Modular building, or the practice of constructing components in a factory through controlled manufacturing techniques and assembling them on the site, offers a lot of low-hanging fruit to the construction industry. It keeps workers away from perilous jobsite elements, allows for more efficiency and autonomy, reduces waste and cuts down on project time.
But offsite is not just an interesting proposition anymore.
Instead, it's a way for the construction industry to self-actualize, according to Skender.
It's the only way for the entire building process to be completely vertically integrated, allowing for the most advanced, efficient delivery of a structure from start to finish, the firm says, adding to a sentiment McKinsey & Co. may have said best in a report on the market this year: Modular construction transforms the practice from project-based to product-based.
Chicago-based Skender, a traditional construction firm for 64 years that's now primarily known as a modular builder, says it's on the cusp of a proposition that is as efficient a business model as the industry can imagine. And it's ready to scale, with a "brilliant pipeline that's validating its strategy," according to Chief Technical Officer Stacy Scopano.
"Skender's leadership team is talking a level of chess that I haven't seen other builders do," Scopano told Construction Dive. "Now that we're vertically integrated, the implications are enormous. Now we’re looking at a distribution strategy and sales model that looks more like a product-oriented business" than a construction business, he said.
"This is the indictment of our industry," he continued. "We’ve never solved for economies of scale." Scopano's impressive resume includes experience as vice president of innovation at Skanska USA and senior strategist for building construction at Autodesk, Inc. Though he worked on the cutting edge of contech at those firms, there's a lot more than just technology driving Skender's revolution, he said.
Skender focuses on three segments: hospitality, healthcare and housing, with the latter including affordable, senior, student and market-rate models, Vice President of Marketing Todd Andrlik told Construction Dive. Six modular projects are underway and 25 others are in various stages of planning.
By the numbers
But as a business model, Skender can perfect the manufacturing and assembly of a three-story affordable housing unit and get the designs permitted, for instance, then can scale that up to say, a 12-story multifamily building with hundreds of units.
Or it can go adjacent into healthcare and hospitality and turn that finished building and the process that delivered it into a commodity that can be ordered like a product, though with customization, on an on-demand or wholesale basis.
The commodification that allows for scaling is fueled by steady relationships with suppliers, Scopano added, including with big names such as Kohler.
Because every step of manufacturing is digitized, the process provides a feedback loop to the product. That allows for delivery a-la a "Betty Crocker cookbook recipe," meaning Skender can "do it once and sell it 10 times."
One of its first orders after opening its 130,000-square-foot plant located in South Chicago earlier this year was for just that: 10 affordable-rate, three-flat apartment buildings. Based on a common architectural type in the city, each "three-flat" consists of 12 modules, totaling approximately 3,750 square feet per building, with three two-bedroom, one-bathroom units and modern finishes, Skender Chief Design Officer Timothy Swanson told Construction Dive earlier this year.
"Now that we're vertically integrated, the implications are enormous. Now we're looking at a distribution strategy and sales model that looks more like a product-oriented business."
Chief Technical Officer, Skender
The steel-frame units will be completed and ready for occupancy in the city's 27th Ward in a nine-week production schedule — 80% faster than conventional construction methods — and at a 5% to 20% lower project cost, depending on the delivery method, according to the firm.
Skender claims it can sequence 95% of a building in its Chicago factory, and efficiently. "We don't have a single dumpster because everything arrives at that factory perfectly cut to our design," Scopano said. "We don't cut stuff. We're down into single digits on percentage of waste that's coming in our factory versus what we buy."
The model gives developers an "easy button," he continued, that entails cost and schedule certainty and helps Skender, city officials and developers put "an enormous dent" in affordable housing challenges.
And Skender's socioeconomic implications don't stop there, Scopano said. "The factory literally creates jobs," and ones that are out of the weather elements, are more ergonomically feasible and trainable from a repeatability standpoint, lending itself well to apprenticeship programs in which journeymen can bring in workers who weren't in the industry 100 days prior to their first shift on the line.
Some analysts have heralded Skender as well. "There are strong signs of what could be a genuine broad-scale disruption in the making," Jan Mischke, a partner a McKinsey Global Institute, said in a report about modular building, naming Skender as one of the firms leading the way in the movement.
However, many observers look at the modular coming-of-age from a "wait-and-see" standpoint, reticent to name leaders in the space. When questioned at the Modular Building Institute's Offsite Construction Expo 2019 (OSCE) event in Washington, D.C., last month, several industry participants in attendance were hesitant to call out Skender, noting that the untapped market potential for modular that's just over the horizon is still anyone's game.
After all, not many significantly-sized commercial modular buildings have been stacked on a scale that big names in the space — such as Katerra, Prescient, FullStack Modular and Skender — have envisioned for the near future.
But from Construction Dive's point of view, Skender offers the most promising model, heritage and leadership for modular's next big step, and has gone out on a limb to recognize the firm's potential.
And Skender is not going it alone. This year it announced a deal with Zekeleman Industries' Z Modular business unit to build multifamily housing components using the latter's proprietary VectorBloc system.
VectorBloc is a self-bracing, steel structural system "concentrating the load-bearing and connection functions on a standard, scalable, precision pre-engineered component," that allows the modules to be snapped together onsite.
Like the interlocking units, the partnership is a fit that aims to "capitalize on the Skender model," Z Modular Director of Business Development Chris Waters told Construction Dive at OSCE.