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September 22, 20233 min read

For decades, construction has lagged behind other sectors in productivity. Prefabricated and volumetric construction presents a golden opportunity for this industry to revolutionize its processes by transferring numerous construction activities from traditional sites to off-site, manufacturing-style production settings.

Prefabricated and volumetric construction isn’t a novel idea, but it’s currently drawing unprecedented attention and investment due to technological advancements, economic pressures, and a shift in attitudes. If fully adopted, it could dramatically enhance productivity in the industry, alleviate housing crises in many markets, and substantially alter our current construction methods.



Essentially, prefabricated and volumetric construction is a process that involves manufacturing standardizedparts of a structure in a factory off-site, then bringing these components together on the actual site for assembly. You might also hear “off-site construction” or “prefabrication.” These phrases encompass various systems and approaches, from single elements, joined using standard connections and interfaces to 3-D volumetric units complete with fixtures. Historically, prefabricated construction has been a cost-effective option during specific periods. For instance, postwar booms in the United States and the United Kingdom saw it being adopted as a quick solution for reconstruction and social housing needs.

However, its appeal was short-lived due to various factors, including supply and demand fluctuations and safety concerns. Fast forward to today, prefabricated and volumetric construction is garnering attention again, but this time, there are signs that its appeal will be enduring. The evolution of digital tools has substantially improved the process of prefabrication, aiding in the design of modules and enhancing delivery logistics. Changing consumer perceptions of prefab housing, driven by more varied and visually appealing material options, also contribute to its renewed popularity. Perhaps most crucially, a shift in mindset among construction sector CEOs is noticeable. Many leaders are becoming aware of technology-based disruptors entering the scene and recognizing that it’s time to reinvent their approaches.


As one of the world’s largest sectors, a significant shift in construction methodologies could significantly impact global economic productivity. Recent projects utilizing prefabricated and volumetric construction have expedited project timelines by 20 to 50 percent. Moreover, this construction method offers the potential for substantial cost savings. While this is currently more of an exception, as the supply-chain participants become more experienced, leading real estate players ready to shift and optimize for scale can realize over 20 percent in construction-cost savings. Additional potential gains can be made in full-life costs, such as through reductions in running costs via energy and maintenance savings. With moderate penetration assumptions, the market value for prefabricated and volumetric construction in new real estate construction could reach $130 billion in the United States by 2030.



So far, prefabricated and volumetric construction has secured a sustainable position in a few markets like Japan and Scandinavia. However, European and US markets could also see annual savings of up to $22 billion. Indications suggest that this resurgence could be different. The industry is embracing new, lighter-weight materials and digital technologies that improve design capabilities and precision, boost manufacturing productivity, and streamline logistics. Contrary to the outdated perception of prefabricated housing as a low-quality, cheap option, some builders focus on sustainability, aesthetics, and the premium market segment.


Capturing the full cost and productivity benefits of prefabricated and volumetric construction requires strategic optimization of material choice, achieving the right blend of 2-D panels, 3-D modules, and hybrid designs and mastering challenges in design, manufacturing, technology, logistics, and assembly. It also depends on operating in a market where scale and repeatability can be achieved. Although prefabricated and volumetric construction is still an outlier in many countries, there are promising signs of a possible broad-scale disruption in the making. Given the likelihood of a large-scale shift to prefabrication alongside digitization, it’s critical for all industry players to evaluate these trends and impacts and reassess their strategic choices to ensure they are positioned to benefit and not be left behind.

Despite decades of slow change, the era of prefabricated and volumetric construction is upon us, poised to disrupt the construction industry and its broader ecosystem. The time for change is now.

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