sets the standard for off-site construction that is being implemented in a number of states. It’s intended to provide minimum requirements to safeguard the public health, safety, general welfare and address societal and industry challenges for the inspection and regulatory compliance of off-site and modular construction. 11

The Canadian Minister of Families and other members of parliament announced another investment into the Rapid Housing Initiative, which is building affordable homes for at risk and vulnerable people in Canada. 10

There are many other examples of markets and government pushing to use more off-site manufacturing and modular construction.

Age old problems

The two primary drivers most many others in the construction industry globally are historic low productivity and the demand for housing.

When thinking about productivity not just in housing but more generally across all types of construction the numbers are eye watering. A recent report examined this and produced the following schematic. 8


The benefits in of adopting modular construction in Europe and the United States could deliver $22 billion in savings annually. The figure below breaks down the size of construction expenditure across all types of buildings and then shows how much the sub-sectors could be impacted by moving to off-site/modular construction. This demonstrates very clearly the size of the opportunity to the industry. 8


Perfect Timing?

When researching this paper, I have found many articles talking about this being the best time ever for offsite manufacturing & modular building to become a recognized challenger to traditional construction practices, and in all types of construction. The themes are also global, not specifically regional, and that is being driven by challenges that we all face.


IFS – Beyond Traditional Construction ERP

IFS Cloud is a project & asset focused ERP solution therefore designed to support the full project & asset lifecycle. To that end, IFS have customers that operate within different stages of this lifecycle. For example, organizations that design, that construct, that operate and maintain complex assets and facilities, as well as organizations that are responsible for multiple stages of this lifecycle and are able to manage the entire process within IFS. With this in mind IFS Cloud provides solutions for:

An advantage of IFS Cloud is that it is deployed within one single product, providing seamless data flow between processes and a consistent user experience throughout the application.

Check out how IFS supports construction and engineering companies.


SOURCE: https://www.enr.com/articles/54455-transforming-the-construction-industry