Method of Analysis

The core construction alternatives analyzed are off-site module prefabrication, off-site panel prefabrication, and traditional site-built construction. Each exhibit behaviors that can impact transportation needs and costs in various ways.

Guided by existing literature, a simple flow diagram was initially mapped to assist in the identification of common processes, locations, and logistical relationships required by alternative construction methods for the same project using the same suppliers. Figure 1 identifies the value – add tiers relevant to this investigation and the supply lanes that link them. It displays an aggregate supply lanes for shipments moving from origins A directly to construction site B as well as for shipments from the same origins to site construction site B via fabricator sites C.

Manufacturers / Distributors..

Sub-assembly

Sites. J

_____________ (r

Figure 1: High level material flows for on-site and prefabricated construction alternatives

Traditional on-site construction efforts are supplied through lane A-B. Meanwhile, off-site sub­assembly efforts require that materials first move via lane A-C for sub-assembly and then move to the construction site via lane C-B. If supply lanes A-B and A-C are understood to be fairly similar based on the same bill of materials, shipment size, distance, and direction, then the combined time and costs effects of prefabrication activities at site C and the movement of materials via lane C-B is expected to be where significant effects exist in determining the most cost-effective method of construction.

Based on this framework for experimentation, relationships among the fixed and variable costs reflective of the resources and processes of actual construction operations were used to help build a more-detailed model. Comparative logistics scenarios for each alternative construction method were then created to better identify shared and isolated effects. The construction methods analyzed were:

a) No off-site prefabrication (traditional)

b) Panelized segments constructed off-site

c) Modular segments constructed offsite

d) Hybrids consisting of two or more of the above alternatives

Various levels and configurations of modularity require various transportation capabilities. Transportation alternatives for this study were limited to highway modes (e. g. 40’ flatbed, 53’ dry van) including oversized, permitted loads. The per-mile transportation rates based on shipment types that support the construction of a 3000 square foot structure are provided in Table 1.

Table 1: Shipment count and characteristics, by construction method, to supply materials for a 3000

square foot structure

Shipment Type

Average

Shipment

Weight

Number of Shipments

Rate Per Mile

Minimum

Charge

No Pre-Fabrication, 53’ Dry Van

37,500

4

$2.00

$300

Prefab Panels (20%-70% density loss), 53” Dry Van or Flatbed

20,000 – 30,000

5 – 7

$2.00

$300

Modules, Standard Load, Flatbed

16,000

10

$2.00

$300

Modules, Wide Load (8.5-12 ft.)

24,000

7

$7.00

$900

Modules, Wide Load (>12 ft.)

30,000

5

$15.00

$2,000

Per-mile transportation rates and minimum shipment charges were sampled from archival and web-based commercial sites on a basis. They were plotted and then averaged using line of best fit. Wide variations existed among the rates, particularly for local deliveries and oversized shipments. This could be attributed to the lack of uniformity in overhead allocation and equipment utilization among these specialized carriers. Additional validation was provided by two transportation professionals who reviewed the means and spread of the values.

For each scenario, the specifications of the finished structure as well as its site were held constant as time and total cost effects due to shipment volumes, configurations, and distances as well as opportunity costs of non-operating commercial enterprise were assessed.

Across multiple construction projects, huge variations in building specifications and transportation rates can exist. For example, modular construction can be used to construct small retail shops as well as multi-storied commercial structures such as the twenty-one floors of the Hilton Palacio del Rio hotel in San Antonio, Texas. Also, as earlier explained, oversized highway shipments can present large per-mile rate variations depending on shipment size, permits, among other factors. Therefore, key assumptions were required to help define and limit the scope. For each scenario,

a) Finished commercial structures are built under contract to the same specifications

b) Structures can be built using any construction method (i. e. modules, panels, kits, and traditional site-built) or any combination of methods.

c) All finished structures will bear a structural weight per square foot of 50 pounds and a construction cost to the customer of $100 per square foot. (averaged data from a variety of sources; e. g. Building Construction Cost Data, 2005)

Scenarios are differentiated by applying building sizes ranging from 3000 to 12000 square feet. Supply origins will first be held constant and then localized. Inventory carrying costs, construction loan interest, and off-site overhead were not included as variables.

