Metro Vancouver Regional District Housing Committee

5.1To:Housing CommitteeFrom:Hossam Meawad, Regional Planner, Regional Planning and Housing ServicesDate:February 14, 2022Subject:Case Study Comparison - Modular versus Woodframe ConstructionMeeting Date: March 3, 2022RECOMMENDATIONThat the Housing Committee receive for information the report dated February 14, 2022, titled “CaseStudy Comparison - Modular versus Woodframe Construction”.EXECUTIVE SUMMARYThe Metro Vancouver Housing 10-Year Plan seeks to expand Metro Vancouver Housing’s (MVH) portfolio.To ensure efficient and cost-effective delivery of new housing, the Housing Committee directed staff toexplore modular construction compared to conventional woodframe construction. In July 2021, staffbrought forward a high level review of the pros and cons of modular construction, and recommendedfurther exploration at the feasibility stage of a project.This report presents a feasibility study comparison of modular versus woodframe for a sample projectsite. This analysis shows that woodframe construction currently remains the most financially feasible andsuitable construction method for MVH. While modular construction can offer efficiencies, such as ashorter construction timeline, it is significantly more expensive than woodframe construction. As anevolving industry, MVH will continue to monitor costs and trends for modular and other forms ofconstruction, and identify the most viable options for future development projects.PURPOSETo update the Housing Committee on a more detailed comparison of modular construction vs.woodframe construction.BACKGROUNDThe Metro Vancouver Housing 10-Year Plan seeks to strategically expand Metro Vancouver Housing’sportfolio of affordable homes. To ensure effective delivery of new housing, the Housing Committeedirected staff to explore modular construction compared to conventional woodframe construction. Tofurther assess the benefits and drawbacks of each approach, this report provides an overview of amodular concept study and compares it a woodframe concept for the same sample site.MODULAR VERSUS CONVENTIONAL WOODFRAME DEVELOPMENTWhile modular construction can include a variety of approaches, this report explores and comparesvolumetric modular (where complete 3D modules are pre-fabricated offsite and then erected on site) toconventional woodframe development (where the building is entirely constructed on site).509036767 of 44

Case Study Comparison - Modular vs. Woodframe ConstructionHousing Committee Meeting Date: March 3, 2022Page 2 of 4To further explore the differences in design, cost, and schedule, staff engaged NRB Modular Solutions, adesign-builder with demonstrated experience in volumetric modular construction, to prepare a modularhousing concept study. This has been compared to an existing woodframe concept study for the samesample site. This sample site was selected for a case study as there is recent costing data for thewoodframe concept (August 2021), and potential for replicability of modular construction, being a largersite with potential multiple buildings.DesignWhile still at a conceptual stage, both the modular and woodframe concepts appear able to deliver adesign that is compatible with the existing neighbourhood and site context, and meet MVH’s objectivesfor livability, accessibility, and sustainability, as well as municipal and provincial regulation and fundingpartner design requirements. Key differences include: The modular concept is somewhat bulkier due to the double wall system (i.e., each moduleincludes its own roof, floor, and walls, there are wider floor and wall assemblies). This consumesmore floor area and building footprint area as well as adds to building height, but also provides abenefit of better sound-proofing. Some limitation for the design, layout, and materials used in modularAssumptions: Modular concept proposes a total of 162 dwelling units compromised of studio, one-, two-, andthree-bedroom units with a total gross building area of 151,406 sf Woodframe concept proposes a total of 161 dwelling units compromised of studio, one-, two-,three-, and four-bedroom units with a total gross building area of 125,386 sf Both concepts propose two detached buildings and a shared underground parking garage Both concepts are providing the minimum amount of required indoor amenity spaceWoodframe Concept RenderingModular Concept RenderingScheduleThe pre-construction period timeline for both construction methods does not differ greatly as bothconstruction types must still go through the typical municipal approvals processes and regular designphases of any project. Any reduced timelines occurring with modular construction during the preconstruction phase and to an extent during the construction phase would likely be attributed to thedesign-build project delivery method rather than the modular construction system. However, municipal8 of 44

