New House Rules

From what I understand about Chad Ludeman, I am instinctively his fan. His work as a developer with postgreen and his vision with the 100K House project demonstrate his values and commitment. Now he’s written an interesting, well-considered critique of prefabrication that has been bouncing around and getting attention the past few days. His title isn’t subtle: Prefab is Not the Answer to Affordable, Modern & Green Homes. It’s worth reading. Do so, but please come back. I have some comments, including agreements, corrections and rebuttals.

My title in response is similarly direct:

What good is Prefab…if it is Not the Answer to Affordable, Modern, Traditional & Green Homes?

Ludeman means to strike down what he outlines as four broad and untrue assertions about prefabricated homes:

1. Prefab is more Affordable
2. Prefab produces less Waste
3. Prefab takes less Time
4. Prefab is more "Green”

He makes some very good points in his analysis, but I’d like to dig in a little. The subject is interesting and I think ultimately an important one, considering where things may go next for the homebuilding industry.

First, I dislike the term "prefab." I don’t know what it means. Are the manufacturers providing precut parts, or panelized sections, or modular volumes or a combination? What percentage of the house is completed when it arrives on site? There’s no good definition of the term. Most manufacturers are only precutting and/or preassembling a small percentage (15%-40%) of the whole house, leaving some of the most difficult and time consuming aspects to be accomplished on site. Others are doing more complete buildings, but they are really providing fully-formed modular volumes, which I think of as a different construction species, generally just called "modular."

I also don’t understand why prefab is presumed to be modern. Isn’t Prefabrication a method of building, not a stylistic outcome? What is the correlation? Is it that progressive design should be (or must be) connected to progressive building techniques? Ludeman seems to think so:

“Like many, I hoped that prefab would be the answer to bringing modern architecture to the masses in the US and beyond. I thought that finally, modern home design would be attainable by those of us who aren't pulling in lofty six figure incomes.”

But really, where’s the connection? Why would a contemporary house be built differently than a traditional home? The only reason I can think of is to amortize the design fees over numerous projects, allowing the architect/designer to get an income stream, as opposed to the typical architectural design fee. Presumably, this is a technique to make “high” design more affordable, but the real motivation might be just a potentially better business model for modernist architects. Who knows? What I do know is that although there is sometimes a symbiotic basis for the relationship between modern design and prefab, the marriage is more an outgrowth of intention than style. The manufacturing process doesn’t care.

I also don’t like the prefix added to fabrication. When parts and pieces are aggregated into larger and more complete components before arriving at the building site, this is simply fabrication that happens in a different place. The term, therefore, only applies to the component itself, not the building. Windows, cabinets, doors, fixtures, and most of the heating, cooling and appliance equipment come to building sites already fabricated, but the buildings these elements become a part of aren’t automatically prefabricated. Similarly, when wall, floor and roof elements are also fabricated elsewhere (to one degree or another), they are still just wall, floor and roof panels that help to improve the quality and efficiency of the home’s construction. Despite my objections, I acknowledge that the term is pervasive and I won’t fight it for this post.

So, back to Chad Ludeman’s challenge of prefabrication’s trumpeted attributes. To begin with, the four points are actually two. “More affordable” and “Less time” are inseparable, as are “Less Waste” and “Green.” More time, more cost; more waste, less green.

I assume that as a developer, Ludeman has direct experience with prefabrication, but I am intrigued by his claim that site built is faster.

“If you scour a prefab company's FAQ's, call them or ask others that have gone through the process you will find that 6-12 months or more is not uncommon from start to finish. With site-built homes often going up in 4-5 months where is the time savings in prefab?”

If that’s true, it explains the relative high cost. Ludeman says that prefab homes would typically cost between $250 and $400 per square foot and says that the site built equivalent would be a lot less. Well, if he’s right about the time, he’s also right about the money. And if he’s right at all, it’s more a critique of the particular companies Ludeman has checked out (or used) than it is a condemnation of the concept of prefabrication.

Ludeman is right that prefab has to overcome its costs (overhead, shipping, crane, etc.) to be competitive and affordable. This is hard to do if the product has the costs of prefabrication without the benefit. I’m afraid Ludeman is looking at some poor examples.