Results

Interpretations of the data derived from the analysis are consistent with what is observed in a variety of supply chain environments. For example, manufactured products like potato chips that entail less density thus higher per-mile transportation costs than does its raw materials (i. e. potatoes) will put pressure on the manufacturing site to locate nearer the market. The data provided in Table 2 support this notion. Total costs for transportation services that support the supply of materials for finished structures of 3000 square-feet and 12,000 square-feet in size are provided. Each shipment type represents a sole application of that type to the project. That is, data for applications of mixed shipment types to the project are not listed.

The lanes identified by Figure 1 are also indicated. The two sizes define the range of sizes studied are used for the sake of efficiency in conveying the cost differences among shipment type (based on size and configuration), the miles traveled, and the total volume of materials moved. Transportation costs applying to finished structures of other sizes supplied over varying distances can be readily calculated by shipment type using this table because there are no multiplicative or exponential relationships among the variables as modeled. Calculations for projects of mixed technologies and/or shipment types could be approximated by weighed averages based of the percentage of usage or application among the variables.

Table 2: Total Transportation Charges per Lane for the Alternative Construction Methods (for 3,000 square-foot and 12,000 square-foot structures)

Shipment Type

3000 Square Feet

12000 Sc

uare Feet

25 miles

trans$ per sf

200 miles

trans$ per sf

25 miles

trans$ per sf

200 miles

trans$ per sf

A-B: No Pre-Fabrication

$1,200

$0.40

$1,600

$0.53

$4,800

$0.40

$6,400

$0.53

A-C: No Pre-Fabrication

$1,200

$0.40

$1,600

$0.53

$4,800

$0.40

$6,400

$0.53

C-B:

No Pre-Fabrication

$1,200

$0.40

$1,600

$0.53

$4,800

$0.40

$6,400

$0.53

Prefab Panels (70% density loss)

$2,100

$0.70

$2,800

$0.93

$8,400

$0.70

$11,200

$0.93

Modules, Standard Load

$3,000

$1.00

$4,000

$1.33

$12,000

$1.00

$16,000

$1.33

Modules, Wide Load (8.5-12 ft.)

$6,300

$2.10

$9,800

$3.27

$25,200

$2.10

$39,200

$3.27

Modules, Wide Load (>12 ft.)

$10,000

$3.33

$15,000

$5.00

$40,000

$3.33

$60,000

$5.00

Table 2 also provides the transportation cost allocated per square-foot for the finished structure. This is helpful for determining how the type or mode of transportation used can impact the overall cost of the building. Based on the findings, the greatest deterrent to the geographic market expansion or proposing competitive bids as they apply to prefabrication technologies is the distance from the fabrication shop to the construction site and the type of transportation service used. Total cost differentials for the primary shipment types and distances traveled for a particular scenario are illustrated by Figure 2. At face value, large oversize loads seem to exhibit the highest total costs even with fewer total loads.

It is important to note that the values as they exist in Table 2 and Figure 2 should not be interpreted as either good or bad. Because trade-offs exist among the various operating assets and processes, the total cost of a particular construction method may be the lowest among competing alternatives even though the transportation cost by itself was the highest in the group. The cost for moving five oversized loads that were needed to assemble a 3000 square-foot building, for example, may have allowed for a particular prefabrication process that created a greater savings in construction costs and project time.

The rates, configurations, and distances for shipments in and out of a fabricator’s facility can provide insight into sourcing, site location, and module design. In referencing Figure 1, total transportation costs from suppliers to the construction site have been calculated for the various construction methods based on the sole use of the shipment type noted. They pertain to a project involving a 3000 square-foot structure and supply legs of 25 miles and identified as:

a) A-B, Conventional On-site Construction: $1200

b) A-C-B, Panels with 70% density loss at site C ($1200 for four inbound loads moving 0 to 150 miles + $2100 for seven outbound loads moving 0 to 150 miles): $3300

c) A-C-B, Modules, no permits ($1200 for four inbound loads moving 0 to 150 miles + $3000 for ten outbound loads moving 0 to 150 miles): $4200

d) A-C-B, Modules, with permits ($1200 for four inbound loads moving 0 to 150 miles + $6300 for seven outbound loads moving 0 to 125 miles): $7500

e) A-C-B, Modules, with permits ($1200 for four inbound loads moving 0 to 150 miles + $10000 for five outbound loads moving 0 to 125 miles): $11200

