A Value-Based Cost-Benefit Analysis of Prefabrication Processes in the Healthcare Sector: A Case Study

A VALUE-BASED COST-BENEFIT ANALYSIS OF

PREFABRICATION PROCESSES IN THE
HEALTHCARE SECTOR: A CASE STUDY
Eric I. Antillón 1, Matthew R. Morris 2 and William Gregor 3

ABSTRACT
In the building construction industry, the healthcare sector is considered to have the
highest opportunity to implement prefabrication. Some of the benefits attributed to its
implementation are cost savings, schedule acceleration, improved quality and safer
work environments, among others. The decision to use prefabrication tends to be
based on anecdotal evidence rather than rigorous data, given that no formal methods
are available to determine the impact of prefabrication on project performance
outcomes. A value-based cost-benefit analysis was conducted on an on-going 831,000
square feet hospital consisting of 360 patient beds, with the input from the major
parties involved in the prefabrication process. Four specific prefabricated components
were studied: prefabricated bathroom pods, exterior wall panels, overhead MEP
utility racks, and patient headwalls. To determine the impact of prefabrication on the
project, prefabricated versus traditional site-built performance outcomes were
compared in terms cost, schedule, safety, and quality. Each prefabricated component
was analyzed individually, as well as the combined impact from all four components.
A cost premium of 6% over the traditional site-built cost, as well as a schedule
reduction of 10% and over 150,000 work-hours diverted from the jobsite were among
the findings from this study. A value-based benefit-to-cost ratio of 1.14 was estimated
to be accomplished in this project. This case study shows that direct costs savings is
not considered to be the primary benefit of prefabrication, but rather the indirect
benefits achieved, such as schedule savings and reduced on-site labor, which can be
quite significant when quantified.

KEY WORDS
Prefabrication, Cost-Benefit Analysis, Healthcare Sector, Bathroom Pods, Wall
Panels, Overhead Utility Racks, Headwalls

1
Research Assistant, Civil, Environmental and Architectural Engineering, University of Colorado,
428 UCB, Boulder, CO 80309-0428, Phone +1 303/492-3706, Fax 303/492-7317;
[email protected]
2
Instructor, Civil, Environmental and Architectural Engineering, University of Colorado, 428 UCB,
Boulder, CO 80309-0428, Phone +1 303/492-0468, Fax 303/492-7317;
[email protected]
3
Construction Executive, Mortenson Construction, 1621 18th Street, Suite 400, Denver, CO 80202,
Phone +1 303/295-2511; [email protected]

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Eric I. Antillón , Matthew R. Morris and William Gregor

INTRODUCTION
The healthcare sector has recently reported to be the building sector with the highest
use of prefabrication among all types of building construction projects, as well as the
sector with the highest opportunity in implementing such construction strategies.
Currently, nearly half of all healthcare projects use prefabrication, and it is reported
that schedule and costs are the biggest drivers to use prefabrication, followed by
safety and quality (McGraw-Hill 2011). Cost savings, schedule acceleration,
improved quality and safer work environments are among the most common benefits
attributed to the use prefabrication (Haas and Fagerlund 2002). Cost is typically the
driving factor when considering the benefits of using prefabrication as a construction
strategy, therefore, when considering other value components of using prefabrication,
these components are translated into actual dollars.
The decision to use prefabrication has been shown to be based on anecdotal
evidence rather than rigorous data, and this has been mainly due to the fact that no
formal measurement procedures or strategies are available (Blismas et al. 2006). A
major issue in conducting comparative evaluations and analyses on traditional and
prefabricated building components is that these methods do not typically account for
all the factors that affect cost (indirectly) and other recognized benefits. As Blismas et
al. (2006) describe this issue, typical evaluations are cost-based and not value-based
analyses.
By using these existing methodologies, this study has taken an approach that
holistically evaluates other value components that are indirect benefits attributed to
prefabrication, as experienced by the Exempla Saint Joseph Heritage project. By
using actual data as experienced by Mortenson Construction, the general contractor in
this project, and its subcontractors involved directly with the prefabrication scope of
work, the evaluation method implemented has taken a value-based approach. The
hospital project is an on-going 831,000 square feet hospital consisting of 360 patient
beds, in which cost, schedule, labor, safety and quality, being some the main
performance drivers that were available to the researchers, were analyzed to
determine actual project prefabrication performance outcomes.
The purpose of this study is to present the combined effect of four significant
prefabricated components implemented in this hospital project and compare and
contrast its main performance outcomes with traditional site-built processes.
Furthermore, this study is presented an as extension of previous studies that have
conducted comparative evaluations for prefabrication components, including
prefabricated bathroom pods, in which certain value components were also analysed,
and to further extend the methods of proper evaluation of such construction strategies.

