Finance & DevelopmentDevelopmentWhere and When Is Modular Construction Applicable?

Where and When Is Modular Construction Applicable?

The acceptance of “modular construction” is evolving. USA Today announced in June that Marriott has made the decision to strongly support franchisees’ use of modular construction in the development of appropriate brands. While largely recognized in Europe, modular construction has been notably slow to take off in the United States, encompassing just 3 percent of all construction in North America. That reality along with the hospitality industry’s historically low adaptation of the method begs the question, “What’s the hold-up here?”

In a world where people constantly look for more cost-effective and timely ways to deliver quality products–whether a hotel project or Apple’s new iPhone–at first glance, it is curious that modular construction has not already cemented itself as the new norm in the construction and development culture. However, what we have found through our experience with modular construction is that while the concept presents some distinct advantages, it is best used in certain circumstances and environments to achieve those advantages.

What is Modular Construction?

Modular buildings are sectional, prefabricated buildings that are manufactured in a factory and delivered to the job site in modular sections. For a hotel, the modules are typically one room in width and two rooms in depth and include the central corridor. These units are constructed in an enclosed facility where poor exterior environmental conditions do not hinder the construction timeline or quality. When factory production of the units is complete, they are then transported on trailers to the hotel location and sequentially staged for placement to create the hotel’s upper floors. Erection and placement of the modular units occur rapidly and is completed on most hotel projects within a week to ten days. A significant advantage in comparison to traditional construction practices is that modular construction could deliver units of higher finish quality and consistency.

Modular Construction at Washington State University

Our first venture into modular construction began in 2016 with a Courtyard by Marriott in Pullman, Wash., located on the Washington State University campus. As we researched further into the benefits of the practice, we continually asked ourselves how we could best get an objective opinion on the long-term feasibility of this construction method. Once we decided to pursue the modular route, we saw that there was an opportunity to involve hospitality and construction-focused students at WSU and give them hands-on exposure to a project in the field they had chosen to study.

Recruiting students from WSU’s Construction Management and Hospitality Management schools, we challenged them to test our hypothesis that modular construction is a viable method for hotel development in the future. We believed that it had merit; however, we wanted to obtain findings from an unbiased viewpoint and to see what these students would come up with in terms of cost/benefit analysis and whether modular construction is sustainable in the long term.

The students participated in a real-life, cutting-edge project with class sessions taught on the job site by professionals involved in the hotel project. Classes included a multi-day field trip to the modular fabrication plant. Faculty members from WSU’s Hospitality Management and Construction Management Schools jointly facilitated the class, which culminated in the presentation of the students’ findings to the Stonebridge executive team.

Some of the uncovered results are as follows:

Construction Schedule Compression

Because modular construction accelerates the completion of the building envelope, the overall project can be constructed in less time. The modular construction duration period from start of construction to hotel opening can be 30 percent to 40 percent less than conventional site-built construction. Buildings that typically take 12 to 14 months with traditional construction can be completed with a schedule ranging from 8 to 10 months with modular construction. This is partly due to the potential to significantly reduce site-related delays; the guestrooms are essentially complete upon placement. When properly designed and coordinated, modular construction also has the potential to reduce costs and has been reported to decrease design and construction time by approximately 30 percent to 50 percent with fewer change orders. As with many investment decisions, the ability to deliver product to market, reduce construction carry costs, and get “heads-in-beds” faster can significantly improve the property’s pro forma and increase the attractiveness of modular construction.

Dependable Timeframe

Once the modular units are designed and a production schedule is established, there is typically little variance in the production and on-site placement schedule. The controlled environment of the modular fabrication plant eliminates weather delays and subsequent impacts to completion of the building tower. However, the on-site preparation to receive and place the modular units requires careful scheduling and coordination to ensure that the modules are installed in an efficient manner. For a hotel with relatively few guestrooms on the ground floor, it is best to include those rooms in the conventional structure of the ground floor, and use modular units for the upper floors. For hotels with a large footprint and numerous ground-floor guestrooms, having those rooms constructed from modules can be advantageous.

Consistent Quality, Appearance, and Acoustic Performance

Modular fabricators are generally organized to achieve high efficiencies in design and production workflow. Modular buildings also abide by the same building codes as traditional construction. Consequently, modular construction delivers the same or superior quality, durability, and longevity as would be achieved with conventional construction. Since the modules are fabricated with a consistent work crew and staff within the modular factory, there is a great degree of consistency within the rooms in terms of finished quality.

The modules are constructed as individual units, which requires that each unit have separate walls on each side, as well as separate floor and ceiling assemblies. As a result, when the modules are placed side-by-side and stacked vertically, the guestrooms have walls, ceilings, and floors that are of double thickness. It is our expectation that the additional structure and insulation will provide improved acoustic separation between rooms as compared to conventional construction. As a result, we anticipate greater guest satisfaction.

Improved Pre-opening Labor Costs

As previously indicated, the modules are delivered to the site with the rooms essentially complete. During connection of the units and final construction of interior corridors, the rooms are sealed to prevent the incursion of dust and dirt that is produced during the finish work in the corridors and stairs. In this manner, the rooms are kept clean and require less effort to prepare for guest occupancy.

In Pullman, we found that one deep-cleaning pass was needed to get the rooms in guest-ready condition. In conventional construction, three to four passes are required by the hotel housekeeping staff to ready rooms for guests. This represents a significant savings in labor costs, and enables the hotel staff to focus on other aspects of preparing the hotel for opening. The decreased amount of required cleaning also represents further compression of the overall project schedule, allowing the hotel to open sooner than if constructed conventionally.

Where and When is Modular Best Applicable?

What Stonebridge and the WSU students ultimately concluded was aligned with what we had originally hoped for in terms of time effectiveness and quality. However, it is worth noting that the cost-effectiveness of this method is up for debate. Modular construction has a future–and it is here to stay, mostly due to the fact that it is able to save time on projects. From our experience, modular construction works best in terms of cost-effectiveness in an urban environment development where site constraints, logistics, and/or an environment with sub-contractor labor shortages are dominant factors. It should also be noted that modular construction does not lend itself well to all-suite products—it works best when applied to conventionally sized hotel rooms, due to construction and transportation constraints.

While it’s a known fact that the employment of modular construction has been historically low in the hotel construction sector, the recent support from Marriott and Hilton may help bring more awareness, acknowledgment, and, ultimately, an embrace of the concept into projects that fit the right criteria and environment. In retrospect, we also concluded that there is potential for further improvement of the modular process both in the fabrication plant and on-site, and that these improvements will increase the long-term viability for incorporating modular construction into future projects.


About the Authors
Navin Dimond is the CEO of Stonebridge Companies. He is an alumnus of Washington State University. 

Dr. Nancy A. Swanger is an Associate Professor at Washington State University College of Business.

Jason Peschel is an Assistant Professor at Washington State University School of Design and Construction.