Modular Building Basics
Constructing a building from scratch is not an easy task. However, alternative construction methods
can help you erect a building more quickly and cost-effectively.
There are two main types of modular construction, also known as prefabricated construction,
available: mobile offices and modular buildings. Mobile offices consist primarily of pre-made
stock buildings that are typically used by construction companies for temporary office space.
Modular buildings, in contrast, are custom-built to a user's specifications.
With both types of buildings, construction of the building takes place in a factory-controlled
environment using the same materials utilized for traditional construction. The entire building
is not built in one piece; instead, the floor plan is broken up into individual modules that
can be shipped on the road. Each module ranges in size from 10 to 18 feet wide to 36 to 76 feet
long, with the module width depending on state shipping regulations.
Up to ninety percent of a building is normally constructed at the factory. Each module is built
out with walls, ceilings, carpeting, and wiring. Building modules are then assembled to form
a seamless building when they reach the destination site.
Most modular buildings consist of one to two modules and occupy one floor, for a total of one
to two thousand square feet. Modular buildings can also be used for much larger spaces ranging
in the tens and even hundreds of thousands of square feet and can be three or four stories tall.
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Modular Building Look & Feel
As with traditional buildings, modular buildings can be used for many different purposes. They
can range from portable classrooms to research lab facilities to a medical clinic. Companies
in the healthcare, government, education and retail industries often turn to modular buildings
for their construction needs.
Unlike traditional buildings however, modular buildings have design constraints. Since the
building will be shipped via the road, there are maximum height constraints. Typical ceiling
heights are around 8 feet vs. 9 to 10 feet for traditional construction. Companies looking for
a building to enclose a much large overhead space (e.g. prefab warehouse, riding arena) will
likely fare better with a steel building structure.
Another downside is that modular building entrances are usually located up to 30 inches above
ground. Ramps and steps are then built to reach the building entrance. If you prefer having the
building entrance be level with the ground, you may want to look into the possibility of having
a pit-set foundation. With this type of foundation, the foundation is built in a hole dug in
the ground to help lower the entrance. This can be quite costly to build, however. You will also
need to consult with a local geotechnical firm to ensure the soil conditions can support this
type of foundation.
While most modular buildings are finished with steel siding, it is possible to have a brick,
stucco or another exterior finish. You can also customize your exterior with windows, multiple
doors, and various roof treatments. Numerous options exist for finishing the interior as well.
To provide a more custom look, there has been a recent trend to constructing "permanent modular" buildings
that require more on-site construction. This translates to having as little as 50 percent of
the construction occurring at the factory.
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Pros & Cons of Modular Buildings
As with all purchases, a modular building has its pros and cons.
Probably the most compelling reason why companies turn to modular buildings is the speed of
construction. A standard five thousand square foot building like a medical clinic can be erected
in as little as 45 days vs. the 6-month timeframe for traditionally built buildings. Faster construction
means that a company can generate revenue more quickly and start paying for overhead costs sooner.
Modular buildings are also less expensive than conventionally built buildings. Where you might
pay $100 to $130 per square foot for a site-built medical clinic, modular building pricing can
range from $55 to $60 per square foot, including installation. The actual price you will pay
for your specific building can be dramatically higher or lower than these ranges. However, you
can always expect to pay less than you would for a traditionally built building.
Prefab modular buildings can also be relocated. This can certainly work to your advantage if
you anticipate having to move sites. That way, you do not have to re-invest in constructing another
building from scratch, with all its related costs.
There are also tax savings related to modular buildings. There are tax savings associated with
leasing a building vs. buying one. Even if you choose to purchase a modular building, you can
benefit from a more favorable depreciation schedule. Traditional building costs are usually amortized
over 35 years. Modular buildings can be recognized under an accelerated depreciation schedule
of 7 or 12 years, which can be a real unheralded benefit. Make sure to consult your accountant
about your specific situation before making a final decision.
The primary drawback of modular buildings concerns its look and feel. If you want a more custom,
architectural look to your building, modular buildings are probably not well suited for you.
However, it should be noted, that there has been an increasing trend to permanent modular buildings
where a portion of the construction is done on site.
Basic modular construction elements like the elevated entrance and somewhat shorter ceilings
can make the buildings look less stylish. While there are certainly ways to address these design
elements, doing so can increase your overall building costs.
For those unaccustomed to the idea of not seeing a building being constructed in front of your
eyes, the modular building process can also be somewhat disconcerting. While concerns about shoddy
construction occurring since most of the building is built offsite may exist, it should be noted
that onsite construction also suffers from the same issues.
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Modular Building Suppliers
When it comes time to buy or lease a modular building, you can turn to modular building dealers
or manufacturers.
Modular building dealers broker most of the buildings sold and leased today. These companies
do not build the buildings themselves, but instead lease already-constructed buildings that they
hold in inventory or turn to modular builders for their construction.
Building manufacturers known as "integrated dealer manufacturers" also sell directly to end-users.
While many building manufacturers previously relied on modular building dealers to sell their
construction services to end users, some have recently turned to selling to customers directly
in an effort to better control their revenues.
