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Modularization Business Case Analysis

RT-396 Topic Summary
RT 396

Overview

The demand for increased efficiency for projects in the heavy industrial sector continues to rise, compressing time-to-market expectations. At the same time, skilled craft labor has evaporated, and environmental regulations have become more stringent by applying sustainability guidelines. Industry leaders need to 1) understand how to respond to these challenges and 2) take advantage of the industry’s best implementation tools. Foremost among the best available techniques is the concept of modularization. Although modularization is far from new or complicated, its implementation strategy is still is not well understood, properly planned, or effectively executed.

To tackle these problems, CII RT-396 was challenged to address an essential research question:
“When is the appropriate time for modularization planning, and how should a company develop a business case to support the modularization decision?”

In response to this research question, the team provided the following solutions:
  1. Standardized Modular Terminologies and Definitions
  2. Modularization Barriers & Barrier Breakers
  3. Recommended Modularization Timing
  4. Modularization Business Case Analysis Tool for Opportunity Framing
  5. Modularization Business Case Analysis Tool for Assessment and Selection
  6. ESG Modularization Assessment Tool

Used together with the research findings, the combination defines a successful modularization strategy and assessment process AND, if implemented early and followed specifically, provides a path to the best modularization strategy for the project, including a direct relation between modularization and ESG factors.

Key Findings and Implementation Tools

1 : Standardized Modular Acronyms and Terminologies

RT-396 defined/updated the current terminologies on modularization (i.e., modularization, site construction, offsite construction, prefabrication, preassembly, module assembly) currently used in the industry. Among these many terms, RT-396 defined modularization as an execution strategy that transfers work from the project site to an offsite location to improve project performance. In addition, to help the industry better understand, RT-396 split the module types by size in terms of how modules are fabricated, shipped, moved to a site, and set (FR-396, p. 28).

Reference: (FR-396)

2 : Modularization Barriers and Barrier Breakers

RT-396 identified the top ten barriers for the implementation of modularization in capital projects and how best to overcome these barriers. The 10 top barriers are (FR-396, p. 7):

  1. Requirement of early scope and design freeze
  2. Vendor data is not available to support modular execution
  3. Not compelling business case
  4. Modularization is not part of the project design
  5. Project delivery method prevents effective modularization planning/execution
  6. Owner’s reluctance on modularization
  7. Lack of major financial/business driver to modularize
  8. Lack of (early) fabricators/supplier’s involvement
  9. A custom project with no standardization or repetition
  10. Lack of knowledge/guide/process to execute modular projects successfully
     

RT-396 responded by identifying Modularization barrier breakers (FR-396, p. 10):

  1. Industry needs to plan, execute and design early and properly.
  2. Provide the industry with “easy” guides and tools.
  3. Shift paradigm from stick-built to modular to standard modular.
  4. Thoroughly educate the industry leaders, students, and academics.
Reference: (FR-396)

3 : Recommended Modularization Timing

The team designed this tool to help users make informed decisions by reviewing key modularization drivers and considerations during early project phases. This tool also helps users understand the enablers and barriers related to modularization and addresses new drivers like ESG (FR-396, p. 14).