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Cost analysis for sustainable off-site construction based on a multiple-case study in China
Habitat International 57 (2016) 215e222
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Cost analysis for sustainable off-site construction based on a multiplecase study in China Chao Mao a, c, d, *, Fangyun Xie a, Lei Hou b, Peng Wu c, Jun Wang c, Xiangyu Wang c a
School of Construction Management and Real Estate, Chongqing University, Chongqing, China School of Engineering, Griffith University, Gold Coast, Australia c School of Built Environment, Curtin University, Perth, Australia d International Research Center of Sustainable Built Environment, Chongqing University, Chongqing, China b
a r t i c l e i n f o
a b s t r a c t
Article history: Received 6 October 2015 Received in revised form 16 August 2016 Accepted 17 August 2016
Off-site construction (OSC) methods, such as prefabrication and modularisation have been regarded as an efficient way to boost sustainability and productivity against conventional cast-in-situ methods. Nevertheless, the promotion of OSC in many countries has lagged behind during the past 20 years because of the lack of explicit recognition with regard to the spending and savings associated with deploying such innovative methods in the construction industry. The multiple-case study method is applied to conduct an in-depth analysis on expenditure items of implementing OSC against conventional construction methods in China. Findings validate that the total cost of implementing OSC or semi-OSC techniques is significantly higher than that for conventional construction methods. The major expenses are incurred from such processes as prefabricated component production, transportation, and design consultancy. Compared with developed countries, the experience, skills, and market demand of applying OSC in China are far from adequate, which also increases the price of deploying OSC nationwide. By contrast, the spending of OSC on masonry, plastering, and measurement works is lower. Furthermore, a shift from onsite construction to factory-based indoor prefabrication decreases the number of workers required and the project delivery timeframe, thereby contributing to cost savings. To conclude, this study rationalises the wider adoption of OSC in the near future through comprehensive and thorough cost analysis case studies from which stakeholders in China would understand the pros and cons of OSC and eventually make deliberate decisions. © 2016 Elsevier Ltd. All rights reserved.
Keywords: OSC Conventional construction Cost analysis China
1. Introduction Off-site construction (OSC) methods, such as prefabrication and modularization, have emerged as promising construction methods to address traditional in-situ construction challenges, such as productivity, logistics, safety, pollution, wastage, quality, and subjectivity to environment and weather (Blismas & Wakefield, 2009; Jaillon & Poon, 2008, 2009; Li et al., 2016; Mao, Shen, Shen, & Tang, 2013). For the global construction industry, prefabrication is not a new construction process, but one that has been used extensively and widely for many years. Given the numerous benefits of implementing OSC, a growing uptake of OSC has been
* Corresponding author. School of Construction Management and Real Estate, Chongqing University, Chongqing, China. E-mail address: [email protected] (C. Mao). http://dx.doi.org/10.1016/j.habitatint.2016.08.002 0197-3975/© 2016 Elsevier Ltd. All rights reserved.
witnessed in several countries and regions, such as Hong Kong, Singapore, the United Kingdom, and the United States. Since the mid-1980s, Hong Kong has adopted a policy to require prefabrication in public housing construction (Chiang, Chan, Lok, 2006; McCutcheon, 1990), and precast elements, reusable formwork, and modular design and assembly are extensively adopted in public housing projects; the private housing sector in Hong Kong is also attempting to keep abreast with this trend (HKBD, 2001). To reduce dependency on resources and imported workforce, Singapore is the first country to promulgate statutory provisions in which buildability, quality, and productivity are the three mandatory requirements for construction companies to achieve (Chiang et al., 2006). OSC may also help Singapore to overcome the skill shortage issues that are commonly observed in the constantly changing built environment and complex construction projects. Moreover, the prefabrication of a building would reduce lifecycle waste by 60% (Pons & Wadel, 2011). In the United Kingdom,
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prefabricating houses has not been commercially successful because of perceived barriers, such as high costs and a reduced space for the client and designer to personalise. However, recently completed prefabricated hotel, apartment, house, and sheltered accommodation projects have increased since the last decade, which thus portends a wider uptake in the near future. In the United States, the manufacturing and construction industries have made significant advances in implementing off-site processes to build and deliver more sophisticated and complex facility types through system prefabrication, modularization, and panelisation. Clients are starting to turn to off-site methods for multi-story wood construction, steel-framed structures, healthcare facilities, educational structures, and large-scale military projects (NIBS, 2016). The Chinese construction n industry is experiencing a shift from traditional low-end labor-intensive projects to high-end technology-intensive projects. The construction sector in China continues to contribute a large percentage to the national gross domestic product. Hence, the focus of the central government of China on shifting the construction sector to a higher value-added and knowledge-intensive level via enhancing construction innovation capability has been transferred to higher quality, innovative products, and established business processes (Wang & Yuan, 2011). OSC is viewed as a technique to fulfill this target. Sustainability and environmental impact from construction are a genuine concern for China. These issues when coupled with the expertise of China in manufacturing are expected to take advantage of the benefits of OSC. However, the current scale of OSC in China remains lower than that of other regions and countries. As reflected from its projected market value, the OSC share of China remains below 2% of its entire construction sector (Li, 2015; NCRE, 2015). Several significant barriers that impede the use of OSC in China are as follows: constructability implementation by virtue of skills, experience, and knowledge; social climate and attitudes, such as market acceptance and demand; architectural performance, including design diversity, aesthetics, maintenance complexity, and quality impression; costing associated with initial cost, capital cost, and capital payback period; supply chain issues; lack of codes, standards, and government incentives; and strategic policies and regulations (Blismas & Wakefield, 2009; Kam, Alshawi, & Hamid, 2009; Mao, Shen, Pan, & Ye, 2013; Zhang, Skitmore, & Peng, 2014). To promote viable technological upgrade and reform to the traditional manner, extensive capital costs and complex interfacing between off-site and on-site components and systems are required (Dewick & Miozzo, 2002; Khalfan & Maqsood, 2014). The high initial costs associated with fixed assets, such as establishing fabrication factories and prefabricating building modules and components, as well as the concerns of mortgage lenders and insurers about the capital payback period of constructing non-traditional buildings, are collectively considered hindrances to a widespread undertaking of OSC in China (Mao, Shen, & Pan et al., 2013; Pan & Sidwell, 2011). Jaillon and Poon (2009) and Bhangale and Mahajan (2013) revealed that the high initial costs could be counteracted by improved productivity, reduced labor, early completed and defect-free deliverables, and the use of new materials, such as precast reinforced concrete planks and prefabricated brick panels. When confronting the paradox between OSC adoption and cost uncertainty, most Chinese stakeholders report a lack of available scientific or empirical studies that can help them justify an OSC or non-OSC option. As stated by Pan and Sidwell (2011), major dilemmas associated with information knowledge paucity involve the following: (1) the conceptual ambiguity of OSC costs, (2) the consequently real or perceived higher costs of off-site solutions than those of traditional options, (3) the lack of cost data and information on OSC, and (4) the unknown techniques of decreasing construction costs but increasing effectiveness. On this premise, this study generalises the
following research gaps that hamper the deployment of OSC in Chinese construction projects: The ad-hoc costing items/categories rooted in OSC during the construction stage. The extent to which OSC could decrease costs as against traditional construction methods, and the possible justifications. To fulfill the cost investigation and analysis, this study uses the multiple-case study method (MCSM) and identifies prefabricated concrete systems (PCSs) as the primary construction elements because PCS holds the largest market share in China. The remainder of this paper is divided into six sections. Section 2 presents the definition of OSC. Section 3 provides a critical review of the related literature, with a focus on the research gaps, together with a justification of methodology applied in this study. Section 4 discusses the cost analysis for implementing OSC. Section 5 presents the data derived from two case studies. Section 6 indicates the results and discussion. Finally, Section 7 concludes this study. The main conclusion is that increased recognition from costing synthesis has been gained to increase the confidence and commitment of stakeholders to OSC. 2. Overview of OSC Similar to traditional on-site construction, OSC can be used to form a variety of architectures and functions, including residential and commercial buildings and infrastructure, such as power stations and oil and gas plants. OSC is typically implemented in manufacturing plants that are specifically designed for fabricating modular units. As stated in Table 1, OSC has several similar terms and interpretations. Gibb and Isack (2003) categorised the vast range of OSC or what they refer to as “pre-assembly” into four categories. The first and most traditional form is component manufacture and sub-assembly, which encompasses typical factory-made components, such as bricks and tiles. The second category is non-volumetric pre-assembly, which takes the level of OSC one step further by including semi-finished components, such as precast concrete slabs, structural insulated panels, prefabricated light steels, and PCSs. The third category is volumetric preassembly. This technique includes a pre-assembled unit, such as bathroom pods, kitchen pods, or plant rooms; usable spaces, which once delivered to the site require only installation into a steel or concrete-framed structure; and the connection of services (Arif & Egbu, 2010; Gibb & Isack, 2003). The fourth category according to Gibb and Isack (2003) is modular building, which refers to most of the construction effort being concentrated off site in a factory setting. Pre-assembled modules that form the actual structure and fabric of the building are then simply transported, assembled, and connected together on site. Arif and Egbu (2010) considered this classification further, suggesting a fifth hybrid category in which a combination of any two or more of the above could also exist. 3. Justifications of research gaps and methodology While OSC is not a new concept, a number of issues have brought it into the spotlight. Cigolini and Castellano (2002) proposed a quantitative model to determine the cost variance between modular construction and stick built. Other studies have identified comprehensive criteria to aid the decision making of stakeholders with regard to OSC. For example, Pan, Dainty, and Gibb (2012) developed more than 50 value-based decision criteria and quantified their relative importance for systematically assessing building technologies. Landolfo, Fiorino, and Corte (2006) identified the most critical factors for selecting modularisation or stick built.