It can be difficult to determine whether a company that sells modular buildings is a dealer
or a manufacturer. Modular building dealers do not readily disclose this information because
of the perception that potential customers would prefer working directly with the manufacturer.
This concern should not be relevant as long as the dealer works with a reputable manufacturer
and can properly manage your project.
Both dealers and manufacturers will cite reasons why they are a better fit for end-users. Dealers
assert that it is more effective to work with them as they can wield more clout with a manufacturer.
Since a dealer will purchase many more buildings from the company than a typical end customer,
if a problem were to arise, you would have better representation. In turn, manufacturers claim
that working directly with them can reduce the risk of miscommunication, gives you increased
control over quality and cuts out the middleman dealer, leading to reduced pricing.
In the end, your decision about which type of company you turn to should be based on finding
a company that can provide a quality building at a fair price and offer a high level of customer
service throughout the buying process.
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The Modular Building Buying Process
Despite the complexity of the final product, buying a modular building is a fairly straightforward
process.
It starts with an initial call where you describe what your needs to a project manager or estimator.
The builder will learn about your desired modular building application (e.g. portable classroom,
day care center, medical clinic etc.), the ideal size building you want, and any specific requirements
you have for the building. This conversation should help you both understand whether a modular
building is the appropriate type of construction for your needs.
After this initial conversation, the next step is for the building supplier to develop your
building specifications. It can start with a hand-drawn sketch of the building with a rough floorplan.
The floorplan then gets fleshed out over the next few days, with details like the placement of
windows, cabling, and electrical outlets ironed out.
A proposal based on this specification is then developed. If you work with an integrated dealer
manufacturer, your project manager will turn to the estimating department to prepare a quote
for you. Dealers will request quotes from one or multiple modular building manufacturers, depending
on whether they have exclusive arrangements, and then choose one to present to you.
After you have signed off on a proposal, you will approve the deal by making a down payment.
Your project manager will then visit your site to square away details about the site location
and building that are needed to draft engineering documents. These engineering documents define
the structural requirements for construction. Manufacturers may use in-house engineers or outsource
the document creation to an engineering firm.
With the engineering documents created and then reviewed by third-party inspectors, actual
construction can begin. The building process can take one to three days for a five thousand square
foot building. Since the building is created in a climate-controlled environment, factors like
sunlight and inclement weather do not restrict the available hours to work.
Third-party inspectors will then inspect the completed building modules before they can be
shipped to you. Most buildings have a frame, axle and tires attached directly to the module so
it can be shipped directly to you by truck.
Even though a building may be ready for shipping as soon as a week after you have ordered it,
it can take several weeks for the appropriate permits to be issued. Once the permit-related hurdles
are crossed, the foundation can be built and the building modules can be delivered and assembled.
Most often, you would hire a local work crew to build the foundation and turn to your building
partner to handle the building installation.
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Pricing for Modular Buildings
As you might imagine, costs for modular buildings can vary quite dramatically from $35 to $200
per square foot. The primary factors that affect price include the building size, material
quality and complexity of the buildout.
Portable classrooms and offices, which typically do not have very complex buildout requirements,
will fall on the low to mid- end of the scale. Basic medical offices are typically more costly
than these types of buildings. On the high end, sophisticated buildings with extensive HVAC,
wiring and/or high-end building material quality will result in building costs that fall on the
high end of the spectrum.
Pricing also varies according to the region of the country. It can be difficult to take advantage
of regional differences however as the shipping costs can be prohibitive.
If you receive multiple bids, be wary of choosing the lowest priced bid. It is critical that
you ensure that bids are truly comparable before choosing solely based on price. Compare specifications
carefully as one bid can be significantly lower than another as a result of skimping on construction
materials. Check that the quality of fixtures, doors, walls, carpeting, electrical and HVAC are
comparable. In addition, make sure to include all costs such as installation when comparing bids.
In terms of financing, you can choose to buy or lease your modular building. Consult your accountant
about the tax implications of either leasing or purchasing a building before making a final purchasing
decision.
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Pre-fab Buildings Buying Tips
- Find out whether the vendor will be constructing your modular building or outsourcing its
construction.
- If you work with a dealer, make sure to find out which manufacturer will be creating the
building.
- If you are working with an integrated dealer manufacturer, check how long the company has
been selling directly to end- users. Be sure that the company has had a strong handling end
users directly to ensure a smooth building process
- Do not purchase a building without a complete set of specifications and defined scope of
work agreed upon.
- Read the contract carefully. Make sure the contract does not allow the manufacturer to substitute
materials without specifying that they be the same or higher quality than the materials included
in the specification.
- Check a builder's reputation. Shoddy construction can be hard to identify, even if you are
an expert. Speak with references that have had buildings for multiple years to see how they
have lasted.
- Check the seller's experience in building the type and size building you want. You do not
want them to learn at your expense.
- Ask about the building quality control and inspection process. Knowing what steps builders
take to ensure that the finished product meets expectations will help you minimize the risk
of disappointment when the final product is delivered.
- If you are leasing an already-made building, ask for digital photos and inquire about its
last refurbishment.
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