Off-site and modular building:
The construction industry is at a tipping point
By Jacob D’Albora
Special to North Carolina Construction News
“The tipping points that magical mo-
ment when an idea, trend or social
behavior crosses a threshold, tips
and spreads like a wild fire.”
(Malcolm Gladwell)
The construction industry is no-
toriously known as one of the slow-
est industries to accept change and
evolve with recent technology.

Even looking outside of a monitor
screen, the industry is still resistant
to assistance from technology in
progressing manual labor which has
always been the foundation of
building buildings. This is about to
change. The construction industry is at a
tipping point. What is this tipping
point? What is the revolution that is
about to spread across the built
world? Off-site construction. The process
of planning, designing and fabricat-
ing building elements at a site other
than the final location, creating a
more rapid and efficient construc-
tion of a permanent structure.

The key is this tipping point is
not happening because the industry
has finally accepted progressive
ideas and found a willingness to try
the new methodologies. This tip-
ping point, or what Gladwell refers
to as that magical moment, will be
forced out of an act of urgency and
survival by three main factors:
• Labor force
• Rising construction costs
• Global warming
Labor force
The current labor pools have al-
most dried up and the cause is di-
rectly correlated to the push for all
12 — AUGUST/SEPTEMBER 2019 — The North Carolina Construction News
high school students to go to col-
lege and earn a degree. As noble
as that sounds, the act has been a
detriment not just to the construc-
tion and other industries but to the
young adults that were pushed that
direction. Numerous studies show
the debt that student loans accrue
and the burden these individuals
live with. Sometimes for the rest of
their life.

“As man as 40 per cent of borrowers
could default on their student loans
by 2023.” (H. Hoffower from the
Business Insider.)
Some studies have cross refer-
enced this data with the labor short-
age in the construction industry,
showing that trade schools gradu-
ates earn more on average than
their new graduates with a four-year
B.A. degree. Contractors and own-



ers will be forced to get more cre-
ative with projects and procurement
methods with the construction oc-
cupation market projected to grow
11 percent from 2016 to 2026, a
gain of 747,600 new jobs, according
to data from the US Bureau of
Labor Statistics.

Construction costs
In June of 2019, McKinsey &
Company released a report on mod-
ular construction, one of the key
pieces of off-site construction
methodologies. Within this report
McKinsey compares the current
growth of construction costs, 2.5%
growth in 2018 which is twice the
rate of other industries, and the sav-
ings that modular construction pro-
vides. Advantages to modular construc-
tion, McKinsey wrote, are that it can
deliver projects 20% to 50% faster
than traditional methods; a poten-
tial for costs savings of up to 20%...

and as ripe market around the world
ready for this kind of disruption.”
In the last two years, material
and labor costs have grown faster
than contractors’ bid for work caus-
ing contractors to have thinner
profit margin, according to this pub-
lihed report.

The two goliaths, owners and
contractors, of the construction in-
dustry are quickly coming to an im-
passe. One that can be mitigated
with the implementation of off-site
construction. Global warming
The summer of 2019 has been
considered record setting tempera-
tures across the United States. The
National Weather Service has even
declared the June of 2019 the
hottest June ever including 90-de-
gree weather in Anchorage, AL.

These factors bring major risk not to
just costs of construction but also
the safety of employees. See this
published report. Contractors, like
Choate Construction, are during
concrete pours at 2 a.m. to avoid
the risks involved with the heat at
their Nashville jobsite.

Off-site construction
The current economy is forcing
the construction industry to keep up
and due to the recent recession, no
one is volunteering to take their foot
off the gas. These three factors
combined are forcing the key deci-
sion makers to become opportunis-
tic. Off-site construction can be
compared to how IKEA manufac-
tures their own furniture. Create a
series of components and provide
instructions on how to put them to-
gether. Now apply that concept to a
building. Through construction tech-
nology known as BIM (Building In-
formation Modeling) contractors are
virtually building a construction
ready model virtually, then dissect-
ing it into a series of components
that make up the overall building.

The term off-site refers to the
process of being able to manufac-
ture the series of components in-
side a warehouse where weather,
construction quality and processes
are controlled and streamlined.

Two of the larger pushes within off-
site construction are prefabrication
and modular.

Prefabrication refers to the IKEA
process. A full run of piping within
the building is virtually built and
then manufactured off-site. The
components are labeled sent to the
site with instructions (Component A
connects to Component B) and in-
stalled. Modular refers to producing full
sections of a building. Repetitive
items found within a building a re-
peated built in an assembly line
with all trades involved. AC Marriott
is a leader in this process producing
the full hotel room (all the down to
installed bedframes and box
springs) inside a warehouse. After
being shipped to site and the units
are stacked on top of another creat-
ing the form of the building as well
as the units inside.

Both of those examples reduce
field labor and construction costs
while providing the ability to control
weather and risk.

Back to the tipping point. The in-
dustry cannot afford to be slow to
adopt. It can no longer have an un-
willingness to change or evolve.

If anything, McKinsey & Com-
pany has produced the ice breaker
for the construction industry. The
discussion has become real and re-
inforced behind the McKinsey &
Company name. Does anybody else
see a tipping point?
Jacob D’Albora is director of
BIM-FM Services and associate
vice-president at McVeigh & Mangum
Engineering, Inc. in Charlotte, NC.

He can be reached by email at
jdalbora@mcveighmangum.com or
by phone at (704) 547-9035. Story
copyrighted by the writer, and
republished here with permission.

The North Carolina Construction News — AUGUST/SEPTEMBER 2019 — 13