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Table 1 Definitions of off-site prefabrication. Quoted source
Terms
Definition
Tatum, Vanegas, and Williams (1986)
Prefabrication Prefabrication is a manufacturing process that is generally conducted at a specialised facility where various materials are joined to form a component part of the final installation; it is “the transferring stage of construction activities from field to an off-site production facility.” Pre-assembly Pre-assembly is a process by which various materials, prefabricated components, and/or equipment are joined together at a remote location for subsequent installation as a sub-unit. It is generally focused on a system. CIRIA (1997) Pre-assembly For a given piece of work, the organiaation and completion of a substantial proportion of its final assembly work take place before installation in its final position. It includes many forms of sub-assembly. It can take place on or off site and often involves standardisation. Bjornfot and Sarden (2006) Prefabrication Prefabrication is the making of construction components in a place that is different from the point of final assembly, and it may lead to better control of the inherent complexity within the construction process. Gibb (1999) Off-site Off-site fabrication is a process that incorporates prefabrication and pre-assembly. The process involves the design and fabrication manufacture of units or modules, usually remote from the work site, and their installation to form the permanent works at the work site. In its fullest sense, off-site fabrication requires a project strategy that changes the orientation of the project process from construction to manufacture and installation. Senaratne and Ekanayake Prefabrication Prefabrication is a manufacturing and pre-assembly process that makes construction components in a place that is different (2011) from the point of final assembly under specialised facilities with different materials used to produce both prefabrication structure and the production facility. Stephen Emmitt and Gorse Prefabrication Prefabrication is a term used to describe the construction of buildings or building components at a location, usually a factory, (2010) remote from the building site. Off-site Off-site production is used to describe the manufacture of a prefabricated building. The manufactured building or building production parts are then delivered to the site and assembled in their final position.
These comprehensive works have more or less helped project stakeholders in decision making. However, most of these works targeted the strategic level, while a few works addressed a more concrete and tactical decision level, such as how to select prefabricated components as an economics portfolio and what is an appropriated precast volume for clients under certain constrains. Meanwhile, construction costs have been noted to vary in comparison to traditional construction depending on the project. Jaillon and Poon (2009) suggested that cost might increase because of higher transportation costs and additional green features, which would not have been incorporated into conventionally constructed houses. For the prefabricated projects that cost the same or more than conventional construction, long-term savings, such as energy efficiency and minimal maintenance, would soon offset any imbalance (Jaillon & Poon, 2009). However, considering only the direct material and labor costs may not convincing enough; rather, the whole-life costs of the structure should be considered (Blismas & Wakefield, 2009). The lack of awareness about this aspect and an inadequate culture of achieving low cost by construction companies are typical constraints to the perception of OSC benefits. Recognising the high cost of establishing an OSC facility is also vital. Prefabrication is financially viable only when constant volume can be maintained. These factors can understandably increase the risk for small-to-medium-sized construction businesses to invest in OSC. To shorten these loops, this study aims to rationalise the costs when implementing OSC in construction projects and to specify the detailed cost items derived from the OSC and non-OSC undertakings. This study conducts multiple face-to-face interviews with a number of experienced representatives from real estate companies that have been operating OSC projects in mainland China. These representatives have more than 10 years of practical experience in cost and generic project management, which is regarded as valuable and could be refined to develop a conceptual cost framework in OSC projects. This approach is adopted from Zhang's work (Zhang, Wu, Feng, & Xu, 2015) in developing a framework for implementing energy performance contracting in China. As mentioned, the multiple case study method is applied in this study for in-depth comprehension of the illustrated OSC practices upon which quantitative analysis of OSC costing is conducted.
4. Identification of cost types in OSC 4.1. Analysis for OSC cost In this section, the analysis for OSC cost is predicated upon a generic framework formulated by El-Haram, Marenjak, and Horner (2002), as stated in Fig. 1. Capital costs are the total costs needed to bring a project to a commercially operable status. Capital costs are typically referred to as the sum of outlays associated with project design and construction. Given the significant fluctuation in capital costs across different design and construction methods, an indepth investigation on the state-of-the-art construction practices of China is important, especially in ad hoc areas, such as professional design consultancy, procurement of a prefabrication supplier, and on-site installation of prefabricated products and modules. The costs of the operation phase are also discussed; for OSC projects, these costs include operating, maintenance, and replacement costs. However, this study aims to evaluate the cost changes as a result of the changes in construction mode. Few buildings have completed the service life and been demolished because of the slow development of OSC in China. Therefore, collecting cost data is difficult. The crucial cost accounting adopted in this study is mainly associated with design costs (e.g., professional fees of the architect, quantity surveyor, and engineer), bidding costs, and construction costs (highlighted in yellow in Fig. 1); it excludes other costs, such as land acquisition costs, commission and handover costs, client overhead, facility management costs (involving operation, maintenance, and replacement costs), and disposal costs. Table 2 lists a detailed breakdown of the scrutinised cost items between OSC and non-OSC. 5. Implementation of case studies 5.1. Case collection The main purpose of OSC cost analysis is savings cost. This study aimed to identify new costs and the change degree of added costs through refining cost and studying cases. This study also indicated how cost savings of OSC in China can be achieved and clarified the objects and ranges for reference when governments are formulating policies.
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Whole Life Cost(WLC) of OSC Financial Costs
Overheads
Management Costs Preliminary Cost (Briefing)
Capital Cost(design &build)
Facility Management Cost
Disposal Cost
Development Fees
Bidding/Tendering Cost
Operating Cost
Demolition and Site Clearance
Land Acquisition Cost
Commission and Hand-over Cost
Maintenance and Replacement Cost
Demolition Management Cost (Phase specific)
Capital Management Cost (Phase specific)
Other (eg. Support fee)
Fees for Designing (Archit.,Struct. M&E,Prefab.)
Capital Overheads (Phase specific)
FM Management Cost (Phase specific)
Demolition Overheads (Phase specific)
Quantity Survyor
Design Cost
Prefab. Component Cost
Prefabricated Cost (Off-site Factory)
FM Overheads (Phase specific)
Transportation Fee
Construction Cost (On site)
Site Preparation Substructure Super-substructure Finishes Assembly and Fitting Building Services
Difference Cost between Off-site vs. Conventional
External Works
Fig. 1. OSC project lifespan cost framework (adapted from El-Haram et al., 2002).
Table 2 Cost items comparison between OSC and conventional construction. Phase
Cost items
Detailed
No. Comparative OSC Conventional
Briefing Design and building
Land acquisition cost Development fees Design fees
Bidding/tendering costs Construction costs
Prefabricated costs
Facility management
Disposal
Commission and handover costs Other costs Operation costs
Land gain Development grants, planning gain, wayleaves, and easements Architecture Structure M&E Splitting of prefab. Quantity surveyor General contractor/subcontractor/suppliers Prefabricated manufacturers Site preparation Substructure Super-structure Finishes Assembly and fitting of prefab components Building services External works Prefab components, (e.g., stairs, beam, column, balcony, unitary kitchen, etc.) Transportation fess Testing operation
C1 C2 C3
B B
B B
C4 C5 C6 C7 C8 C9 C10 C11 C12 C13 C14 C15 C16 C17
D D D D
D D
D
B
D D D D D D D D
B
Tax, statutory charges C18 B General support services, including letting fees, facilities management fees, and caretaker and C19 B janitorial services Maintenance and replacement Redecoration, periodic maintenance, and component replacement activities C20 D costs FM management costs C21 B FM overhead C22 B Others (e.g., support fee) C23 B Demolition and site clearance C24 B Demolition management costs C25 B Demolition overheads C26 B
D
N/A
N/A B
D D D
N/A
D D N/A N/A B B B
D B B B B B B
Note: “B”refers to the same costs in both methods; “D” refers to existing costs in the method; “N/A” refers to non-existing costs in the construction method.