PREFABRICATION – DRIVERS, BENEFITS & BARRIERS

Lean construction aims at minimizing waste while maximizing value as one of its
core objectives. The utilization of prefabrication fits with the lean building model in
its ability to increase productivity significantly (Olsen and Ralston 2013). Pasquire
and Connolly (2002) show how lean construction has a direct application through
prefabrication of building components and the benefits that result from it. However,
they also indicate that such strategies as prefabrication will fail to be incorporated
properly if the advantages offered through these strategies are not or cannot be
properly evaluated. Prefabrication is defined as “a manufacturing process, generally

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A Value-Based Cost-Benefit Analysis of Prefabrication Processes in the Healthcare Sector: A Case Study

taking place at a specialized facility, in which various materials are joined to form a
component part of a final installation" (Tatum 1987). The term prefabrication in this
study is used collectively to refer to the assembly of prefabricated assemblies,
modules, or components taken from the field to offsite production (OSP) for
subsequent installation in the project site.
Among those benefits that fail to be properly evaluated, significant value-adding
components that can be attributed to the use of prefabrication are listed in Table 1.
This list provides a well-rounded list in which many of the value components
evaluated in this paper are also indicated as being evaluated quantitatively as part of
the Benefit/Cost ratio (B/C) or qualitatively (QUAL).

Table 1: Value Components, Expectations (adapted from Table 1-1 in Cook 2013)

Evaluated in Study
Value Component Prefab Expectation
(B/C or QUAL)
Cost (Material and Labor) Neutral or Lower B/C
Time (Schedule) Compressed B/C
Design Flexibility Difficult to make changes No
CM/GC Coordination Time Reduced No
Quality Equal or Better QUAL
Site Deliveries and Supplies Reduced No
Sub-Trade Activity on Site Reduced B/C
Safety and Worker Health Increased B/C
Ergonomics Better QUAL
Weather Conditions Controlled No
Environmental Impact Reduced No
LEED Certification Mixed pros and cons No
Waste and Disposal Reduced No
Public Relations Favorable No
Marketing Favorable No
Maintenance (Lifecycle) Improved No

A recent detailed study comparing site-built vs. prefabricated hospital bathroom pods
(Cook 2013) found that the bathroom pods reduced the construction schedule from 45
to 19 days, a 58% decrease in time, which is a significant overall construction
schedule improvement. In another study, Blismas (2007) evaluated 7 case studies in
Australian construction implementing OSP methods ranging from buildings, to
transport, to stadium projects in which many different prefabrication components
were ultimately evaluated to determine the main drivers and benefits of OSP in
general. Typical barriers were also identified, such as lengthened lead times, need to
fix designs at an earlier stage of the project process, need to specifically design
products and building components, very low IT integration in the construction

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Eric I. Antillón , Matthew
M R. Mo
orris and Williiam Gregor

induustry, and high fragm mentation iin the indusstry among g many othhers. Finally y, as
indiicated, a bigg part of prrefabricationn in achieviing lean con
nstruction ggoals is thro
ough
the improvemeent of produ uctivity, forr which Eaastman and Sacks (20008) have sh hown
thatt OSP in the
t construcction indusstry has haad a consisttently highher productiivity
growwth than onn-site constrruction prodductivity.

TH
HE CASE ST
TUDY
Morrtenson Connstruction wasw charge d with buillding the 83 31,000 sf, 3360 patient bed
Exeempla Saintt Joseph Heeritage Proj ect in 29.5 months. As A reportedd by the Den nver
Bussiness Journnal (Proctorr 2012), thee fact that the hospitaal has to oppen by Janu uary,
2015 drove Moortenson to figure out how to acccelerate con nstruction annd yet main ntain
the highest quaality standaards while ddoing so. Thhe tradition
nal, on-site llinear appro
oach
wouuld have ressulted in a 36-month
3 scchedule whiich was not acceptable.. An overalll 15%
scheedule comppression wass required, tto achieve a 29.5 month h schedule.

