According to a new report from McKinsey & Co., a new trend in construction—modular construction—may completely change the way projects are designed and built and the role all the players in construction undertake during projects.

The report, Modular Construction: From Projects to Products, notes growing interest in modular construction is being driven by significant opportunities for increased speed (cutting project times by up to 50 percent), reduced cost (by as much as 20 percent), greater certainty in planning for both time and cost, and overall improved quality of the structures (including better energy performance and seismic performance).

According to the report, "For decades, construction has lagged other sectors in productivity performance. Now, there is an opportunity for a step change—shifting many aspects of building activity away from traditional onsite projects to offsite manufacturing-style production. While modular (or prefabricated) construction is not a new concept, it is attracting a fresh wave of interest and investment on the back of changes in the technological and economic environment."

The report notes that all players involved in building construction will be affected by the shift to modular construction: developers, designers/engineers, general contractors, OEMs, specialized trades (including electrical contractors) and operations/maintenance.

In terms of growth, the report estimates modular construction could claim as much as $130 billion of the U.S. and European markets by 2030, delivering annual cost savings of $22 billion.

In terms of specific construction type, the report estimates a market potential of $45 billion for multifamily residential, $30 billion for single-family residential, $15 billion for schools, $10 billion for office buildings, $10 billion for hotels, $10 billion for logistics/warehouse facilities, and $5 billion each for retail, hospitals, and other buildings.

In terms of how appealing a project might be for modular construction, the report cites seven factors: regulatory issues, access to materials, supply chain and logistics, labor dynamics, quality perception, local site constraints, and consolidated/continuous demand volumes.