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Table 3 Project information of the six case studies (first group). Project
Case 1-A
Case 1-C
Case 1-D
Case 1-E
Types Location Year of completion Height (m) Building sq. ft. (m2) Basement Structure system No. of stories Seismic intensity Construction method Precast level (% by volume) Types of prefab components
Residential building Residential building Shenyang Shenyang 2014 2013
Case 1-B
Residential building Shenyang 2014
Residential building Shenyang 2014
Residential building Residential building Shenyang Shenyang 2014 2013
86.9 12,547
51.7 7542.24
60.9 7036
60.9 4713.56
96.2 14,166
82 13,251
Two floors Share-wall system 30 Eight levels Sim-prefabrication
One floor Share-wall system 16 Eight levels Sim-prefabrication
One floor Share-wall system 18 Eight levels Sim-prefabrication
One floor Share-wall system 18 Eight levels Sim-prefabrication
One floor
11.00%
37.20%
60.00%
65.00%
Two floors Share-wall system 33 Eight levels Cast on-situ construction 0%
28 Eight levels Cast on-situ construction 0%
Facades/staircase/balcony slab/slabs/external wall/ partition wall General contractor: main structure cast on-situ
Facades/staircase/balcony slab/slabs/external wall/ partition wall General contractor: main structure cast on-situ
N/A
N/A
Facades/staircase
Facades/staircase/balcony slab/slabs/external wall/ partition wall Procurement General contractor: General contractor: main main structure cast structure cast on-situ on-situ Prefab contractor: all prefab Prefab contractor: components all prefab components Total construction 1473 1525 cost per sq.m 2 (yuan/m ) Cost of 1113 1232 superstructure
Case 1-F
General contractor: General contractor: main structure cast main structure cast on-situ on-situ
Prefab contractor: all prefab Prefab contractor: all prefab components components 2178
2418
1186
1155
1656
1964
948
936
Table 4 Project information of the three case studies (second group). Project
Case 2-A
Case 2-B
Case 2-C
Types Location Building sq. ft. (m2) Structure system Height (m) Floor height (m) Precast level (% by volume) Construction method Types of prefab components No. of stories Year started
Residential building Shanghai 7039 Frame-shear wall structure 42.5 2.92 44%
Residential building Shenzhen 170600.9 Frame-shear wall structure 76 2.9 10.5%
Residential building Chengdu 6887.21 Frame-shear wall structure 33.5 3.35 23%
Sim-prefabrication PC exterior wall panels, balcony panels, staircases, air conditioning panels, laminated panels, parapet 14 2007
Sim-prefabrication Exterior walls, floor panels, staircases 27 2011
Sim-prefabrication Balcony panels, staircases, laminated panels 9 2013
Two groups (shown in Tables 3 and 4), including nine cases, are discussed in this paper with the following approaches: (1) comparison between the two groups to show clear distinctions between the traditional method and the proposed method of cost analysis; (2) inner comparison in each group for quantitative analysis for reduced or increased cost and change magnitude of OSC. In the first group, cases were from Shenyang, with the traditional cost accounting method. The same location was used to eliminate interference on area, environment, economic development, and other factors. Five cases in the first group adopted OSC, whereas the remaining case adopted the traditional mode of production. Cases in the second group were from Shanghai, Chengdu, and Shenzhen, which represent three development levels of OSC in China. Raw data were analysed with the cost accounting system in Chapter 4, and the added costs and the contribution to the total cost variation of each case were gained.
5.2. Case analysis The projects vary from one another, but the following variables are always present: a. In the aspect of preliminary administrative examination, financing, and project management, no difference in cost exists between the traditional construction method and the OSC method. Thus, the cost of this portion was not taken into consideration in the comparative analysis. b. Some projects were completed after more than five years, whereas others were completed in less than five years. Therefore, calculating the costs in the operation phase and the disposal cost was difficult. c. The costs of projects with different sites were different from their land acquisition costs. d. Amount of gross floor area.
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To ensure the comparability of the nine case studies against the variables above and to guarantee a common base for effective analysis, this study focused on the capital cost (Fig. 1) in the design and construction phase, excluding the preliminary costs, facility management (operation and maintenance) costs, and disposal costs. Related cost was converted into the same measurement unit (yuan/m2) to normalize cost comparison. The total cost is more sensitive to superstructure costs than to preliminaries or contractor overheads (Pan & Sidwell, 2011). The cases in the first group were from the same city, and all of them were government projects. The management cost and contract costs could thus be ignored. We obtained the construction costs on the ground without considering the same part between the traditional method and OSC. Results are shown in Table 5 (based on the traditional construction cost-accounting system). In this study, the superstructures were clustered as RC work, prefabricated component work, floor work, roof and waterproof work, plastering work, and measures and other work. On the basis of the cost accounting system provided in Chapter 4, added cost of cases in the second group were accounted without considering the same part between the traditional method and OSC. By comparing cases with traditional construction methods of the same location and developer, we obtain added cost types and change fluctuation of each case. Results are shown in Table 6. 6. Results and discussion 6.1. Comparison between the traditional cost accounting method and the proposed accounting system When adopting the traditional cost accounting method to analyse the OSC cost, the costs of various parts in building are determined, such as bidding costs, foundation costs, construction costs on the ground, decoration costs, and PC component costs. However, determining the reason for the varying costs of traditional projects and OSC is difficult. The prefabricated and traditional costs are also not categorised. The proposed cost accounting system can better reflect the differences in cost between traditional project and OSC, including the cost types and change fluctuation. A thorough analysis and identification of the causes of cost changes indicate that the proposed system can help reduce the OSC cost by adopting appropriate measures. 6.2. Total cost of superstructures in semi-prefabrication and conventional construction The detailed cost items of the superstructures from the six cases are shown in Tables 3 and 5 The total cost and the cost of the superstructures with semi-prefabrication are higher than the costs of conventional construction. A higher percentage by precast volume
corresponds to a higher cost. Approximately, 318 yuan/m2 (27%), 370 yuan/m2 (32%), 1023 yuan/m2 (88%), and 1263 yuan/m2 (109%) of the total construction cost increase per sq.m2 in Cases A, B, C, and D, respectively, compared with Case F. The costs of concrete work, masonry work, plastering work, and measurement work clearly vary from those of conventional construction. 6.3. Added cost comparison between the traditional project and OSC To explore the main reasons for the increase or decrease in cost, we conducted an in-depth interview with each project manager on their cost management engagement. Each interview lasted for 40 min to 50 min. The critical causes were largely attributed to the process change incurred by prefabrication, including the cost of the molds for the components, their transportation, and on-site requirements. A detailed analysis is presented in the succeeding sections. 6.3.1. Cost of precast components As shown in Table 6, the increases in precast component cost of three cases are 229, 392.62, and 127.89 yuan/m2, and their contribution to the total added costs are 41%, 81%, and 31%, respectively. Precast component cost mainly refers to material cost, labor costs, machinery costs and factory, land, management costs, and model cost. Unlike traditional construction methods, the precast component production process needs special materials to ensure the performance and assembling, including embedded parts, waterproof plastic, and polyethylene (PE) plastic strips. The embedded parts include adjustment member, sleeves, and rings. Adjustment member and ring are the auxiliary materials during the assembly process. The number of sleeves is affected by the split design, and different split programs may cause a large difference in number of sleeves. Waterproof plastic and PE plastic strips mainly deal with the waterproofing of precast components. Brick and masonry walls are used for traditional walls, and they cost less than concrete walls. The small scale of OSC projects results in a low degree of standardisation of precast components and less demand for them. Furthermore, the economies of scale cannot be formed in the precast factory. Except for increased material, a set of models in precast components are required in the production process. Given the low demand for precast components, the amortization of the model cost also increases the cost of OSC. 6.3.2. Assembly cost of precast components Assembly cost is one of the main reasons OSC costs more than traditional construction. This higher cost is mainly due to the following five factors: machinery cost, PC installation cost, jointing cost, built-in fitting and support costs, and other expenses. The frequency of tower crane use increases, thereby increasing
Table 5 Detailing the cost breakdown of super-substructures from the first group six case studies. Project
Case 1-A
Precast level (% by volume) Substructure (Earthwork/basement) Super-structure RC work (yuan/m2) Prefabricated component work (yuan/m2) Floor work (yuan/m2) Masonry work (yuan/m2) Roof and waterproofing work (yuan/m2) Plastering work (yuan/m2) Measures and other work (yuan/m2)
11% 37% 60% 65% 0% Excluded in the comparison because insignificant changes referring to prefabrication were determined 1113 1232 1656 1964 948 519 214 138 299 407 155 664 1226 1435 0 23 27 62 13 41 37 25 3 1 30 44 37 47 32 34 74 58 55 71 136 261 207 125 113 300
Case 1-B
Case 1-C
Case 1-D
Case 1-E
Notes: Data were gathered through interviews with project managers, architects, and contractors in each project and from the research of Zhao (2014).