Figu
ure 1: Requiired Schedu
ule Compresssion
Preffabrication quickly beecame the solution an nd was a major conttributor to this
acceeleration which
w allow
wed for ssome build ding elemeents to bee built offf-site
sim
multaneous with
w the con nstruction oof the hospittal. This also allowed ffor a signifiicant
num mber of traddes to be pulled
p forwaard that oth
herwise cou uld not beggin on site until
u
lateer in the schhedule undeer a traditionnal approacch. The pro oject team ssearched foor all
possible compponents in the facilityy which wo ould be co onducive too the repetitive
preffabrication process. The four major prefabrication efforts thaat were cho osen
inclluded patieent and adm ministrativee bathroom ms, exterior wall paneels, multi-ttrade
utiliity racks and
a patient room headdwalls. Thee amount of o prefabriccation for each
e
commponent is summarized
s d below in T Table 2. Altthough the holistic
h anallysis perforrmed
on a per level basis
b canno
ot be apprecciated given n the space limitations
l of this papeer, it
is w
worth notingg the per levvel workforrce density that
t can be expected too be reduced d, as
show wn in this table.

T
Table 2: Suummary of Total
T Prefabbricated Uniits per Com
mponent andd Floor Leveel

Flo
oor Bathroom Wall
MTR's Headwaalls
Le
evel Po
ods Panels
P
L
LL 10 2% 0 0% 0 0%
% 0 0%
1 34 8% 0 0% 0 0%
% 15 4%
2 28 6% 0 0% 0 0%
% 0 0%
3 12 3% 0 0% 0 0%
% 1 0%
4 63 14% 822 24% 54 33%
% 76 220%
5 15 26% 744 21% 48 29%
% 108 229%
6 16 26% 722 21% 41 25%
% 108 229%
7 62 14% 188 34% 23 14%
% 68 18%
To
otal: 440 100% 3466 100% 166 100%
% 376 1000%

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A Value-Based Cost-Benefit Analysis of Prefabrication Processes in the Healthcare Sector: A Case Study

Figure 2: Typical Prefabricated Bathroom Pod & Wall Panel

The prefabricated bathrooms pods installed in the project were manufactured by a
leading third party manufacturer of prefabricated bathroom pods for hospitals, hotels,
dormitories, and multi-unit residential projects. Prefabricated bathroom pods are
completely finished inside and are designed and accessorized per the architectural and
MEP plans. Everything is pre-installed, including towel bars, mirrors and paper
holders.
The prefabricated wall panels were built at an off-site fabrication facility
established by the framing subcontractor for the purpose of the project from which
the framing, sheathing, weather barrier, spray foam air barrier, brick ties and rigid
insulation were assembled prior to delivery to the construction site for installation.

Figure 3: Typical Prefabricated Multi-Trade Rack & Patient Headwall

The multi-trade utility racks (MTRs) were prefabricated off-site at a warehouse that
was set up for the purpose of prefabricating the MTRs and patient headwalls within
10 miles from the actual construction site. The warehouse was approximately 60,000
SF, which had sufficient storage space for all the material needed and up to two 2
floors worth of fabrication ahead of schedule. This, being one of the benefits of
prefabrication, allowed the team to maintain a strong buffer to account for unforeseen
events on-site. The MTRs fabrication off-site consisted of the rack structure, cable
tray and electrical components, HVAC ductwork, piping, insulation, and to some

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Eric I. Antillón , Matthew R. Morris and William Gregor

extend framing and drywall for special installation scenarios. The patient headwalls,
similarly were prefabricated with the main framing of the headwall, installation of
mechanical outlets and piping such as oxygen and carbon dioxide, electrical, data and
light components, and finally the casework.
In general the process comparison that was evaluated for this research, in
retrospect to what can be considered the life cycle of the prefabricated components,
was focused on mainly considering the beginning of the off-site production for each
of the four components, through delivery and final installation of each component.
This boundary for the purpose of the study was necessary given that the project is still
currently in progress and the conclusions past detailing are hard to quantify at this
moment.
Process Comparison for Comparative Analysis Study

Final
Initial Design Off-Site
Delivery Intallation Detailing Inspections
Planning Development Production
(Punch Lists)

