Authors: Beatriz Feijoo, Roberto Interiano, and Diana Fisler
The construction industry has been contending with an aging workforce, extended labor shortages, lack of innovation, and narrow profit margins for decades. Since 1947, it has been outpaced in labor productivity by a factor of 16. It’s no surprise then that, on average, large construction projects tend to be 80% over budget and 20 months delayed. In the residential sector, which contributes as much as 5% of US GDP, this issue has ignited interest in adopting off-site construction methods. Despite this renewed interest, the concept of prefabricated homes is not new. Dating back to WWII, the Manhattan Project required the construction of three secret cities to house a total population of 125,000 people in a matter of months. Even if it wasn’t always pretty, the construction success of the 40s paved the way for a modern prefab industry that is poised to end the decades-long stagnation in labor productivity without sacrificing design flexibility.
The B-1 Flat Top at the American Museum of Science and Energy
Lack of visibility into project timelines, materials supply chain problems, and environmental conditions are just a few of the industry challenges that magnify the American construction sector’s productivity problem. Construction productivity today is lower than it was in 1968, and the impact of these trends on housing affordability has been detrimental. With only 36 affordable rental homes available for every 100 low-income renter households, the US faces a shortage of more than 7 million affordable homes. The question is: can these trends be reversed?
In short, yes. Emerging practices like modular construction and prefabrication can significantly reduce costs, decrease construction timelines, minimize waste, and dramatically improve new and existing building energy performance. While this may sound straightforward, there are a multitude of challenges inherent with any new practice, ranging from industry standardization to public perception and collaboration with regulators.
Before it can save housing, prefab needs to overcome early hurdles. It is for this reason that ADL Ventures and the Rocky Mountain Institute, supported by the U.S. Department of Energy, have established the Advanced Building Construction (ABC) Collaborative. The mission of this initiative is to help the United States remain globally competitive in the construction industry by accelerating the development, demonstration, standardization, and deployment of innovative high-performance off-site construction methods.
Although the impacts of integrating prefabrication into residential construction are more nuanced today than ever before, this is not the first time that our country has sought out the large-scale deployment of modular housing.
Oak Ridge – Prefab Then
Oak Ridge, Tennessee is one of the three cities built in the 1940s in complete secrecy as part of the Manhattan Project: the highly classified research credited for the creation of the world’s first nuclear weapon and the establishment of the US nuclear weapons arsenal. Originally referred to as “Site X,” Oak Ridge was situated on 60,000 acres of government land in East Tennessee. To lead development, the government enlisted Skidmore, Owing & Merrill, an architecture and engineering firm that has designed high profile corporate campuses for the likes of Walt Disney and Citigroup, as well as major US airports and some of the tallest buildings in the world including the Sears Tower (now renamed the Willis Tower), One World Trade Center and Burj Khalifa. Driven by urgency to end the war, the project required building a town to house a population that would grow 7,400% to 75,000 people in only 3 years.
Example of an Oak Ridge home
Necessity is the mother of invention. It was these extreme constraints that set Oak Ridge on a path to reinvent the housing design and construction process, cutting typical build timelines by an order of magnitude. To save money and time, single-family homes for incoming residents were manufactured off-site and transported to Oak Ridge on truck beds. Walls, furniture, plumbing systems, and all ancillary systems were also prefabricated off-site and shipped to location. This approach allowed construction of 17 finished houses per day without sacrificing personality; each home had 20 floor plan options and room for customizing porches, floors, and fireplaces to help attract top tier talent in the scientific community. Remarkably, in spite of this optionality, each home could be built in just 30-minutes.
Initially predicted to house 13,000 residents, Oak Ridge’s workforce expanded quickly to require housing for 75,000 people. The project also achieved cost savings of which today’s builders can only dream. While the cost of traditional construction averaged $32/ft² at the time, prefabrication slashed costs to just $5/ft² (adjusted to 2020 dollars). Estimating the houses were 1,200ft², the $27 saved per ft² means prefabricating the homes resulted in savings of more than $30,000 per property – a total savings of $150 million.
Oak Ridge was built so long ago that at the time, nearly 50% of American homes were heated with bituminous coal. Note the storage bin rooms featured in the floor plans.
Despite these dramatic efficiency gains, we must acknowledge that the rush to produce these homes left a stain on the term “prefab.” Since the Oak Ridge project, prefab homes have been stigmatized and often mistakenly associated with poor design, inferior quality, and barren living conditions. While highly imperfect, Oak Ridge is a powerful early example of the potential of prefab to slash cost and construction times.
A more recent photo of an Oak Ridge prefab home
Prefabrication has come a long way since its inception as an affordable housing alternative. New homeowners are on the quest for unique, greener, and smarter homes. Prefabricated homes have reached a high level of sophistication, and the method is proving itself as a sustainable and low-cost alternative to conventional construction practices.
Take Dvele as an example. Founded in 2017, the startup is one of the leaders in the emerging eco-conscious world of prefabricated construction for single-family homes. The San Diego-based company’s objective is to create a new generation of ultra-energy-efficient, self-powered high-end prefabricated houses that will inspire society’s transition to a clean energy future.
Dvele’s “Trinity” Model
Compared to the 20 layouts offered during the Oak Ridge development, Dvele presents 13 options with personalized prices, bedroom configurations, and aesthetics. The potential for customization extends far beyond basic options like porches and fireplaces and allows for an array of selections in interior design, millwork, doors, hardware and more. One can think of it as putting a handful of Lego pieces together in infinitely creative ways.
Focusing on conservation by maximizing energy efficiency, homes are built to Passive House Standards. The designs reduce thermal bridging and mitigate energy conduction losses. Additionally, low-load and high-tech mechanical systems, LED lighting, energy-efficient appliances, and energy recovery systems improve the operational efficiency of the home, contributing to 84% energy reduction per square foot when compared to a traditionally built home.
Dvele is just one example of numerous companies in the country that offer modern and efficient prefab homes. GO Home by GO Logic is leading the development of prefab passive-house dwellings, Bone Structure is all-in with net-zero energy homes, and even Amazon is venturing into the space with Plant Prefab’s Alexa-enabled homes.
With the potential to reduce construction costs by 20% and cut time to completion by 20-50%, the motivation to move on from conventional practices are crystal clear.
Despite these dramatic improvements, the U.S lags behind other nations in the adoption of prefabrication. In comparison to Sweden, where an impressive 84% of detached homes are pre-built in factories, penetration in the United States stands at just 2%. In this gap, there is a massive opportunity. By committing to the practice, the US can bring construction productivity up to parity with other manufacturing segments, while at the same time protecting and creating high-quality jobs and strengthening a critical trillion-plus-dollar domestic industry. With the nation facing a shortage of affordable homes and 80% of construction companies unable to find the workers they need, the time to transition to offsite construction is now. Oak Ridge is an example of the potential for prefabrication to revolutionize the construction industry and more importantly, evidence of the power of collaboration in marshaling resources to unlock this innovative approach. If we were able to succeed in this effort nearly 75 years ago, what is stopping us from advancing to a better future today?