Case 1-F 0% 936 434 0 29 25 37 105 306
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Table 6 Detailing the cost breakdown from the second group three case studies. Added cost type
Case 2-A
Bidding Design and consultation Prefabrication associated
Construction
Total added cost
Staircases Laminated panels Balcony panels PC exterior wall panels Air conditioning panels Parapet Transport fee Foundation fee Cast in-situ fee Assembly fee
Case 2-B
Case 2-C
Volume (yuan/m2)
Fluctuation
Volume (yuan/m2)
Fluctuation
Volume (yuan/m2)
Fluctuation
e 16 2 10.47 41.91 31.24 141.88 1.82 1.82 17.47 e 16.2 28 557
e 2.87% 0.36% 1.88% 7.52% 5.61% 25.47% 0.33% 0.33% 3.14% e 2.91% 5.03% 100.00%
3 20 14 51.20 62.16 e 279.26 e e 4.10 e 16 34.16 487
0.62% 4.11% 2.87% 10.51% 12.76% e 57.34% e e 0.84% e 3.29% 7.01% 100.00%
e 16 2 3.64 107.93 16.33 e e e 14.65 e 34.6 28 406
e 3.94% 0.49% 0.90% 26.58% 4.02% e e e 3.61% e 8.52% 6.90% 100.00%
machinery cost. In the traditional construction mode, the tower crane enters the construction site once and is used for approximately nine months. In off-site residential construction, a tower crane enters the construction site twice and is used for approximately eight months. Although the service time of the tower crane decreases, the cost of the tower crane increases at the same unit price. No mounting fee of the PC part is considered in the traditional construction, but the mounting fee of PC is an important part in off-site residential construction because of the great number of prefabricated (concrete) elements. In addition, mounting comprises many joints; thus, it has to handle the joints, and the cost of joints increases further. Unlike the traditional mode, OSC uses extensive built-in fitting to connect the prefabricated concrete elements rather than overall cast-in-place. Consequently, the built-in fitting is required to set in advance. Other expenses are from the dumper, labor cost of unloading, constructional iron of lifting, and protective film of the outer wall. 6.3.3. Transportation and design cost Transportation cost is an important part of the increased costs. The three cases of the second group increased by 2.87%, 4.11%%, and 3.94%. For traditional construction, the traffic expenses mainly include direct transport fees to move raw materials to the construction site. However, OSC increases the transport component, namely, the transport of raw materials to the prefabrication sites and the prefabricated (concrete) elements to the construction site. The total costs increase further because of the increased transport costs. Hence, OSC needs more trucks than the traditional mode to transport an equal number of objects. When the price does not change and the number of trucks increase, the total costs will increase. Design cost occupies a lower proportion of the overall project cost and thus has an insignificant influence on the OSC project cost. OSC design cost includes design and consulting fees. For additional split design, detailed design in OSC increases the types and quantity of drawings and design costs. However, OSC design is not mature enough in China, and developers need to consult experienced domestic and foreign design companies, thereby resulting in increased consulting fees. 6.3.4. Cast in-situ cost Increased cast in-situ cost mainly refers to the cost effect on the cast in-situ part of the project that adopts OSC methods. In the second group, Cases 2-A and 2-B were developed in 2007 and 2011, respectively; given the immature production technology and construction technology, the cost of cast in-situ part increased by
approximately 16 yuan/m2. With the development of OSC in China and the efforts of developers to solve technical problems, the cost of cast in-situ part decreased in Case 2-C project in 2013. 7. Conclusions The diffusion of OSC adoption has achieved considerable progress worldwide, but it remains at a lagged pace in China. The critical hindering factor is the lack of comprehensive cognition of the cost. This study adopts a combined method of literature review, case studies, and face-to-face interview to distinguish the process between OSC and conventional construction, to refine the cost framework of OSC, and to conduct case studies to address the research questions. The following conclusions were obtained: The cost of OSC is similar but not limited to conventional construction because of the different processes during the entire building stage. Therefore, special costs should be considered, namely, the professional design consulting fee (especially designed for the manufacture and assembly of prefabricated components along with logistic integration into the design process), the procurement of a prefabrication supplier, and the on-site installation of prefabricated products and modules. The total cost of semi-prefabrication is significantly higher than that of the current conventional construction in China. The main contribution cost is associated with the production of prefabricated component, transportation, and design consultancy. This association is due to the lack of experience, skills, and market demand in China. By contrast, the costs of masonry, plastering, and measurement works, as well as the costs that indirectly benefit from labor saving and time reduction, decrease considerably. The decreased costs provide clients with more confidence despite their inability to offset the incremental costs from prefabricated construction in the current phase in China. The results of this study focus only on first-mover projects in China. If we view the costs from the short- and long-term perspectives, then the total cost can be reduced. Previous studies based on the practices of developed countries have shown that higher costs could be offset by time saving, non-rework due to zero defects, labor saving, resource reduction, and economies of scale (Jaillon & Poon, 2009). Chu and Sparrow (2001) asserted that the shortening of construction time by adopting prefabrication also provides economic benefits for clients, such as lower site overheads, reduced loan interest, and early rental returns. Bhangale and Mahajan (2013) emphasised the effectiveness of a prefabricated system in cost reduction. The Egan Report indicated the capacity of OSC to improve productivity (Department of the Environment and
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the Regions, 1998) and thus higher productivity in the future could delimit the entire building cost. In sum, this paper presented nine cases to help more clients or stakeholders to recognize the cost of prefabricated construction. A limitation of this research is the small number of cases involved and studied in China. Nevertheless, this study contributes to the literature by establishing a comprehensive framework for the cost estimate of OSC, thus making it a common basis for future studies on more practical cases and multiple comparative studies. Acknowledgments This study was supported by the National Social Science Foundation of China (Grant No. 15CJY030) and the Fundamental Research Funds for the Central Universities in China (Grant No. 106112014CDJSK030002). References Arif, M., & Egbu, C. (2010). Making a case for offsite construction in China. Engineering, Construction and Architectural Management, 17, 536e548. Bhangale, P., & Mahajan, A. K. (2013). Cost reduction through cost effective construction techniques. Bjornfot, A., & Sarden, Y. (2006). Prefabrication: A lean strategy for value generation in construction. In Proceedings of the 14th annual conference of the international group for lean construction (pp. 265e267). Santiago, Chile: School of Engineering, Catholic University of Chile. Blismas, N., & Wakefield, R. (2009). Drivers, constraints and the future of offsite manufacture in Australia. Construction Innovation: Information, Process, Management, 9, 72e83. Chiang, Y.-H., Chan, E. H.-W., & Lok, L. K.-L. (2006). Prefabrication and barriers to entryda case study of public housing and institutional buildings in Hong Kong. Habitat International, 30, 482e499. Chu, R., & Sparrow, C. (2001). Prefabrication techniques for high-rise residential buildings. In Proceedings of environmentally friendly structures seminar, Hong Kong, China (pp. 25e44). Cigolini, R., & Castellano, A. (2002). Using modularization to manage construction of onshore process plants: A theoretical approach and a case study. Project Management Journal, 33, 29e40. CIRIA. (1997). CDM regulationsePractical guidance for clients and clients' agents. Department of the Environment, T., & The Regions, L.. (1998). Rethinking construction the report of the construction task force to the Deputy Prime Minister, John Prescott, on the scope for improving the quality and efficiency of UK construction. Dewick, P., & Miozzo, M. (2002). Sustainable technologies and the innovationeregulation paradox. Futures, 34, 823e840. El-Haram, M. A., Marenjak, S., & Horner, M. W. (2002). Development of a generic framework for collecting whole life cost data for the building industry. Journal of Quality in Maintenance Engineering, 8(2), 144e151. Emmitt, Stephen, & Gorse, C. A. (2010). Barry's advanced construction of buildings. Great Britain: Blackwell Publishing. Gibb, A. G. F. (1999). Off-site Fabrication: Prefabrication, pre-assembly and modularization. Latheronwheel: Whittles Publishing. Gibb, A., & Isack, F. (2003). Re-engineering through pre-assembly: Client expectations and drivers. Building Research & Information, 31, 146e160.