Figure 4: The Study’s Focus during the General Prefabrication Process

METHODOLOGY: A VALUE-BASED COST-BENEFIT ANALYSIS

Proponents of prefabrication typically agree that cost comparisons based on the
deductive credit that accounts direct material and labor costs, ignores other indirect
value-adding benefits. Such comparisons that only take direct cost into consideration,
often give the site-built cost and equal or lower cost than the prefabricated cost as
shown in Table 1. In order to conduct a comparative cost-benefit analysis on the
performance outcomes achieved by the use of prefabrication in this project, the
researchers established the performance outcomes of the prefabricated components as
the base case, and compared it to the site-built hypothetical scenario.
A cost-benefit analysis is used to evaluate investments when the investor, which
for this case-study is seen from the perspective of the general contractor, is trying to
determine if the resulting benefits from the investment exceed the cost of the
investment. To measure such an investment in prefabrication, this measure can be
expressed as the benefit-to-cost ratio (B/C) of the investment:

B/C = total benefit from prefabrication / total prefabrication cost (1)

If the B/C ratio is greater than or equal to one, then the investment in prefabrication
would be considered economically acceptable, and when the ratio is less than one
then it is not. This is an approach that was developed from a similar study in which
the analysis of the investment on construction craft training in the United States was
evaluated in a similar manner (Wang et al. 2010). Having established this analysis,
the research team then determined what value components would be realistic to
obtain from many of the subcontractors performing these scopes of work, and how
reliable and objective such data could be. As discussed in Blismas et al. (2006), the
traditional cost-based approach often lacks the “soft” aspects of benefit evaluation
models, which considers other value components such as labor, safety, and quality
that are not typically accounted for, thus providing a more balanced evaluation. To
determine the B/C ratio shown above, the hypothetical cost and performance of the

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same scope of work for the base case was determined for site-built processes. The
overall B/C ratio was defined as:

[ ]
= (2)

In this case, the Site-Built Costs are the direct material and labor costs for the same
scope of work performed for the prefabricated processes in this project, the Schedule
Savings is the amount of potential general conditions (GC’s) avoided due to
prefabrication, and the Incident Costs Avoided is the cost of potential injuries avoided
due to the use prefabrication as reflected per the general safety performance statistics
on the project. In order to determine these three values, the site-built hypothetical
scenario was compared to the prefabricated performance in terms of costs, schedule,
safety, and labor, discussed next.

CASE STUDY RESULTS

In the following section, the results for each of the main performance outcomes
measured in this case study are presented. For each prefabricated component, each
outcome was analyzed individually (shown as pods, panels, MTRs, and headwalls)
and then the four prefabricated components were analyzed collectively (total prefab)
to determine the overall impact on the project. Due to the site limitations of this paper
and confidentiality of the data provided by the suppliers and the general contractor
involved, detailed itemized costs, material, labor-hours and safety statistics are not
shown, except for the conclusive results.

COST
In this section, the direct costs due to labor and material for each of the four
prefabricated components were analysed. For each of the prefabricated components
analysed, a detailed cost breakdown sheet was developed in which all of the subs
involved in the scope of work related to the specific prefabricated components were
asked to provide detailed data for the analysis. Using the parties involved directly in
the project provided a more realistic input for the expected direct costs under the
hospital-specific conditions, which were then validated with documentation from the
general contractor. For each prefabricated assembly, either a typical type 1 bathroom
pod, a 15'W x 30'L wall panel, a typical 25'L x 8'H x 3'H MTR, or a typical patient
room headwall were considered to be the units of analysis. These are discussed in
detail above in the case study description. From this analysis, the productivity rates,
labor cost, work-hours, and material cost allowed for the analysis to make an overall
comparison of prefabrication vs. site-built costs.

