Building a Sustainable Tomorrow: How Co-Investments and Technology Are Transforming Modular Construction

The transition to modular construction has been slow due to upfront cost, perception, regulation, and upskilling. Recent reports on substantial investment, capability, and infrastructure building are accelerating the adoption of this construction method.

• Premier Modular secured investments from MML Capital Partners and Cabot Square Capital in August to scale production in domestic and European markets. Established in the 1950s, Premier Modular provides temporary and permanent modular facilities across the United Kingdom and North Europe. It is the first non-financial company in Europe to gain Environmental, Social, and Governance (ESG) accreditation, and is set to be carbon zero by 2035.
• In April, TopHat modular builder raised £70 million from stakeholders with substantial investment from FTSE 100 housebuilder Persimmon Homes, Goldman Sachs Asset Management, and institutional investor Aviva. The funding will assist with the launch of Europe’s largest modular housing factory in 2024, scaling TopHat’s current output of 800 homes to target 4,000 ultra-low carbon homes a year.
• Early this year, South Korean construction and engineering company Samsung C&T, known for high-rise construction projects like Burj Khalifa and the Petrona Towers, has agreed to invest and collaborate with Forta PRO, Latvian prefabricated building specialists, to scale and advance smart modular construction in the global market.

The latest developments are increasing awareness and recognizing the untapped potential of modular efficient, low-cost, and sustainable builds globally.

The principle of a modular build is prefabricating building components off-site in a controlled setting, shipped and assembled on-site. Modular construction dates to 1600 AD, and gaining popularity during World War II to address the growing demand for military housing. The main construction types include Three-Dimensional (3D) closed modules (fully enclosed with walls, ceilings, and floors) and Two-Dimensional (2D) open/partially open-sided modules, based on use, project, and site constraints. The 2018 Revision of World Urbanization Prospects reports that as the world rapidly urbanizes, the population is projected to be 68% urban dwellers (6.7 billion).

Modular design solutions tackle this challenge head-on with the key advantages including:

• Cost and Scalability: Factory-based mass production streamlines the construction process, resulting in reduced labor cost and material wastage. On average, modular construction can be completed 30% to 50% faster than traditional methods due to scale and speed of construction.
• Standardization: Building typologies with repetitive modules like apartment blocks, schools, offices, hotels, hospitals, and dormitories prefer this construction method. McKinsey Reports that 80% of new houses are prefabricated and potentially 20% of new buildings will be modular by 2030 in the United Kingdom and Europe. Consequently, modular construction could claim US$130 billion of the market by 2030 in the United States and Europe with moderate penetration, delivering an annual cost savings of US$22 billion.
• Resource Reduction and Sustainability: Academics in London compared traditional and modular construction methods, which can reduce carbon emissions up to 45% due to a streamlined flexible design & construction process, efficient material usage, quality control, and savings in logistics, labor, and delivery time. Additionally, the modules can be designed to integrate energy-efficient features and green materials.
• Adaptability, Reusability, and Resilience: Factory production and vigorous quality control result in durable components that require less maintenance with a building life span of at least 50 years. This allows for flexible multifunctional spaces during the building life span, a critical application during the pandemic, serving as clinic and quarantine centers.

A competitive landscape has developed with China leading the market in modular production. U.S. and European construction companies are focusing on integrating sustainable principles and green building practices. The major players include ACS Group, Skanska AB, Komatsu, Larsen & Toubro, Balfour Beatty, Kiewit Corporation, Taisei Corporation, Red Sea Housing, System House, and Bouygues Construction, focusing on construction and digital innovation and sustainable/green building practices.

Technological advancements, digital software, and tools have enhanced design capabilities, precision, and productivity in manufacturing and logistics, scaling the adoption of this construction method, which include:

• Design for Manufacture and Assembly (DFMA): CATIA (Dassault Systèmes’ 3DEXPERIENCE platform) is a comprehensive tool, enabling individual part models, assemblies (of parts), high-end surface modeling, Finite Element Analysis (FEA), structural analysis, generative design, and so on. The design tool is connected to other tools, such as ENOVIA (collaboration), DELMIA (supply chain planning) and SIMULIA (simulation), among others.
• Building Information Modeling (BIM): Autodesk (BIM 360) is a comprehensive platform that facilitates digital design, assembly generation such as panel design, production, and fabrication up to assembly line panel installation workflows.
• 3D Printing with Robotics and Automation: The Lennar Corp (The United States’ second-biggest home builder) collaborated with 3D printing startup ICON to build 100 homes in the Genesis Collection in Texas, demonstrating the scale of 3D printing technology to deliver energy-efficient and resilient homes with minimal waste.
• Generative AI: Metroc, a Finnish construction tech company, has developed a Software-as-a-Service (SaaS) tool to assist construction firms in seeking out project opportunities. Further applications are to automate generative design based on parameters such as function, aesthetics, and structural integrity.

ABI Research has been ahead of the curve and identified the application, suppliers, and use cases of robotics (see Robotics for Construction & Extraction (AN-4927)) and Augmented Reality (AR) (see Augmented Reality in the Engineering and Construction Industry (AN-2726)) in the construction industry. Modular construction is a product of innovation, successful design, and engineering, transforming the construction industry one step closer to a sustainable and circular future.