HKBD. (2001). Joint practice note No.1. In Green and innovative buildings. Hong Kong: Hong Kong Buildings Department. Jaillon, L., & Poon, C.-S. (2008). Sustainable construction aspects of using prefabrication in dense urban environment: A Hong Kong case study. Construction Management and Economics, 26, 953e966. Jaillon, L., & Poon, C. S. (2009). The evolution of prefabricated residential building systems in Hong Kong: A review of the public and the private sector. Automation in Construction, 18, 239e248. Kam, K., Alshawi, M., & Hamid, Z. (2009). Barriers to industrialized building system (IBS): The case of Malaysia. In BuHu 9th international postgraduate research conference (IPGRC), Salford, United Kingdom. Khalfan, M., & Maqsood, T. (2014). Current state of off-site manufacturing in Australian and Chinese residential construction. Journal of Construction Engineering, 2014. Landolfo, R., Fiorino, L., & Corte, G. D. (2006). Seismic behavior of sheathed coldformed structures: Physical tests. Journal of Structural Engineering, 132, 570e581. Li, H. (2015). Using modularized building system to promote the level of industrialized building in China. http://archcy.com/point/gdbl/35ed7be0073a3092. Li, C. Z., Hong, J., Xue, F., Shen, G. Q., Xu, X., & Luo, L. (2016). SWOT analysis and Internet of Things-enabled platform for prefabrication housing production in Hong Kong. Habitat International, 57, 74e87. Mao, C., Shen, Q., Pan, W., & Ye, K. (2013). Major barriers to off-site construction: the developer's perspective in China. Journal of Management in Engineering, 31(3), 04014043. Mao, C., Shen, Q., Shen, L., & Tang, L. (2013). Comparative study of greenhouse gas emissions between off-site prefabrication and conventional construction methods: Two case studies of residential projects. Energy and Buildings, 66, 165e176. McCutcheon, R. (1990). The role of industrialised building in low-income housing policy in the USA. Habitat International, 14, 161e176. NCRE. (2015). Higher cost hindering the promotion of building industrilization in China. Beijing: Newpaper of China Real Estate (NCRE). http://www.new-ci.com/ html/14-3/3093.htm. NIBS. (2016). OSC council-a council of the national isitute of building sciences. Pan, W., Dainty, A. R., & Gibb, A. G. (2012). Establishing and weighting decision criteria for building system selection in housing construction. Journal of Construction Engineering and Management, 138, 1239e1250. Pan, W., & Sidwell, R. (2011). Demystifying the cost barriers to offsite construction in the UK. Construction Management and Economics, 29, 1081e1099. Pons, O., & Wadel, G. (2011). Environmental impacts of prefabricated school buildings in Catalonia. Habitat International, 35, 553e563. Senaratne, S., & Ekanayake, S. (2011). An evaluation of lean principles to precast concrete bridge beam production process. Journal of Architectural Engineering. Tatum, C. B., Vanegas, J. A., & Williams, J. M. (1986). Constructability improvement using prefabrication, pre-assembly andModularization, construction industry institute. California: Stanford University. Technical report No. 297, November. Wang, J., & Yuan, H. (2011). Factors affecting contractors' risk attitudes in construction projects: Case study from China. International Journal of Project Management, 29, 209e219. Zhang, X., Skitmore, M., & Peng, Y. (2014). Exploring the challenges to industrialized residential building in China. Habitat International, 41. Zhang, X., Wu, Z., Feng, Y., & Xu, P. (2015). “Turning green into gold”: a framework for energy performance contracting (EPC) in China's real estate industry. Journal of Cleaner Production, 109, 166e173. Zhao, J.-s. T. F.-s. (2014). Comparative analysis of the cost of prefabricated assembly integral shear wall residence and cast-in-place residence. Value Engineering, 77e79.
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Cost analysis for sustainable off-site construction based on a multiplecase study in China Chao Mao a, c, d, *, Fangyun Xie a, Lei Hou b, Peng Wu c, Jun Wang c, Xiangyu Wang c a
School of Construction Management and Real Estate, Chongqing University, Chongqing, China School of Engineering, Griffith University, Gold Coast, Australia c School of Built Environment, Curtin University, Perth, Australia d International Research Center of Sustainable Built Environment, Chongqing University, Chongqing, China b
a r t i c l e i n f o
a b s t r a c t
Article history: Received 6 October 2015 Received in revised form 16 August 2016 Accepted 17 August 2016
Off-site construction (OSC) methods, such as prefabrication and modularisation have been regarded as an efficient way to boost sustainability and productivity against conventional cast-in-situ methods. Nevertheless, the promotion of OSC in many countries has lagged behind during the past 20 years because of the lack of explicit recognition with regard to the spending and savings associated with deploying such innovative methods in the construction industry. The multiple-case study method is applied to conduct an in-depth analysis on expenditure items of implementing OSC against conventional construction methods in China. Findings validate that the total cost of implementing OSC or semi-OSC techniques is significantly higher than that for conventional construction methods. The major expenses are incurred from such processes as prefabricated component production, transportation, and design consultancy. Compared with developed countries, the experience, skills, and market demand of applying OSC in China are far from adequate, which also increases the price of deploying OSC nationwide. By contrast, the spending of OSC on masonry, plastering, and measurement works is lower. Furthermore, a shift from onsite construction to factory-based indoor prefabrication decreases the number of workers required and the project delivery timeframe, thereby contributing to cost savings. To conclude, this study rationalises the wider adoption of OSC in the near future through comprehensive and thorough cost analysis case studies from which stakeholders in China would understand the pros and cons of OSC and eventually make deliberate decisions. © 2016 Elsevier Ltd. All rights reserved.
Keywords: OSC Conventional construction Cost analysis China
1. Introduction Off-site construction (OSC) methods, such as prefabrication and modularization, have emerged as promising construction methods to address traditional in-situ construction challenges, such as productivity, logistics, safety, pollution, wastage, quality, and subjectivity to environment and weather (Blismas & Wakefield, 2009; Jaillon & Poon, 2008, 2009; Li et al., 2016; Mao, Shen, Shen, & Tang, 2013). For the global construction industry, prefabrication is not a new construction process, but one that has been used extensively and widely for many years. Given the numerous benefits of implementing OSC, a growing uptake of OSC has been
* Corresponding author. School of Construction Management and Real Estate, Chongqing University, Chongqing, China. E-mail address: [email protected] (C. Mao). http://dx.doi.org/10.1016/j.habitatint.2016.08.002 0197-3975/© 2016 Elsevier Ltd. All rights reserved.
witnessed in several countries and regions, such as Hong Kong, Singapore, the United Kingdom, and the United States. Since the mid-1980s, Hong Kong has adopted a policy to require prefabrication in public housing construction (Chiang, Chan, Lok, 2006; McCutcheon, 1990), and precast elements, reusable formwork, and modular design and assembly are extensively adopted in public housing projects; the private housing sector in Hong Kong is also attempting to keep abreast with this trend (HKBD, 2001). To reduce dependency on resources and imported workforce, Singapore is the first country to promulgate statutory provisions in which buildability, quality, and productivity are the three mandatory requirements for construction companies to achieve (Chiang et al., 2006). OSC may also help Singapore to overcome the skill shortage issues that are commonly observed in the constantly changing built environment and complex construction projects. Moreover, the prefabrication of a building would reduce lifecycle waste by 60% (Pons & Wadel, 2011). In the United Kingdom,
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prefabricating houses has not been commercially successful because of perceived barriers, such as high costs and a reduced space for the client and designer to personalise. However, recently completed prefabricated hotel, apartment, house, and sheltered accommodation projects have increased since the last decade, which thus portends a wider uptake in the near future. In the United States, the manufacturing and construction industries have made significant advances in implementing off-site processes to build and deliver more sophisticated and complex facility types through system prefabrication, modularization, and panelisation. Clients are starting to turn to off-site methods for multi-story wood construction, steel-framed structures, healthcare facilities, educational structures, and large-scale military projects (NIBS, 2016). The Chinese construction n industry is experiencing a shift from traditional low-end labor-intensive projects to high-end technology-intensive projects. The construction sector in China continues to contribute a large percentage to the national gross domestic product. Hence, the focus of the central government of China on shifting the construction sector to a higher value-added and knowledge-intensive level via enhancing construction innovation capability has been transferred to higher quality, innovative products, and established business processes (Wang & Yuan, 2011). OSC is viewed as a technique to fulfill this target. Sustainability and environmental impact from construction are a genuine concern for China. These issues when coupled with the expertise of China in manufacturing are expected to take advantage of the benefits of OSC. However, the current scale of OSC in China remains lower than that of other regions and countries. As reflected from its projected market value, the OSC share of China remains below 2% of its entire construction sector (Li, 2015; NCRE, 2015). Several significant barriers that impede the use of OSC in China are as follows: constructability implementation by virtue of skills, experience, and knowledge; social climate and attitudes, such as market acceptance and demand; architectural performance, including design diversity, aesthetics, maintenance complexity, and quality impression; costing associated with initial cost, capital cost, and capital payback period; supply chain issues; lack of codes, standards, and government incentives; and strategic policies and regulations (Blismas & Wakefield, 2009; Kam, Alshawi, & Hamid, 2009; Mao, Shen, Pan, & Ye, 2013; Zhang, Skitmore, & Peng, 2014). To promote viable technological upgrade and reform to the traditional manner, extensive capital costs and complex interfacing between off-site and on-site components and systems are required (Dewick & Miozzo, 2002; Khalfan & Maqsood, 2014). The high initial costs associated with fixed assets, such as establishing fabrication factories and prefabricating building modules and components, as well as the concerns of mortgage lenders and insurers about the capital payback period of constructing non-traditional buildings, are collectively considered hindrances to a widespread undertaking of OSC in China (Mao, Shen, & Pan et al., 2013; Pan & Sidwell, 2011). Jaillon and Poon (2009) and Bhangale and Mahajan (2013) revealed that the high initial costs could be counteracted by improved productivity, reduced labor, early completed and defect-free deliverables, and the use of new materials, such as precast reinforced concrete planks and prefabricated brick panels. When confronting the paradox between OSC adoption and cost uncertainty, most Chinese stakeholders report a lack of available scientific or empirical studies that can help them justify an OSC or non-OSC option. As stated by Pan and Sidwell (2011), major dilemmas associated with information knowledge paucity involve the following: (1) the conceptual ambiguity of OSC costs, (2) the consequently real or perceived higher costs of off-site solutions than those of traditional options, (3) the lack of cost data and information on OSC, and (4) the unknown techniques of decreasing construction costs but increasing effectiveness. On this premise, this study generalises the
following research gaps that hamper the deployment of OSC in Chinese construction projects: The ad-hoc costing items/categories rooted in OSC during the construction stage. The extent to which OSC could decrease costs as against traditional construction methods, and the possible justifications. To fulfill the cost investigation and analysis, this study uses the multiple-case study method (MCSM) and identifies prefabricated concrete systems (PCSs) as the primary construction elements because PCS holds the largest market share in China. The remainder of this paper is divided into six sections. Section 2 presents the definition of OSC. Section 3 provides a critical review of the related literature, with a focus on the research gaps, together with a justification of methodology applied in this study. Section 4 discusses the cost analysis for implementing OSC. Section 5 presents the data derived from two case studies. Section 6 indicates the results and discussion. Finally, Section 7 concludes this study. The main conclusion is that increased recognition from costing synthesis has been gained to increase the confidence and commitment of stakeholders to OSC. 2. Overview of OSC Similar to traditional on-site construction, OSC can be used to form a variety of architectures and functions, including residential and commercial buildings and infrastructure, such as power stations and oil and gas plants. OSC is typically implemented in manufacturing plants that are specifically designed for fabricating modular units. As stated in Table 1, OSC has several similar terms and interpretations. Gibb and Isack (2003) categorised the vast range of OSC or what they refer to as “pre-assembly” into four categories. The first and most traditional form is component manufacture and sub-assembly, which encompasses typical factory-made components, such as bricks and tiles. The second category is non-volumetric pre-assembly, which takes the level of OSC one step further by including semi-finished components, such as precast concrete slabs, structural insulated panels, prefabricated light steels, and PCSs. The third category is volumetric preassembly. This technique includes a pre-assembled unit, such as bathroom pods, kitchen pods, or plant rooms; usable spaces, which once delivered to the site require only installation into a steel or concrete-framed structure; and the connection of services (Arif & Egbu, 2010; Gibb & Isack, 2003). The fourth category according to Gibb and Isack (2003) is modular building, which refers to most of the construction effort being concentrated off site in a factory setting. Pre-assembled modules that form the actual structure and fabric of the building are then simply transported, assembled, and connected together on site. Arif and Egbu (2010) considered this classification further, suggesting a fifth hybrid category in which a combination of any two or more of the above could also exist. 3. Justifications of research gaps and methodology While OSC is not a new concept, a number of issues have brought it into the spotlight. Cigolini and Castellano (2002) proposed a quantitative model to determine the cost variance between modular construction and stick built. Other studies have identified comprehensive criteria to aid the decision making of stakeholders with regard to OSC. For example, Pan, Dainty, and Gibb (2012) developed more than 50 value-based decision criteria and quantified their relative importance for systematically assessing building technologies. Landolfo, Fiorino, and Corte (2006) identified the most critical factors for selecting modularisation or stick built.
