Introductory Guide to Off-Site Construction

Two workers wearing safety vests and hard hats are applying SECUROCK® EXOAIR® 430 to a commercial building.

Off-site construction practices are growing in popularity for commercial projects to increase efficiency and reduce waste. Off-site methods also help to combat persistent industry challenges such as skilled labor shortages, material availability and price increases.

For instance, at the beginning of 2022, lumber prices tripled, placing a heavy burden on builders, architects and other industry stakeholders to cut costs and improve efficiencies wherever possible.

While off-site construction can mitigate these issues, it can require more upfront effort initially from the project owner and contractors, which can cause some apprehension. Despite the shift away from the status quo, many projects will see that the advantages of off-site construction methods far outweigh the added coordination.

Here’s everything you need to know about permanent off-site construction, including key advantages, items to consider before starting the process and how to get project stakeholders on board. (Note that “permanent” off-site construction refers to buildings that are not intended to be temporary or relocatable.)

What Is Off-Site Construction and Pre-Fabrication?

Off-site construction and pre-fabrication involve some or all of a building being constructed in a factory, then delivered to the project site to be installed.

This process allows site development work (excavation, concrete foundation, etc.) and structural element installation to continue, while simultaneously building the modular elements off-site. Constructing numerous parts of a building at the same time regardless of weather conditions reduces the overall project timeline.

This image shows a modular construction schedule compared to a site built construction schedule.

There are two main types of off-site construction: 2D modular panels used to complete the interior and/or exterior walls of the building, and 3D volumetric modular units that consist of entire rooms or sections of a building.

2D Prefabricated Panels

2D pre-fabricated panels bring together the structural elements of a building and are simple to transport from factory to job site. Pre-fabricated panels can include insulation, structural and finishing materials including a steel stud framed assembly, SIPS panels and architectural exterior finishes. Some panels can even come with windows and doors pre-installed.

Once the pieces are delivered to the job site, contractors can dry-in the building faster than with standard construction, allowing interior trades to complete their work sooner. However, mechanical fixtures, such as electrical service, plumbing and HVAC hoses and fittings, are not pre-installed in the factory, so the final installation process will still take some time.

3D Volumetric Modular

3D modular units are larger, making delivery to the final destination more difficult and expensive. Project owners may also face size restrictions during transport. If the load is wider than 8.5 feet, taller than 14.5 feet or over a state’s weight limit, then it is considered an oversize load and will need a permit for each state it travels through. Some states also require a pilot car in front and behind the load for safety. It’s also important to note that each state has different size restrictions, so a travel route will need to be established well before the load leaves the factory.

Once the load arrives, the assembly process is less labor-intensive compared to using 2D panels and traditional on-site construction. These details can be assessed and accounted for during the design phase.

The front-end fabrication process makes 3D volumetric units efficient and can be the most cost-effective option for new construction, particularly in repeatable fabrications like hotel rooms and apartments. However, this does not mean that the design of each 3D unit must be exactly alike. Design factors can differ from unit to unit in order to create a custom look for the building.

Using Both 2D Panels and 3D Volumetric Modular Construction

It’s also possible to create a hybrid model using both 2D and 3D units. The design process can determine the best balance.

For instance, building facçade elements and interior walls could be manufactured and delivered as 2D panels in combination with entire bathrooms delivered as 3D pods.

Buildings that have repetitive layouts or units like hotels, hospitals, offices, schools and dormitories and hospitals benefit most from this process. Each project will have its own unique considerations that will dictate how they approach modular building.

What Are the Advantages of Off-Site Construction?

A panelized wall system with Securock ExoAir 430 being worked on.

There are numerous benefits of off-site construction for the building owner, contractor and architect. Here’s an overview of some of the biggest advantages typically seen in modular projects.

Improved Efficiency

Utilizing an industrialized approach to construction brings a new level of efficiency to the market. More processes are automated in a controlled environment, and steps can be repeated to reduce time. A recent McKinsey report found that modular building cut project schedules by as much as 50% and cut costs by as much as 20%.

Greater Cost Certainty and Cost Predictability

Design decisions need to be made upfront with modular building. But the advantage to having little room for changes is that the budget is fairly firm as well. There’s rarely any scope creep, which can otherwise lead to budget overages in a traditional construction project. There’s also a decreased chance that market volatility will impact pricing for materials and labor since the project is finished over a shorter time span.

Shorter Install Time, Reduced Construction Schedule

The majority of the work done in an off-site construction project is completed indoors. That means that fewer aspects of the process are at the mercy of the weather and can be completed at any time of the year.

Plus, modular units are built at the same time that on-site work begins. In most construction, concrete is required to cure for a minimum of 28 days before additional work can be started. By leveraging off-site construction, work can continue in a factory during that 28-day period. Everything is happening simultaneously to help reduce the overall project timeline. Once the units are completed in the factory, they can be installed on-site in a wider range of environmental conditions.

