Modular construction has been around since the late 1960s, when Zachry Construction completed the 21-story Hilton Hotel on the San Antonio Riverwalk in record time utilizing concrete modules. The Disney Corporation followed a few years later by constructing the iconic 14-story Contemporary and Polynesian resorts at Disney World utilizing modular construction.

However, the traditional construction community still has many questions about the method. For starters, it helps to think of modular as a construction process rather than as a specific building type. Modular construction is simply a process whereby volumetric sections, or “modules,” of a building are built at an offsite location, transported to the site and assembled to make up all or part of a structure.

Common Applications
Despite being constructed offsite, modules must meet local building codes. While nearly any building can be constructed utilizing some degree of modularization, the most common markets are educational facilities, office and administrative spaces, health care facilities, retail establishments, and multifamily projects such as apartments, hotels and student dorms. Health care and multifamily facilities are the fastest growing markets for the modular construction industry primarily due to the larger size of the projects and their repetitive elements. 

Wood-framed buildings from one to three stories are common, but recently the industry has seen a rise in popularity of steel framed projects in the four- to nine-story range. These projects are more prevalent in the Northeast and Northwest United States, as well as larger metropolitan areas such as Chicago and San Francisco.

The modular industry gained momentum during the economic downturn as more owners, developers and contractors began seeking more resource-efficient ways to build. Some of the industry’s most successful projects have been collaborations between conventional and modular contractors, whereby the modular contractor serves as a subcontractor.

Market Drivers
Many factors point to an increase in modular construction use, including the projected labor shortage, the increasing demand for more sustainable and safe construction practices, and the growing desire by owners to shorten construction schedules. Due to this growing interest, the Modular Building Institute created an Offsite Construction Council within the National Institute of Building Sciences that brings together contractors, manufacturers, architects, academics, owners and government agencies to advance offsite construction techniques. 

General contractors that incorporate modular components into their next project typically experience better early communication with the entire team. For example, many discover design tweaks that could improve the overall efficiency and reduce costs if modular is considered upfront, rather than as a cost-saving measure after the fact. Some large hospitals and hotel chains are already incorporating modular construction in the form of bathroom pods to reduce the number of craft professionals onsite and to expedite the construction of these repetitive small spaces.

Prevailing Wage Issues
By and large, the modular construction industry is in sync with the merit shop philosophy, particularly in terms of preventing the expansion of prevailing wages. Currently, Davis-Bacon wage requirements (as well as many state prevailing wage laws) are imposed “on the site of work.” As such, any offsite fabrication is not covered.

Not surprisingly, this issue is being taken up in the court of law. In the California case Russ Will Mechanical v. Sheet Metal Workers, the courts ruled emphatically that prevailing wages did not apply to any offsite fabrication work, provided that the fabrication facility was not established to exclusively serve the public project and the fabricators also sold to other private customers. However, the court was also very clear that the matter now rests in the hands of the Democrat-controlled California legislature, which is likely to introduce legislation that would expand prevailing wages to offsite fabrication in California.

Tom Hardiman is executive director of the Modular Building Institute. For more information, visit or register for the World of Modular conference March 13-16 in Las Vegas.