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When thinking about the cost of a home or home addition you tend to consider only construction costs. Although there are savings in construction costs when building modular, there are many other savings that come from the system-built process.
Interest
Conventional construction projects require your lender to inspect progress frequently to approve "advances" or "progress payments". The bank then advances money to you to pay the contractor. You have borrowed the funds and you now owe interest payments. As the job proceeds, the advances accumulate and interest is due on the growing loan amount. Also, each inspection has a charge to you to pay the inspector for their time and reports. A typical home addition or new home takes months to complete and the interest expense and inspection costs grow over that time. Modular construction takes a day to accomplish what conventional construction takes months to do. Our suppliers are advanced just 10% of their costs as a deposit and are paid the balance the day of delivery (with just one inspection).
The savings is thousands of dollars and is not part of the "hard costs" of construction. They are part of your "soft costs". If divided by the size of the space being built, can be $3.00-$7.00 per square foot in savings.
Dislocation/ Carry
When replacing your home or making a major addition, you will be displaced from your home for some period of time. The expense related to this is your "dislocation" costs. If you are building a new home, you are "carrying" two loans at the same time. Completing the new project allows you to sell or rent the existing property. This expense is your "carrying" costs. The speed of modular construction minimizes these expenses and causes less disruption to your life.
Typical dislocation and carrying costs are also soft costs and can be up to $1,500 per month and equate to $4.00-$6.00 per square foot in calculated space cost.
A&E
Sandcastle is a turnkey system-built company providing design services to help you create your dream. Most of the projects we build are custom designs but there are hundreds of standard plans to choose from. Once designed, the building's structural, electrical, heating, and other engineering requirements are the obligation or our suppliers. These tasks are, collectively, called "architecture and engineering" (A&E) and are necessary to create the dream and to obtain building permits. Modular construction, because of its speed and off-site production, includes these soft cost expenses in the base price.
A&E costs are usually 7-10% of the cost of a residential project. Although some site related engineering will be required, the savings using modular construction is at least 5% of costs or $5.00-$8.00 per square foot of built space.
Winter Conditions
In New England, the snow, wing, rain and cold all team together to cause what is called winter conditions. This means delays, renting equipment to keep things warm, plowing, and many other expenses. All contractors will protect themselves from winter conditions by contract. When it takes months to complete a project, winter conditions will prevail. These charges will be 3-4% of the project costs. Modular construction speed will not eliminate winter conditions but will greatly reduce the likelihood.
Winter conditions at about 3%, represents $3.50 to $5.00 per square foot in additional expense.
Theft
You can't steal what isn't there. Conventional construction means that materials and equipment are stored on-site for months as construction occurs. Meanwhile, modular production is happening off-site. Whether by the thieves of the world, the workers, or the neighbors, stuff will "walk" from the site. Honest contractors will tell you that this is a percentage of the loose materials exposed to theft monthly.
At a suggested level of 1% of exposed material per month, this calculates to be about $1.50-$1.60 per square foot.
Waste
Factories are able to plan ahead. In so doing, modular factories can pre-order, pre-cut, and prepare for their production needs. In fact, a 2,000 square foot colonial home leaves one five gallon barrel of waste behind (and this is all recycled!). We have all seen the wasted materials at conventional construction sites.
This feature of modular construction generally results in another 1% to 1.5% savings, or $1.50 to $2.00 per square foot of space.
Change Orders
That 2,000 square foot colonial with a 2-car garage takes 3-5 days to produce in our modular factories. This speed precludes changes caused or suggested by you, the contractor, the architect, or anyone else. These changes are called Change Orders and can cause what we call "price creep". The end result is a project that costs more than you expected.
Change Orders and easily $5,000 per project (and up to 3 times that). That equates to $2.25 to $3.25 per square foot of constructed space.
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