Faster Revenue Generation

A streamlined construction timeline means a faster path to revenue for building owners. It also reduces the risk of market changes impacting the owner’s ability to fill units and helps improve cash flow since funds aren’t tied up for as long.

Reduces Material Waste

Off-site construction is quickly gaining a reputation for its sustainable practices. There tends to be less material waste in factories compared to on-site. In fact, one study found there is up to 83% less waste generated in modular construction.

Additionally, working indoors minimizes weather-related moisture infiltration into the wall systems, which can cause mold and mildew growth and subsequent air quality issues when the building is in use.

Addresses Construction Labor Shortages

The construction industry is facing a clear labor crisis. A recent survey by the U.S. Chamber of Commerce revealed that 55% of contractors have a high level of difficulty finding skilled workers. Using building components built off-site relieves the burden of having to source a large team to complete the construction process.

Avoids Local Disruptions

By minimizing the amount of on-site work, modular construction reduces disruption to area residents and, in the case of a restoration project, existing building occupants. This process also benefits projects in crowded urban areas with little laydown room for excess equipment, scaffolding and building materials. For projects using prefabricated wall panels or 3D panels, the units can be delivered to the job site in the order in which they will be installed, minimizing the need for storage or staging space.

Improved Safety

A factory offers a more controlled and consistent environment than a construction site. Work is frequently done at bench height, with panels laid horizontally, as opposed to workers scaling ladders or working from scaffolds or aerial lifts while building on-site. It creates a safer work environment and reduces liability concerns.

In fact, a report from Dodge Data & Analytics found that 85% of general contractors and 86% of sub-contractors saw an increase in safety when using off-site construction compared to traditional methods.

Higher Quality

Modular fabrication is mostly a reiterative process. This reduces the chance for defects as well as the need for re-work. Plus, not only are off-site units built to meet or exceed building codes for the specific destination, they’re often built stronger than on-site buildings because they must withstand transportation.

How Stakeholders Are Impacted

A multi-story building has multi-colored siding. There is a street below the building with various cars parked by the curb. This image was taken at sunset.

When you’re just starting to explore off-site construction, you may wonder how each project stakeholder will be impacted. After all, industry veterans may not be keen to stray from the tried and true methods they’ve been using for decades.

Contractors

While it can be a learning curve for the general contractor to track both the on-site and the modular timelines to ensure that the two come together cohesively, many contractors actually prefer to use an off-site approach to differentiate themselves during the bid process and potentially win more projects. One major benefit for all contractors is that the construction site can be safer when the primary elements are constructed elsewhere.

Architects

One major change for architects with modular design is the shift to communicating with the factory. Regular visits by the design team during the production process allow them to review ongoing work and make any necessary changes before it’s too late. In addition to designing the modular pieces themselves, architects should also design modular elements with the transportation and assembly restrictions in mind. With this collaborative approach, the manufacturer, fabricator and architect should clearly define their roles and responsibilities at the onset of the project to minimize any miscommunications or ambiguities.

Installers

The installation team’s responsibilities will depend on whether the project has 2D panels, 3D units or both. While some of their typical scope of work may be completed in the factory by another party, installers are critical to the on-site assembly and connection of the various systems.

There are also plenty of other building components that cannot be constructed in a factory, which will require field applicators before and after the prefabricated elements arrive at the job site. For example, installers will be needed for features like balconies, parking decks and most interior finishes.

Building Owners

Building owners stand to benefit the most from off-site construction since there is a huge potential for cost and time savings. However, they should be prepared to make key decisions early in the process and understand that design flexibility gets more difficult once the fabrication process begins.

For instance, exterior finishes, textures and colors, as well as space planning, interior finishing details and service integrations, should be finalized in the early stages of planning. Changing design decisions once fabrication has begun can be costly.

What to Consider Before Choosing Off-Site Construction

A person is working on a commercial building design with a laptop.

Both on-site and off-site construction requires detailed planning and communication. However, those processes look a little different when you switch to modular building.

Early Decision-Making

One key difference all parties will notice is that more decisions need to be made early on since modular fabrication happens quickly and often simultaneously with other stages of the construction process. And once construction begins, the ability to make changes is limited.

Potential Solution: Select an experienced off-site construction company that can identify necessary decisions, implement a timeline and efficiently manage that process from beginning to end.

Financing Challenges

All parties also need to be clear on who is responsible for the financial and insurance obligations of the pre-fabrication process. The financing process becomes challenging in terms of the lender’s definition of “property.” When the units are off-site, lenders often won’t release funds until the units are delivered to the job site.

