How to adapt construction contracts to fit modular building

The following is an excerpt from ForConstructionPros.com on how contracts for modular jobs demand greater attention to deadlines for the deeper preconstruction workload.

Those utilizing modular construction techniques occupy a unique position that doesn’t fit neatly within traditional building industry models. Without first adequately communicating responsibilities on the project and employing the proper contract language clearly defining those roles, a project owner, general contractor, subcontractor or supplier could be held responsible for complications that are not of their own making. At the very least, the project could be delayed, and legal costs may mount while fingers are pointed in multiple directions.

As modular construction continues to boom — a recent report pegged it as an $8 billion industry, doubling in size over five years — all parties must have a thorough understanding not only of how the process operates, but how it fits into the overall plan of construction. When drafting contracts involving modular construction, certain areas demand extra attention.

Scheduling and coordination

Perhaps the most notable benefit of modular construction is the boost the process delivers in speed and efficiency. When a foundation or pedestal can be built at the same time that modules — say, a set of apartments or offices — are being constructed, a project that regularly may have taken six months could be finished in half the time. At a time when manpower is at a premium in the construction industry, the savings in time and money can be substantial.

Conversely, with the modules being prefabricated, the process may lengthen the time for pre-construction work. Decisions on details like wall finishes or architectural specifics must be made ahead of time, whereas during a traditional build, these choices can come later while steel structures or frames are being built. This front-loaded process means that every party involved in the construction process must be in agreement once the contract documents are signed. There is little to no room for changes of any significance once fabrication begins.

Unlike traditional projects that advance step-by-step, the nature of modular construction means there is not a linear progression. Foundations and related infrastructure are built at the same time as the modules that will sit upon them. As such, multiple deadlines may hit at the same time. For example, the first modules in a project may be expected at the site just as the foundation is finished.

Incorporating these dates into a contract is not anything drastically different from what most construction professionals and their counsel are used to doing, but it may be made more complicated and, perhaps, even more critical. If a foundation is finished and there is nothing to place on it because of a delay at the plant where the modules are being built, the project comes to a standstill and the primary reason behind using modular construction is undermined. Thus, contracts must clearly set forth the delivery dates for site work, completed modules, building systems, etc., as well as who is responsible for the cost of any delays if these dates are not met.

Read the full article at ForConstructionPros.com.