Benefits of Modular Construction

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For small or mid-sized construction firms looking to streamline productivity, costs, and sustainability efforts, modular construction is becoming a popular alternative to traditional building models. Traditional construction involves bringing all materials on-site and performing full assembly at the end destination, leading to higher upfront costs, wasted materials, and a need for significant amounts of physical labor. With 75% of construction company respondents to AGC's 2023 Outlook Survey concerned about a recession or economic slowdown, tackling rising construction and labor costs is critical. [1] Modular construction is a solution to increased concerns about cutting costs while maintaining high levels of production.

In this article, we'll tackle how modular construction solves some of the challenges facing construction companies, along with the benefits of modular construction, potential challenges, and what types of businesses should consider modular construction.

What is modular construction?

Modular construction is the building process of creating a 3-D module offsite and then assembling it on site. Also called "offsite construction" or "pre-fabrication," modular construction is popular for increased sustainability, productivity, and cost. Instead of taking all building materials to the site and building from the ground up, modular construction allows for the large majority of the build to take place elsewhere.

Especially for small businesses, modular construction is often easier and more streamlined. Much of the build can happen in an industrial factory-like setting so workers can focus on crucial on-site tasks. It also helps alleviate some of the struggles small businesses face with labor and talent shortages as factory workers perform the bulk of the labor.

What are the benefits of modular construction?

While modular construction is not the most mainstream type of building, it's also been around for hundreds of years, thanks to its unique advantages. Especially for businesses concerned about sustainability, waste, and efficiency, modular construction offers a building alternative without sacrificing quality or safety.


With most of the fabrication done offsite, construction companies can simultaneously work on-site while three-dimensional structures are built elsewhere. Also, by building the modular elements in a controlled environment, businesses deal with fewer weather delays, allowing them to be more productive and stay on schedule. Plus, some of the biggest lifts when it comes to manual and physical labor are done in a factory setting, allowing workers to stay safer and not get injured lifting heavy materials.


Not only is construction labor significantly high, but material costs are skyrocketing. In traditional construction, all materials are kept on site, which not only reduces space and makes working conditions tighter but also creates the opportunity for theft. Companies can save on wasted or ruined materials, and labor costs are lower when using fewer workers on site.


If construction projects are consistently off-schedule and off-budget, modular construction might be the answer to staying on schedule. Without concerns over labor delays, weather incidents, material shortages, and more, projects are managed and executed more efficiently.

Keep in mind

According to Software Advice’s 2023 Construction Feedback Survey, completing the work on time is the top challenge faced during the project closeout phase, mentioned by 38% of construction professionals.* When it comes to putting the finishing touches on a building project, workers on site can stay focused on the little details that get a project across the finish line, as some of the significant manual labor was done offsite.

Less waste

With modular construction, construction companies are more eco-friendly and sustainable. They produce fewer carbon emissions and reduce the waste of materials, water, and energy. Building 3-D structures in factory settings allows for proper reuse and recycling, and manufacturers are responsible for eco-friendly practices. In traditional, on-site building, materials go to waste due to human error or weather incidents, leading to excess lost resources.

What are the potential challenges of modular construction?

There are also unique challenges and obstacles to modular construction that prevent it from being more widespread. From challenges around budgeting and pricing to potential transportation risks, modular construction sometimes deals with a few errors.

Less customization

Traditional building methods allow for high levels of customization for extremely custom and technically complex buildings. Modular construction focuses on the mass production of components, which is ideal for apartments, hotels, or standard subdivision homes. In the modular manufacturing processes, pre-engineered models are standardized, and customization is limited as structures are built to fit specific sizes and configurations. Plus, modular construction doesn't allow for deviation due to the potential of compromising the structural integrity of the 3D modules.

Risks of transportation

Modular construction involves transporting large, pre-built structures across potentially hazardous conditions and long distances. Transportation eats up a large part of the modular construction budget as significantly more logistic planning goes into transporting modular elements. Especially if a manufacturer is far away from an on-site location, transportation can be hazardous and lead to delays if accidents occur.

Limited manufacturers

Modular construction is growing in popularity, but it's not as widespread as traditional building. This often means the infrastructure or need for modular projects isn't quite there yet and manufacturers and suppliers are also limited. Fewer manufacturers might mean delays, long timelines or waitlists, or increased costs if a manufacturer is far away. Plus, it's difficult to integrate modular construction with existing structures, so modular projects have to be built from beginning to end.

What kind of business should consider modular construction?

For businesses looking to streamline efficiency, costs, and productivity, modular building benefits might outweigh the cons. To keep up with the pace of mass building, modular construction is ideal for single-family homes, apartment buildings, hotels, and office spaces. Modular construction also needs to be implemented at the conceptual design phase, so projects that are already in flight should stick with traditional building models.

Overall, for any construction company specializing in intricate or complex projects, traditional building allows for deep customization, custom finishes, and unique features, while modular construction is more standardized.

Next steps to getting started with modular construction

To get started with modular construction, assess whether your construction business can adapt to a few tweaks and changes. Establish if modular construction is even feasible for your industry, team size, location, and building requirements, and begin a fresh construction project in the design phase with modular construction in mind.

Collaborate with modular construction experts

From architects to designers to engineers, it's critical to have a modular construction team. Collaborating with these professionals not only allows you to learn more about best practices, challenges, manufacturer recommendations, and more, but it also lets you build a go-to set of resources to make modular construction projects happen. Establishing this relationship allows for on-time and smooth delivery of components and helps your suite of experts offer their recommendations for both the design and construction process. These experts are partners you'll work closely with over long periods and are valuable resources as you enter a new field.

Evaluate and tweak internal processes

Modular construction is a leaner, more agile approach, and your internal processes and workflows will need to adjust accordingly. Project management tools should be reworked to accommodate modular construction schedules, milestones, and dependencies, and regular communication needs to take place with modular construction suppliers. Communication is transparent and quick, allowing for iterative feedback and continuous collaboration. Different software and technology might be needed to build more iterative feedback loops and real-time communication.

Build in time for training and skill development

Modular construction might be a big departure from traditional building methods, and both on-site and office workers need to be educated on these new methods. Cross-training on both techniques helps workers stay agile and flexible, adapting to new methods seamlessly. Not only will employees need training on actual modular construction techniques, but they will also need implementation time on new software and processes.

Maintain regulatory compliance

Requirements for local building codes and regulations might change with modular construction, so ensure you have any approvals needed ahead of time. When switching techniques, prepare any partners, vendors, or customers for potential challenges and inquire about clarification around any changing regulatory standards. It's critical to maintain regulatory compliance, so double-check that you're prepared with any new processes or requirements.

Explore the advantages of modular construction

With an increased need for speed and sustainability while combating rising labor and material costs, construction companies are turning to alternative building methods outside of traditional on-site fabrication. While traditional construction methods are time-intensive, sequential processes, modular construction is more flexible and agile, allowing multiple parts of a construction project to be worked on simultaneously. Add in high labor costs and significant material waste, and the environmental impact of traditional building methods leads to resource depletion and inefficient energy consumption.

Modular construction is an alternative solution with significant advantages for businesses working on straightforward, standardized construction projects like apartment complexes or single-family homes.

Survey methodology

* Software Advice's 2023 Construction Feedback Survey was conducted in January 2023 among 301 U.S. respondents to learn more about construction software and its benefits. Respondents were screened to be a construction professional that has some role in the selection/purchase of construction software.