Are We Ready For Pre-fabricated Construction?

Imagine calling Elon Musk in the early days of Tesla and saying: Build me 50 units of a model that doesn’t exist, make it cheap, fast, and perfect—but I won’t tell you when I can pick it up, I’ll only pay on delivery, and I may never order again. Sounds crazy? That’s how we’re treating pre-fabricated manufacturers today.

For the past few years, and now especially after the introduction of Build Canada Homes, it seems like everywhere you turn, there’s a discussion about pre-fabricated construction, modular pieces, automated processes, new materials, etc., to be used as silver bullets to solve the Canadian housing crisis.

Having been intimately involved with these technologies, I am a big supporter of all of them, but I am not convinced that, as an industry and ecosystem, we have a good understanding of what needs to be done for these ideas to become a reality, and therefore, I wrestle with this question: Are we ready for any of these technologies?

Below are some of the main areas of disconnect I’ve witnessed firsthand, along with some suggestions. Unless we solve/improve on some or all of these items, I don’t think we can witness any major impact from these sectors.

1. Technical Uncertainties

For some reason, over the past decade in Toronto (I’m not sure about other municipalities), we’ve developed a habit of starting buildings with partial and/or conditional permits. I believe this path was originally created as a band-aid for the slow approval process that has generally plagued our development industry.

This band-aid is like a death sentence for a prefabricated building.

In some instances, the building permit gets issued in phases, even if you have all your docks in a row and could legitimately ask for a full building permit. Why is it such a big issue for prefab buildings? because you have a significantly long lead time to “pre-fabricate” your building or its pieces and can’t wait until you’ve substantially completed your previous partial permit before releasing your drawings (pending permit comments/issuance) for fabrication.

2. Insurance

While the insurance industry has made significant progress in understanding the timing and logistics of dealing with prefabricated building elements, it is still far from having a streamlined product.

3. “Good Enough” Isn’t Good Enough

As an industry, during the boom cycle and in response to excess demand and low margins, we’ve grown accustomed to the “good enough” standard in early project design documents. Unfortunately, this mentality defeats the very purpose and intent behind the prefabrication process. Although some of the consultant teams have a great understanding of how this process needs to work, we need a paradigm shift in the industry for these new systems to truly take off.

I must admit that this paradigm shift needs to start from the top, i.e. the developer/client. If the client is not clear how critical the early decisions are on the output of a prefabricated building, the consultants will not have enough room (especially in their budgets) to meet the requirements, i.e. the projects will significantly suffer at later stages.

4. Money to follow!

This one is simple, not easy; our traditional draw cycle mentality and construction financing simply do not work for these new buildings and technologies. We can’t ask a developer and/or a manufacturer to somehow finance the large deposits required to pre-fabricate 10-50% of their buildings before tapping into their construction financing. Our lenders (and very particularly CMHC these days) need to appreciate and adapt to the realities of this landscape.

5. We shouldn’t fix it on the site!

At my roots, I’m a construction person, and I believe that we can fix almost all other types of errors and issues on a construction site (for a cost!). Most of us pride ourselves on our abilities to solve problems and make things work on the site, but that is the wrong mentality if we want to work on a prefabricated project. We have to shift from problem solvers to problem preventers; otherwise, we are in trouble.

6. Steady Pipeline

Returning to the Tesla analogy I began with, without steady pipelines, it is nearly impossible to have a thriving and robust prefabricated sector in the construction industry. Realistically, this steady pipeline will not happen without the government acting as the sector’s first large-scale client. Until such time that the industry’s learning curve matures enough for the private sector to feel comfortable with it.