Case Study Comparison - Modular vs. Woodframe ConstructionHousing Committee Meeting Date: March 3, 2022Page 3 of 4approvals for modular can also be more complicated if the municipality is less familiar with this type ofbuilding technology.During the construction phase, modular construction can provide shorter construction timelines as siteclearing, excavation, and foundation work can begin on site while fabrication and assembly of modularunits happens off-site. For the sample site, the modular concept construction estimate is 13 months,compared to 18-24 months for woodframe construction. This is dependent on an uninterrupted supplyand delivery of modular units as well as site readiness and completion of other on-site and off-siteconstruction.CostAnalysis of the hard costs revealed that modular construction costs approximately 50/sf more thanwoodframe construction. As the modular concept was designed slightly larger than the originalwoodframe concept, costs for the woodframe concept have been adjusted to account for the differencein square footage, building footprint and building height for a fair comparison. This results in an additional 10.5M in hard costs for the modular concept, with an overall premium of 14.5M in total capital costsfor this sample concept.The breakdown of all the associated capital costs and assumptions for the two concepts have beenincluded below.Woodframe ConstructionCost BreakdownHard CostsSoft CostsFinancingContingencyEscalationTotal Capital CostOriginal concept(125,836 ft2) 44.0M 8.0M 2.3M 9.9M 5.5M 69.7MAdjusted for sizecomparison(151,406 ft2) 53.0M 9.6M 2.8M 11.9M 6.6M 83.9MModular ConstructionCost BreakdownHard CostsSoft CostsFinancingContingencyEscalationTotal Capital CostBased onconcept(151,406 ft2) 63.5M 11.6M 1.7M 13.2M 7.9M 97.9MAssumptions: Soft costs estimated at 18.2% of hard costs, (based on recent project experiences) Contingency estimated at 19% of hard and soft costs, given unknown water table and soilconditions Escalation estimated at 12.5% of hard costs (representing 5% per year, assuming constructionto begin in mid-2024). Financing costs, assuming straight-line draw of funds over the life of the project and 2.9% interestrate in year 1 and 3.19% in year 2o Modular - based on 13-month construction timelineo Woodframe – based on 24-month construction timeline for woodframe9 of 44

Case Study Comparison - Modular vs. Woodframe ConstructionHousing Committee Meeting Date: March 3, 2022Page 4 of 4ALTERNATIVESThis is an information report. No alternatives are presented.FINANCIAL IMPLICATIONSThis is an information report and does not have any direct financial implications. The cost of the modularconcept study was 7,500 and part of the Board-approved 2021 Housing Planning and Policy budget.CONCLUSIONMVH engaged NRB Modular Solutions to prepare a modular concept study that is similar to an existingwoodframe concept study for a sample project site so that the design, schedule, and cost differences canbe relatively understood and compared. The study revealed that the design is comparable and can bedeveloped to achieve specific targets. Modular construction is estimated to be 5-9 months faster;however, it is more expensive to build. This study suggests that woodframe construction is currently themost financially feasible and suitable construction method for MVH. However, as an evolving industry,MVH will continue to monitor costs and trends for modular construction and identify opportunities forfurther exploration for future development projects.Attachment“Exploring Modular Housing Construction Report”, dated, June 18, 2021.5090367610 of 44

