Cost of Modular Vs Insitu Construction

Over the years working in the modular industry, I get asked the same question over and over again.

Is modular cheaper than Insitu construction??

I have seen it all. From KPMG and other high calibre firms doing costs analysis, to building surveyors and in-house estimators modelling cost savings for potential clients.

The answer to clients is always, “yeah, sure it is". But the reality is often another. I am a big advocate of modular, but we need to stop telling clients and the industry that on-site manufacturing (OSM) is simply cheaper. The reality is most of the time it isn’t.

In my opinion, it shouldn’t be cheaper! Manufacturers need to pay for large factories and, at times, specialised equipment. Some of them have robotics on their production lines. So, why would a high-tech constructed item be considered cheaper than one built on-site as we have seen traditionally?

Manufacturers should be proud of their product and remember that the mining camp building era is a thing of the past. Government and industry accepts OSM as a serious contender to solve the housing crisis. We no longer need to see modular as an alternative or niche industry and play more like a mainstream operator.

So, to recap. Can modular be cheaper??

The answer is?yes!?Under certain circumstances.

You are building in a remote or regional area where labour and materials are expensive.

You are building more than 10 units of similar footprints, shape and form.

You need your project built fast.

I’ll explain my backflip!?

Yes, modular can be cheaper in remote areas as the cost of housing trades in regional areas can be astronomical, especially in regions closer to mining operations.

Modular can be cheaper when you need to build more than one unit. It is hard for a fabricator to make money on one-off’s. If you want real savings and affordable housing solutions, you need to mass produce, and modules need to be similar. In fact, I can confidently say that if you build identical units, the price will drop.?

There is a reason why white cars are the most affordable out of the production line.

Current government housing programs have had mild success in part for the large number of typologies. There needs to be change by both consumer and government on acceptance of a generic housing product. Yes, you can do a lot of things to make a building unique, from paint to landscape, but the main shape of the building needs to be easily replicated.

Lastly, the real saving for any developer against In-Situ construction is the dramatic reductions to your holding costs. You will de-risk your project, by bring it to market quicker, therefore putting a substantial reduction on your return on investment timeline.