Why is a prefabricated modular interior build out significantly more costly than an interior build out using conventional construction methods?


It should be that simple, and that should be the end of this post, but perceptions persist for good reasons. Here are just a couple:

  • Perceptions tend to be dated. Once you have one it wears a little groove in your brain; the longer you own it, the more deeply entrenched it gets: wherever you go, it goes (meetings, presentations etc).
  • Pet perceptions signal the fact that we might have something to defend or protect. That’s understandable, but challenging those perceptions from time to time can result in some profound changes in perspective. Remember, there was a time when folks thought that the earth was flat.

So here we go. I’m going to offer a few factoids that I hope are new to you, or at least offer a new perspective. We’ll see if your perception changes even a little bit. Should be fun.

10 years ago DIRTT started building prefabricated modular interiors at their factory in Calgary. They have not had a price increase since, nor do they expect one in the foreseeable future. Why? (Thought you’d never ask). Because as they’ve grown they’ve gained momentum and economy of scale. More importantly, because they build prefabricated interiors in a controlled factory environment, they are able to become more efficient at what they do.

By contrast, conventional construction sees their costs rising at an average of 6% to 8% per year. No wonder hard hats and safety boots are required.

Let’s do the math, if a prefabricated modular interior was twice the price of building conventionally 10 years ago, that same build out using conventional construction today would cost twice as much and the prefabricated modular interior’s price would have remained virtually unchanged. Making the cost of prefabricated modular versus conventional construction today just about neck and neck.

Now some would argue that the rate of inflation for conventional construction is only 5% or even 4%, but that would be missing the point. The trend is clear and compounded increases will ensure that over time the gap will only continue to widen.

So, if your perception blossomed 10, or even 2 years ago maybe it’s time to take another look at the facts and make an adjustment in perspective.

Here’s another good one. Somebody decided that prefabricated modular interiors should be compared to conventional construction based on the cost per linear foot of wall. That would be like trying to determine the value of a car based on the cost of the tires. Yes, they’re important and you won’t get far without them, but they’re hardly indicative of the usefulness and value of the car as a whole.

In construction the cost per square foot of space is the generally accepted measuring stick. $40 – $60 per square foot is currently the accepted range of cost in our market to build out the interior of a commercial space. Using this measure two projects we’ve completed in the last few months totalling over 50,000 square feet have come in at $42 per square foot.

So, by all means check those tires and make sure they’re going to get you where you want to go, but don’t forget to look over the rest of the car.

In closing, I’d like to offer a simple formula to put this complex issue in a new light:

DIRTT + Time = More for Less $
Conventional Construction + Time = Less for More $

Hey, I never claimed I was Einstein