This is a problem for developers who need up to 50% of the loan upfront, and all they can provide lenders as collateral is an empty lot. Developers can look to non-traditional lenders for their non-traditional construction method, such as real estate investment funds.

There are also several financing options available for off-site construction as it applies to renovating for energy efficiencies and Deep Energy Retrofit projects. One example is Commercial Property Assessed Clean Energy or C-PACE. This program allows commercial buildings to receive funding for energy efficiency upgrades or renewable energy systems, which are paid back through property tax assessments.

Several states also have their own specific funding available for deep retrofit projects such as Efficiency Maine’s PACE Loan Program, Clean Energy Works Oregon and RetrofitNY.

In Canada, the Federation of Canadian Municipalities (FCM) recently launched three new financing programs representing an investment of nearly $1 billion to support retrofits in private homes, social housing and community buildings.

Download Restoration Guide

Regulatory Compliance

States differ in how they regulate modular building. Some require modular units to comply with the same building codes as traditional construction, while other states have a separate set of requirements. The industry has allowances for in-plant construction and inspection processes to meet site codes to accommodate off-site construction.

Another factor to consider is the location of the manufacturing facility compared to the job site. If the two locations are in different states, the manufactured units need to meet the regulations of both states. Most modular plants are familiar with building to other states’ code requirements, but it’s worth confirming at the beginning of the project to avoid issues.

Design Considerations

The consideration is to determine whether the project is well-suited for modular design and fabrication. For instance, areas with good weather and easy access to raw materials may not benefit as much from the time and cost savings that come with off-site construction. It’s definitely smart to do a cost-benefit analysis of both options before making a decision.

Additionally, buildings that are complex and don’t have a lot of repetition may also be better suited for traditional on-site construction.

How Does the Installation Process Work?

A crane lifting a large building material.

Once the design team and the manufacturing firm complete the units, the delivery and installation processes can begin. The job site must be staged to receive the shipment, with grading, foundation and utility work completed in advance.

When the units arrive, they need to be lifted into place. 3D units are typically moved with a tower crane, unless it’s a temporary building on a raised foundation, while 2D panels have more installation equipment options depending on their size, from forklifts to truck mounted hydraulic cranes to crawler cranes.

The installation team then connects the modules and secures them to the foundation. The roof may also need to be constructed on-site. Mate lines must be sealed together to prevent water and air leaks, and exterior cladding may also need to be installed if not included in the original factory design.

Next, the installation team will connect electrical and plumbing lines between the units as well as to the exterior hook-ups. They’ll also take care of any interior and exterior finishes, such as stairs, ramps, parking lots, lighting and landscaping.

Hybrid Installation Models

Off-site construction is not an all-or-nothing business decision. Hybrid models, where part of a project is built off-site, while others are completed on-site, are both achievable and common. In fact, in some cases, it can even be more efficient to utilize both methods.

One example of a hybrid construction model is a mixed-use commercial building. Known as a podium building, the bottom one or two levels are built as a concrete podium and feature things like a parking garage and retail stores.

These elements are built on-site as part of the foundation of the building. Then modular apartment units are constructed in-plant (often at the same time) that easily stack on top of the podium.

In hotels, common areas are constructed on-site and modular construction is utilized for the repeatable rooms.

There are a number of options for approaching off-site construction that suits the needs of nearly any project.

How To Re-Design a Traditional Project Into Modular

Two construction workers are talking about the project on the construction site.

It is possible to transition from a traditional construction project to an off-site one, but the decision should be made as early as possible in order to take full advantage of its benefits. Here are some important factors to consider when thinking about a mid-project switch to off-site.

Check on Size Availability

Modular buildings with 3D units can be slightly larger than traditionally constructed buildings because the stacking approach essentially doubles the thickness of the interior walls. The construction site needs to have enough square footage to accommodate the extra space; otherwise, the pods could be too large to fit.

Modular units and pre-fabricated panel sizes may be limited by the Department of Transportation's restrictions on shipping. It’s also important to note that oversized loads can increase over-the-road freight cost. Get estimates on the cost to transport the modular units before making the final decision to change construction methods.

Convert the Project Plans

If you’re in the early stages of a project, it should be straightforward to convert the project plans to off-site construction. Talk to the architect; ideally, they’ll have some familiarity with modular design for an easier process and to make sure all specifications are up to code.

This is fairly likely since 76% of architects report having at least some project experience with modular buildings, according to McGraw-Hill Construction. Building material manufacturers and the unit fabricators should also be involved with the process of converting plans to ensure products are being incorporated appropriately.

Talk to the General Contractor

Although the site preparation work is likely the same, connecting pre-fabricated units at the job site requires a specific installation method. It’s best practice to find subcontractors who have experience working on a modular building.