ATTACHMENTTo:Housing CommitteeFrom:Jason Hingley, Director Housing Planning, Development & FinanceRegional Planning and Housing ServicesDate:June 18, 2021Subject:Exploring Modular Housing ConstructionMeeting Date: July 7, 2021RECOMMENDATIONThat the Housing Committee receive for information the report dated June 18, 2021, titled “ExploringModular Housing Construction”.EXECUTIVE SUMMARYThe Metro Vancouver Housing 10 Year Plan seeks to strategically expand the Metro Vancouver Housingportfolio to create more affordable housing in the region. The Housing Committee requested that staffinvestigate and compare modular construction to more conventional on site construction methods. Thisreport explores the benefits and drawbacks of modular compared to conventional construction.The analysis found that modular construction has a number of benefits including quality control,reduction in waste and the potential for a shorter construction schedule. Cost comparisons suggestedhigher hard costs, caused by a redundancy in the amount of material used to construct modules, as wellas additional transportation of modules to site. However, this could potentially be offset by a shorterconstruction phase which would result in less interest accrued in construction financing and faster rentup. Modular construction is another viable construction option for MVH and will be explored as apreferred alternative during the feasibility stage of project development.PURPOSETo inform the Housing Committee about Modular Housing Construction.BACKGROUNDThe Metro Vancouver Housing 10-Year Plan endorsed by the Board in 2019 sets a goal to strategicallyexpand Metro Vancouver Housing’s portfolio of affordable homes. This report provides the HousingCommittee with information about modular construction as one of a number of methods to considerwhen planning new housing development or redeveloping existing sites.MODULAR DEVELOPMENTThe Metro Vancouver Housing 10-Year Plan set a target to expand the number of homes in the MetroVancouver Housing portfolio through redevelopment of existing sites and partnerships with members onnew sites. In 2020, the MVHC Board endorsed a number of development priorities for the next 10 years.To explore construction methods to deliver on these development priorities, staff engaged WSP tocompare off-site modular construction to conventional timber and lightweight steel frame construction.Conventional construction describes constructing and assembling all building components in place, onsite for multi-family apartments up to six storeys. Staff also spoke to two leading off-site modulardevelopment companies to discuss the design, manufacturing and construction process and to betterunderstand the costs associated with modular development.4594420311 of 44

Exploring Modular Housing ConstructionHousing Committee Regular Meeting Date: July 7, 2021Page 2 of 5There are different methods of developing off-site construction solutions (modular), also known as Designfor Manufacture and Assembly (DfMA). This broadly describes systems, technologies and methodologiesthat include some degree of pre-fabrication of building elements in an offsite location, designed with theease of site assembly in mind to achieve an improved or enhanced product or schedule. This research andreport is focused on ‘volumetric modular’, where complete and finished three dimensional modules arepre-fabricated offsite and erected as large elements to form the structure with wood as the primaryconstruction material.Other common types of modular include ‘panelization’ where panels of floors, walls, roofs are prefabricated, ‘components’ where sections of a unit (i.e. bathrooms) are pre-fabricated, and ‘elements’,which is becoming more common in mass timber developments. Lightweight structural steel is anothereffective material to execute stud wall floor joist systems, however WSP’s experience has shown that itdoes not compete as favourably on price compared to timber elements. Further, there are fewer suppliersand trades in the current multi-residential development market that can deliver these products, creatingmore procurement headwinds and a less competitive pricing environment. For low rise construction inMetro Vancouver, lightweight steel construction presents very limited opportunity for an advantage overlightweight timber.Conventional vs. Modular ConstructionWhen planned and executed appropriately and comprehensively, modular construction offers somebenefits when compared to conventional in situ construction; however, there are some importantconsiderations and potential drawbacks with modular construction. Table 1 explores primary benefits anddrawback of modular construction.Table 1. Benefits and Drawbacks to Modular ConstructionCommon BenefitsReduced construction schedule: Module fabrication can occur simultaneouslywith site preparation works and foundationand/or podium construction. It is possible that the production,transportation and assembly of the modulescan be substantially quicker thanconventional on-site assembly.Common DrawbacksDoubling up: As each module needs its own roof and floor,and every module needs its own wall tocomplete the internal finish and to providetransportation strength, there is someredundancy in material and additionalmaterial is required. The redundancy results in deeper floor andwider wall assemblies, which consume moreof the available space of the site plan andavailable height limit.Reduced waste: Operating in a controlled environment wherematerials are closely managed. Material savings resulting in both costssavings and carbon reductions.Complexity: Complex framing can be required aroundplumbing runs; complexity works against theefficiency benefits of the off-site process.12 of 44