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Table 3: Direct Cost Comparison Results

Bathroom Pods Wall Panels MTRs Headwalls Total Prefab
Type 1 15'H x 30'W 25'Lx8'Wx3'H Patient Room
Unit of Analysis: All Prefab
Bathroom Pod Wall Panel MTR Headwall
Total Units: 440 346 166 376 1,328
Area (SF) / Unit: 51 284 200 72 N/A
Length (LF) / Unit: N/A 19 25 N/A N/A
Total Area (SF): 22,440 98,325 33,200 26,997 N/A
Total Length (LF): N/A 6,458 4,150 N/A N/A
Prefabrication Direct Cost $ 9,498,000 $ 3,405,000 $ 3,006,000 $ 6,655,000 $ 22,560,000
Site-Built Direct Cost $ 9,082,000 $ 3,535,000 $ 2,471,000 $ 6,187,000 $ 21,280,000
Total Direct Cost Delta $ 416,000 $ (130,000) $ 535,000 $ 468,000 $ 1,280,000
% Direct Cost Delta 4.6% -3.7% 21.7% 7.6% 6.0%

By using the results from the detailed cost breakdown for each prefabricated
component, the overall direct cost impact due to using these prefabricated
components can be calculated. Note that given the complexity between the many
different amounts of prefabricated units developed, such as different types of
bathroom pods and wall panels, a generalization for the total cost for each of the
prefabricated components was carried out to develop a cost comparison based on the
amount of prefabrication found in the project (number of units).

SCHEDULE
In order to determine the impact that using the prefabricated components had on the
project, each particular prefab component was individually analyzed to determine
how the schedule was affected. The impact that all prefab components together had
on the project schedule was then determined, that is the total impact. A baseline
schedule was first established in which all of the prefabricated components were
included in the schedule logic and durations. This baseline schedule was the project
schedule, updated through at the time of analysis. The start of construction of the
main hospital building was December 15, 2011. The baseline completion date,
considered to be the Certificate of Occupancy date in this study, was July 1, 2014.
The overall construction duration for the hospital is therefore 929 calendar days,
which is equivalent to 649 workdays for the project including all standard federal
holidays that fall in between these dates. This was the baseline schedule length used
for the analysis of the schedule.
For each of the prefabricated components, it was first determined how best to
adjust the baseline schedule to reflect how using the traditional approaches can be
realistically reflected within this baseline schedule. To do this, for each of the
components, the primavera schedule of the project was adjusted by inserting schedule
fragnets that reflected the traditional site-built processes developed, where the
prefabricated activities were scheduled. The fragnet included all on-site activities and
logic necessary to build the components traditionally, on-site, with the trade flow on
each floor. Once each schedule was adjusted reflecting the alternative site-built option,
the impact on the project schedule due to each adjustment (additional days added to
the overall construction duration) was then used to determine the potential impact on
the project. The indirect impact that each component has on the project was
quantified by calculating the potential general conditions (GC's) that were avoided by

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the general contractor and subcontractors, having finished the project earlier due to
prefabrication.

Table 4: Schedule Impact Comparison Results

Bathroom Pods Wall Panels MTRs Headwalls Total Prefab
Total Baseline Duration (Work Days) 649 649 649 649 649
Additional Work Days due to Site-built 52 41 20 0 72
Total Duration for Site-Built (Work Days) 701 690 669 649 721
% Schedule Delay Avoided 7.4% 5.9% 3.0% 0.0% 10.0%
Avoided GC's Cost (rates not shown) $ 3,124,000 $ 2,384,000 $ 1,192,000 $ - $ 4,275,000

From the results shown above, it can be observed that of the four prefabricated
components, the prefabricated bathroom pods have the most significant impact on the
schedule by avoiding a potential schedule delay of up to 2.5 months (52 workdays for
this project). This is equivalent to a 7.4% schedule delay of the baseline schedule
discussed above. All of the prefabricated components (bathroom pods, wall panels,
MTR's, and headwalls) grouped together avoid 72 workdays from the project once the
schedule is adjusted with all four components, which is approximately a 10%
schedule delay of the baseline schedule. The fact that the prefabricated bathroom
pods have such a significant impact on the overall schedule demonstrates the
importance of this scope of work in the schedule's critical path.

LABOR & SAFETY

As discussed before, one of the major indirect benefits that prefabrication brings is
the amount of labor reduced and moved from on-site to off-site work. This, in turn,
results on improved safety performance for the project as a whole given the amount
of reduced exposure to typical dangerous on-site working conditions. This may not
only affect the workers directly being involved in the prefabricated components but
also the workers working near or within the same scope of work. A summary of the
estimated impact on labor for the project due to prefabrication is shown below for
each prefabricated component, and then cumulative for all components together.
Similarly, due to space restrictions and confidentiality, only the total comparative
results are shown below for reference.

