Life cycle cost (LCC) comparison of a modular building structure with a conventional structure in healthcare

Abstract

With increasing adoption of modular construction in the residential sector, its adoption in the Dutch healthcare sector is studied. Whilst the initial costs can be higher, this method of construction claims to have cost benefits over conventional construction. These are the benefits of construction speed and residual value at the end of lifespan amongst others. Modular buildings are also often advertised as sustainable, because the credentials gained from lean manufacturing coincide with a selection of sustainability objectives [1]. Healthcare projects have higher requirements and process hurdles, which make construction in healthcare much more complex than in the residential sector. However, in the UK, a study of offsite manufacture and modular volumetric construction methods concluded it to be the cost efficient solution necessary for the NHS, which led to 40 modular hospitals planned to be built until the year 2030 [2]. This means that the benefits and drawbacks of a modular approach must be weighed, and this is done in the Dutch context. A life cycle costing is proposed as the fitting tool of assessment.

Interviews were held with Dutch modular contractors to reveal the capabilities and specifics of building in a modular way and find proof for each cost factor. Experts in healthcare construction were interviewed to determine healthcare project priorities and find out whether these are catered for by modular construction. A live construction project of a hotfloor department was then studied. Several options competed in the tender project and were compared in the case study. By collecting the cost quotes and arguing for the monetary value of the identified cost factors, a life cycle cost calculation was done. Additionally, sustainability was considered by calculating the novel carbon tax. To expand the application of results to other projects, sensitivity studies were carried out for each life cycle cost parameter.

The study found that there is application for modular construction in healthcare in the Netherlands. Facilities, which do not host medical installations, do not differ to the construction used in residential modules. As for facilities such as the studied hotfloor department, larger modules and a lesser degree of finish offsite decreases the competitiveness of this construction approach. However, several evident cost factors were proposed to be considered within a life cycle costing. These were earlier income due to faster construction, a gain due to less interest and the residual value. It was found that these considerations allow for a 49,0% increase on the initial cost of a modular option in comparison to a conventional option. A hypothesis was further proposed, stating that the competitiveness of the modular option depends on three criteria. These include the initial modular option costs being up to 49,0% more expensive; the saving in construction time having a monetary value to the client; and life cycle costing results being used in total cost comparison.