In the latest issue of the Leaders & Innovators series Offsight CEO, Vikas Murali sits down with Robert Crotty, AVP of Capital Productivity Improvement and Strategy at HCA Healthcare. Robert and his team at HCA have deployed billions of dollars across multiple projects that use many prefabricated components. These components include modular bathroom pods, interior and exterior wall panels, precast facades, modular ceilings, and volumetric patient rooms. 

Given the scale of HCA’s projects, Robert and his team have already determined that the cost of leveraging standard prefabricated components like bathroom pods can save 10% or more compared with the traditional stick-built approach. In addition, projects can save 5% to 10% on the overall labor on projects leveraging prefabrication. 

On past projects, HCA has seen significant timesavings when at least 20% – 30% of the work is performed offsite and prefabricated components are shipped in for installation. For example, when HCA compared two very similar projects, a traditional onsite project with a project leveraging a significant number of prefabricated components, they found the prefab project was completed 2.25 months faster. They plan to gain even more savings and drive more efficiencies in speed and quality with offsite construction once they further scale up the implementation of more prefabricated components on newer projects. 

In this interview, we hear Robert’s perspective on why healthcare projects are a great fit for prefabrication and how they have already shown to be successful with major providers like HCA. We discuss how Robert and his team make the calculations to take a project offsite with prefabrication and we review the role technology can play in driving prefab adoption by providing supply chain visibility to owners.

R:  Prefab/Modular for our projects provides many advantages. First, building in a controlled environment such as a shop or factory allows work at table height or by machines. Falling off ladders or scaffolding and hand cuts are some safety issues mitigated. Offsetting labor, especially MEP labor, is a significant driver for our program.

Offsetting labor in a factory or shop means less dependency on the project-by-project workforce. The second highest value is speed. We can produce many of the components in parallel with permitting or site work. To leverage cost, an owner must take a programmatic approach to prefab/modular construction versus buying project by project. A program approach in our case is contracting with several modular/prefabrication suppliers using 3-year contracts.

The 3-year contract approach enables protection against escalation. Further, a program provides opportunities to improve the cost by continuous improvement and product quality.

R: The idea is that hospitals have repeatable spaces driven by codes and standard practices. The barrier is that the spaces are slightly different for each project, especially for expansions where the existing building design did not contemplate a modular approach. However, creating components that can be standard, such as bathroom pods, is achievable. Unique spaces can use custom prefabrication or a combination of prefabrication and modular.

R: Technology is a crucial enabler of modular/prefabrication. Using BIM technology and other virtual collaboration tools that have hit the market in recent years makes integrating modular or prefabricated components in projects possible. Technology can enable generative design, automate routine design tasks, and quickly simulate multiple options. Technology in the field helps the project team coordinate all the complexities of a healthcare project. Project teams can integrate components with the supply chain to efficiently schedule and produce modular products according to specifications. To achieve speed and significant labor offsets, many prefabricated components are required. Components such as bathroom pods, headwalls, interior walls, exterior walls, underground electrical, MEP racks, and CUPs are necessary. Multiple components mean multiple suppliers must be coordinated to leverage the benefits. 

Regarding the supply chain, there is a massive gap between suppliers and customers, and other industries have been using Technology to manage product deliveries for a long time. To take advantage of producing in parallel with permitting while supplying the project on time requires visibility into the prefabricator’s production milestones. Construction project schedules change frequently, and a prefabricator can be out of place, producing too early or too late. Visibility between owner, GC, trades, and supplier helps with flexibility and efficient production. Supply chain visibility can help forecast and level load a factory, which is an enabler of cost reduction.

Construction equipment and materials pre-Covid lead times were significantly less for switchgear, chillers, and AHUs. Managing the supply chain did not require any improvements. The combination of post-COVID lead times, mega battery, chip, and data center construction consumes all the material and equipment supply. Healthcare materials and equipment volumes are insignificant compared to the mega projects. These factors require owners to order early in the design and understand delivery status, especially when the GC is not on board to manage the orders. 

R: Here is what I told one of our prefab suppliers, asking a similar question. We compared two projects with the same scope for a medical/surgical bed tower expansion. The conventional project versus the one with modular and prefabricated components shows that the latter finished 2.25 months earlier.

We track the cost of our bathroom pods versus stick-built ones. We have refined the product and installation practices significantly. Our cost is between 5 and 10% less than stick-built units, depending on the supplier. The cost of MEP prefabrication is neutral. The cost of exterior walls is slightly higher, however, offset by the reduction in project duration.

We sampled the number of offsite hours by trade on several similar projects. Generally, less onsite labor is required, and overall labor was reduced by 7% for one team. Moving labor to another pool is needed due to the lack of skilled labor. The CHIPS Act, Inflation Reduction Act, Infrastructure Act, and manufacturing reshoring are driving mega projects. For example, EVs, semiconductors, and data center construction consume large amounts of labor. Couple that with more skilled labor leaving than entering the workforce, and your projects will take longer unless you shift the labor to another pool. Further, shifting labor to a controlled environment improves productivity and increases capacity with the same amount of workers. We have tracked prefab offsite hours. Components like bathroom pods/headwalls represent a significant shift to an offsite labor pool. When marketing modular construction, it is important to always communicate the benefits.