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Table 1 Definitions of off-site prefabrication. Quoted source
Terms
Definition
Tatum, Vanegas, and Williams (1986)
Prefabrication Prefabrication is a manufacturing process that is generally conducted at a specialised facility where various materials are joined to form a component part of the final installation; it is “the transferring stage of construction activities from field to an off-site production facility.” Pre-assembly Pre-assembly is a process by which various materials, prefabricated components, and/or equipment are joined together at a remote location for subsequent installation as a sub-unit. It is generally focused on a system. CIRIA (1997) Pre-assembly For a given piece of work, the organiaation and completion of a substantial proportion of its final assembly work take place before installation in its final position. It includes many forms of sub-assembly. It can take place on or off site and often involves standardisation. Bjornfot and Sarden (2006) Prefabrication Prefabrication is the making of construction components in a place that is different from the point of final assembly, and it may lead to better control of the inherent complexity within the construction process. Gibb (1999) Off-site Off-site fabrication is a process that incorporates prefabrication and pre-assembly. The process involves the design and fabrication manufacture of units or modules, usually remote from the work site, and their installation to form the permanent works at the work site. In its fullest sense, off-site fabrication requires a project strategy that changes the orientation of the project process from construction to manufacture and installation. Senaratne and Ekanayake Prefabrication Prefabrication is a manufacturing and pre-assembly process that makes construction components in a place that is different (2011) from the point of final assembly under specialised facilities with different materials used to produce both prefabrication structure and the production facility. Stephen Emmitt and Gorse Prefabrication Prefabrication is a term used to describe the construction of buildings or building components at a location, usually a factory, (2010) remote from the building site. Off-site Off-site production is used to describe the manufacture of a prefabricated building. The manufactured building or building production parts are then delivered to the site and assembled in their final position.
These comprehensive works have more or less helped project stakeholders in decision making. However, most of these works targeted the strategic level, while a few works addressed a more concrete and tactical decision level, such as how to select prefabricated components as an economics portfolio and what is an appropriated precast volume for clients under certain constrains. Meanwhile, construction costs have been noted to vary in comparison to traditional construction depending on the project. Jaillon and Poon (2009) suggested that cost might increase because of higher transportation costs and additional green features, which would not have been incorporated into conventionally constructed houses. For the prefabricated projects that cost the same or more than conventional construction, long-term savings, such as energy efficiency and minimal maintenance, would soon offset any imbalance (Jaillon & Poon, 2009). However, considering only the direct material and labor costs may not convincing enough; rather, the whole-life costs of the structure should be considered (Blismas & Wakefield, 2009). The lack of awareness about this aspect and an inadequate culture of achieving low cost by construction companies are typical constraints to the perception of OSC benefits. Recognising the high cost of establishing an OSC facility is also vital. Prefabrication is financially viable only when constant volume can be maintained. These factors can understandably increase the risk for small-to-medium-sized construction businesses to invest in OSC. To shorten these loops, this study aims to rationalise the costs when implementing OSC in construction projects and to specify the detailed cost items derived from the OSC and non-OSC undertakings. This study conducts multiple face-to-face interviews with a number of experienced representatives from real estate companies that have been operating OSC projects in mainland China. These representatives have more than 10 years of practical experience in cost and generic project management, which is regarded as valuable and could be refined to develop a conceptual cost framework in OSC projects. This approach is adopted from Zhang's work (Zhang, Wu, Feng, & Xu, 2015) in developing a framework for implementing energy performance contracting in China. As mentioned, the multiple case study method is applied in this study for in-depth comprehension of the illustrated OSC practices upon which quantitative analysis of OSC costing is conducted.
4. Identification of cost types in OSC 4.1. Analysis for OSC cost In this section, the analysis for OSC cost is predicated upon a generic framework formulated by El-Haram, Marenjak, and Horner (2002), as stated in Fig. 1. Capital costs are the total costs needed to bring a project to a commercially operable status. Capital costs are typically referred to as the sum of outlays associated with project design and construction. Given the significant fluctuation in capital costs across different design and construction methods, an indepth investigation on the state-of-the-art construction practices of China is important, especially in ad hoc areas, such as professional design consultancy, procurement of a prefabrication supplier, and on-site installation of prefabricated products and modules. The costs of the operation phase are also discussed; for OSC projects, these costs include operating, maintenance, and replacement costs. However, this study aims to evaluate the cost changes as a result of the changes in construction mode. Few buildings have completed the service life and been demolished because of the slow development of OSC in China. Therefore, collecting cost data is difficult. The crucial cost accounting adopted in this study is mainly associated with design costs (e.g., professional fees of the architect, quantity surveyor, and engineer), bidding costs, and construction costs (highlighted in yellow in Fig. 1); it excludes other costs, such as land acquisition costs, commission and handover costs, client overhead, facility management costs (involving operation, maintenance, and replacement costs), and disposal costs. Table 2 lists a detailed breakdown of the scrutinised cost items between OSC and non-OSC. 5. Implementation of case studies 5.1. Case collection The main purpose of OSC cost analysis is savings cost. This study aimed to identify new costs and the change degree of added costs through refining cost and studying cases. This study also indicated how cost savings of OSC in China can be achieved and clarified the objects and ranges for reference when governments are formulating policies.
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Whole Life Cost(WLC) of OSC Financial Costs
Overheads
Management Costs Preliminary Cost (Briefing)
Capital Cost(design &build)
Facility Management Cost
Disposal Cost
Development Fees
Bidding/Tendering Cost
Operating Cost
Demolition and Site Clearance
Land Acquisition Cost
Commission and Hand-over Cost
Maintenance and Replacement Cost
Demolition Management Cost (Phase specific)
Capital Management Cost (Phase specific)
Other (eg. Support fee)
Fees for Designing (Archit.,Struct. M&E,Prefab.)
Capital Overheads (Phase specific)
FM Management Cost (Phase specific)
Demolition Overheads (Phase specific)
Quantity Survyor
Design Cost
Prefab. Component Cost
Prefabricated Cost (Off-site Factory)
FM Overheads (Phase specific)
Transportation Fee
Construction Cost (On site)
Site Preparation Substructure Super-substructure Finishes Assembly and Fitting Building Services
Difference Cost between Off-site vs. Conventional
External Works
Fig. 1. OSC project lifespan cost framework (adapted from El-Haram et al., 2002).
