Modular construction companies that do both manufacturing and assembly are more profitable

Modular construction companies that perform both manufacturing and assembly services are more profitable than those that focus solely on one of those tasks, according to a report by McKinsey & Co.

Integrated companies enjoy higher margins because they have more control over process, quality, and speed, the report says. Manufacturing and assembly companies have more profitable engagements because they can take on a broader scope, can organize more efficiently because their teams are trained to cover a broader modular system, and typically pass fewer costs on to subcontractors.

Profitability is higher for companies that build more specialized assets such as hotels and hospitals instead of residential. The higher cost per square meter of these buildings means there is higher value for building in a factory environment. In some cases, there is also less competition in these segments.

Recent technological developments and more-tailored solutions are allowing modular construction to scale to its potential, leading to enhanced, higher-quality projects and a wider variety of building types.

New digital platforms are helping connect customers across the ecosystem with suppliers, and are allowing companies to more easily customize and optimize designs for specific sites.