The only point of off-site fabrication is to make consistently better products that can be assembled on site more quickly. If it does that first, then the price points will be variable depending on production runs, types of materials used and customization. Windows, for instance, are almost never made on the construction site. If they were, it would take much more time and the quality/price ratio couldn’t possibly compare with what can be accomplished by the window manufacturers. When the window arrives on site, it is installed in the opening and done. It doesn’t require more work. The same is true of the manufacturing of prehung doors and cabinets. They are better, they save time, and you can choose from very expensive to very affordable. You don’t have to choose between time, quality and cost. You can have all three.

This is not true of many companies that are trying to get on the prefab bandwagon. Since there is no accepted definition of prefab, anything goes. A kit of raw materials, with some essential parts precut, makes the grade; so does a package that comes with open wall panels, roof trusses and bundles of unprocessed materials that have to be cut, shaped and installed on site. Ludeman’s story about his friend having a pile of OSB left over from his building project suggests that the prefab in question had raw materials, even at the building’s sheathing level. No wonder it was slow to construct and expensive. Prefabrication without any added value (cutting, shaping, assembling) is simply a hoax.

Even with much of the package incomplete, it’s hard to imagine any credible reason why a prefab building would take longer than conventional construction. Not only would the company have provided no added value with its package, but it would have added some difficulty factor that must have confounded the guys who were trying to put it together. Perhaps the directions were in Greek. Kidding aside, I don’t get that.

On the other hand, I do understand why costs might be higher. One of the big reasons is that the contractors hired to put the package together often have no motivation to be efficient, and furthermore, have a very convenient excuse if things take longer and cost more: it’s not their fault; they are the solution, the prefab package is the problem. In addition, the subcontractors who bid on the portions of work not accomplished with the prefabrication tend to charge 15-25% more for the same reason. It’s very often not whether the work will be more or less difficult, but just the fact that it’s different. It’s the out-of-my-comfort-zone tax, and it's one of the hidden costs of any alternative form of construction. Too often, there’s simply an up-charge for having to think.

The secret to successful prefabrication is to make the components as complete as possible. Anything that isn’t done will take longer than it should to accomplish on site. How do I know that? Experience. The lesson learned is that the building can’t be called prefabricated unless most everything, including some of the mechanical systems and finishes, are delivered to the site in a mostly completed state and can be installed very quickly. Since Ludeman has made the point, I’ll raise the ante and say that if the product takes as long or longer to build on site than its conventional counterpoint, then it doesn’t deserve to be called anything other than a pile of expensive materials. There’s nothing fab about it.

There’s an alternative, and it’s similar to Chad Ludeman’s hybrid proposal. We call it a "Shell Package." It’s not a prefabricated house; it’s the structural shell. Typically, the shell goes up in one to two weeks and includes all the structure from the foundation to the roof and results in a complete, enclosed, weather tight, insulated (closed panel) building. It’s not the finished product, though. It’s just a good jump start. It advances the construction schedule by 2-3 months, but it leaves a substantial amount of work to be done the old-fashioned way on site. The distinction is perhaps subtle, but important. We didn’t promise a car and sell a chassis. With the Shell Package, we promise and sell only the chassis, and then put a lot of effort (including a twice-yearly intensive course) into helping homeowners and contractors understand the most efficient methods for installing and applying mechanical systems and finishes. The Shell Package has good value, reduces time, and is detailed to allow systems and finishes to install easily, but it isn’t priced or marketed as a prefab house. That’s something else entirely.

Let’s define that "something else": a complete prefab home package should have 60-75% of the above-foundation construction done before arriving on site, and it should be completed a similar percentage faster than on-site construction. This raises the bar, but it doesn’t make sense that a home that is marketed as prefabricated is actually only 15-20% complete when the fabricated elements are in place. This is why I think Ludeman’s gripe is real, but it reveals an immature industry and consumer confusion, not a revelation that prefab can’t work.