Table 2 Cost items comparison between OSC and conventional construction. Phase
Cost items
Detailed
No. Comparative OSC Conventional
Briefing Design and building
Land acquisition cost Development fees Design fees
Bidding/tendering costs Construction costs
Prefabricated costs
Facility management
Disposal
Commission and handover costs Other costs Operation costs
Land gain Development grants, planning gain, wayleaves, and easements Architecture Structure M&E Splitting of prefab. Quantity surveyor General contractor/subcontractor/suppliers Prefabricated manufacturers Site preparation Substructure Super-structure Finishes Assembly and fitting of prefab components Building services External works Prefab components, (e.g., stairs, beam, column, balcony, unitary kitchen, etc.) Transportation fess Testing operation
C1 C2 C3
B B
B B
C4 C5 C6 C7 C8 C9 C10 C11 C12 C13 C14 C15 C16 C17
D D D D
D D
D
B
D D D D D D D D
B
Tax, statutory charges C18 B General support services, including letting fees, facilities management fees, and caretaker and C19 B janitorial services Maintenance and replacement Redecoration, periodic maintenance, and component replacement activities C20 D costs FM management costs C21 B FM overhead C22 B Others (e.g., support fee) C23 B Demolition and site clearance C24 B Demolition management costs C25 B Demolition overheads C26 B
D
N/A
N/A B
D D D
N/A
D D N/A N/A B B B
D B B B B B B
Note: “B”refers to the same costs in both methods; “D” refers to existing costs in the method; “N/A” refers to non-existing costs in the construction method.
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Table 3 Project information of the six case studies (first group). Project
Case 1-A
Case 1-C
Case 1-D
Case 1-E
Types Location Year of completion Height (m) Building sq. ft. (m2) Basement Structure system No. of stories Seismic intensity Construction method Precast level (% by volume) Types of prefab components
Residential building Residential building Shenyang Shenyang 2014 2013
Case 1-B
Residential building Shenyang 2014
Residential building Shenyang 2014
Residential building Residential building Shenyang Shenyang 2014 2013
86.9 12,547
51.7 7542.24
60.9 7036
60.9 4713.56
96.2 14,166
82 13,251
Two floors Share-wall system 30 Eight levels Sim-prefabrication
One floor Share-wall system 16 Eight levels Sim-prefabrication
One floor Share-wall system 18 Eight levels Sim-prefabrication
One floor Share-wall system 18 Eight levels Sim-prefabrication
One floor
11.00%
37.20%
60.00%
65.00%
Two floors Share-wall system 33 Eight levels Cast on-situ construction 0%
28 Eight levels Cast on-situ construction 0%
Facades/staircase/balcony slab/slabs/external wall/ partition wall General contractor: main structure cast on-situ
Facades/staircase/balcony slab/slabs/external wall/ partition wall General contractor: main structure cast on-situ
N/A
N/A
Facades/staircase
Facades/staircase/balcony slab/slabs/external wall/ partition wall Procurement General contractor: General contractor: main main structure cast structure cast on-situ on-situ Prefab contractor: all prefab Prefab contractor: components all prefab components Total construction 1473 1525 cost per sq.m 2 (yuan/m ) Cost of 1113 1232 superstructure
Case 1-F
General contractor: General contractor: main structure cast main structure cast on-situ on-situ
Prefab contractor: all prefab Prefab contractor: all prefab components components 2178
2418
1186
1155
1656
1964
948
936
Table 4 Project information of the three case studies (second group). Project
Case 2-A
Case 2-B
Case 2-C
Types Location Building sq. ft. (m2) Structure system Height (m) Floor height (m) Precast level (% by volume) Construction method Types of prefab components No. of stories Year started
Residential building Shanghai 7039 Frame-shear wall structure 42.5 2.92 44%
Residential building Shenzhen 170600.9 Frame-shear wall structure 76 2.9 10.5%
Residential building Chengdu 6887.21 Frame-shear wall structure 33.5 3.35 23%
Sim-prefabrication PC exterior wall panels, balcony panels, staircases, air conditioning panels, laminated panels, parapet 14 2007
Sim-prefabrication Exterior walls, floor panels, staircases 27 2011
Sim-prefabrication Balcony panels, staircases, laminated panels 9 2013
Two groups (shown in Tables 3 and 4), including nine cases, are discussed in this paper with the following approaches: (1) comparison between the two groups to show clear distinctions between the traditional method and the proposed method of cost analysis; (2) inner comparison in each group for quantitative analysis for reduced or increased cost and change magnitude of OSC. In the first group, cases were from Shenyang, with the traditional cost accounting method. The same location was used to eliminate interference on area, environment, economic development, and other factors. Five cases in the first group adopted OSC, whereas the remaining case adopted the traditional mode of production. Cases in the second group were from Shanghai, Chengdu, and Shenzhen, which represent three development levels of OSC in China. Raw data were analysed with the cost accounting system in Chapter 4, and the added costs and the contribution to the total cost variation of each case were gained.
5.2. Case analysis The projects vary from one another, but the following variables are always present: a. In the aspect of preliminary administrative examination, financing, and project management, no difference in cost exists between the traditional construction method and the OSC method. Thus, the cost of this portion was not taken into consideration in the comparative analysis. b. Some projects were completed after more than five years, whereas others were completed in less than five years. Therefore, calculating the costs in the operation phase and the disposal cost was difficult. c. The costs of projects with different sites were different from their land acquisition costs. d. Amount of gross floor area.
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To ensure the comparability of the nine case studies against the variables above and to guarantee a common base for effective analysis, this study focused on the capital cost (Fig. 1) in the design and construction phase, excluding the preliminary costs, facility management (operation and maintenance) costs, and disposal costs. Related cost was converted into the same measurement unit (yuan/m2) to normalize cost comparison. The total cost is more sensitive to superstructure costs than to preliminaries or contractor overheads (Pan & Sidwell, 2011). The cases in the first group were from the same city, and all of them were government projects. The management cost and contract costs could thus be ignored. We obtained the construction costs on the ground without considering the same part between the traditional method and OSC. Results are shown in Table 5 (based on the traditional construction cost-accounting system). In this study, the superstructures were clustered as RC work, prefabricated component work, floor work, roof and waterproof work, plastering work, and measures and other work. On the basis of the cost accounting system provided in Chapter 4, added cost of cases in the second group were accounted without considering the same part between the traditional method and OSC. By comparing cases with traditional construction methods of the same location and developer, we obtain added cost types and change fluctuation of each case. Results are shown in Table 6. 6. Results and discussion 6.1. Comparison between the traditional cost accounting method and the proposed accounting system When adopting the traditional cost accounting method to analyse the OSC cost, the costs of various parts in building are determined, such as bidding costs, foundation costs, construction costs on the ground, decoration costs, and PC component costs. However, determining the reason for the varying costs of traditional projects and OSC is difficult. The prefabricated and traditional costs are also not categorised. The proposed cost accounting system can better reflect the differences in cost between traditional project and OSC, including the cost types and change fluctuation. A thorough analysis and identification of the causes of cost changes indicate that the proposed system can help reduce the OSC cost by adopting appropriate measures. 6.2. Total cost of superstructures in semi-prefabrication and conventional construction The detailed cost items of the superstructures from the six cases are shown in Tables 3 and 5 The total cost and the cost of the superstructures with semi-prefabrication are higher than the costs of conventional construction. A higher percentage by precast volume
corresponds to a higher cost. Approximately, 318 yuan/m2 (27%), 370 yuan/m2 (32%), 1023 yuan/m2 (88%), and 1263 yuan/m2 (109%) of the total construction cost increase per sq.m2 in Cases A, B, C, and D, respectively, compared with Case F. The costs of concrete work, masonry work, plastering work, and measurement work clearly vary from those of conventional construction. 6.3. Added cost comparison between the traditional project and OSC To explore the main reasons for the increase or decrease in cost, we conducted an in-depth interview with each project manager on their cost management engagement. Each interview lasted for 40 min to 50 min. The critical causes were largely attributed to the process change incurred by prefabrication, including the cost of the molds for the components, their transportation, and on-site requirements. A detailed analysis is presented in the succeeding sections. 6.3.1. Cost of precast components As shown in Table 6, the increases in precast component cost of three cases are 229, 392.62, and 127.89 yuan/m2, and their contribution to the total added costs are 41%, 81%, and 31%, respectively. Precast component cost mainly refers to material cost, labor costs, machinery costs and factory, land, management costs, and model cost. Unlike traditional construction methods, the precast component production process needs special materials to ensure the performance and assembling, including embedded parts, waterproof plastic, and polyethylene (PE) plastic strips. The embedded parts include adjustment member, sleeves, and rings. Adjustment member and ring are the auxiliary materials during the assembly process. The number of sleeves is affected by the split design, and different split programs may cause a large difference in number of sleeves. Waterproof plastic and PE plastic strips mainly deal with the waterproofing of precast components. Brick and masonry walls are used for traditional walls, and they cost less than concrete walls. The small scale of OSC projects results in a low degree of standardisation of precast components and less demand for them. Furthermore, the economies of scale cannot be formed in the precast factory. Except for increased material, a set of models in precast components are required in the production process. Given the low demand for precast components, the amortization of the model cost also increases the cost of OSC. 6.3.2. Assembly cost of precast components Assembly cost is one of the main reasons OSC costs more than traditional construction. This higher cost is mainly due to the following five factors: machinery cost, PC installation cost, jointing cost, built-in fitting and support costs, and other expenses. The frequency of tower crane use increases, thereby increasing
Table 5 Detailing the cost breakdown of super-substructures from the first group six case studies. Project
Case 1-A
Precast level (% by volume) Substructure (Earthwork/basement) Super-structure RC work (yuan/m2) Prefabricated component work (yuan/m2) Floor work (yuan/m2) Masonry work (yuan/m2) Roof and waterproofing work (yuan/m2) Plastering work (yuan/m2) Measures and other work (yuan/m2)
11% 37% 60% 65% 0% Excluded in the comparison because insignificant changes referring to prefabrication were determined 1113 1232 1656 1964 948 519 214 138 299 407 155 664 1226 1435 0 23 27 62 13 41 37 25 3 1 30 44 37 47 32 34 74 58 55 71 136 261 207 125 113 300
Case 1-B
Case 1-C
Case 1-D
Case 1-E
Notes: Data were gathered through interviews with project managers, architects, and contractors in each project and from the research of Zhao (2014).
