Local residents got their first glimpses of modular construction of multistory buildings recently as cranes swung whole rooms into place like Lego blocks at Sacramento’s Eviva Midtown apartment building and at the new Fairfield Inn in Folsom.
The message from general contractors, developers and designers is: Expect to see more.
Once used as a stopgap measure to surmount shortages of qualified labor in the construction trades, modular construction increasingly is winning proponents because it reduces construction risks and the time spent on the job site. That doesn’t mean all the kinks are worked out, however. This hybrid method of construction is so new and so different from on-site building that early adopters are experiencing headaches with architectural deadlines, construction responsibilities, planning and cost estimates.
Tony Moayed, the chief executive officer of Gold River’s Tricorp Construction, told me that he’s a big fan of modular construction despite some hiccups he encountered as the general contractor on the Eviva Midtown project. The modules were installed in the last quarter of 2015.
“Modular really makes sense,” he said. “We’re doing it in other locations now. We’re doing a hotel elsewhere, and we’re going to save time and money. It’s all about planning. One of the things I would do differently is put all the consultants under one umbrella instead of dividing work between the owner and the general contractor. ... There was a lot of ‘Do you have this?’ or ‘I don’t have this. Do you have it?’ because the consultants were all in different places.”
Guerdon Modular Buildings, based in Boise, Idaho, produced the apartments for Eviva at 1531 N St. and the hotel rooms for the Fairfield Inn under construction at 1745 Cavitt Drive in Folsom. The company can deliver whole rooms with major appliances, counters, beds, bathtubs, toilets and vanities all in place.
At Eviva, Moayed said, Tricorp built a basement parking garage and first-floor retail and parking. Guerdon then constructed five stories of apartments that were put above that podium. Essentially, he said, each rectangular-shaped module contained rooms for two apartments and flooring for the hallway that divided them.
“One of my complaints about modular construction is they need to do more before the units get here,” Moayed said. “We had to put all the shear walls in, which is the plywood on top of there, and then we had to put the drywall on top of that. That’s a ton of work.”
In essence, the construction industry must dramatically revise the checklist long used to establish responsibilities on a construction project and the deadlines that each party must meet. That includes deadlines for architects, said Matt Samuelson, president of Integral Gude in Atlanta. His company handles construction management for Integral Development, the company developing Eviva Midtown.
“It hasn’t been a long-tested means of construction,” Samuelson said. “We’re learning things in this process. There’s a different rhythm of design and construction than what everyone in the industry is accustomed.”
In the conventional construction world, Samuelson said, architects often mesh the completion of their designs with the start of construction and details continue to filter in as the project is progressing. That doesn’t work with modular construction, he said.
“One of the benefits of this new construction is that you are running parallel operations on a schedule,” he said. “You’re actually manufacturing units as the podium is being constructed, so that when they’re ready to be set on this podium, you can start setting them. Otherwise, you have a podium that sits for six to eight months until the units are ready. If you’ve got units being built while you’re building the podium, then you need to make final design decisions before you begin.”
The Eviva project also hit a big snag, Samuelson said, when the initial modular contractor, Zeta Communities, shut down operations at McClellan Park and defaulted on its contract. Integral had to find a new contractor, he said, and ended up paying higher costs.
Even with these challenges, Samuelson said, Integral Gude expects to start leasing units at Eviva in May, two months ahead of the time it would have taken to do a stick-built project. That means Integral will be bringing in revenue sooner.
Lad Dawson, Guerdon’s founder and CEO, said the company launched in 2001 but that he and his team spent years educating developers, architects and general contractors about the benefits of the building method. His first customers came from the affordable housing industry, but these days, he is seeing a lot more traffic from for-profit companies.
Executives from Marriott International had been studying modular construction for several years, said Jennifer Lund, the senior director for the hotel chain’s Global Design Strategies division, but it wasn’t until 2014 that the company felt its owners and franchisees would really consider it. The hotelier had approved hundreds of hotels for construction, but labor shortages had deferred building.
“At the height of that economic meltdown a few years ago,” Lund said, “we watched tons of general contractors and architectural firms just evaporate, just go completely out of business. Unfortunately, those people haven’t come back, and we as a country are not graduating enough engineers and construction managers.”
Even though franchisees and owners understood the big economic forces at play, Lund said, she and her team knew they would want to be comfortable with every aspect of modular building before they would embrace it.
In the first quarter of 2015, Marriott’s global design leaders went to the modular building industry’s big trade show and challenged companies there to make a case for using this method of construction in the hospitality industry. About a dozen companies talked with Marriott executives, she said, and they eventually whittled that number down to four companies that they invited to produce hotel modules and present them at a big annual owners conference in Florida. Guerdon was one builder that undertook the expense of building the units and transporting them.
“We did a lot of different things to evaluate the companies,” Lund said. “We did site visits at their plants to see the entire production process, the level of quality, the level of craftsmanship, the level of engineering that went into how all this is done. We put them all through pricing exercises with our estimating group.
“We didn’t want to put forth a viable alternative that is more expensive because that just simply wasn’t going to work. It either had to be at or comparable or below in terms of cost.”
A team from one of Marriott’s oldest and largest franchisees, Tharaldson Hospitality Management out of Fargo, N.D., saw the demonstration at that show and immediately saw the possibilities. Its billionaire owner Gary Tharaldson has a reputation for being indifferent to how things are traditionally done: adopting less-expensive wood frames rather than poured-concrete construction at his Hilton hotels, for instance.
Tharaldson had plans for a Fairfield Inn in Folsom, Lund said, and the company was at a point in the design phase where they could stop what they were doing and potentially turn it into a modular project. They conferred with Guerdon and did just that.
“They broke ground on this project in March,” Lund said. “We’re now sitting here in mid-April, and this will open in July.”
Marriott has teamed with Guerdon at various stages of the Fairfield Inn construction project to invite in developers, franchisees and owners to the factory and the Folsom job site to see “the guts” of the process. Overall, Lund said, this new construction method has exciting possibilities, but many general contractors haven’t done enough modular projects to know how to estimate their costs. If they don’t know how to price it, she said, they put the largest possible number forward because they want to cover contingencies.
Larry Madson, Tharaldson’s director of hotel construction, said the Fairfield Inn is on schedule to open six months ahead of what a conventional site construction would. Plus, he said, the project has been built with a lot less risk of injury to workers and exposure to weather. And because much of the construction is done in a factory, there are few inspections to hold up the work.
“The Department of Labor has done studies that they feel that there’s a 50 percent improvement in productivity in a manufactured, controlled environment where the workers are continuously working on a product on a line, vs. on site,” he said. “We have to look at what we can do better, more efficiently to keep our costs in check and keep our risks down. That was our main reason we wanted to try modular.”