Modular and Prefab Construction 2.0
Construction is one of the largest sectors by capital spend, but productivity has not kept pace with growth. Economic, social, and environmental drivers continue to force owners, developers, and builders to find cost savings opportunities. We covered automation in a previous correspondence, and now we’re taking a look at how and why modular and prefab startups are positioned to capitalize on the momentum of the burgeoning construction tech market.
We’ve been here before — but this time is different
“Prefab and Modular 1.0” has been around the block before, and failed. It was a period marked by few manufacturable products, a lack of meaningful cost reductions, and homes that were perceived to be of poor quality. Take Katerra for instance, which promised an all-in-one solution that ultimately fell short on execution and failed to solve for the complex supply chain.
Modular 2.0 — Whereas Katerra’s process involved running a construction process repeatedly inside a warehouse, Modular 2.0 rethinks the building as a designed product. This model outsources complexity to the sub-assembly supply chain and leverages digital tools to improve logistics and on-site delivery. Here are some of the bets we’ve made in the space thus far:
Assembly OSM, which delivers architecturally distinctive high-rise buildings (1–30 floors) through a technologically advanced process of digital design, manufacturing, assembly, and on-site installation. Watch Assembly in action here.
ICON, which develops construction technologies intended to 3D-print homes using concrete. Watch ICON in action here.
Veev, which provides design, fabrication, and build services for low-rise single and multifamily homes and accessory dwelling units across California and Texas.
Why will it work this time?
Superior technology — New materials science, manufacturing automation, and digitalization of products and processes are enhancing design capabilities, improving precision and productivity in manufacturing, and better facilitating logistics.
Differentiated processes — Tiered supply chain models, asset-light fabrication, and just-in-time delivery are hallmark traits of companies emerging in the space today.
Change is already happening -The global modular construction market size is expected to reach $138.9B by 2028 and R&D spending among the top 2,500 construction companies globally has risen by 77% since 2013.
The pandemic has accelerated changes that were already occurring at scale in the construction industry due to (1) supply-chain bottlenecks and (2) labor shortages creating significant production schedule delays. Everyone is trying to do more with less these days and COVID proved that this technology is improving coordination between remote and on-site teams.