Case 1-F 0% 936 434 0 29 25 37 105 306
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Table 6 Detailing the cost breakdown from the second group three case studies. Added cost type
Case 2-A
Bidding Design and consultation Prefabrication associated
Construction
Total added cost
Staircases Laminated panels Balcony panels PC exterior wall panels Air conditioning panels Parapet Transport fee Foundation fee Cast in-situ fee Assembly fee
Case 2-B
Case 2-C
Volume (yuan/m2)
Fluctuation
Volume (yuan/m2)
Fluctuation
Volume (yuan/m2)
Fluctuation
e 16 2 10.47 41.91 31.24 141.88 1.82 1.82 17.47 e 16.2 28 557
e 2.87% 0.36% 1.88% 7.52% 5.61% 25.47% 0.33% 0.33% 3.14% e 2.91% 5.03% 100.00%
3 20 14 51.20 62.16 e 279.26 e e 4.10 e 16 34.16 487
0.62% 4.11% 2.87% 10.51% 12.76% e 57.34% e e 0.84% e 3.29% 7.01% 100.00%
e 16 2 3.64 107.93 16.33 e e e 14.65 e 34.6 28 406
e 3.94% 0.49% 0.90% 26.58% 4.02% e e e 3.61% e 8.52% 6.90% 100.00%
machinery cost. In the traditional construction mode, the tower crane enters the construction site once and is used for approximately nine months. In off-site residential construction, a tower crane enters the construction site twice and is used for approximately eight months. Although the service time of the tower crane decreases, the cost of the tower crane increases at the same unit price. No mounting fee of the PC part is considered in the traditional construction, but the mounting fee of PC is an important part in off-site residential construction because of the great number of prefabricated (concrete) elements. In addition, mounting comprises many joints; thus, it has to handle the joints, and the cost of joints increases further. Unlike the traditional mode, OSC uses extensive built-in fitting to connect the prefabricated concrete elements rather than overall cast-in-place. Consequently, the built-in fitting is required to set in advance. Other expenses are from the dumper, labor cost of unloading, constructional iron of lifting, and protective film of the outer wall. 6.3.3. Transportation and design cost Transportation cost is an important part of the increased costs. The three cases of the second group increased by 2.87%, 4.11%%, and 3.94%. For traditional construction, the traffic expenses mainly include direct transport fees to move raw materials to the construction site. However, OSC increases the transport component, namely, the transport of raw materials to the prefabrication sites and the prefabricated (concrete) elements to the construction site. The total costs increase further because of the increased transport costs. Hence, OSC needs more trucks than the traditional mode to transport an equal number of objects. When the price does not change and the number of trucks increase, the total costs will increase. Design cost occupies a lower proportion of the overall project cost and thus has an insignificant influence on the OSC project cost. OSC design cost includes design and consulting fees. For additional split design, detailed design in OSC increases the types and quantity of drawings and design costs. However, OSC design is not mature enough in China, and developers need to consult experienced domestic and foreign design companies, thereby resulting in increased consulting fees. 6.3.4. Cast in-situ cost Increased cast in-situ cost mainly refers to the cost effect on the cast in-situ part of the project that adopts OSC methods. In the second group, Cases 2-A and 2-B were developed in 2007 and 2011, respectively; given the immature production technology and construction technology, the cost of cast in-situ part increased by
approximately 16 yuan/m2. With the development of OSC in China and the efforts of developers to solve technical problems, the cost of cast in-situ part decreased in Case 2-C project in 2013. 7. Conclusions The diffusion of OSC adoption has achieved considerable progress worldwide, but it remains at a lagged pace in China. The critical hindering factor is the lack of comprehensive cognition of the cost. This study adopts a combined method of literature review, case studies, and face-to-face interview to distinguish the process between OSC and conventional construction, to refine the cost framework of OSC, and to conduct case studies to address the research questions. The following conclusions were obtained: The cost of OSC is similar but not limited to conventional construction because of the different processes during the entire building stage. Therefore, special costs should be considered, namely, the professional design consulting fee (especially designed for the manufacture and assembly of prefabricated components along with logistic integration into the design process), the procurement of a prefabrication supplier, and the on-site installation of prefabricated products and modules. The total cost of semi-prefabrication is significantly higher than that of the current conventional construction in China. The main contribution cost is associated with the production of prefabricated component, transportation, and design consultancy. This association is due to the lack of experience, skills, and market demand in China. By contrast, the costs of masonry, plastering, and measurement works, as well as the costs that indirectly benefit from labor saving and time reduction, decrease considerably. The decreased costs provide clients with more confidence despite their inability to offset the incremental costs from prefabricated construction in the current phase in China. The results of this study focus only on first-mover projects in China. If we view the costs from the short- and long-term perspectives, then the total cost can be reduced. Previous studies based on the practices of developed countries have shown that higher costs could be offset by time saving, non-rework due to zero defects, labor saving, resource reduction, and economies of scale (Jaillon & Poon, 2009). Chu and Sparrow (2001) asserted that the shortening of construction time by adopting prefabrication also provides economic benefits for clients, such as lower site overheads, reduced loan interest, and early rental returns. Bhangale and Mahajan (2013) emphasised the effectiveness of a prefabricated system in cost reduction. The Egan Report indicated the capacity of OSC to improve productivity (Department of the Environment and
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the Regions, 1998) and thus higher productivity in the future could delimit the entire building cost. In sum, this paper presented nine cases to help more clients or stakeholders to recognize the cost of prefabricated construction. A limitation of this research is the small number of cases involved and studied in China. Nevertheless, this study contributes to the literature by establishing a comprehensive framework for the cost estimate of OSC, thus making it a common basis for future studies on more practical cases and multiple comparative studies. Acknowledgments This study was supported by the National Social Science Foundation of China (Grant No. 15CJY030) and the Fundamental Research Funds for the Central Universities in China (Grant No. 106112014CDJSK030002). References Arif, M., & Egbu, C. (2010). Making a case for offsite construction in China. Engineering, Construction and Architectural Management, 17, 536e548. Bhangale, P., & Mahajan, A. K. (2013). Cost reduction through cost effective construction techniques. Bjornfot, A., & Sarden, Y. (2006). Prefabrication: A lean strategy for value generation in construction. In Proceedings of the 14th annual conference of the international group for lean construction (pp. 265e267). Santiago, Chile: School of Engineering, Catholic University of Chile. Blismas, N., & Wakefield, R. (2009). Drivers, constraints and the future of offsite manufacture in Australia. Construction Innovation: Information, Process, Management, 9, 72e83. Chiang, Y.-H., Chan, E. H.-W., & Lok, L. K.-L. (2006). Prefabrication and barriers to entryda case study of public housing and institutional buildings in Hong Kong. Habitat International, 30, 482e499. Chu, R., & Sparrow, C. (2001). Prefabrication techniques for high-rise residential buildings. In Proceedings of environmentally friendly structures seminar, Hong Kong, China (pp. 25e44). Cigolini, R., & Castellano, A. (2002). Using modularization to manage construction of onshore process plants: A theoretical approach and a case study. Project Management Journal, 33, 29e40. CIRIA. (1997). CDM regulationsePractical guidance for clients and clients' agents. Department of the Environment, T., & The Regions, L.. (1998). Rethinking construction the report of the construction task force to the Deputy Prime Minister, John Prescott, on the scope for improving the quality and efficiency of UK construction. Dewick, P., & Miozzo, M. (2002). Sustainable technologies and the innovationeregulation paradox. Futures, 34, 823e840. El-Haram, M. A., Marenjak, S., & Horner, M. W. (2002). Development of a generic framework for collecting whole life cost data for the building industry. Journal of Quality in Maintenance Engineering, 8(2), 144e151. Emmitt, Stephen, & Gorse, C. A. (2010). Barry's advanced construction of buildings. Great Britain: Blackwell Publishing. Gibb, A. G. F. (1999). Off-site Fabrication: Prefabrication, pre-assembly and modularization. Latheronwheel: Whittles Publishing. Gibb, A., & Isack, F. (2003). Re-engineering through pre-assembly: Client expectations and drivers. Building Research & Information, 31, 146e160.
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