A fully prefabricated house is one in which the panelized sections come with finishes in place; wiring, plumbing and heating systems are substantially installed off site; “pods,” as Ludeman calls them, are used for bathrooms and mechanically intensive areas; and millwork comes cut and finished and ready to install. Of course, it’s easy to describe, but harder to do. Despite the reach and challenge, we have decided to make this process our standard product because it is our best way of controlling quality, time and cost. I’ll say more about this process in future blogs, but here are a few photos of recent projects to pique your interest. And since I can almost hear the question, yes, we are building complete homes under $200 p.s.f. (a current project will come in at around $150 p.s.f.; another that is close to completion will be around $185 p.s.f.), and these are fully custom homes, not stock plans. We can’t wait to find out how cost efficient we can be when we find the opportunity to build multiples.

Exterior walls in process with finishes



Unity House nearing completion



Private residence, all components fabricated off site







Regarding the green/waste issue, the first point I have already made. Ludeman decries the waste inherent in prefabs by telling this story:

“I recently walked through a delivered prefab with the owner and he offered me pallets of free OSB because he had so much extra and had no idea what he was going to do with it. I'm sure every prefab company is not this sloppy, but it is another indication of waste in an industry claiming extreme efficiency.”

If raw materials such as this are coming to the site, this hardly fits the description of a home that has been prefabricated. Chad’s right: this is a waste of both material and money and there’s no good reason to ship in a raw material that can be purchased at any lumber yard. It also doesn’t fit my definition of prefab. Neither does the rest of his description about the waste issue. He’s describing modular building, not what I think of as a much smarter and better way to accomplish off-site fabrication.

“Most prefab companies are still using loose, batt insulation that is often falling out of the framing by the time the modules reach the site. Batt insulation alone is not what is making the better green homes out there more energy efficient. Also, in many cases, all of that house wrap that is supposed to be sealing up the home from the outside is tearing apart and falling off of the exterior by the time the modules reach their final resting spot.”

This is a fair critique of the typical modular box one sees barreling down the highway, but it doesn’t apply to prefab, in which components are mostly panelized and flat-packed for delivery. Also, the typical fiberglass batt insulation that’s used in most modular homes isn’t either green or energy efficient. Whether installed on site or in a factory, it’s not up to any basic standard for a well-built 2008 home. Other forms of insulation, such as dense packed cellulose or spray foam, can be installed in factory conditions effectively and with greater control than one would typically be able to achieve on the construction site.

The extra framing Ludeman alludes to is also an issue for the modular boxes, not panelized prefabrication, so I’m not going to spend time with that. I do want to address this comment:

“There is something called "value engineering" which can be done effectively on site-built homes and the polar opposite called "over-engineering" that is often done with prefabs. Guess which produces more waste and costs the client more money.”

This just isn’t true. Value engineering can be done on site or in the off-site production facility. The difference is that, in off-site production, the decisions and cutting are accomplished entirely with software and CNC cutting equipment. It is precise and nobody is spending any time on a chop box. The decisions are made by the engineers, who can balance sturdy results and cost-effective framing solutions.

My biggest problem with site construction is that it often results in “devalue” engineering. Frequently, the people on the site think they know more than engineers and they reduce the framing schedule, reduce the fastening patterns, don’t install all the clips and tie-downs and otherwise save themselves effort and time by reducing the structural quality of the building. My start in the building industry was with tract home construction in suburban developments. Before I knew anything, the shortcuts and the flimsy buildings were appalling to me. We sometimes forget that the standard of building in America isn’t the custom homes built by the good builders, or the good prefabrication efforts by responsible companies. That vast majority of homes are tract homes built by low-skilled, unqualified labor.

We can do much better. We have to do much better. When the economy rebounds and large volumes of homes will need to be built for the average American, we need a viable alternative to out-of-date, out-of-sync site construction. I’m firmly dedicated to the concept that the future is in really good quality building components being assembled in controlled conditions, in both small shops and large factories, leaving the site for efficient, effective assembly only. This will lead to the answer for affordable, green homes, both modern and traditional. This could be called prefab, but in the 21st century, I will just call it "smart building."