Table 5: Labor Comparison Results

Bathroom Pods Wall Panels MTRs Headwalls Total Prefab
Total Prefab Work-hours:
Off-Site Prefab w-h 50,600 27,770 28,280 14,350 121,000
+ On-Site Prefab w-h 3,520 6,290 7,500 3,010 20,320
= Prefab w-h 54,120 34,060 35,780 17,360 141,320
Total Site-built Work-hours:
Site-built w-h 81,820 39,210 31,070 18,700 170,800
Total Diverted Work-hours:
Reduced On-Site Labor Hours 78,300 32,900 23,600 15,700 150,500
Diverted w-h 27,700 5,150 -4,710 1,340 29,480

Reducing labor on-site has a direct impact on productivity improvements on-site

given the reduction of congestion within working areas throughout a building, and it
also creates the space and morale of a more efficient and safe working
environment.Error! Reference source not found. As shown, using prefabrication in

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this hospital project, it is estimated that the number of work-hours on-site throughout
the life of the project will be reduced by 150,500 hours. Using a standard
measurement of 2080 work-hours per year per worker, which is 40 hours a week for
52 weeks, an estimated amount of workers per prefabricated components can also be
calculated:
# workers = (total work-hours)/(2,080 w-h/year) x (Duration/365) yrs. (3)
The duration is the amount of workdays that were concluded in the schedule analysis.
The estimated direct cost avoided by reducing this amount of workers is taken into
account per the direct cost discussed earlier, however, the indirect burden for each
additional employee depending on each subcontractor, such as hiring costs,
supervision and training costs could be quite significant.
In order to determine how the use of prefabrication in this project impacted safety
performance, project-specific safety performance outcomes were analyzed. Based on
previous academic work on safety risk quantification, a methodology based on
probability, frequency and severity was used to quantify safety risk (Hallowell 2010).
The type of incidents reported for this project are first-aid injuries, medical-only
(MO), restricted-duty (RD) and lost-time (LT) incidents, which are also considered to
increase in severity in that same order. Only MO, RD, and LT are considered to be
recordable injuries, which are the incidents that determine the recordable injury rate
(RIR) for the project. Incident history for the project at the time of data collection was
used to produce the following results. Note that the frequency and severity rates have
been hidden for confidentiality porposes.

Table 6: Safety Impact Comparison Results

Bathroom Pods Wall Panels MTRs Headwalls Total Prefab
Total On-site Diverted w-h 78,300.0 32,900.0 23,600.0 15,700.0 150,500.0
Frequency
Avoided On-site Incidents
(w-h/incident)
First Aid 33,612.0 2.33 0.98 0.70 0.47 4.48
Medical Only 83,144.0 0.94 0.40 0.28 0.19 1.81
Restricted Duty 394,936.0 0.20 0.08 0.06 0.04 0.38
Lost Time 789,872.0 0.10 0.04 0.03 0.02 0.19
Total Avoided On-Site Incidents 3.57 1.50 1.08 0.72 6.86
Severity
Avoided Incident Direct Risk Cost
($/incident)
Avoided On-site First Aid $ 594 $ 1,385 $ 582 $ 417 $ 278 $ 2,662
+ Avoided On-site Medical Only $ 1,641 $ 1,545 $ 649 $ 466 $ 310 $ 2,970
+ Avoided On-site Restricted Duty $ 13,544 $ 2,685 $ 1,128 $ 809 $ 538 $ 5,161
+ Avoided On-site Lost Time $ 28,084 $ 2,784 $ 1,170 $ 839 $ 558 $ 5,351
= Incident Direct Risk Cost Avoided $ 8,399 $ 3,529 $ 2,532 $ 1,684 $ 16,144
+ Incident Indirect Risk Cost Avoided (5xDirect) $ 41,995 $ 17,646 $ 12,658 $ 8,421 $ 80,719
= Total Incident Risk Cost Avoided $ 50,395 $ 21,175 $ 15,189 $ 10,105 $ 96,863

BENEFIT-TO-COST RATIO
These benefits that prefabrication brings that can be quantified to some extent, such
as direct labor and material costs, schedule cost savings, and indirect injury avoidance
costs, can all add up to the benefits experienced by the general contractor by
implementing prefabrication in this project. These benefits, having been explored in
depth by analyzing project-specific data available, have been quantified to discuss the
overall benefit-to-cost ratio of prefabrication per individual prefabrication component
and grouped together, as experienced in the project.