Adjust the Inspection Process

Since the construction site and manufacturing facility will likely be under different county or state jurisdictions, the inspection process may differ as well. Early inspections for the interior are actually performed at the factory with inspectors from that jurisdiction for both 3D and 2D units.

Once the modular units are delivered and assembled, a local inspector completes the exterior inspections and any hybrid areas that were constructed on-site.

How Do Pros Get Started With the Process?

Three coworkers are sitting at a table together with a calculator and a laptop, working on design plans for a building.

There are clearly a lot of benefits to using off-site construction for all or some of a commercial building project. As construction professionals make the switch, it’s important to understand differentiation in the process.

Design Stage

The goals of the design stage are slightly different with an off-site construction project compared to a fully on-site one. One unique objective is to make each modular piece as large as possible in order to minimize the amount of on-site assembly required. Another, however, is to keep the size in balance with job site equipment and labor needs, as well as transportation load requirements for federal, state and local jurisdictions. The manufacturer and the design team typically work in partnership for this phase.

Permits and Approvals

The off-site construction process is quite similar to the traditional approach when it comes to permits and approvals. The construction manager should check with state and local authorities to make sure all the proper permits are received, including foundation, building, mechanical, electrical, plumbing, water, sewer and more.

Factory Inspections

Factory inspections are performed throughout the build process by local inspectors. However, if this is your first time working with a fabricator or your first off-site project, it is best practice for the architect, builder or GC, and owner to visit the manufacturing facility and check in on their project’s progress. Facility walkthroughs are not necessary for every subsequent project.

Installation

Site preparation work is similar, if not the same, but installation requires heavy equipment and an experienced team. The modular pieces are secured to the foundation or structure​​ and to each other. The necessary channels of 2D panels, such as the channels for heating, ventilation, air conditioning (HVAC) and plumbing, should already be prepared and can be connected using standard connections.

Then infill sheathing is installed at mate lines and exterior cladding is installed if necessary.

How To Get Buy-In From Building Owners

Two people are shaking hands. One is wearing a black suit, and the other is wearing a gray plaid suit.

When talking to building owners about the potential of an off-site project, use hard data points to back your position that off-site construction truly is a good fit for the project.

Then, outline some of the primary benefits.
  • Growing popularity: Multi-family projects doubled in market share from 2015 to 2020.
  • Compressed timeline: Project timing can decrease by as much as 50%, according to the McKinsey report.
  • Lower budget: The McKinsey report also estimates that costs can be reduced by as much as 20%.
  • Top-quality and durability: Reliable materials and brands make off-site construction quality at least on par, if not better than, on-site.

How To Specify Off-Site Products

Specifying off-site building materials has a lot of similarities to on-site materials. Similar to any traditional product, it’s important to check availability and lead times to make sure they won’t slow down the project schedule.

If the team is unsure where to start when it comes to specifying off-site projects, talk to the modular factory. Most facilities will have a list of the best products to work with or can point the team to their recommended building material manufacturers.

Product Use Cases for Off-Site Construction

A large crane is being used to help construct a commercial building. There is a blue sky with lots of clouds in the background.

Many reputable building materials brands have a reliable history of supplying high-quality products for the off-site construction industry. Contact a manufacturer for examples of previous modular buildings they’ve worked on and to discuss their level of involvement with future projects.

Tremco Construction Products Group

Tremco CPG companies are leaders of off-site construction solutions. They specialize in commercial sealants and waterproofing, continuous insulation, panelized wall systems and more. Product types include:

  • Air barriers
  • Sealants and adhesives
  • Tapes and foams
  • Continuous Insulation
  • Exterior cladding / EIFS
  • Traffic coatings
  • Drainage
  • Pre-expanded foam tapes

It’s easier to make the shift when you can incorporate brands you know and trust into the pre-fabrication process.

Learn more about how Tremco CPG can help with your off-site construction building envelope or download our brochure to see a list of products and systems you can use in your next off-site construction project.

Dryvit

A large commercial building is being built.

Part of Tremco Construction Products Group, Dryvit’s Modulite™ prefabricated solutions are ideal for both fully modular and hybrid projects. They come with numerous architectural finishing options to choose from when opting for pre-fabricated cladding systems.

Glossary: Terms to Know for Off-Site Construction

2D panels: These wall systems, usually flat, are built individually off-site, then delivered in standard, 25-foot containers. The flat pieces are assembled together, requiring more effort at the job site, but transportation is easier.

3D volumetric: Fully constructed units or pods that are delivered to the construction site in their final state. Multiple units may be stacked and connected on-site to complete a building.

Permanent modular construction: Permanent buildings that can be constructed off-site and assembled on-site, but that are not intended to be temporary or relocatable after assembled.

Relocatable off-site construction: Relocatable buildings can be moved from the original assembly site and reused elsewhere.

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