Article Date: 01/24/2014

Consultant Offers Advice for Deciding Whether to Invest in Prefabrication Facilities

By Steve Rizer


For mechanical and electrical contractors who are thinking about starting up their own prefabrication facilities, what advice should they heed in deciding whether or not to take such a step? In an interview with ConstructionPro Week, Ethan Cowles, FMI Corp. senior consultant and co-author of the company’s recently released “2013 Prefabrication and Modularization in Construction Survey Results” report, answered this question.


“Plan, and do the math," Cowles advised contractors facing such decisions. "The ‘math’ includes calculating ROI [return on investment] on all aspects of the investment. The goal for a contractor is to think and act more like a manufacturer. In manufacturing, they have been tweaking efficiencies and understand the payback of their investments in buildings, tools, technology, and labor. A contractor who thinks, ‘Wouldn’t it be better if we had our own shop?’ hasn’t spent near enough time understanding what size that shop should be, how the contractor will keep it busy, what the labor costs and savings or expenses are, what the competitive edge is, etc.”


Cowles added that “some contractors will realize they really shouldn’t own their own shop once they have gone through this exercise. That’s good and could save a lot of money. Others will better understand how to keep their shop working at high efficiency and how it works into their overall market strategy.”


Approximately 48 percent of the mechanical and electrical contractors responding to the recent survey had more than 11 percent of their current project work accomplished using prefabricated assemblies. That is slightly less than the 52 percent that FMI reported in its 2010 survey report. In the 2013 study, of those mechanical and electrical contractors not owning prefabrication facilities, 17 percent were considering it, compared to only 5 percent in 2010.



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