Exploring Modular Housing ConstructionHousing Committee Regular Meeting Date: July 7, 2021Page 3 of 5Higher quality control: Oversight and quality inspections are easilyand promptly executed, while the repetitiveprocess results in efficiency and quality.Seismic connections: The nature of the connection and lateralforce resisting system (LFRS) requirementsneeds to be carefully assessed and the designmust accommodate these considerationsfrom an early stage by maximizing the abilityof the LFRS to perform. It may be necessary to increase the amountof on-site work to accommodate.Controlled environment for manufacturing: By constructing within a factoryenvironment, construction is protected fromweather (rain, wind, snow etc.) and climaticimpacts, including a buffer against thermalvariances. Since modules are constructed one at a time,there are production line quality benefits andworks never occur in difficult to accesslocations or more than one storey in the air.Regulatory: Authority with jurisdiction may require earlyengagement for inspection to ensure theproject stays on schedule.Safer construction: Working in a controlled environment onrepetitive tasks, and with a very limitedexposure to height, modular constructionsubstantially reduces well known Health,Safety and Environment (HSE) risks.Building Envelope: Careful consideration must be given to thedesign of the joints between units forcontinuity of air/vapour/moisture barriers.This may be more difficult if constructed tightagainst an existing structure. Possible cold bridging at the corners wheretwo units are connected as there will likely bea “gap” in the cavity insulation.Acoustic performance: The overall system is often better than aconventional building, since there is a doublestructure build up and air gap between levels– every module has a distinct floor and roof –and between adjacent units – as everymodule has its own wall.Energy PerformanceWSP reports that there is general consensus in the industry (also backed up by preliminary research bythe Zero Energy Mass Custom Home Network) that the enhanced quality control in a factory environmenttranslates into higher air tightness of building modules (in modular construction) relative to the equivalentenvelope areas in conventional construction. This is particularly true when not only windows and doorsare assembled as part of the modules, but also HVAC penetrations are sealed in a factory environment.However, module joints (in addition to thermal bridging) introduce a very significant potential forincreased infiltration in modular construction.13 of 44

Exploring Modular Housing ConstructionHousing Committee Regular Meeting Date: July 7, 2021Page 4 of 5Procurement StrategyModular construction has specific building design and construction oversight considerations that requirespecialized skills and experience that differs from conventional construction. To realize the potential toexpedite a project schedule (and associated benefits of reduced cost uncertainty) with modularconstruction, a design-build (one company is contracted to both design and construct the project)procurement approach is recommended. This differs from the design-bid-build (separate competitivedesign and construction contracts are procured) approach most commonly used with conventionalconstruction. Therefore, early commitment to modular construction is required. While it is possible tomodify and convert a modular design into a conventional build, converting from a conventional design tomodular is not as straight forward.Development Costs and ScheduleWith a more predictable process, and more work happening in a controlled factory environment, there isthe potential for greater cost and schedule certainty with modular construction. However, modularmanufacturing requires a manufacturing plant and associated overheads, a skilled trade workforce,transportation of units to the construction site, and modules that require almost twice as much wood1compared to conventional construction. Given the current cost of lumber, this last consideration has asignificant impact on modular’s ability to compete on price with conventional construction at this time.Generic cost and schedule estimates 2 were provided by two modular manufacturers. Costs were 6% to25% higher per square foot and 16,000 to 63,000 more expensive per unit compared to conventionalconstruction cost estimates; however, schedules are expected to be shorter given site and civil works canoccur at the same time as modular fabrication offsite. It is important to note that without a detailed designthis cost and schedule information is unconfirmed and provided only for context.IMPLICATIONS FOR METRO VANCOUVER HOUSINGModular construction provides MVH with another viable construction tool to deliver on its target toexpand affordable homes set out in the 10-year plan. As this comparison between volumetric modularconstruction to conventional stick frame identifies there are a number of possible benefits to modular,particularly a shorter construction schedule, fewer unknowns and generally accepted higher constructionquality control, however there is also higher construction costs that should be expected and a redundancyof material (wood) required, although less waste. Given the likely trade-off between cost versus speedbetween modular and conventional construction, MVH will include volumetric modular as a method ofconstruction analyzed during the feasibility stage of project planning before a recommendation ispresented to the Housing Committee and Board for endorsement.ALTERNATIVESThis is an information report. No alternatives are presented.FINANCIAL IMPLICATIONSThis is an information report and does not have any direct financial implications. The cost of the WSPreport was part of the 2021 operating budget. As part of the capital project f

METRO VANCOUVER REGIONAL DISTRICT . HOUSING COMMITTEE. Minutes of the Regular Meeting of the Metro Vancouver Regional District (MVRD) Housing Committee held at 1:00 p.m. on Thursday, January 13, 2022 in the 28. th. Floor Boardroom, 4515 Central Boulevard, Burnaby, British Columbia. MEMBERS PRESENT: Chair, Mayor Mike Hurley, Burnaby