Discussion

Modularity not only applies to the construction of a building. In manufacturing circles, using and integrating of common form factors or semi-finished components across multiple differentiated outputs has been highly successful for growing revenues and minimizing procurement and transformation costs (Zinn and Bowersox, 1988). Multiple automobile models assembled at the same plant, for example, may be built with common parts and sub-assemblies such as engines, chassis, and body panels. In any event, integrating standardized sub-assemblies into a process is intended to strike the balance among acceptable levels of customization, reduced delivery times, and cost containment (Waller et al., 2000). Similar effects are also expected when prefabrication
construction techniques are applied. The results are truncated project times, greater production efficiencies, and acceptable levels of quality for a variety of finished structure that are accepted by the market.

Various logistics factors have been investigated regarding their impact on the feasibility of various prefabrication construction strategies. It was determined that building specifications, the relative value of the materials, as well as logical and tested procedures used for assembly did not allow enough opportunity to significantly reduce in-process inventory levels. Transportation cost factors, however, did play a critical role in determining the economic feasibility of prefabrication. The importance of transportation activities as they relate to the total cost of a supply chain have traditionally been marginalized in favor of asset utilization strategies such as flexible manufacturing, inventory minimization, and outsourcing. This is perplexing because total transportation expenses represent the highest cost of any supply chain network.

Construction time is also expected to decrease as the degree of off-site modularity is increased. This phenomenon will drive savings in construction loan interest and forgone operational earnings but based on the evidence derived by the research, other operating costs, particularly those emanating from transportation activities can off-set other savings. The level of transportation service required of a particular shipment will also help in determining the cost. For example, expedited delivery or oversized, permitted loads will require added resources and therefore, increase the rates. Based on the findings, oversized, permitted shipments may be the greatest operational threat to the growth in off-site modular construction. Increased distances for these shipments further exacerbate this effect.

Conclusion

Based on the results of this study, it is recommended that designers of modular construction methods incorporate lean manufacturing principles as they create solutions that are flexible enough to provide product variety, fast enough to offer marked reductions in construction times, and minimize total delivered costs to better compete with other construction alternatives.

A hybrid process that incorporates optimum assembly and logistics processes is envisioned. A combination module and panel solution, for example may add only a week to the project’s duration but at a level of operational cost saving to make it worthwhile. Standardization of core materials for sub-assembled component and base modules that conform to conventional transportation equipment and services may be also included. Finally, if modular construction is less expensive when sub-assembly occurs closer to the market, then mobile prefabrication shops that source materials locally may offer the ultimate solution.

References

Ballou, R. H. (2004), Business Logistics Management: Planning, Organizing, and Controlling the Supply Chain, 5th edition, Upper Saddle River, NJ: Prentice-Hall.

Building Construction Cost Data (2005), 63rd edition, R. S. Means Company, Kingston, MA.

Construction Industry Institute (2002), “Prefabrication, preassembly, modularization, and offsite fabrication in industrial construction: A framework for design-making.” Research Summary 171­1 (July), Construction Industry Institute, Univ. of Texas at Austin, Austin, Tex.

Haas, C. T. and Fagerlund, W. R. (2002), “Preliminary Research on Prefabrication, Pre-assembly, Modularization, and Off-site Fabrication in Construction.” Research Report 171-11 (July), Construction Industry Institute, Univ. of Texas at Austin, Austin, Tex.

Kupitz, J. and Goodjohn, A. (1991), “Trends in Nuclear Power Reactor Design and Technology.” Energy, Vol.16(1/2).

Stock, J. R. and Lambert, D. M. (2001), Strategic Logistics Management, 4th ed., Boston: McGraw-Hill Irwin.

Tatum, C. B., Vanegas, J. A., and Williams, J. M. (1987), “Constructability Improvement Using Prefabrication, Preassembly, and Modularization.” Source Document 25, Construction Industry Institute, Univ. of Texas at Austin, Austin, Tex.

Waller, M. A., Dabholkar, P., and Gentry, J. J. (2000), “Postponement, Product Customization, and Market-Oriented Supply Chain Management”, Journal of Business Logistics, Vol.21(2), pp. 133-160.

Zinn, W. and Bowersox, D. J. (1988), “Planning Physical Distribution with the Principle of Postponement”, Journal of Business Logistics, Vol.9(2), pp. 117-136.