Home Innovation Insights

What can push offsite construction methods onto the map?

Ed Hudson, MBA
May 3, 2024

Key Facilitators for Offsite Construction Going Mainstream

Traditional “diffusion of innovation” thinking has emphasized removal of barriers to adoption as the primary way to encourage widespread use of beneficial technologies. In my 30 years of construction research, I’ve realized that some of the industry’s greatest innovations finally break into the mainstream not just when barriers are removed, but rather, when important “facilitators” are introduced. Assuming that the underlying innovation creates an industry improvement (some do not!), facilitators often include things like educating of the buyer or end-user of the benefits, technical support to purchasers and installers, reconfiguration in the supply chain, and a major financial commitment from the supplier.  

With this in mind, Home Innovation Research Labs included questions for home builders in our quarterly Omnibus Survey addressing willingness to adopt various offsite construction solutions—like modular, panelization, manufactured housing, and others.

Facilitators of Adoption

How would the following conditions impact your likelihood of more fully adopting offsite fabrication systems (panelization, modular, etc.) construction methods in the future? 

Respondents were asked to rate each option on a 1 to 5 scale, where 1 = Does not increase likelihood at all and 5 = Greatly increases likelihood. The following graph shows how many of the 300 home builders responded with either Greatly or Moderately Increases. 

Graph showing top facilitators to offsite construction with first being comparable or lower cost, second homebuyer preference, third high level of service, fourth only minor changes needed, fifth avoid dependence on one supplier, sixth local logistics, and seventh willing workforce

Cost Parity or Reduction

By far, the most popular answer related to cost—either cost parity or superiority as being a condition leading to their adoption. Many builders believe, either based on past experience or recent investigation, that site-building remains a lower cost, more flexible, and easier-to-manage way to build homes. Offsite solution suppliers often express their doubts about builder notions on these, but suppliers have the burden of convincing and demonstrating this key benefit of cost savings (and then providing the support builders need to realize the savings). With labor cost and availability conditions deteriorating rapidly in recent years, the cost picture for offsite housing may soon be changing in its favor.  

Homebuyer Preference

In the #2 position, was “when homebuyers have a preference” for offsite-constructed homes. Studies over the years repeatedly find that home buyers have a preference for site-built homes over factory-built homes. Factory-built housing has been historically associated with simpler, repeated home designs made with lower cost materials—and customization and personalization of living space are still very important to American homeowners.

While still a difficult dilemma to overcome, one possible way to address negative perception is through educating home buyers of offsite’s potential for superior construction quality, and particularly younger generations of buyers who consistently show in research that they have less negative bias against factory-built housing. Another possible response is to incrementally adopt offsite methods—beginning with pre-cut framing packages which appear to all but insiders as site-built construction. 

Higher Level of Service

Thirdly, builders report a need to be offered a high level of service before switching to offsite methods. In the past, successful introductions of structural building materials such as wood I-joists, for example, have required a large network of technical support reps and a high level of service from manufacturers and dealers. Suppliers of offsite construction solutions should expect the need to make big investments in the staffing and training of technical and field reps to support builders and their contractors in their switchover to a new way of building.

Minimal Changes to Construction Process

One reason that builders are successful in today’s industry is their diligence in developing and refining a process for efficiently constructing homes. All are somewhat different and are adapted to the unique circumstances of the builder, their staff, and local markets they serve. Changing methods can mean starting again closer to the base of the learning curve—which is time-consuming, risky, and may lower profit margins until the curve is surmounted. In fact, it’s difficult for anyone to accept a change that renders their current expertise obsolete. This issue is particularly acute in today’s environment where so many successful builders are older, having survived the 2000’s housing crisis, and are now eyeing retirement as their next big change. More than once, a builder has told me that offsite methods are a great thing, but “let the next generation do that.” There is possibly some wisdom here—companies may need to focus on changing the younger generation of builders who have a bright and innovative career ahead of them. This also suggests that incremental change may be the more effective way to take it “mainstream” rather than trying to do it all at once.

Spreading Risk with Multiple Suppliers 

More than a third of builders in the survey need the assurance of multiple suppliers before they adopt offsite practices. In the builder’s mind, after adapting to a whole new way to build homes, being completely dependent on a single supplier’s ability meet their tight construction schedules is too much risk. Some production builders have chosen to develop in-house prefabrication of components rather than rely on an outside company. This dilemma also creates an opportunity for offsite solution providers, much like Mitek has done in the truss industry, providing a system that allows independent truss shops to operate profitably in a decentralized, smaller-scale way.

Other Offsite Facilitators

The study also found that another opportunity exists around surmounting logistical issues in transporting and assembling prefabricated units. Further, builders seem to be limited by their workforce, and training remains another opportunity. These last two facilitators also tend to support the idea that small, incremental steps can be a way to advancing the state-of-the-industry in housing assembly. 

Outlook for Various Offsite Methods

Home Innovation Research Labs is in the business of assessing market and industry opportunities for suppliers and manufacturers to be more successful. Our studies on offsite housing, as an example, continue to reveal that opportunities exist here, but each will require substantial investment. In the coming weeks, we will begin publishing the findings of our 2024 Builder Practices Survey, which includes our annual updates on the use of open and closed wall panels, floor cassettes, and modular construction. While we’re waiting to see the findings of this study, contact me to be first on the list for the 2024 data, to add your custom questions to our next quarterly Omnibus Survey, or to discuss how to take advantage of your market opportunities.


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