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Table 7: Benefit-to-Cost Ratio Analysis

B/C Analysis Bathroom Pods Wall Panels MTRs Headwalls Total Prefab
Benefit
Total Site-Built Cost Investment $ 9,082,000 $ 3,535,000 $ 2,471,000 $ 6,187,000 $ 21,280,000
+ Total Schedule Cost Savings $ 3,124,000 $ 2,384,000 $ 1,192,000 $ - $ 4,275,000
+ Total Incident Cost Avoided $ 50,395 $ 21,175 $ 15,189 $ 10,105 $ 96,863
= Total Benefit $ 12,256,395 $ 5,940,175 $ 3,678,189 $ 6,197,105 $ 25,651,863
Cost
Total Direct Prefab Cost $ 9,498,000 $ 3,405,000 $ 3,006,000 $ 6,655,000 $ 22,560,000
Benefit/Cost Ratio 1.29 1.74 1.22 0.93 1.14

Based on the presented value-based cost-benefit analyses performed on the most

significant performance drivers for prefabrication (schedule, cost, and safety), the
B/C ratios shown above show the efficiency of the prefabricated components for the
project. The value-based benefits that all of the prefabricated components studied in
this project add can be quantified to provide an overall B/C ratio of 1.14. The benefits
can be interpreted as having the ability to provide the actual building components
being prefabricated (at a regular site-built cost), the indirect schedule cost savings and
the incident costs avoided due to prefabrication. The cost for each of the prefabricated
components is interpreted as the direct cost of using prefabrication. For every dollar
spent on prefabrication for this project, approximately 14% of the invested amount is
expected to be returned on benefits to the project.

QUALITY & QUALITATIVE ASPECTS

Initial findings regarding the impact of prefabrication on quality outcomes are were
inconclusive at the time this study was conducted. As the project is currently in
progress, it is not possible to quantify the resultant quality comparison as a “punchlist”
has not been generated yet. Preliminary anecdotal responses from team members
indicate an improvement in quality-related discrepancies for each component thus far.
Ultimately, a comparison should be made between the quantities of punchlist items
generated in each prefabricated component compared to the quantity of punchlist
items generated in a site-built scenario within the project. This data can convey the
difference in labor-hours required for punchlist, the labor cost savings or premium
and the schedule impact.

CONCLUSIONS & FUTURE STUDIES

This value-based cost-benefit analysis performed on four prefabricated components
for the Exempla Saint Joseph Heritage Project has shown how some of those benefits
that fail to be properly evaluated, significant value-adding components that can be
attributed to the use of prefabrication, have impacted this project significantly. As
shown in Table 1, many more feasible value components that could be quantified can
make this increase of decrease respectively. This has only considered some of the
performance outcomes and benefits that add the most value, therefore this is B/C ratio
is the minimum expected return in investment.
The individual return on investment for prefabricated wall panels could
potentially be up to 1.74 given the significant impact on schedule that has been shown.
A large part of the return on investment from prefabrication on this project could be
attributed to the schedule cost savings accomplished by the use of prefabricated wall
panels in particular. The impact on safety performance is significantly lower per the

Industrialisation, prefabrication, assembly and open building 1005

Eric I. Antillón , Matthew R. Morris and William Gregor

estimated quantities for incident avoidance based on historical project-specific data.

The representative workforce involved on in this project, however, is approximately
only 4.6% of all of the workforce, therefore, such a big improvement in safety cannot
be expected to come from such a small percentage of the work for the size and
complexity of this project.
Future studies to expand on this findings could further determine measurable
metrics to implement for the comparison of quality performance for prefabrication vs.
site-built processes by quantifying these outcomes. Environmental and sustainability
impacts are also other measurement that could be included to provide a more holistic
evaluation. Furthermore, to expand the results from this study, considering the shown
B/C ratios, a post-analysis of the same project could shed light into the actual use of
such value-based analyses and if the expected benefits drive with the suggested B/C
ratios. Should one consider the average B/C ratio of several components or only use
components with a B/C ratio greater than 1.0? Such considerations must look beyond
the direct costs savings as the primary benefit of prefabrication, and take into account
the indirect benefits achieved, such as schedule savings and reduced on-site labor,
which can be quite significant when quantified.

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1006 Proceedings IGLC-22, June 2014 | Oslo, Norway